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-    Canadian litigation procedure has distinctions compared to US rules, with variations depending on the Canadian province in which the dispute is adjudicated. 
-    Ensure that litigation holds are implemented on both sides of the US-Canada border.
-    A defendant in overlapping class actions in different Canadian provinces should consider if and where to seek a stay of competing actions.

Given the close relationship between the United States (US) and Canada, it is common for commercial disputes with US origins to migrate north and take on cross-border dimensions. There are certain key considerations for in-house counsel to keep in mind once a dispute reaches Canada. All Canadian provinces except for Quebec follow the common law system, to which this article is limited.

     A.    Initial checklist for contract disputes

Canadian courts will generally respect the parties’ freedom to contract, and will enforce provisions in commercial agreements where the parties’ intentions are clear. 

At the outset of a dispute, Canadian litigation counsel will look closely at the contractual provisions in considering available strategic options. Certain clauses, such as jurisdiction, arbitration, governing law, and limitation of liability clauses, may be relied upon to pursue early dispositive motions in order to avoid litigation in Canada altogether or limit its potential scope.

  • Jurisdiction: In general, Canadian courts will recognize and enforce exclusive jurisdiction clauses, including clauses in favor of US federal and state courts. Even without a jurisdiction clause, a Canadian court may decline to exercise jurisdiction if there is another forum that is clearly more convenient for the determination of the dispute. In considering whether to decline jurisdiction in favor of a foreign court, Canadian courts will look to a range of non-exhaustive factors to determine which jurisdiction has the most substantial connection to the subject matter of the litigation and the parties.
  • Arbitration: Many commercial agreements include provisions requiring disputes to be resolved by arbitration rather than litigation. Canadian courts are generally “pro arbitration”, tend to enforce both arbitration agreements and arbitral awards, and will stay related court actions in the face of a contract clause providing for arbitral exclusivity. Courts tend to closely scrutinize the wording of arbitration clauses, meaning that parties intending for a dispute arising under a particular agreement to be exclusively arbitrated should expressly state that and specify the seat and language of the arbitration. 
  • Governing law: While not determinative, choice of law clauses stipulating the application of US or other foreign law will be considered in selecting the appropriate forum. Such clauses will generally be given effect, though Canadian courts will treat the US or foreign law as being the same as Canadian law, unless a party provides evidence of the foreign law’s content. While in our experience there are more similarities than differences between Canadian and US law, certain divergences may be material, including with respect to limitation periods and the recovery of certain heads of damages.
  • Limitation of liability: Parties often seek to limit potential claims exposure through limitation of liability provisions. They may also try to obtain early determinations of their rights by relying on such clauses (e.g. seeking to establish a “cap” on potential liability in damages).  Canadian courts will generally enforce limitation of liability provisions where they are agreed upon by sophisticated commercial parties, and not otherwise unconscionable in the circumstances. Again, the particular contractual language used by the parties will drive the analysis and outcome.

Tip: When negotiating contracts with US-Canadian cross-border dimensions, it is important that thought is given to the potential for a contractual dispute to arise, the preferred jurisdiction (Canada vs. US), the preferred forum (arbitration vs. litigation), and the potential damages that may be recoverable given differences in domestic law between Canada and the US. Engage Canadian counsel in the negotiation process early to ensure these issues are weighed and considered.

     B.    Canada-specific litigation considerations

Keep in mind nuances of Canadian litigation procedure at the outset of a dispute, to preserve a party’s position and fully assess the desirability of strategic alternatives. A non-exhaustive list of potentially key issues follows.

1.    Discovery issues 

There are unique aspects to Canadian discovery, of which all in-house counsel managing cross-border disputes should be aware:

     a)    Litigation holds

When cross-border litigation is reasonably anticipated, a litigation hold should be established early on both sides of the border to preserve potentially relevant documents in both jurisdictions. 

Unfortunately, the scenario where a US hold is put in place but no hold is established for the related Canadian operation is far too common in our experience, and can lead to significant evidentiary issues in defending or prosecuting an action later on. Where there is a potential Canadian element to a dispute, parties should ensure that any hold notice includes their Canadian operations.

     b)    Single discovery representative

Civil procedure rules in Ontario and British Columbia, among other provinces, provide that only one representative may be examined on behalf of each party. Consent of the parties or leave of the court is otherwise required to examine additional representatives. In Alberta, there is no limit to the number of representatives that can be examined, though if an excessive number is requested, a court application may be brought to limit it. 

