Monday, July 16, 2012

Substituting, dispensing or validating service in a Contracting State, so as to avoid R. 17.05, not proper

Khan Resources Inc. v. Atomredmetzoloto JSC, 2012 ONSC 1522 deals with the interesting legal issue of whether, when dealing with a Contracting State under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters a party can seek to substitute, dispense with, or validate service of a party residing in a foreign state that refuses to facilitate service. The short answer is "no" which means, practically, that service is functionally impossible. The Court rules:

[77] In light of these principles, I must presume that Rule 17.05(3) conforms to Canada's international obligations under the Service Convention. This means that Rule 17.05(3) prescribes the only methods of service available when service is to be performed in a contracting state. A party seeking to perform service cannot resort to Rules 16.04 or 16.08 to substitute, dispense with, or validate service. This conclusion is required by the exclusive character of the Service Convention.

[78] I also find that this presumption is not rebutted by "an unequivocal legislative intent to default" on this international obligation. The arguments made by the respondents do not rise to the threshold of "unequivocal legislative intent", particularly in light of the appellants' arguments to the contrary. As LeBel J. made clear in Hape, "In deciding between possible interpretations, a construction that would place Canada in breach of its international obligations should be avoided." As such, I reject the respondents' interpretation and adopt the one advanced by the appellants.

[79] In summary, Rules 16.04 and 16.08 have no application when service must be performed abroad in a contracting state pursuant to Rule 17.05(3). Master Graham erred in law by validating service under Rule 16.08. Accordingly, the appeal is allowed.

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