Respondents could not circumvent Service Convention simply because compliance would be costly

Ontario civil | Civil Procedure

COMMENCEMENT OF PROCEEDINGS

Respondents could not circumvent Service Convention simply because compliance would be costly


Respondents were companies incorporated pursuant to laws of British Virgin Islands, Mongolia, and Ontario. Appellant was Russian state-owned corporation. After failed joint venture in Mongolia, respondents commenced action in Ontario seeking damages from appellant for $300 million for breach of fiduciary duty, unlawful interference with respondents’ economic relations, breaches of good-faith duties, and damage to plaintiffs’ rights, business reputation and property in Mongolia. Respondents retained law firm in Moscow to assist in service of statement of claim on appellant in Russia. Respondents were informed that service of statement of claim must comply with Service Convention, since both Canada and Russia are signatories. Article 2 of Service Convention requires that request for service be filed with central authority, which is Ministry of Justice of Russian Federation. Request for service was filed with Ministry in form required by Service Convention. Ministry declined to serve statement of claim on appellant on basis of paragraph 1 of Article 13 of Service Convention. No further explanation was provided by Ministry. Respondents brought motion in Ontario to substitute or dispense with service pursuant to Rule 16.04 of Rules of Civil Procedure (Ont.), or to validate service pursuant to Rule 16.08. Master allowed respondents’ motion to validate service pursuant to Rule 16.08. Appeal was allowed. Rules 16.04 and 16.08 have no application when service must be performed abroad in contracting state pursuant to Rule 17.05(3). Master erred in law by validating service under Rule 16.08. Application of domestic rules of service constituted noncompliance with Service Convention. Respondents could not circumvent Service Convention simply because compliance would be costly or tedious.

Khan Resources Inc. v. Atomredmetzoloto JSC (Mar. 9, 2012, Ont. S.C.J., O’Marra J., File No. CV-10-409104) Decision at 209 A.C.W.S. (3d) 237 was reversed. 212 A.C.W.S. (3d) 905 (20 pp.).

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