Identifying an opposing party’s asset position prior to, during or following a proceeding can be critical to informing a plaintiff’s litigation or judgment enforcement strategy; obtaining a judgment will be of little value if the unsuccessful party has no assets or is unable to satisfy the judgment. Fortunately, a number of measures are available in Canada that can assist in identifying an opposing party’s asset position.

Publicly Available Information and Private Investigations

Some limited information that can shed light on an adversary’s financial position is publicly available. By way of example, title searches and land registry searches can reveal the registered owners of real property and whether any encumbrances such as liens, certificates of pending litigation (CPL), judgments or mortgages are registered against the property. Searches can be conducted for personal or movable property, which will indicate whether the personal property of a person or corporate entity is encumbered and subject to the security interests of other creditors.

Litigation searches and insolvency searches can reveal the extent to which an adverse party has been involved in prior or concurrent litigation and/or insolvency proceedings. If the adverse party is or has been involved in litigation or insolvency proceedings, a review of public court filings may reveal useful financial information about that party.

Licensed private investigators can be engaged to investigate a party’s financial position and asset holdings. In Canada, private investigators are subject to industry regulations as well as provincial and federal laws. Various legitimate investigative techniques can be used by private investigators to garner financial information, including: 

• carrying out registry searches (including the aforementioned);
• conducting interviews; and
• performing surveillance.

Examinations in Aid of Execution

From a post-judgment perspective, having a full appreciation of the unsuccessful party’s asset position will facilitate a well-considered and targeted enforcement strategy. Once judgment is obtained, a judgment creditor can conduct an examination in aid of execution to obtain information concerning the debtor’s financial position and their ability to satisfy the judgment. The debtor must answer questions under oath about their financial affairs, assets, income, liabilities and expenses. The debtor is also obliged to produce relevant financial records, such as financial statements, bank statements, tax returns, payroll information and the like – all of which can help guide the creditor’s enforcement strategy. Examinations in aid of execution are discussed in more detail in 2.3 Costs and Time Taken to Enforce Domestic Judgments.

Freezing and Asset Disclosure Orders

In Canada, there are a number of remedies to assist in securing assets before judgment. Among them are Mareva injunctions (which can include an asset disclosure component) and CPL, as well as asset or “specific fund” preservation orders issued under provincial rules of civil procedure.

Mareva injunction in Canada

This extraordinary form of pre-judgment “freeze order” is available in Canada and, in the right circumstances, can be granted with asset disclosure terms having worldwide effect. Dubbed “one of the law’s two nuclear weapons”, it was confirmed as part of the common law of Canada in a 1985 decision of the Supreme Court of Canada. However, the Supreme Court did not establish a rigid test for the remedy, but rather established broad parameters without imposing a rigid prescription. The court summarised the “gist of the Mareva action” as the right to freeze exigible assets ‒ regardless of where the defendant resides ‒ where a cause of action between the plaintiff and defendant has been determined that is justiciable before the courts of that jurisdiction and where there is a genuine risk of the disappearance of assets, either inside or outside the jurisdiction.

As more Mareva orders have been sought in varied scenarios, the requirements for a Mareva injunction have been relaxed somewhat. Multiple Ontario Superior Court decisions have held that the risk of dissipation can be inferred in cases where the inference arises from the circumstances of the alleged fraud, taking into account all of the surrounding circumstances, such as evidence suggestive of the defendant’s fraudulent activity or a pattern of prior fraudulent conduct. The inference is also available if a strong prima facie case is established for other causes of action. 

The Supreme Court seemed to favour the “strong prima facie case” requirement adopted by the Ontario Court of Appeal a few years earlier, while also noting that the Ontario approach was “somewhat narrower” than the “good arguable case” standard of UK case law. The “balance of convenience” must favour the issuance of the order. This branch of the analysis involves a detailed consideration of the competing interests at play ‒ principally, the plaintiff’s interest in avoiding a worthless judgment and the defendant’s interest in not having assets detained prior to judgment. 

In British Columbia, the courts have adopted a flexible approach, employing a two-step test for the issuance of a Mareva injunction. The test requires an applicant to:

• establish the threshold issue of a strong prima facie or good arguable case; and
• consider all the relevant factors in balancing the interests of the parties, including ‒ without limitation ‒ the existence of eligible assets and a real risk of disposal or disposition of those assets.

Courts have the flexibility to carry out justice between the parties in any given case and “the judge must not… become a prisoner of a formula”. The British Columbia Court of Appeal has also recognised that almost every Mareva injunction is likely to inconvenience the other party in some way and this court has emphasised that “the overarching consideration in each case is the balance of justice and convenience”.

Mareva injunctions are often sought on an ex parte basis. As with any ex parte relief, it is crucial that full, frank and fair disclosure be made of all material facts, particularly those that tend to support the position of the absent party against whom the injunction is sought. Such disclosure should include sufficient detail to allow the judge to determine the correct value of the underlying claim and the assets to be frozen. 

Certain jurisdictions have developed model Mareva orders, which serve as a guide when determining the appropriate parameters for this extraordinary relief. In a number of provinces, the ex parte order has a specific shelf life (eg, ten days in Ontario), within which it must be renewed on an inter partes basis. 

