Civil Procedure/International Law: Jurisdiction
International Air Transport Association v. Instrubel, N.V., 2019 SCC 61 (38562)
The S.C.C. (6:1): appeals dismissed; debt subject to jurisdiction of Québec courts.The Chief Justice wrote as follows (at para. 1):
“A majority of this Court is of the opinion to dismiss the appeals with costs throughout, substantially for the reasons of the Court of Appeal save for the matters addressed in obiter.”
Côté J. (in dissent) wrote as follows (at paras. 31-32, 36-37, 60-61, 68):
“The importance of looking to the location of the property, rather than to that of its owner — or of the garnishee — cannot be emphasized enough. The enactment of art. 3152 C.C.Q. represented a departure from the past. The legislature recognized the need to resolve the confusion arising from the possibility of grounding the jurisdiction of Quebec courts in the defendant’s domicile even where the dispute concerned property located outside Quebec: see C. Emanuelli, Droit international privé québécois (3rd ed. 2011), at pp. 133-34. The Minister’s commentary illustrates this new approach:
- [translation] This article, which is new law, confers jurisdiction over real actions on the Quebec authorities in the place where the property is situated, thereby aligning the applicable law (art. 3097) and adjudicative jurisdiction. Unlike article 73 C.C.P., which deals with the jurisdiction of Quebec courts over real and mixed actions, article 3152 does not base jurisdiction on the defendant’s domicile. This criterion is more relevant to mixed actions than it is to real actions. [Emphasis added.]
- (Ministère de la Justice, Commentaires du ministre de la Justice, vol. II, Le Code civil du Québec — Un mouvement de société (1993), at p. 2012)
This focus on the property’s location is, moreover, supported by arts. 3138 and 3140 C.C.Q., which, as explained by academic commentators, give Quebec authorities jurisdiction to order provisional or conservatory measures, or emergency measures, where the property is located in Quebec: see Emanuelli, at p. 134; G. Goldstein and E. Groffier, Droit international privé, vol. II, Règles spécifiques (2003), at p. 299; see also J.-G. Castel, Droit international privé québécois (1980), at p. 829.
In summary, a seizure before judgment by garnishment is effected in rem and, in this sense, a request for a writ of seizure constitutes a real action within the meaning of the rules of private international law. Quebec courts generally have jurisdiction to issue a writ of seizure only where the property in question is located in Quebec: see Goldstein and Groffier, at p. 299. I now turn to the property in dispute in these appeals.
The above-quoted passages perfectly illustrate Instrubel’s view — which was the right view — of the nature of the property at the time it sought to seize it. According to its affidavit and the Writ of Seizure Before Judgment by Garnishment as issued, Instrubel understood that the property was owned by ICAA and was only held by IATA on behalf of ICAA. Instrubel knew perfectly well that it was not seizing property belonging to IATA — that is, found in IATA’s patrimony — as it is now suggesting in this Court.
This may be thought to be an overly formalistic conclusion. However, seizures — including seizures before judgment by garnishment — constitute harsh and exceptional measures that interfere with private individuals’ property and are therefore subject to stringent formal conditions: Belleau et al., at No. 2-1142. This is one of the technical areas of the law in which it is important that courts apply such conditions rigorously. A writ of seizure before judgment can be issued only where the requesting party has complied with all formal conditions prescribed by law: Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34,  2 S.C.R. 336, at para. 7 (“The respondent must find authority for the seizure in the Code of Civil Procedure read in light of the Copyright Act . If he cannot find authority in the legislation, then it does not exist and the seizure was wrongful.”); Tri-Tex Co. Inc. v. Gideon,  R.J.Q. 2324 (C.A.), at pp. 2331-32 (“A writ of seizure may therefore be issued only in circumstances where the rules governing this procedure have been strictly observed.”); Lavallée v. St-Germain,  R.D.J. 291 (C.A.), at p. 294 ([translation] “[S]eizure before judgment is a draconian and severe procedure and therefore demands scrupulous compliance with procedural requirements and a true basis in law.”).
Banking law is certainly important. The world’s economy is, in many respects, built upon banking, and banking law principles help to regulate the daily dealings of a commercial society. But banking law cannot be used to deny commercial realities whenever it is convenient to do so. The sums collected by IATA on behalf of ICAA never left ICAA’s patrimony and thus continued to belong to it. The funds deposited remain identifiable and belong to ICAA. IATA acted only as an administrator of ICAA’s property in depositing the funds. At best, IATA is the bank’s lender.
I am of the view that the bank account in this case, although in IATA’s name, is for practical purposes equivalent to a trust account. IATA deposited the sums it collected on behalf of ICAA in that account. Indeed, IATA said as much in its Solemn Declaration: “IATA had in its possession an amount of USD166,652,878.55 that according to the books of IATA is held in trust for the benefit of the Iraqi Civil Aviation Authority” (A.R., vol. II, at p. 3 (emphasis added)). Until transferred to ICAA’s bank account in New York pursuant to the Contract (specifically art. 7.2), the sums in the Swiss bank account were held for the benefit of IATA’s mandator. IATA could not deal with the funds as it saw fit; it could only remit them in accordance with the terms of the Contract and its role as mandatary.
Given that the property in dispute is located outside Quebec, I conclude that the Quebec Superior Court did not have jurisdiction to issue the Writ of Seizure Before Judgment by Garnishment.”