Similarly, while the rules of oral discovery vary across the provinces, in Ontario there is no obligation on a discovery witness to answer questions to which they do not know the answer. To the extent relevant, a discovery witness may choose to “undertake” or take “under advisement” whether to answer a discovery question, and then provide the answer in writing after the examination is completed. 

     c)    Confidentiality

The discovery process may require the disclosure of non-privileged commercially sensitive documents. Generally, the rules of civil procedure in the common law provinces require both parties to produce to the other all relevant documents that are not otherwise subject to a claim of privilege. In certain provinces, including Ontario, Manitoba, and Prince Edward Island, the civil procedure rules expressly also include a “deemed undertaking” rule. 

A similar “implied undertaking” obligation at common law exists in the other provinces. These undertakings provide some protection for confidential information produced in the course of civil litigation, by requiring a party not to use documents or information obtained through the discovery process for any purpose outside the dispute. 

Parties may also seek a confidentiality order addressing the exchange of documents and filing of documents prior to trial, though sealing orders at trial can be difficult to obtain, even on consent, and will not typically be granted in the absence of evidence establishing a serious threat to a commercial interest. There is also no automatic right to redact documents, though court permission may be sought to do so.

     d)    Costs: “loser pays,” usually 

Costs may be available to the successful party on motions and at trial. In certain jurisdictions the “loser pays” principle is the default rule, though it can be displaced depending on the circumstances of the case (for example, if there is split success between the parties or a novel question of law is in issue). Costs awards can include amounts for disbursements (including expert report fees) and attorney fees (though usually not “full” fees).

     e)    Virtual hearings post-COVID

Most Canadian courts have dramatically expanded their capacity for virtual hearings on account of the pandemic. There has also been a notable modernization of court search and filing systems. Post-COVID, virtual hearings are expected to become much more routine, and even the norm for unopposed, consent, and scheduling matters.

     f)    Class action risk

Canadian class counsel often file “copycat” claims that parallel proceedings advanced in other jurisdictions, and most often the US. Where one or more Canadian actions advance in parallel to actions in the US or elsewhere, it is critical to recognize the impact that the parallel Canadian litigation may have on companion litigation south of the border, and develop a comprehensive strategy to achieve the best possible outcome. While Canadian class action litigation will typically trail US litigation, this is not always the case, and an early coordinated cross-border strategy is often essential.  

Class actions in Canada are heard in provincial superior courts and governed by provincial class proceedings statutes. In Canada, there is no consolidation regime equivalent to the Multi-District Litigation procedure in the US for referring related actions commenced in different provinces to a single court. As a result, a defendant can face multiple proposed class proceedings asserting identical claims in different provinces at the same time, with no guarantee of coordination among class counsel advancing the claims. 

To address this issue, some provinces have introduced legislative provisions to address overlapping class actions involving similar subject matters and overlapping class members. Indeed, changes to the class action legislation in Ontario and other provinces have recently been introduced with the aim of limiting the potential for overlapping and competing class proceedings across the country; however, the full effect of these changes remains to be seen. While such legislative changes may help avoid certification of multiple class proceedings in some cases, it remains that defendants have limited alternatives available for managing related class actions brought across the country. 

Tip:  When multiple class proceedings have been commenced in different provinces, one important issue for a defendant to consider is whether a particular provincial jurisdiction may be more favorable, and whether the defendant may seek a stay of competing class actions in other provinces and when (for example, during pre-class certification or at the certification hearing itself). The ability to obtain a stay and the permitted timing for such procedural motions varies across the country and must be accounted for when developing a comprehensive Canadian national strategy. 

     g)    Dispositive motions

Unlike other jurisdictions where summary judgment and other dispositive motions are often brought with a view to disposing of a case early in the dispute, Canadian courts are generally reluctant to dispose of cases at early stages. While summary judgment is procedurally available in Canada where it will avoid the need of a trial, success on such motions is often challenging and motions for partial summary judgment are permitted only in the rarest of circumstances. While most provinces have expanded the fact-finding powers of summary judgment judges to improve access to justice, such motions are still brought less frequently in Canada than in other jurisdictions.

Tip: Despite the uphill battle that a dipositive motion may present in Canada, they can still be an effective strategic tool for addressing issues early on in a dispute and should be considered when developing a comprehensive cross-border strategy in response to similar or identical litigation arising in both Canada and the US.


Notwithstanding the close relationship between Canada and the US, when disputes with a cross-border dimension arise, it remains important for in-house counsel to have regard to the important procedural and legal differences in the systems of both countries. When negotiating and drafting contracts with cross-border dimensions, in-house counsel will want to have specific regard to the contractual provisions that may impact on a cross-border dispute should it later arise. Likewise, the different procedural and substantive laws of Canada will require specific consideration by in-house counsel when looking to develop a comprehensive cross-border litigation strategy for managing the dispute.

Authors: Max Shapiro, Partner, Blake, Cassels & Graydon LLP (Toronto), Robin Linley, Partner, Blake, Cassels & Graydon LLP (Toronto), and Natasha Lombardi, Associate, Blake, Cassels & Graydon LLP (Toronto)

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