Certain model Mareva orders include or permit asset disclosure terms, which can be a powerful tool to determine the scope of a defendant’s assets. There will often be a term that requires the defendant to deliver a sworn statement describing the nature, value and location of assets, whether in their own name and whether solely or jointly owned. A further term can require the defendant to submit to examinations under oath on the sworn asset statement. Where these terms are granted, refusal to provide the asset information or submit to cross-examination may result in a finding of contempt of court.

As mentioned, Mareva injunctions can be framed to freeze and obtain the disclosure of assets, both within Canada and on a worldwide basis. The Ontario Superior Court of Justice has provided for a worldwide Mareva injunction where the defendant had few assets in the jurisdiction. A key factor in granting the injunction was evidence based on information from Hong Kong lawyers that the Canadian order would assist in securing a freezing order in Hong Kong.

In a recent decision, the British Columbia Court of Appeal found that courts can draw an adverse inference to determine whether a defendant has exigible assets. The plaintiff obtained judgment against the defendant in an initial action before bringing a second action alleging that the defendants were trying to frustrate the plaintiff’s ability to collect on the judgment. The plaintiff had obtained evidence that the defendant had withdrawn significant sums from his bank account following the judgment in the initial action and conducted an examination in aid of execution during which the defendant testified that he had made various payments including to some unknown “creditors”. The lower court initially granted a Mareva order in the context of the second action. However, the same court later set aside the Mareva order because it found no evidence that the defendant possessed any assets that could be restrained. The appellate court overturned the lower court’s decision, finding that the lower court erred in not drawing an adverse inference against the defendant based on the withdrawal of the funds and what the court deemed an “improbable story” told by the defendant during the examination in aid of execution. The appellate court did not remit the decision to the lower court because it held that the balance of interests favoured the plaintiff. The appellate court ordered that the initial Mareva order be reinstated in updated form.

Ontario courts have also recently granted Mareva injunctions freezing cryptocurrencies, signalling that digital assets are subject to execution and seizure to satisfy a judgment debt. 

Finally, while Mareva injunctions are typically sought before judgment, there is authority to grant a Mareva after judgment. This can be useful in determining the location of assets and securing assets in circumstances where a judgment debtor may seek to deplete, move or otherwise deal with the assets pending the outcome of an appeal. 

Certificates of pending litigation

Where real property is at issue, an order for a CPL may be obtained. A CPL is designed to provide a notice of claim and a warning to the public that the property is subject to a court dispute. It has the practical effect of restraining dealings with the property (sale, financing, mortgaging, etc) while the litigation is pending.

As a standalone pre-judgment remedy, a CPL can be made on a motion without notice, provided that the originating pleading includes a claim for the CPL with a proper description of the land in question. To obtain an order for a CPL, the moving party must first show that there is a triable issue in respect of the claim to an interest in the land. If this threshold test is met, the court will typically go on to consider a variety of equitable factors, such as:

• whether the land is unique;
• whether there is an alternative claim for damages;
• whether damages would be a satisfactory remedy;
• the ease or difficulty in calculating damages;
• the presence or absence of a willing purchaser;
• the balance of convenience or potential harm to each party;
• whether the interests of the party seeking the CPL could be protected by another form of security; and
• whether the moving party has prosecuted the proceeding with reasonable diligence.

Orders for the preservation of specific property or funds

The rules of the court in each Canadian province permit the parties to obtain orders for the preservation of property that is the subject matter of a proceeding. In Ontario, for example, the rules permit the court to make an interim order for the custody or preservation of the property in question or property relevant to an issue in the proceeding and may authorise entry on or into the property. To obtain such an order, the moving party must show that:

• the asset sought to be preserved constitutes the very subject matter of the dispute;
• there is a serious issue to be tried regarding the plaintiff’s claim to the asset; and
• the balance of convenience favours granting the relief sought by the applicant or moving party (ie, preserving the asset).

Similarly, where the right to a “specific fund” is in question, the court may order the fund to be paid into the court or otherwise secured on such terms as are just. Such orders are subject to the same three-step test outlined earlier.

All judgments are court orders, but all court orders are not necessarily judgments. Judgments dispose of a proceeding on its merits with finality, whereas orders can be interlocutory or interim in nature, with the final determination to follow. Judgments can be granted on default if the proceeding is not defended within the timeframe stipulated in the rules of the relevant province. In some circumstances, such default judgments can be set aside by the court, provided the defendant can satisfy certain tests (typically, an explanation for the delay, arguable defence, etc). 

Money judgments are the most common form of judgments; however, courts can also grant declaratory relief, permanent injunctive relief and other remedies, whether based in statute or the common law. Non-monetary remedies that can be ordered include: 

• specific performance;
• vesting orders;
• an accounting of ill-gotten profits;
• granting title to assets;
• a range of insolvency-related orders under the Bankruptcy and Insolvency Act, RSC, 1985, c B-3 and Companies' Creditor Arrangement Act, RSC 1985, c C-36; and 
• orders ancillary to corporate reorganisations or other transactions, including plans of arrangement. 

Each province in Canada has its own legislation governing the enforcement of domestic judgments. As there is substantial overlap across this legislation, this chapter focuses on the enforcement of domestic judgments in Ontario, Canada’s most populous province.

