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To Attorn or Not To Attorn

When legal proceedings are commenced in another jurisdiction, one of the most pressing issues for a non-resident defendant is whether to attorn to the other jurisdiction, i.e. whether to defend proceedings in the Courts in the other jurisdiction. The decision of British Columbia Supreme Court in Old North State Brewing Company v. Newlands Services serves to illustrate the serious nature of the decision to attorn and the possible consequences of making the wrong decision.

In Old North State, the plaintiff sued in North Carolina for damages for breach of a contract for the supply and installation of brewing equipment. The contract between the plaintiff and the defendant provided that British Columbia law would apply and indicated that disputes would be litigated in British Columbia. Apparently, relying on these provisions, the defendant did not defend the North Carolina proceedings and the plaintiff obtained judgment against it. In the undefended proceedings, the North Carolina court held that the defendant's breaches of contract amounted to unfair trade practices and awarded treble damages under North Carolina law.

The plaintiff brought proceedings in B.C. to enforce the North Carolina judgment and the British Columbia court, in a summary proceeding granted judgment against the defendant. The Court concluded that North Carolina was the jurisdiction with the most substantial connection to the case because the equipment was delivered in North Carolina and the defendant was instrumental in installing the equipment there. The Court was not persuaded that the contract precluded proceedings in jurisdictions other than British Columbia, i.e., the clause providing for litigation to take place in B.C. did not provide the B.C. courts with exclusive jurisdiction. The defendant contended that the North Carolina court should have, in accordance with the terms of the contract, applied B.C. law in determining damages, but British Columbia Court held that, in order to have had B.C. law applied, the defendant would have had to have appeared in the North Carolina proceedings and proved what the law in British Columbia was. Moreover, the B.C. Court found that the treble damages award did not offend public policy (although no such scale of recovery is available in Canadian proceedings) and was therefore enforceable.

The Old North State decision drives home the importance of the decision whether or not to attorn to another jurisdiction. Non-residents who are sued in other jurisdictions must carefully consider whether they will attorn and must be aware of the risks associated with the decision not to attorn.

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