In April of 2013, the Rana Plaza building in Bangladesh collapsed killing and injuring thousands of people there. Many of the victims were employed to make garments for Joe Fresh, a recognizable and popular brand of clothing for Loblaws, a Canadian business. A class proceeding was commenced in Ontario seeking to recover billions of dollars in damages for those victims. The defence moved to strike the claim based on it being statute barred by the law of Bangladesh. They were successful before a motions judge. The plaintiff appealed to the Ontario Court of Appeal (“ONCA”).
Choice of Law
The choice of law was critically important in this case. The action had been brought within Ontario’s two year limitation period in which to commence a claim for negligence. If the law of Ontario applied, then all of the claimants in the class could potentially recover damages. However, as the incident giving rise to the claims occurred in Bangladesh and if the law there applied, the claims of many of the victims were potentially statute barred by a one year limitation period.
The Supreme Court of Canada’s (“SCC”) decision in Tolofson v. Jensen is the leading case on determining the appropriate choice of law. The governing rule or test is the Latin phrase “lex loci delicti” meaning that as a general rule the law of the place where the event occurred should be used.
Attempts to Avoid the Rule
The plaintiff’s had obviously considered the potential problem of the “lex loci delicti” rule. They attempted to avoid it in two ways. The first was to plead that many of the guiding decisions had been made in Ontario, making it a local tort of negligence. The second was to suggest the case was an exceptional one, as per Tolofson, such that it would cause an injustice to use the law of the foreign country and therefore Canadian law was to be used.
Where did the Negligence Occur?
The SCC in Tolofson alluded to the possibility that the rule would be unjust to apply strictly where although the wrong occurred elsewhere, the consequences occurred locally.
[I]t seems axiomatic to me that, at least as a general rule, the law to be applied in torts is the law of the place where the activity occurred, i.e., the lex loci delicti. There are situations, of course, notably where an act occurs in one place but the consequences are directly felt elsewhere, when the issue of where the tort takes place itself raises thorny issues. In such a case, it may well be that the consequences would be held to constitute the wrong.
The ONCA agreed with the motion’s judge that there is no actionable wrong in negligence without injury. The decisions made in Ontario were said to give rise to a duty of care, but the duty was owed to the people of Bangladesh who were killed or injured there. The wrong, the injury, occurred in Bangladesh not Ontario.
An Exceptional Case?
The SCC in Tolofson also suggested the possibility of an injustice exception to the lex loci delicti rule as follows:
I have already indicated, of course, that I view the lex loci delicti rule as the governing law. However, because a rigid rule on the international level could give rise to injustice, in certain circumstances, I am not averse to retaining a discretion in the court to apply our own law to deal with such circumstances. I can, however, imagine few cases where this would be necessary.
The injustice suggested to invoke the exception was twofold. The first was that local Bangaleshi law mandated an unequal distribution of damages between male and female claimants. The second was the unavailability of punitive damages in Bangladesh.
Both suggestions were rejected by the ONCA. The inequality issue affected only a small number of claimants in unique circumstances and further, could be severed when assessing damages if the case got that far. As for punitive damages, it was unclear that they were unavailable in Bangladesh, that they were unlikely to be awarded in Canada given the size and uniqueness of the claim advanced, and, even if absent, that absence did not offend Canadian fundamental values sufficiently to warrant the exception.
As a result the claims were statute barred by the application and use of Bangladeshi law.
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