The enforcement of an order for the payment of money is largely governed by the Rules of Civil Procedure RRO 1990, Reg 194 (“the Rules”), the Execution Act RSO 1990, c E 24 (the “Execution Act”) and the “Creditors’ Relief Act 2010, SO 2010, c 16, Sched 4 (the “Creditors’ Relief Act”).

The enforcement of an order that requires a party to do or abstain from doing an act may be dealt with by seeking a contempt order. Contempt orders do not apply to orders for the payment of money.

The Rules set out the procedures by which a judgment or order for the payment of money can be enforced. The Execution Act sets out the role of the sheriff and a public official, and the rights of debtors and creditors. The Creditors’ Relief Act provides the basis for the distribution of seized assets and establishes priorities among execution and garnishment creditors, support and maintenance orders, and debts of the Crown.

Enforcement Methods

Primarily, there are four methods of enforcing a domestic judgment for the payment or recovery of money in Canada (and, specifically, in Ontario): 

• a writ of seizure and sale under the Rules; 
• garnishment under the Rules; 
• a writ of sequestration under the Rules; and 
• the appointment of a receiver under the Rules, the Bankruptcy and Insolvency Act RSC 1985, c B-3, and the Courts of Justice Act RSO 1990, c C 43 (the “Courts of Justice Act”).

Sheriff assistance

Pursuant to the Courts of Justice Act, a creditor will require the assistance of the sheriff to enforce a domestic judgment for the payment of money. The creditor will need to file a writ of seizure and sale with the sheriff and move to enforce the writ after filing. As a practice note, depending on the nature of the defendant (eg, financial institutions being reliably willing to satisfy judgments voluntarily), moving to enforce a writ of seizure and sale should be done promptly after obtaining judgment – unless assets have been frozen prior to judgment. The creditor must provide the sheriff with a direction to enforce, which includes detailed information as to the amount of the order, the amount and date of any payment, the rate of post-judgment interest, and the costs of enforcement.

Upon receipt of the direction to enforce a writ of seizure and sale, the debtor’s property can be seized. The Execution Act empowers the sheriff to use reasonable force to enter the debtor’s land and premises if the sheriff has reasonable and probable grounds to believe that there is exigible property on the land or premises. One exception to this power is that the sheriff may not enter a dwelling place with force unless a court order is obtained.

There are exceptions with regard to the types of personal property that are exigible. By way of example, household furniture, utensils, equipment, food and fuel contained in the debtor’s permanent home ‒ up to a prescribed value ‒ are not exigible, and neither are pension entitlements.

The sheriff can enforce a writ against personal or real property. The writ will be valid for six years from the date of the judgment, but can be renewed. A writ will give the debtor priority over other unsecured creditors, but that priority is lost if the debtor becomes bankrupt. Other creditors who have perfected security interests in the debtor’s property will also have priority.

Before the sheriff sells personal or real property that was seized pursuant to a writ, notice must be provided to the creditor of the time and place of the sale.

Garnishment

Garnishment is another common procedure in Canada to enforce a domestic judgment. Garnishment permits a creditor to seize money that is owed to the debtor by a third party (eg, wages, salaries, dividends, and receivables). A creditor with a judgment for the payment of money can request that the local registrar issue a notice of garnishment. The creditor must provide particulars of the judgment and of the debts owed to the debtor by a third party.

Writ of sequestration

A writ of sequestration is another enforcement method ‒ although it is considered “extraordinary” and is rarely used. Pursuant to a writ of sequestration, the sheriff is directed to take possession of and hold a debtor’s property and to collect and hold any income from the property until the debtor complies with the order. Where there is a writ of sequestration, the property is not sold.

Receivers

Finally, a receiver can be appointed by a court where it is “just or convenient to do so” (Section 101 of the Courts of Justice Act). The court may authorise a receiver to recover and sell the debtor’s property to satisfy the remaining judgment or debt.

The costs involved and the length of time taken in enforcing a judgment can vary dramatically, depending largely on whether there are any known assets in the jurisdiction and how straightforward (or difficult) it is to obtain those assets.

Although the simplest scenario would involve a voluntary payment by the debtor, the most straightforward enforcement scenario involves a debtor who has known, readily available assets (ideally cash) that are held in the debtor’s own name and are not immune from seizure and/or sale. In such a scenario, the costs are correspondingly minimal, with limited legal fees and only modest court filing fees. 

If the creditor does not have knowledge of the extent or location of the debtor’s assets, the first step is often to conduct an examination in aid of execution to identify exigible assets. Counsel fees will vary for such examinations, depending on the nature of the debtor (eg, examining fraudsters who are not expected to tell the truth will require more strategic thinking). The examination can also give rise to undertakings by the debtor to produce documents or further information, which ‒ in turn – can give rise to a re-attendance to complete the examination at a later date.

In Ontario, one examination in aid of execution is allowed in a 12-month period for the same proceeding. If the creditor seeks to re-examine a debtor (as opposed to continuing an existing examination to ask questions arising from undertakings) within one year, they will need an order from the court. A court order is also required if the creditor seeks to examine a third party in aid of execution. The timeframe and costs will increase where the debtor attempts to avoid or frustrate such examinations or the debtor attempts to transfer assets fraudulently to avoid enforcement. In the event of such a fraudulent transfer, fresh legal proceedings arising from the enforcement efforts will sometimes be required (eg, in order to name one or more new defendants who may have received transferred assets from the debtor). 

