Forum Selection Clauses

"Forum selection clauses, also referred to as submission to jurisdiction clauses, are effective provided that the court of the selected forum has jurisdiction over the subject matter and there is no dispute between the parties - in this instance, the court in effect acquires jurisdiction by consent. Note, however, that parties cannot by agreement confer jurisdiction on a court that otherwise does not have the power or authority to hear the action.

A problem is encountered when a party commences an action in a jurisdiction that is not the selected forum stipulated in the contract. Notwithstanding any express contractual provisions, courts always retain the power to decide whether or not to hear an action.

If Ontario is not the selected forum and an action is brought in an Ontario court, the Court may choose to stay the proceedings although it does not necessarily have to do so. In order to assume jurisdiction appropriately, the court must determine that it has jurisdiction based on a real and substantial connection. Then it must consider whether there is a more appropriate forum to hear the dispute. If according to a forum non conveniens analysis the court determines that there is a more convenient forum elsewhere, it can choose not to exercise jurisdiction.

If Ontario is the selected forum and a proceeding is brought in breach of the agreement, in another forum, the court may issue an anti-suit injunction (ÒASIÓ) to stay the proceedings in the other jurisdiction. However, the Ontario court may only entertain an application for an ASI if it is alleged to be the most appropriate forum and is potentially an appropriate forum. Furthermore, an application for an ASI should only be considered once foreign proceedings are pending and the party seeking the ASI has first applied to the foreign court for a stay and has failed [Amchem Products Inc. v. British Columbia (Workers' Compensation Board) [1993] 1 S.C.R. 897]."