New fraud risks for Canadian defendants to foreign judicial proceedings

In December 2003, the Supreme Court of Canada released an important fraud-related decision with significant implications for Canadians who do business internationally or anyone with assets in Canada, writes Matthew J Latella of Baker & McKenzie. Specifically, the Court established new rules for determining the circumstances in which Canadian judges are to recognise and enforce decisions made by foreign judges in proceedings outside Canada. In arriving at its decision, the Court considered allegations of fraud on both sides of the case and took the opportunity to clarify when such allegations can provide a defence to the enforcement of foreign judgments.

Matthew J Latella is a barrister and solicitor in Baker & McKenzie’s Dispute Resolution Department based in Toronto. He is presently on a one-year secondment with the firm in London and may be contacted via tel: +44 (0) 20 7919 1000; email: matthew.j.latella@bakernet.com

The case of Beals v Saldanha offers lessons on when Canadian individuals and businesses should retain foreign legal counsel to defend lawsuits in other countries. It sets out guidelines for Canadian courts to follow when faced with a situation in which a foreign judgment has been obtained against a Canadian party (or a party with assets in Canada) who is subsequently sued in Canada in an attempt to enforce that foreign judgment. The case is particularly applicable to circumstances in which the Canadian defendant fails to defend the foreign proceeding, resulting in the foreign judgment being obtained by default.