Execution on a judgment itself can be complex. By way of example, if execution may give rise to a breach of the peace, the sheriff may require the assistance of the police.

At one end of the scale, seizing monies in a known bank account can be relatively swift, straightforward and inexpensive. On the other hand, seizing and selling real or personal property, appointing a receiver, liquidating business assets and securities are generally more complex and costly. 

If there are no known assets and the creditor cannot reliably discover assets by an examination in aid of execution, creditors will often hire an investigator or an asset-tracing firm. For simple investigative services involving local debtors, the fees are generally a few thousand dollars. However, more complex enforcement costs can involve significant international investigations of corporate dealings, offshore trusts, etc, and the fees for such services can run into the tens or even hundreds of thousands of dollars. In some cases, a party may be able to recover the cost of enforcement measures from the judgment debtor (see Sociedade-de-Fomento Industrial Private Limited v Pakistan Steel Mills Corporation (Private) Limited, 2018 BCCA 145).

As discussed in 1.1 Options to Identify Another Party’s Asset Position, a judgment creditor may conduct an examination of the debtor in aid of execution. This is a powerful tool allowing the creditor to question the debtor under oath in order to obtain information relating to:

• the reason for non-payment or non-performance of the judgment; 
• the debtor’s income and property; 
• the debts owed to and by the debtor; 
• the disposal of any property the debtor has made, either before or after the making of the order; 
• the debtor’s present, past and future means to satisfy the order; 
• whether the debtor intends to obey the order or has any reason for not doing so; and 
• any other matter that is pertinent to the enforcement of the order.

Provincial rules also allow for the possible examination of “any person who the court is satisfied may have knowledge” of the debtor’s finances. The court is more likely to order the examination of a third party where the debtor has been non-responsive or evasive, has fled the jurisdiction, or is deceased.

A debtor who fails to attend a court-ordered examination in aid of execution ‒ or otherwise frustrates such an examination by being uncooperative, unresponsive or deceitful ‒ may be found liable for civil contempt. The consequences of being found in contempt include a fine for the payment of money, being ordered to do or refrain from doing an act, the payment of costs to the creditor, compliance with any other order the judge may consider necessary, and/or imprisonment for a set period or until the non-compliance is cured.

A party may challenge the enforcement of a domestic judgment by challenging the judgment itself. By way of example, in Ontario, a party may make a motion to: 

• have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made; or 
• suspend the operation of an order. 

The Rules also provide for setting aside or varying an order on such terms as are just, including orders made on default (Rules 19.08 and 52.01(3)).

A default judgment debtor who was not properly served with the proceedings may challenge the judgment on that basis, provided that the defendant did not participate in the merits of the proceeding or otherwise attorn to the jurisdiction of the court by agreement or conduct.

In addition, a party can appeal a judgment and – in doing so – will impose an automatic stay of a money judgment in some provinces, such as Ontario. Generally, a judgment creditor cannot successfully pursue enforcement of a domestic judgment until at least the initial appeal rights have been exhausted. However, once a judgment debtor loses an appeal, there is no further automatic stay, nor a further appeal as of right; appeals to the Supreme Court of Canada are only available with the leave of that court. Judgment debtor appellants facing money judgments must generally post security before the judgment can be appealed. 

Enforcement may also be challenged on the basis that the assets being targeted by the judgment creditor are not properly available for execution because they are not considered to be assets of the judgment debtor (they are the assets of a related party or are somehow immune from seizure, etc). Such scenarios tend to be highly fact-specific and are often complex ‒ see Yaiguaje v Chevron Corporation, 2018 ONCA 472, leave to appeal to SCC refused (2018) SCCA No 255; Belokon v Kyrgyz Republic, 2016 ONCA 981, leave to appeal to SCC refused 37460 and 37463 (15 June 2017).

Generally, domestic judgments will be enforced, subject to the grounds to challenge enforcement set out in 2.5 Challenging Enforcement of Domestic Judgments.

Canada does not have a central register of all judgments, but execution and judgment searches can be carried out on a province-by-province basis. A judgment debtor who has paid a creditor in full can obtain a satisfaction piece for filing in the court. This is a formal court document acknowledging that the debtor has paid the creditor in full satisfaction of the judgment.

There are three routes to enforce foreign judgments in Canada: 

• at common law;
• under legislation; or 
• pursuant to a treaty.

Foreign Money Judgments

Canadian courts will generally enforce a foreign money judgment where:

• the court giving judgment is a judicial body or tribunal regularly established and exercising the jurisdiction conferred upon it by the relevant competent authority;
• the court had proper personal and subject-matter jurisdiction according to Canadian rules regarding the conflict of laws ‒ jurisdiction is viewed as being properly taken if:
1. the court had proper in personam jurisdiction over the defendant;
2. there is a real and substantial connection between the foreign jurisdiction and the subject matter of the proceeding; or
3. the defendant attorned to or by contract agreed to the jurisdiction of the foreign court;
• the foreign judgment is for a debt or a definite sum of money; and
• the judgment is final and conclusive with respect to the rights and liabilities of the parties to it so as to be res judicata in a foreign jurisdiction, although Canadian courts may recognise and enforce interlocutory orders as long as they meet the requirement of finality ‒ for an interlocutory order to be recognised and enforced, the foreign court’s jurisdiction to vary or set aside the judgment must be exhausted.

