In NewAgco Inc. v. Syngenta Crop Protection, 2019 SKQB 56, Mr. Justice G.A. Meschishnick vacated an earlier ex parte Queen’s Bench decision enforcing a U.S. court decision under Saskatchewan’s The Enforcement of Foreign Judgments Act, SS 2005, c E-9.121. The U.S. decision stemmed from a settlement agreement negotiated between parties to an arbitration and which had resulted in a consent ‘judgment’ of the arbitration tribunal. Having successfully applied to a U.S. court to confirm that arbitration judgment as a U.S. court decision, the U.S. corporation failed to enforce that same U.S. court decision in Saskatchewan against a Saskatoon corporation bearing the same corporate name, unsuccessfully arguing that the Saskatoon corporation was bound by the settlement and U.S. court decision.
Syngenta Crop Protection, LLC (“Syngenta”), a U.S. corporation, holds rights in data which, under U.S. law, entitles it to compensation if another uses that data for registration of a pesticide in the U.S. NewAgco Inc. (“NewAgco”), a Saskatchewan corporation, operates a generic pesticide research, development and registration business. Mr. Jason Mann is its only officer, director and shareholder.
Another entity, based in Barbados, also uses “NewAgco Inc.” as its corporate name (“NewAgco Barbados”) and has three (3) directors, including Mr. James Mann, a resident of Saskatoon, and two (2) others individuals, both residents of Barbados. Its declared activity of business is “international trade and commerce as defined in s. 6 of the International Business Companies Act in respect of creating and managing Intellectual Property in the Agricultural Sector and as an International business company.”
101072498 Saskatchewan Ltd. (“101 Sask”) owns the shares of NewAgco Barbados. Both Mr. Jason Mann and Mr. James Mann are officers and directors of 101 Sask which has two (2) shareholders, each of which are corporations holding 50% percent of the voting shares. Mr. James Mann is the sole officer, director and shareholder of one of the shareholding corporations and Mr. Jason Mann is the sole officer, director and shareholder of the other.
Under the U.S. law entitling Syngenta to compensation, arbitration is provided if compensation cannot be negotiated. Syngenta claimed that its data had been used but, unable to negotiate compensation, undertook arbitration against a respondent it described as “NewAgco”.
After the arbitration had commenced, a settlement was reached, effective August 29, 2016 (“Settlement Agreement”). The Settlement Agreement stated, among other things, that:
– it was between Syngenta and “NewAgco, a Barbados corporation”;
– in default of payment, Syngenta could enter judgment in any court of competent jurisdiction in the U.S.;
– the parties submitted to jurisdiction of the U.S. District Court for the District of Columbia; and,
– service of an proceedings to enforce the Settlement Agreement would be made to Mr. Jason Mann, NewAgco, Inc. at an address in Saskatoon.
One of the Barbados-based directors signed on behalf of NewAgco Barbados. The Settlement Agreement was confirmed in a consent judgment by the arbitration tribunal. Proceedings to enforce the Settlement Agreement were served on Mr. Jason Mann in Saskatoon but no one defended the U.S. litigation and a judgment issued on December 8, 2017 (“Columbia Judgment”).
Syngenta applied to the Queen’s Bench to register the Columbia Judgment in Saskatchewan pursuant to Saskatchewan’s The Enforcement of Foreign Judgments Act, SS 2005, c E-9.121 (“EFJA”), doing so ex parte as permitted by the EFJA. The Columbia Judgment was registered by the Queen’s Bench on April 6, 2018. NewAgco applied to set aside that Saskatchewan decision to register the Columbia Judgment.
Meschishnick J. considered the general principles applicable to an application to set aside a decision recognizing and enforcing a foreign judgment, referring to Britton v. Simon (Estate), 2016 SKQB 30, and excerpting paras 22-25. That decision itself relied on Chevron Corp. v. Yaiguaje, [2015] 3 SCR 69, 2015 SCC 42, paras 43-44 and 53.
Those principles should be of interest and familiar to arbitration practitioners given the procedures and reasoning parallels those for recognizing and enforcing foreign arbitral awards. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the “New York Convention”).
At para. 18 of his reasons, Meschishnick J. summarized NewAgco’s position as “not a complicated one”. NewAgco and NewAgco Barbados are separate companies. NewAgco neither submitted to the jurisdiction of the U.S. courts nor applied to register a pesticide. NewAgco did not participate in the arbitration and was not a party to the Settlement Agreement.
Meschishnick J. agreed with NewAgco. He determined that, on the facts, NewAgco had not agreed to submit to the U.S. court jurisdiction and there was no real and substantial connection between the U.S. court and the facts on which the U.S. court litigation were based. His analysis of the facts spanned several paragraphs and were grouped under different aspects:
(i) paras 29-39 – “express agreement to submit to originating court”: Meschishnick J. held NewAgco had not expressly agreed to submit to the court in the U.S.;
(ii) paras 40-43 – “carry on business”: Meschishnick J. held that NewAgco satisfied him that it did not carry on business in Delaware;
(iii) paras 44-46 – “contractual obligation to be performed in Delaware”: Having decided that NewAgco was not a party to the Settlement Agreement, there could be no finding that NewAgco had obligations thereunder to be performed in the U.S. district.
(iv) paras 47-61 – “authority to bind NewAgco to the Settlement Agreement”: This is the lengthiest treatment of the facts undertaken Meschishnick J. and his analysis is relevant to arbitration practitioners considering whether their actual or proposed contractual wording meets or fails the test applied.
In analysing whether NewAgco Barbados had authority to bind NewAgco, Meschishnick J. determined that:
(a) NewAgco Barbados was not acting as agent for NewAgco when it signed the Settlement Agreement as was the case in 196303 Ontario Inc. v Glen Grove Suites Inc., 2015 ONCA 580; and,
(b) NewAgco and NewAgco Barbados did not have a common directing mind as was established in Seip & Associates Inc. v. Emmanuel Village Management Inc., 2009 ONCA 222 and Martinez de Morales v. LaFontaine-Rish Medical Group Ltd., 2009 CanLII 31991 (ON SC), aff’d De Morales v. Lafontaine-Rish Medical Group Ltd., 2010 ONCA 59.
Meschishnick J. vacated the April 6, 2018 decision of Saskatchewan’s Queen’s Bench, adding that there was no basis for continuation of the enforcement charge registered against NewAgco’s bank account as a result of that decision.
Note: At para. 13, Meschishnick J.’s reasons note that “Syngenta brought an action in the United States District Court for the District of Columbia … to confirm the Arbitration Judgment.” For reasons not fully apparent from the Saskatchewan Queen’s Bench decision, Syngenta opted to apply in Saskatchewan under the EFJA to recognize and enforce the U.S. court decision. The reasons do not explain why Syngenta did not apply under Chapter VIII, sections 35 et seq. of Saskatchewan’s The International Commercial Arbitration Act, SS 1988-89, c I-10.2 to recognize and enforce the actual consent ‘judgment’ issued by the arbitration tribunal.
The result would not have been different if it had. Syngenta would have been unable to enforce an the arbitration ‘judgment’ as the arbitration and the Settlement Agreement did not involve NewAgco. The arbitration tribunal’s consent ‘judgment’ (i) made no mention of NewAgco, (ii) contained no evidence of NewAgco’s express submission to the arbitration tribunal’s jurisdiction and (iii) stemmed from a Settlement Agreement to which NewAgco was not privy.