So, you’ve obtained a judgment from an American court, but the judgment debtor has insufficient assets in the United States to satisfy the judgment. You know that the debtor has assets in Canada. Should you seek to have your judgment recognized and enforced in Canada? In this article, we discuss the key factors to consider when deciding whether and how to seek recognition of an American judgment in a Canadian jurisdiction.
Subject to upholding natural justice principles, Canadian courts take a generous approach to recognizing American judgments, and once an American judgment is recognized in Canada, it is enforceable as if it were a Canadian judgment.
When deciding whether to seek recognition of your American judgment in Canada, there are four key considerations you should keep in mind:
Generally, there are two types of judgments: monetary judgments and non-monetary judgments. Canadian courts regularly recognize monetary judgments, but they may also recognize non-monetary judgments, including judgments for specific performance, injunctions, and constructive trusts1. If your judgment is a non-monetary judgment, or you are seeking to register and enforce non-monetary relief that is part of a monetary judgment, special attention should be paid to the nature of the non-monetary relief and whether that relief is suitable for enforcement in Canada.
In Canada, American judgments are normally recognized on a provincial or territorial basis. The federal court can only recognize judgments if specific legislation under its jurisdiction provides for recognition2. A provincial or territorial recognized judgment only allows for enforcement against assets located in the province or territory of recognition. Thus, if the judgment debtor has assets distributed across Canada, you must take multiple steps in multiple jurisdictions to enforce against all assets.
When choosing a province or territory in which to seek recognition, a key consideration should be where the judgment debtor has assets or may have assets in the future3. If the judgment is against a corporation, you should carefully consider whether the assets in a particular Canadian jurisdiction truly belong to that corporate entity. For example, a creditor may have difficulty enforcing an American judgment against a foreign corporate subsidiary in Canada if the subsidiary has a different corporate personality than its American parent4.
Even if a judgment debtor has (or may have) assets in the jurisdiction you are considering, you should think about searching for other creditors. The existence of other judgment creditors may impact the amount of recovery you could be entitled to.
Another factor to consider when selecting a jurisdiction is limitation periods. The limitation period applicable to the recognition of foreign judgments varies based on the province or territory and the method of recognition or registration. The limitation period is typically calculated based on the foreign judgment and proceedings, not the original cause of action leading to that judgment. For example, in Prince Edward Island, foreign judgments can be recognized or registered within 10 years of the date of that judgment (as long as the time for enforcement in the original jurisdiction has not expired)5. In Ontario, the limitation period is shorter6.
After you have identified your recognition jurisdiction of choice, the next step is to determine whether there is reciprocal enforcement legislation available that could streamline the process. These statutory schemes provide a simplified procedure for registering judgments. For example, in Alberta, the Reciprocal Enforcement of Judgments Act allows monetary judgments from the states of Washington, Idaho, Montana and Arizona to be registered in that province.
If there is no reciprocal enforcement legislation that applies, a judgment creditor must commence a civil action for recognition of the American judgment. At common law, a foreign judgment may be recognized if it was granted by a court of “competent jurisdiction”, is final, and is of a nature that comity requires the Canadian court to enforce7. For non-monetary judgments in particular, determining whether comity requires recognition and enforcement may involve consideration of a broader range of criteria—such as whether the original judgment is clear, specific, and limited in its scope and whether the use of Canadian judicial resources to enforce the judgment is consistent with what would be allowed for domestic litigants8.
Ultimately, the bar for recognition is low. To assume jurisdiction in an action to recognize a foreign judgment, a Canadian court needs only to be satisfied that the foreign judgment debtor was properly served with the statement of claim in the enforcement action. A Canadian court will not ask whether it has a real and substantial connection to the foreign judgment debtor or if the debtor currently has assets in Canada. Instead, the court defers to the connection between the foreign court and the judgment debtor9.
Once you have obtained a recognized judgment in one Canadian province or territory, you may rely on provincial legislation that permits Canadian judgments to be registered in other provinces and territories across the country10. Canadian courts appear willing to permit the registration of a Canadian judgment that resulted from a common law action in another jurisdiction in Canada that recognized a foreign judgment11.
With your recognition judgment in hand, you can take enforcement steps in the province or territory in which you obtained recognition. The appropriate enforcement steps will vary based on the jurisdiction and circumstances of the case. For example, to enforce against assets of a debtor in Ontario, a creditor must get a writ of seizure and sale from the court and file it with the sheriff’s office in the municipality where the debtor’s assets are located. The creditor can then share pro rata with any other judgment creditors when any proceeds are realized from the sale of assets12. The available enforcement steps and the sharing scheme with other creditors varies across Canada and should be reviewed on a jurisdiction-by-jurisdiction basis before taking enforcement steps.
To discuss these issues, please contact the author(s).
This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.
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