Canadian courts will not, however, enforce the following:

• taxes and penalties ‒ enforcing a judgment that is criminal, quasi-criminal, or regulatory would offend the principles of territoriality, as the public law of a country should not be applied beyond its territory (Pro Swing Inc v Elta Golf Inc, 2006 SCC 52); and

• indeterminate monetary orders ‒ interim orders (whether for costs or damages) that do not meet the requirements of finality and clarity will not be enforceable, given that:
1. finality requires that a foreign order establish an obligation that is complete and defined; and
2. clarity means that someone unfamiliar with the case would be able to ascertain what is required to meet the terms of the order.

Non-monetary Relief

A foreign judgment granting non-monetary relief (ie, declaratory or injunctive relief) may be recognised and enforced in Canada (Pro Swing Inc v Elta Gold Inc, 2006 SCC 52). Such enforcement is possible where the foreign judgment was made by a court of competent jurisdiction, the decision was final and the nature of the judgment was such that comity required it to be enforced. However, quasi-criminal judgments such as a foreign contempt order may not be enforced.

Duke v Andler

In March 2022, the Supreme Court of Canada granted leave to appeal an unprecedented decision of the British Columbia Court of Appeal allowing the enforcement of a German judgment against real property located in British Columbia. However, the appeal was discontinued and then closed. In that case (Lanfer v Eilers, 2021 BCCA 241), the enforcement of the German judgment had initially been rejected by the British Columbia court of first instance, relying on a Supreme Court of Canada precedent dating back to 1932 called Duke v Andler, 1932 SCR 734 (“Duke”).

Duke stood for the widely accepted private international law principle that Canadian courts will not enforce a foreign judgment that adjudicates title or interest to land in the domestic court’s territorial jurisdiction. However, in Lanfer, the British Columbia Court of Appeal found that “a foreign order for specific performance implicating rights or interests in immovable property that complies with the requirements of Pro Swing is capable of being recognised and enforced in British Columbia”. In so finding, the British Columbia Court of Appeal effectively found that Pro Swing had “implicitly” overturned the rule in Duke. However, before the Supreme Court of Canada could hear the ultimate appeal, the matter was resolved.

Reciprocal Enforcement

Certain Canadian provinces have passed reciprocal enforcement of judgment statutes that apply to foreign judgments. However, the scope of such legislation varies from province to province and tends to be limited to other Canadian provinces, the UK, a few select US states, and parts of Australia.

Where a provincial reciprocal enforcement of judgments statute applies to foreign judgments, the judgment may be enforced by registration. However, the provincial legislation does not alter the conflict of laws rules applicable to the recognition of foreign judgments. As a practical matter, while the legislation should be invoked when applicable, registration alone may not be satisfactory for enforcement purposes. The courts of each province are still required to take a supervisory role to ensure that the foreign judgment is enforceable in accordance with applicable Canadian law.

Recently, the Supreme Court of Canada dealt with the application of Ontario’s Reciprocal Enforcement of Judgments Act, RSO 1990 c R.5 (REJA) in conjunction with the availability of “ricochet judgments”, where a creditor asks one province to recognise another province’s recognition of a foreign judgment (HMB Holdings Ltd v Antigua and Barbuda, 2021 SCC 44). The Supreme Court of Canada affirmed the Ontario Court of Appeal’s refusal of an application for an order under the REJA to register a judgment from the Supreme Court of British Columbia, which had recognised by way of a default judgment a decision of the UK.

Under Section 3(b) of the REJA, judgments cannot be registered if the judgment debtor was not “carrying on business” within the jurisdiction of the court whose judgment was to be enforced. Although the REJA does not define what constitutes “carrying on a business”, it is an established common-law concept as part of the traditional bases of establishing jurisdiction, which the Supreme Court of Canada found was codified by Section 3(b) of the REJA.

The Supreme Court of Canada found that “carrying on business” requires an entity’s actual presence in a jurisdiction, in addition to a degree of business activity that is sustained for a period of time. Mere virtual presence, such as through advertisement, is not enough. Actual presence within a jurisdiction could involve maintaining a physical office within or regularly visiting the territory of the jurisdiction and engaging directly with customers. Additionally, an “indirect” actual presence could mean that the physical premises of the entity is operated by an agent or other representative (Club Resorts v Van Breda, 2012 SCC 17; Wilson v Hull, 1995 ABCA 374).

Notably, when the plaintiff later tried to enforce the British Columbia default judgment in Ontario via the common-law test, rather than the REJA, the Ontario courts also rejected such efforts at both the court of first instance and the Ontario Court of Appeal. The appellate court raised concerns that such ricochet enforcement proceedings could be used to circumvent more restrictive limitation periods in the second jurisdiction in which enforcement is sought (Ontario’s limitation period is very different from that of British Columbia). Finding no precedent for the plaintiff’s efforts at common law, the court concluded that the common-law test for the enforcement of original foreign judgments in Canada does not apply to the recognition and enforcement of a ricochet judgment.

Treaties

Treaties are a third source of law for the recognition and enforcement of foreign judgments. Canada and the UK have entered into the Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters, ratified as the Canada-United Kingdom Civil and Commercial Judgments Convention Act, RSC 1985, c C-30. The above-referenced Reciprocal Enforcement of Judgments (UK) Act adopts this treaty.

