[Random-bits] Internet Jurisdiction in Quebec

[James Love]

This interesting article covers several issues, including libel and
consumer proteciton disputes.  Jamie


http://www.butterworths.ca/sampleinternetandecommercelawincanada.htm

Sample Issue, November 2000

INTERNET JURISDICTION:  THE VIEW FROM THE QUEBEC COURTS
             Don McGowan
   Stikeman Elliott, Montreal

As with many commercial matters, legal questions pertaining to the
Internet first arose in the United States. Accordingly, Canadian
common law courts, which are accustomed to considering American
precedent in many areas, have looked to judgments from the United
States for guidance with many Internet law issues. However,
especially with respect to questions of procedure, the courts in
Quebec do not have this same habit, and have developed certain
"made-in-Quebec" solutions to topics that might be treated
differently outside of Quebec.  One such topic is the question of
jurisdiction over Internet matters.

   [snip]

IF THE DEFENDANT IS NOT LOCATED IN QUEBEC

After a brief period in which they considered the Internet to be
analogous to a constantly playing advertisement, and in which courts
would take jurisdiction over any Internet matter if the activity in
question could be accessed by a computer in that jurisdiction,2
courts outside of Quebec now have adopted the more nuanced "passive
vs. active" test to determine whether they should exercise
jurisdiction over a particular matter. The "passive vs. active" test
assumes that different activities can occur on the Internet, and that
the legal response should differ with the specific nature of the
activity. An e-commerce site that requires significant interaction
from the user of that site will be an "active" site, and such a site
can be controlled by any court in a jurisdiction where that site can
be accessed, based upon the assumption that, by creating a site that
asks for input from its users, the site provider has intended to
engage in a relationship with people in various jurisdictions. In
contrast, a "passive" site that simply provides information in the
same manner as an electronic brochure and that cannot be used to take
orders for a product will not attract the courts other than those of
the site provider's own jurisdiction.3 The Supreme Court declined to
review this decision.4

Just as with the common law provinces, Quebec courts will exercise
jurisdiction over matters where the defendant is not domiciled in
Quebec, so long as certain criteria are met. Article 3148(3) CCQ
states that the Quebec courts have jurisdiction where "a fault was
committed in Quebec, damage was suffered in Quebec, an injurious act
occurred in Quebec or one of the obligations arising from a contract
was to be performed in Quebec." Case law under art. 3148(3) CCQ has
held that, where the injurious act occurring in Quebec was a breach
of contract causing the Quebec resident to suffer damages, that will
be sufficient for Quebec to take jurisdiction under art. 3148(3).5

Article 3148 CCQ only comes into play where one of the parties is
located outside of Quebec; when the two parties are located within
Quebec, the Quebec Code of Civil Procedure ("CCP") governs, and
unambiguously grants jurisdiction to Quebec courts. The CCP does
contain certain articles with respect to the place of introducing
actions within Quebec, and one of these, art. 68(2) CCP, has drawn
the attention of the two reported Quebec judgments on Internet
jurisdiction. Pursuant to art. 68(2) CCP, "in an action for libel
published in a newspaper," the action may be instituted "before the
court of the district where the plaintiff resides if the newspaper
has circulated therein."6 The Superior Court of Quebec has twice
considered this article in the context of the Internet, and has twice
reached radically different conclusions.

In the first reported judgment on point, Investors Group v. Hudson,7
Cohen J. of the Superior Court held that a website is analogous to a
newspaper distributed simultaneously all around the world, and that
therefore art. 68(2) CCP would apply, allowing a Quebec court to
exercise jurisdiction over that website. In this case, Hudson, a
disgruntled ex-employee of Investors Group, lived in Quebec operated
a website critical of Investors Group. Article 68(1) CCP indicates
that a personal action may be instituted before the court of the
defendant's real domicile, so Investors Group pursued Hudson in
Quebec. Hudson's website was hosted on a server located outside of
Quebec, and Hudson raised objections to the jurisdiction of the
Quebec court because his postings, if defamatory, were placed on a
server outside of Quebec. The court rejected Hudson's arguments as to
jurisdiction, but instead of limiting its ratio to the fact that
Hudson was domiciled in Quebec, the court added that it would have
jurisdiction over Hudson because of art. 68(2) CCP:

   "As a result, by analogy to article 68(2) [CCP], applicable
   in cases of libel, the present action can be instituted in
   the place of the  Plaintiffs residence, as the material on
   Hudson's website is available not only here [Montreal] but
   worldwide, as in the case of any Internet site."

