Choice of Law – pay attention to the ‘boilerplate’ provisions of contracts

In the recent decision of the Ontario Superior Court of Justice,Edward Jones v Raymond James Ltd., an employee brought a motion asking the court to dismiss or stay the action his employer brought against him. The employer alleges that the employee breached the confidentiality and non-solicitation provisions of his employment contract. The employee argued that the Ontario Court had no jurisdiction to hear the case. As an alternative submission, the employee stated that Manitoba (the place of his residence) was a more appropriate forum for the case. In the end, the court dismissed the employee’s motion, finding that the Ontario Court did have the jurisdiction to hear the case. One factor that helped the court come to its decision was that the contract between the parties included a clause which stated that the law of Ontario was to govern disputes arising under the contract. It was the employee’s position that Manitoba was a more appropriate place to hear the case; however, the court explained that conducting the litigation outside of Ontario would create the need to call expert witnesses to prove Ontario Law. This case reminds business owners – especially those operating in multiple jurisdictions – to put some thought into the law they want to govern their contracts. One might be tempted to overlook “boilerplate” clauses like those setting out the choice of law or governing jurisdiction for disputes when negotiating a contract, but the choices made with respect to this contract provision could have important implications in the future. Like the force majeure clause, businesses should appreciate the effects of the governing jurisdiction clause.