Canada is not a signatory to the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters. Therefore, Ontario applies Canadian common law when dealing with recognising and enforcing awards from jurisdictions other than the common-law provinces and the UK. Furthermore, the enforcement treaty between Canada and the UK only applies to monetary judgments, leaving recognition of non-monetary UK judgments to the common law.

When a Canadian court recognises a foreign judgment, it means that the Canadian court will treat the foreign judgment as effective and capable of being enforced. A foreign judgment recognised by a Canadian court may be enforced in the same manner as a domestic judgment.

Simple money judgments are the most straightforward to enforce. Non-monetary judgments may be enforced if comity requires it and if the Supreme Court’s analysis in Pro Swing, as referenced in 3.1 Legal Issues Concerning Enforcement of Foreign Judgments, has been applied successfully. Non-monetary judgments include judgments to enforce: 

• an order for specific performance;
• an injunction order;
• an order establishing a constructive trust;
• an order for declaratory relief; and 
• various orders in the context of insolvency.

Foreign judgments granted by courts without proper jurisdiction will not be enforced. The foreign court must have had a real and substantial connection with the litigants or the subject matter of the dispute or otherwise had jurisdiction based on one of the “traditional” bases, such as consent/attornment.

Canadian courts will not recognise or enforce foreign judgments relating to foreign public laws, foreign taxes and penal or quasi-criminal matters. Additionally, as established by the Supreme Court of Canada in Beals v Saldanha, 2003 SCC 72, Canadian courts will refuse to recognise and enforce a foreign judgment if it: 

• was obtained by fraud going to the jurisdiction of the foreign court or new allegations of fraud that were not the subject of prior adjudication (eg, based on material facts that were not previously discoverable and potentially challenge the evidence put before the foreign court); 
• is contrary to Canada’s concept of natural justice – the foreign court’s procedures did not allow for due process in the form of adequate notice and sufficient opportunity to be heard; or
• would be contrary to public policy – ie, to the Canadian concept of justice, which turns on whether a foreign law is contrary to Canada’s view of basic morality such that enforcement of the monetary judgment would shock the conscience of a reasonable Canadian.

To recognise and enforce a foreign judgment at common law, the party seeking such redress should commence a proceeding. The originating process must be served personally or by an alternative to personal service on the debtor.

If the judgment debtor is domiciled outside the province where enforcement is sought, the method of service will depend on whether the debtor is located in a country that is party to the Hague Convention of Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.

If the material facts are not in dispute, the foreign judgment may be enforced summarily, based on affidavit evidence demonstrating that the judgment was obtained from a court with proper jurisdiction and that none of the defences to enforcement were established on the facts. If the judgment debtor resists enforcement because of credibility issues or otherwise requires a trial, the court may decline to decide the matter on a summary basis.

If the enforcement of a foreign judgment is unopposed, enforcing the judgment should be by default proceedings and therefore simpler. Foreign defendants tend to have a maximum of 60 days from the service of an originating process to defend the proceeding. Where there is no statutory regime to register the foreign judgment, the length of time to enforce a foreign judgment can vary significantly, depending on whether the enforcement proceeding is opposed and, if so, the nature and extent of the defences raised.

That said, generally speaking, enforcement proceedings are much more streamlined and efficient than regular lawsuits ‒ given that the merits of the dispute are not re-litigated before the Canadian courts. Therefore, the scope of the relevant documents and issues to be resolved is much narrower. A straightforward enforcement proceeding that is defended may be brought to court for a dispositive hearing within 12 months. More complex matters may take longer.

The legal fees and disbursements for an enforcement proceeding can also vary widely, depending on the complexity of the matter and the specific defences raised. Canadian court filing fees are minimal; however, other disbursements relating to enforcement can vary substantially.

The recognition and enforcement of foreign judgments may be challenged only on narrow grounds. If the foreign court had proper jurisdiction over the foreign proceeding and the judgment was final and conclusive on its merits, it cannot be challenged for error of fact or law. Canadian courts will not consider or re-evaluate the merits of the case.

The grounds upon which the enforcement of a foreign judgment can be challenged in Canada are: 

• fraud;
• a denial of natural justice; and
• that enforcement would be contrary to Canadian public policy.

Fraud

If the foreign court assumed jurisdiction as a result of fraud, Canadian courts will refuse to recognise and enforce the judgment. However, to challenge enforcement due to fraud going to the merits of the case, the moving party must show that the fraud was not discoverable before obtaining the judgment in the foreign jurisdiction. In other words, if a party detects fraud in the original proceedings, that party must raise those concerns in the original proceedings. Also, if the respondent chose not to participate in the foreign proceeding, they may be barred from challenging enforcement in Canada on the ground that the evidence given in the foreign proceeding was fraudulent and the fraud could not have been discovered by reasonable diligence. 

Denial of Natural Justice

In order to establish the defence of a denial of natural justice, the debtor must show that the applicant obtained the judgment in a manner inconsistent with Canadian notions of fundamental justice (Beals v Saldanha, 2003 SCC 72). The following safeguards form the Canadian notions of fundamental justice:

• adequate notice of the claim;
• an opportunity to defend;
• judicial independence; and
• ethical rules governing the behaviour of the participants.