In a judgment rendered three months after Investors Group but not
citing that case, Convectair N.M.T. v. Ouellet Canada,8 de Grandpré
J. of the Superior Court also considered art. 68(2) CCP, but held
that a website was not analogous to a press libel, and therefore the
Quebec courts could not use art. 68(2) CCP to establish jurisdiction
over that site. In this case, Ouellet, a company based in Montmagny,
Quebec, had inserted the term "Convectair" into the metatags of the
various pages of its website a total of 44 times, causing the Ouellet
site to be found by search engines looking for "Convectair,"
Ouellet's competitor. Convectair itself was based in Saint-Therese,
Quebec, but sued Ouellet in Montreal on the basis that the cause of
action occurred in Montreal. According to the judgment, Convectair
did not allege any fact or act that was committed in Montreal, and it
seems that in oral argument the attorneys for Convectair raised the
argument that, because Ouellet's act constituted a press libel, it
constituted offending conduct that was committed in Montreal because
the offending site could be accessed there. Making reference to the
line of case law in virtue of which art. 68(2) CCP does not apply in
the context of defamation transmitted over television or radio and
quoting from the case of Marion v. Société Radio-Canada,9 the court
held that interpreting the term "press libel" as including materials
transmitted over the Internet would broaden the scope of art. 68(2)
to such an extent that it would be equivalent to legislating, which
the courts should not do. Accordingly, the court held that Montreal
was not the appropriate forum for the litigation between these
parties and dismissed the action.10

IMPLICATIONS OF THESE JUDGMENTS FOR PROCEEDINGS IN QUEBEC

Neither Investors Group nor Convectair has been appealed.
Accordingly, the law in Quebec is wholly inconsistent: one judgment
has ruled that a website is a press libel in virtue of art. 68(2) CCP
allowing Quebec courts to take jurisdiction over the content of that
site wherever it can be accessed in Quebec (i.e., everywhere), and a
second judgment has ruled that a website is not a press libel and
therefore the traditional criteria for attribution of jurisdiction
apply to the Internet.


   [snip]

In a contract case, attribution of jurisdiction would be relatively
simple; Quebec law recognizes choice of forum clauses (art. 3148 CCQ
specifically provides for them), and therefore Quebec courts would
defer to the forum chosen by the parties. The one exception in this
regard is consumer protection. The Quebec Consumer Protection Act12
is entirely of public order, and accordingly the Quebec courts will
always retain jurisdiction over matters where the consumer is
domiciled in Quebec. The two articles of the CCQ dealing with the
private international law of consumer contracts, namely arts. 3117
and 3149 CCQ, clearly indicate that Quebec will retain jurisdiction
over consumers domiciled in Quebec.

Article 3117 stipulates that a choice of law clause in a consumer
contract does not deprive the consumer of protection under the
consumer protection law of the jurisdiction of their residence if the
formation of the contract was preceded by "a special offer or an
advertisement" in that jurisdiction and if the consumer took all
necessary steps for formation of the contract while in that place; if
the parties do not choose a law, the law of the consumer's residence
governs. Is a posting on a website a "special offer or an
advertisement"? Under the holding from Investors Group, a website is
analogous to a newspaper distributed in Quebec, and therefore even a
notice on a website with a 1-800 number for orders would constitute
an advertisement in Quebec, attracting the application of Quebec law.
Under the holding from Convectair, a website is not a newspaper, and
traditional conflict of laws provisions should apply.

    [snip]

Article 3149 sets forth that a Quebec court has jurisdiction over any
consumer contract if the consumer has a domicile or residence in
Quebec, and that waiver of such jurisdiction may not be set up
against the consumer. The application of art. 3149 CCQ could be quite
draconian. A "consumer contract" is defined at art. 1384 CCQ as
covering any situation where a physical person acquires, rents,
borrows, or otherwise procures goods or services for their personal,
family, or domestic use from another party that offers these goods or
services in the context of a business. That is, any e-commerce
contract involving a consumer is, for the purposes of Quebec law, a
consumer contract, and where that consumer is present in Quebec, the
courts in Quebec will have jurisdiction over that consumer and,
therefore, over that contract.

In this context, the "active vs. passive" test is meaningless. The
fact of a consumer's being in Quebec will give the courts in Quebec
jurisdiction over even a passive site, and this even if the contract
between the parties contains a choice of laws or choice of forum
clause.

  [snip]

With respect to extracontractual liability, where (obviously) no
election of forum would exist, the Quebec courts should adopt the
"active vs. passive" test. The judgment in Investors Group takes
exactly the position that was rejected in Braintech. To quote the
Braintech court at para. 63:

       "It would create a crippling effect on freedom of expression
       if, in every jurisdiction the world over in which access to
       Internet could be achieved, a person who posts fair comment
       on a bulletin board could be haled before the courts of
       each of those countries where access to this bulletin
       could be obtained."

At present, following the judgment in Investors Group, a Quebec court
could exercise jurisdiction over any Internet site because, just like
a press libel, that site was accessible in the province of Quebec. A
Quebec-based company discovering an adverse posting about it on the
Internet would be able to access the offending site and, having
accessed it in Quebec, will have created jurisdiction for the Quebec
courts.

   [snip]


-- 
James Love  mailto:love@cptech.org http://www.cptech.org
Consumer Project on Technology, P.O. Box 19367, Washington, DC 20036
voice 1.202.387.8030  fax  1.202.234.5176