This case concerns a legal dispute involving Avantys Health Inc., an international medical insurance company (“Insurer”) and his insured, an American couple living in Florida (“Insured“). For the purposes of this article, we will discuss the decision of the Court of Appeal regarding the application of forum selection clauses and the jurisdiction of Quebec courts.
SUMMARY OF THE FACTS
The insurer is headquartered in Montreal. The insurance policy governed by Quebec law includes a forum selection clause which dictates that disputes relating to the policy will be resolved in the courts of Quebec:
This policy is governed by and will be construed in accordance with the laws of the Canadian province of Quebec.
All disputes regarding this policy will be resolved in the courts of the province of Quebec, Canada.
The dispute arose when the Insurer denied coverage for medical expenses incurred by the Insured in Florida. Legal action ensued, including a lawsuit against the Hospital’s Insured in a Florida court for unpaid medical expenses (“Case in Florida“). The parties subsequently settled the case in Florida.
The Insurer later brought an action in the Superior Court of Quebec seeking to invalidate the insurance policy based on misrepresentation by the Insureds. The insureds responded with a motion to dismiss, arguing that Florida courts were better positioned to resolve the dispute and had jurisdiction.
The appealed decision upheld the declination objection of the insured, rejecting the insurer’s request for invalidity of the insurance policy based on Article 43 of the Code of Civil Procedure (“CCP”):
43.[…]
If the application concerns an insurance contract, the competent court is the court of domicile or residence of the insured, regardless of whether that person is the plaintiff or defendant, or, as the case may be, the court of domicile or residence of the beneficiary of the contract. In the case of property insurance, the court of the place where the loss occurred also has jurisdiction.
[…]
The trial judge also concluded that, had he found the Quebec courts to have jurisdiction, the forum selection clause would not have prevented the application of section 3135 of the Civil Code of Quebec (“CCQ“) and forum is not appropriate doctrine:
3135.Although a Quebec authority has jurisdiction to hear a dispute, it may, exceptionally and at the request of a party, decline jurisdiction if it considers that the authorities of another country are in a better position to resolve the dispute.
Finally, the judge expressed his willingness to issue a stay of proceedings under section 3137 of the CCQ if deemed necessary:
3137.At the request of a party, a Quebec authority may stay its decision in an action brought before it if another action between the same parties, based on the same facts and with the same subject matter, is pending before a foreign authority, provided that the latter action may resulted in a decision that could be recognized in Quebec, or if such a decision had already been rendered by a foreign authority.
ANSWER
The insurer appealed the decision of the lower court on grounds including a challenge to the application of section 43 of the CPC and section 3135 of the CCQ.
The Court of Appeal ruled in favor of the Insurer and declared that the Superior Court of Quebec had jurisdiction to hear the Insurer’s application, highlighting two important aspects:
- First, the Court of Appeal highlighted the trial judge’s misapplication of Article 43 of the CPC by clarifying the role of that legal order in determining territorial jurisdiction within Quebec, no international
- Second, the Court of Appeals pointed out the error in applying section 3135 of the CCQ without ascertaining the jurisdiction of the Florida court and disregarding the intent expressed in the forum selection clause.
COMMENTS
Without completely closing the door to a challenge to the validity of a forum selection clause, this decision highlights the importance of enforcing forum selection clauses in international contracts, such as insurance policies, which favors the predictability and certainty that parties intend to introduce. The decision also offers clarity on the different forms of jurisdiction and the precise application of the legal provisions governing territorial versus international jurisdiction.