Canadian courts will also refuse to enforce a judgment that is contrary to public policy, but only in exceptional circumstances (Beals v Saldanha, 2003 SCC 72). The public policy defence will not bar enforcement of a foreign judgment for the sole reason that the claim in the foreign jurisdiction would not yield comparable damages in Canada. The public policy defence is directed at the concept of repugnant laws, not repugnant facts. Recent Ontario Superior Court authority confirms that the public policy defence will be applied narrowly and it is not a remedy to be invoked lightly. 

A party may also resist recognition and enforcement of a foreign judgment if the party seeking redress did not commence the enforcement proceedings or register the foreign judgment within the time limit prescribed by the applicable limitation periods. In Canada, limitation periods are created by statute and vary between provinces. In addition, the limitation period for the enforcement of foreign judgments varies, with the basic limitation periods in Canada usually ranging from two to six years.

In Ontario, the limitation period to recognise and enforce a foreign judgment under the Reciprocal Enforcement of Judgments Act, RSO 1990 c R.5 and the Reciprocal Enforcement of Judgments (UK) Act, RSO 1990, c R.6 is six years from the date when the judgment was prescribed. Where there is no reciprocity between Ontario and the judgment jurisdiction, the general two-year limitation period will apply. The Ontario Court of Appeal recently confirmed that the limitation period in the enforcement of a foreign judgment begins to run from the date on which the right of appeal regarding the judgment expires, the date on which the appeal is decided, or the date on which the appeal is dismissed. The Ontario Court of Appeal has also confirmed that the statutory provision that provides that no limitation period applies to a proceeding to enforce a court order only applies to domestic orders.

It is important to obtain advice early on with respect to the applicable limitation period to enforce a foreign judgment. As referenced in 3.1 Legal Issues Concerning Enforcement of Foreign Judgments, a failure to commence an application to enforce a foreign judgment within the prescribed time period may be fatal (HMB Holdings Limited v Antigua and Barbuda, 2020 ONCA 12’ aff’d 2021 SCC 44).

Canadian courts readily enforce both domestic and international arbitral awards subject to limited grounds of refusal.

The applicable set of rules to recognise and enforce an arbitral award in Canada depends on whether the award is domestic or foreign. In addition, each province’s rules on enforcement vary slightly, so particular attention must be paid to the subtle variations across the country.

Most Canadian provinces are subject to domestic and international arbitration legislation, each of which governs the enforcement of domestic and international arbitral awards. In common-law provinces (all but Quebec, which has a code-based civil law system), an arbitration is international if: 

• it was held outside Canada;
• the parties have their places of business in different countries; or 
• a substantial part of the obligations under the contract were performed outside Canada.

In Quebec, an arbitration is foreign if the seat of the arbitration lies outside Quebec.

The recognition and enforcement of foreign arbitral awards is governed by the applicable international arbitration acts adopted by the provinces. Canada has passed the United Nations Foreign Awards Convention Act, RSC, c 16 (2nd Supp), implementing the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”). Canada adopted the reservation to limit recognition to arbitral awards that are “commercial”. Every province has passed its own foreign enforcement legislation, implementing the New York Convention.

Canada has also passed the Commercial Arbitration Act RSC 1985, c 17 (2nd Supp), which adopts the UNCITRAL Model Law on International Commercial Arbitration (1985) (the “Model Law”). The provinces have also adopted the Model Law, with Ontario and British Columbia adopting the Model Law’s 2006 amendments.

Canada is a party to and has implemented the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 March 1965 (entered into force on 14 October 1966) (ICSID).

As described in more detail in 4.2 Variations in Approach to Enforcement of Arbitral Awards, final awards obtained by tribunals with jurisdiction over the arbitral proceeding will be enforced subject to very narrow defences.

As discussed in 4.1 Legal Issues Concerning Enforcement of Arbitral Awards, the biggest distinction is between domestic and international awards. However, in both cases, courts defer to the arbitration tribunal and will enforce the award, subject to limited grounds to refuse recognition and enforcement. In all cases, the enforcing court has no power to deal with the merits of the underlying arbitration.

Generally speaking, and under the domestic Arbitration Act 1991, SO 1991, c 17, the court “shall” grant judgment enforcing the award made in the province unless: 

• the award is not final and the period to commence an appeal or an application to set the award aside has not passed;
• there is a pending appeal, an application to set aside the award, or an application to declare the award invalid;
• the award has been set aside or the arbitration is the subject of a declaration of invalidity; or
• the award is a family arbitration award.

In order to recognise and enforce an arbitral award from another Canadian province in Ontario, the same test applies, with the added requirement that the subject matter of the award must be capable of being the subject of arbitration under Ontario law. While all Canadian provinces’ courts readily enforce awards from their own or other Canadian provinces, there are differences in the procedures and tests, which need to be considered, depending on where enforcement of the award is sought.

ICSID awards will typically be recognised as binding. The monetary obligations of the award will be enforceable as though they were a final judgment of a domestic court.

Domestic arbitral awards that extend to parties who are not bound by the arbitration agreement and who have not attorned to the jurisdiction of the arbitral tribunal will not be enforced.

Generally, the Canadian courts will not enforce a domestic or international arbitral award if the subject matter of the arbitration is not capable of being settled by arbitration under the applicable laws where enforcement is being sought.

