July 18, 2017

Supreme Court of Canada – jurisdictions without borders?

Just a few days apart, Facebook and Google, two indisputable internet giants, both suffered essentially unprecedented setbacks before the Supreme Court of Canada.

Other than the decision of the European Court of Justice, which upheld the application of data protection law (the right to be forgotten) in 2014, these are the first judgments having actual potential to influence international electronic commerce and privacy law.

Douez v. Facebook, Inc.

The highest court in the country was asked to rule on the validity of a forum selection clause conferring exclusive jurisdiction to the California courts over any action involving Facebook. The Court found that there was nothing preventing the Californian company from drafting such a clause, but its validity is not absolute. A second test must be performed to determine its enforceability.

To that end, the Supreme Court performed an exhaustive analysis of whether there were any serious grounds supporting the argument that the clause was inapplicable to the class action brought against the multi-national corporation and found that such grounds did exist in this case. The Court’s reasoning was based on the gross inequality of bargaining power between Facebook and the user and the inherent exorbitant costs imposed on a Canadian resident filing an action in California.

By a four-to-three majority, the Court found that when a class action is brought on Canadian soil and is based on a quasi-constitutional statute, the courts of the province where the action originated are best placed to assess the purpose and intent of the legislation at issue. Moreover, the inconvenience caused to Canadian citizens by requiring them to assert their rights before a California court are clearly disproportionate to those sustained by Facebook.

Google Inc. v. Equustek Solutions Inc.

In this second case, which was heard and decided at the same time, the Supreme Court had to determine whether an interlocutory injunction ordering Google to cease referencing certain sites that were unlawfully selling products stemming from the theft of intellectual property could have global reach, that is, whether it could apply to all of Google’s webpages, not only its Canadian webpages.

According to Equustek, this was the only possible way of stopping the counterfeiting company from selling its products. It also submitted that the prior de-indexing by Google on its Canadian platform was not sufficient because internet users could nevertheless access the disputed information via Google’s other domain names, even from Canadian soil.

In this case, the Supreme Court reiterated several basic notions concerning interlocutory injunction orders. It noted, inter alia, that these are equitable remedies intended to prevent otherwise irreparable harm.

The Court also dispelled any remaining doubt concerning the possibility of granting an injunction against a third party to the main action. It confirmed that in any situation where the third party facilitates the prejudicial conduct – with or without intent – it may be subject to an interlocutory injunction.

In its judgment, the Supreme Court also confirmed that it is possible to present an application for an injunction beyond the territorial limits of Canada, if necessary.

Issues

Google submitted that the decision rendered against it violates freedom of expression and opens the door to censorship. It argued that certain governments and foreign commercial entities could use this judgment to ban webpages advocating positions contrary to their own.

With respect to the freedom of expression concerns, the Supreme Court stated at the outset that “[w]e have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods”. In other words, although freedom of expression issues may arise, they seem theoretical in this case because, in the view of the Canadian judges, there was nothing suggesting that the State would object to this order intended to put an end to a crime.

As for the second issue, regarding censorship, there are several possible solutions that would address this concern. First of all, the judgment sought to enforce a personal right. In fact, it was intended to stop the violation of a person’s right.

Moreover, in accordance with the opinion rendered by the European Court of Justice on the right to be forgotten, it was noted that Google is able to restrict access to sensitive information in a highly precise manner. Through geolocators, the company is able to perform de-indexing solely in specific parts of the world. For example, Google can permit a Canadian internet user to access certain information that is inaccessible to a French internet user because of that user’s geographical location.  

Consequently, as the Court noted, there is nothing preventing a country that wants to avoid the application of a worldwide injunction from addressing its national courts or even Google directly.

Personal rights prioritized

In short, despite the completely different factual elements and legal issues involved in these two cases, they nevertheless converge towards an unequivocal common principle – the balance between the personal rights of internet users and the contractual wishes of multinational internet companies. Responding to a society that is increasingly being steered by these technologies and the companies developing them, these judgments form part of a pioneering and innovative legal trend.