Supreme Court of Canada Overrides Forum Clause in Facebook Agreement

The Supreme Court of Canada has decided that a British Columbia privacy class action may proceed against Facebook in the courts of BC, despite the contract naming California as the forum for legal actions.

My personal view is that in business to consumer contracts, if a court decides that a local law is important enough, or if the actions of the business offends local sensibilities, it will find a way to apply local laws and hear the case. This Douez v Facebook decision will be relevant for any future actions in Canada that question the applicability of portions of online or other business to consumer agreements.

Here are some points to take away from the case.

  • The decision only decided that the class action may proceed in BC. The substantive privacy claim has yet to be litigated.
  • The decision shows how difficult this issue is to decide. Of the 7 SCC judges, there were 2 different majority opinions, and a dissent by 3 judges. They were fairly consistent about the test, but came to different conclusions based on the facts and legal philosophy.
  • The case was decided based on the BC Privacy Act that includes a statutory privacy breach tort. It remains to be seen how it would apply to other provinces that may only have a common law privacy tort. Or how it would apply to other issues.
  • It does not render choice of law clauses irrelevant. Nor does it render click-wrap agreements unenforceable. It is still important for vendors to include clear choice of law and forum clauses.
  • It has created uncertainty, and vendors need to know that courts may choose to override forum clauses and perhaps others. The fairer a court perceives the document to be in general (especially in the context of local laws), the more likely it will be followed.
  • Getting privacy right is crucial. If vendors offer services to those in countries with strong privacy laws, they must pay close attention to those laws when designing their products and new features. That includes developing Canadian laws, and for those providing services to European customers, the pending GDPR.

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