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FOREIGN JUDGMENTS - Action on foreign judgment - Enforcement - Bars - Recognition of judgments of foreign state or territory - Considerations

Wednesday, August 23, 2017 @ 8:30 AM  


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Appeal by the Islamic Republic of Iran, the Iranian Ministry of Information and Security and the Islamic Revolutionary Guard Corps (collectively, “Iran defendants” or “Iran”) from the dismissal of their motion for a stay of proceedings, or to set aside default judgments. The respondents, the plaintiffs in the five underlying actions, were American victims of eight different terrorist attacks. They obtained judgments against the defendants in American proceedings based on Iran's active support of terrorist organizations. The respondents commenced proceedings in Canada to enforce the American judgments, availing themselves of 2012 legislative changes to the State Immunity Act (SIA) and the Justice for Victims of Terrorism Act (JVTA) that the Canadian government enacted to facilitate claims by victims of terrorism. Iran did not defend any of the proceedings. The American judgments were recognized and enforced by the Court in default proceedings, including a Mareva injunction over Iran's exigible property. Iran sought to stay or set aside the judgments on the basis it was immune from the jurisdiction and enforcement of the Court. The motions judge dismissed Iran’s motion. He also granted a motion for summary judgment brought by the Bennett respondents for recognition of their American judgment. The motions judge found that Iran not immune from the Court's jurisdiction. He held that the JVTA was a freestanding procedural and substantive mechanism for recovering losses caused by acts of state sponsors of terrorism. He concluded that s. 4(5) of the JVTA did not require a plaintiff to demonstrate that a foreign state supported terrorism within the meaning of s. 2.1 of the SIA if the foreign state was on the list under s. 6.1(2) of the SIA. He further found that all of the plaintiffs met the date requirements, as the limitation date within s. 4(1) of the JVTA referred to the date upon which a plaintiff suffered loss or damage, rather than the date of the terrorist date attack itself. He also found that the plaintiffs were not required to demonstrate the commission of a specific criminal offence to establish a cause of action under the JVTA. He further concluded that the enforcement proceedings were not statute-barred because the claims did not arise until September 7, 2012, when Iran was added to the list of state sponsors of terrorism under the SIA. He also found that recognition of the American judgments was not contrary to Canadian public policy. He found that under s. 12(1)(d) of the SIA, Iran's immunity from enforcement of the American judgments in Ontario was removed and that diplomatic immunity could not be asserted to avoid execution in Canadian court proceedings unless the Minister of Foreign Affairs had recognized the diplomatic status of the property sought to be attached.

HELD: Appeals dismissed. By virtue of the JVTA and the amendments to the SIA, Iran’s state immunity had been lifted with respect to its sponsorship of terrorist acts that occurred on or after January 1, 1985, but not for sponsorship of terrorist activities that occurred before that date. The only proof of the support of terrorism necessary to maintain an enforcement action under s. 4(5) of the JVTA was the listing of the state sought to be used under s. 6.1(1) of the SIA. The trial judge properly relied upon the facts found in the US judgments, and the respondents were not required to prove the commission of a specific criminal offence beyond a reasonable doubt. Section 4(5) of the JVTA set forth the process of recognition of the American judgments. None of the arguments advanced by Iran defeated recognition. There was ample evidence that Iran’s conduct would be punishable under the Criminal Code. The claims were not time-barred, as the cause of action did not begin to run until Iran was listed under. s. 6.1(1) of the SIA. The American courts had jurisdiction to grant the judgments. Finally, recognition of the judgments was not contrary to Canadian public policy. State immunity from enforcement was stripped from Iran because the underlying US judgments were based on Iran’s support of terrorism and the Iranian assets did not have any cultural or historical value. The time for the determination of the exigibility of the Iranian assets was the time of the purported execution.

Tracy (Litigation guardian of) v. Iranian Ministry of Information and Security, [2017] O.J. No. 3480, Ontario Court of Appeal, A. Hoy A.C.J.O., R.A. Blair and C.W. Hourigan JJ.A., June 30, 2017. Digest No. TLD-August212017008