The courts will not recognise or enforce an international arbitral award if enforcement would be contrary to Canadian public policy.

Under most domestic arbitration acts, a party can simply apply to the court to have its domestic arbitral award enforced. The limitation period in which to commence enforcement proceedings varies between Canadian provinces, from two to ten years. The enforcement process is relatively streamlined and is intended to facilitate the enforcement of awards subject only to very narrow caveats. Also, the court’s decision on whether to grant or deny an application to enforce a domestic arbitral award may be appealed.

In order to enforce an international arbitral award, the enforcing party must apply to the applicable court. The application must include the original or a copy of the award, together with the arbitration agreement, attached as exhibits to an affidavit. Neither the New York Convention nor the Model Law sets out limitation periods for the enforcement of a foreign arbitral award. However, pursuant to the New York Convention, each contracting state is required to enforce arbitral awards in accordance with the rules of procedure in the jurisdiction where the party seeks to enforce it. The Supreme Court of Canada has held that the rules of civil procedure of the jurisdiction where enforcement of the foreign arbitral award is sought will apply to those proceedings (Yugraneft Corp v Rexx Management Corp, 2010 SCC 19). The result is that limitation periods for the enforcement of foreign arbitral awards will vary, depending on the province in which enforcement is sought.

The costs and time to enforce domestic or international arbitral awards depend on the case. A straightforward application may take eight to 12 months (or longer, depending on court backlog). However, if the defence to enforcement proceedings raises serious issues that could involve a significant inquiry into whether the enforcement could offend public policy (eg, underlying criminality not previously raised before the tribunal), the enforcement proceedings could take longer. Also, if the party seeking enforcement pursues interlocutory relief (eg, a Mareva injunction to freeze assets) and such steps become subject to set-aside proceedings or other challenges, the progress of the enforcement proceeding may be adversely impacted. Jurisdictional issues related to service can also delay proceedings. Costs for court filings are modest.

Most provinces have legislation that sets out the limited circumstances in which the enforcement of a domestic arbitral award can be challenged. These limited circumstances include where there is a pending appeal of the award, a pending application to set aside the award or a pending application for a declaration of invalidity. Where the period to appeal, set aside the award or apply for a declaration of invalidity has not elapsed, the court may enforce the award or stay enforcement until the period has elapsed or until the pending proceeding is finally disposed of.

In addition, the recognition and enforcement of a domestic award can be challenged on the following narrow grounds:

• absence of notice to the other party;
• the award deals with a dispute that is outside the scope of the arbitration agreement; or
• there is a breach of public policy.

International arbitral awards can be challenged under the limited grounds of Article 36(1)(a)(ii) of the Model Law or Article V of the New York Convention, where the party resisting enforcement can prove that:

• a party to the arbitration was under some incapacity or the agreement was not valid under the law of the seat of arbitration where the award was made;
• the party against whom the award was invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present their case;
• the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters that are beyond the scope of the submission to arbitration; 
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, in the absence of such an agreement, was not in accordance with the law of the country where the arbitration took place; or
• the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made.

In addition, enforcement may be refused if the court finds that:

• the subject matter of the dispute is not capable of settlement by arbitration under the law of the state where enforcement is sought; or
• the recognition or enforcement of the award would be contrary to the public policy of the state where enforcement is sought.

The public policy ground to refuse enforcement of a foreign arbitral award has been narrowly construed (as confirmed, for example, in Enrroxs Energy and Mining Group v Saddad, 2022 BCSC 285 at para 52). The public policy defence is “to guard against enforcement of an award which offends our local principles of justice and fairness in a fundamental way… or where there was ignorance or corruption on the part of the tribunal which could not be seen to be tolerated or condoned by our courts” (Schreter v Gamac Inc, 1992 7 OR (3d) 608).

The public order exception to the enforcement of foreign judgments under the Quebec Civil Code (related to the broader public policy exception applicable in the rest of Canada, which has a common law legal system) was recently considered by the Supreme Court of Canada in a complex and detailed decision involving letters of credit, fraud and conflicting arbitral awards and foreign judgments. Eurobank Ergasias SA v Bombardier Inc, 2024 SCC 11 featured fraudulent conduct by both an arm of the Greek government and a Greek bank, as part of efforts to avoid the results of an arbitration process the Greek State had formally undertaken to honour. Judgments were obtained by the Greek bank from the Greek courts, which were at odds with the arbitral awards and decisions of the Quebec courts. Specifically, the Greek courts found the Greek government had not engaged in fraud under Greek law, whereas the Quebec courts had found the opposite – thereby setting up a direct conflict between Canadian public policy and the conclusions of the Greek courts. However, enforcement of the Greek judgments before the Quebec courts was not sought; instead, the issue before the Canadian courts was whether to uphold the refusal to pay out under the letter of credit by the Canadian bank (the counterpart to the Greek bank in the letter of credit arrangements).

In upholding the Canadian bank’s refusal to pay, the Supreme Court of Canada stated that the Greek judgments raised public order concerns because of their inconsistency with the relevant orders of the ICC Arbitral Tribunal and their failure to give proper consideration to relevant Canadian judgments. The Supreme Court of Canada concluded: “In the circumstances, it was open to the courts below to give the Greek decisions no weight, as mere facts rather than as executory judgments.”