Karim Renno

The appellants challenged a permanent injunction restraining a Canadian bank from honouring a letter of counter-guarantee in favour of a Greek bank.

The Greek bank had paid the beneficiary of an underlying letter of guarantee despite an interim order of an ICC arbitral tribunal prohibiting payment, and despite knowledge that the final arbitral award was imminent.

The majority held that where a beneficiary of a counter-guarantee has knowledge of and participates in a third party's fraud under the primary letter of guarantee, that fraud becomes the beneficiary's own and the fraud exception to the autonomy of letters of credit applies.

The dissent would have allowed the appeal, finding that the Greek courts' determination that the demand for payment was valid could not be disregarded, and that the beneficiary was innocent of any fraud.

Appeal dismissed, Karakatsanis and Côté JJ. dissenting.

The respondent, Transat Tours Canada Inc., sought an injunction in Quebec Superior Court against several Mexican corporations for breach of an exclusive hotel room leasing contract containing a Quebec forum selection clause.

The Mexican defendants brought a motion for declinatory exception, arguing the Quebec courts lacked jurisdiction to issue extraterritorial relief and should decline jurisdiction under the doctrine of forum non conveniens.

The Supreme Court of Canada affirmed the Court of Appeal's decision that the Superior Court had jurisdiction to issue the injunction and that the difficulty of enforcing extraterritorial orders does not negate this power or automatically trigger forum non conveniens.