Khan Resources Inc. et al. v. Atomredmetzoloto JSC et al.

[Indexed as: Khan Resources Inc. v. Atomredmetzoloto JSC]

Ontario Reports

Court of Appeal for Ontario,

Laskin, Rosenberg and Tulloch JJ.A.

April 2, 2013

115 O.R. (3d) 1 | 2013 ONCA 189

Case Summary

Civil procedure — Commencement of proceedings — Service — Rule 17.05(3) constituting complete code for service on foreign defendants in states that are partners to Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters — Ontario courts having no discretion to substitute, dispense with or validate service pursuant to rules 16.04 or 16.08 where Convention applies — Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 16.04, 16.08, 17.05(3).

The plaintiffs sought to commence proceedings against the Russian respondents in Ontario. They tried to serve the respondents in Russia in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, Can. T.S. 1989 No. 2, but the Russian government refused service. The plaintiffs then brought a motion in Ontario to dispense with or validate service under rules 16.04 and 16.08 of the Rules of Civil Procedure. The master allowed the motion. On appeal, the Superior Court judge set aside the master's order. The plaintiffs appealed.

Held, the appeal should be dismissed.

Rule 17.05(3) of the Rules of Civil Procedure, which incorporates the Convention into Ontario law, is a complete code for service on foreign defendants in states that are parties to the Convention. Ontario courts have no discretion to substitute, dispense with or validate service pursuant to rules 16.04 or 16.08 where the Convention applies.

Cases referred to

Bouzari v. Iran (2004), 2004 871 (ON CA), 71 O.R. (3d) 675, [2004] O.J. No. 2800, 243 D.L.R. (4th) 406, 220 O.A.C. 1, 122 C.R.R. (2d) 26, 132 A.C.W.S. (3d) 275 (C.A.); Campeau v. Campeau, [2004] O.J. No. 4788, [2004] O.T.C. 1047, 135 A.C.W.S. (3d) 235, 2004 42942 (S.C.J.); Dofasco Inc. v. Ucar Carbon Canada Inc., [1998] O.J. No. 3745, 79 O.T.C. 377, 27 C.P.C. (4th) 342, 82 A.C.W.S. (3d) 671 (Gen. Div.); Metcalfe v. Yamaha Motor Powered Products Co., [2012] A.J. No. 919, 2012 ABCA 240, 26 C.P.C. (7th) 18, [2012] 12 W.W.R. 425, 536 A.R. 67, 68 Alta. L.R. (5th) 23, 220 A.C.W.S. (3d) 535, revg [2011] A.J. No. 1525, 2011 ABQB 807, 528 A.R. 216; Samina North America Inc. v. H3 Environmental II LLC, [2005] O.J. No. 4644 (C.A.), affg [2004] O.J. No. 6229, 2004 65382, 169 A.C.W.S. (3d) 30 (S.C.J.), consd [page2 ]

Zhang v. Jiang (2006), 2006 24131 (ON SC), 82 O.R. (3d) 306, [2006] O.J. No. 2909, 35 C.P.C. (6th) 312, 150 A.C.W.S. (3d) 29, [2006] O.T.C. 674 (S.C.J. — Master), distd

Other cases referred to

Gray v. SNC-Lavalin Group Inc., [2012] O.J. No. 2898, 2012 ONSC 3735 (S.C.J.); R. v. Hape, [2007] 2 S.C.R. 292, [2007] S.C.J. No. 26, 2007 SCC 26, 280 D.L.R. (4th) 385, 363 N.R. 1, J.E. 2007-1140, 227 O.A.C. 191, 220 C.C.C. (3d) 161, 47 C.R. (6th) 96, 160 C.R.R. (2d) 1, 73 W.C.B. (2d) 528, EYB 2007-120452; Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 108 S. Ct. 2104, 100 L. Ed. 2d 722 (1988)

Statutes referred to

State Immunity Act, R.S.C. 1985, c. S-18 [as am.]

Rules and regulations referred to

Alberta Rules of Court, Alta. Reg. 124/2010, rules 11.26(1)(b), 11.27

Federal Courts Rules, SOR/98-106, rule 137(2)

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 16, 16.04, (1), 16.08, 17.05(1), (2), (3), (a), (b)

Treaties and conventions referred to

Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, Can. T.S. 1989 No. 2, arts. 1, 13, 14.

Authorities referred to

Bernasconi, Christophe, and Laurence Thébault, Practical Handbook on the Operation of the Hague Service Convention, 3rd ed. (Montreal: Wilson & Lafleur, 2006)

Currie, John H., Public International Law, 2nd ed. (Toronto: Irwin Law, 2008)

APPEAL from the order of O'Marra J. (2012), 110 O.R. (3d) 298, [2012] O.J. No. 1059, 2012 ONSC 1522 (S.C.J.) allowing an appeal from the order of Master Graham, [2011] O.J. No. 4793, 2011 ONSC 5465 (S.C.J.) dispensing with or validating service.

James Doris and Derek Ricci, for appellants.

Robert Frank and Erik Penz, for respondents.

The judgment of the court was delivered by

TULLOCH J.A.: —

Overview

[1] The appellants seek to commence proceedings in Ontario against the Russian respondents. They tried to serve the respondents in Russia in accordance with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, Can. T.S. 1989 No. 2 (entered into force May 1, 1989) (the "Convention"), [page3 ]but the Russian government refused service on grounds of sovereignty and national security.

[2] Rather than pursuing an appeal in Russia, as they were entitled to do, the appellants brought a motion in Ontario to dispense with or validate service under rules 16.04 and 16.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The master allowed the motion. On appeal, the Superior Court judge set aside the master's order and concluded that the Convention, incorporated into Ontario law through rule 17.05(3), is a complete code for service on parties in contracting states. The appellants now appeal to this court seeking to restore the master's order.

[3] For the reasons that follow, in my view the Superior Court judge was correct to hold that rule 17.05(3) is a complete code for service on foreign defendants in states that are parties to the Convention. I would dismiss the appeal.

Background

(1) The Convention

[4] Canada became a signatory to the Convention in 1988. The preamble to the Convention sets out its dual purposes: (i) to "create appropriate means to ensure that judicial and extrajudicial documents to be served abroad shall be brought to the notice of the addressee in sufficient time"; and (ii) "to improve the organisation of mutual judicial assistance for that purpose by simplifying and expediting the procedure".

[5] Article 1 of the Convention provides:

1. The present Convention shall apply in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad.

(Emphasis added)

[6] Under the Convention, each contracting state designates a "central authority" where requests for service are directed. When a request is received, the central authority in the requesting state arranges for service according to the laws of that jurisdiction and issues a certificate of confirmation once service has been effected.

[7] The central authority in a contracting state is obligated to follow this procedure subject to one exception: art. 13 of the Convention authorizes a state to refuse to effect service "only if it deems that compliance would infringe its sovereignty or security". Where Art. 13 is invoked, the central authority "shall . . . promptly inform the applicant and state the reasons for the refusal". [page4 ]

[8] Ontario incorporated the relevant articles of the Convention through rule 17.05(3), which provides:

17.05(3) An originating process or other document to be served outside Ontario in a contracting state shall be served:

(a) through the central authority in the contracting state; or

(b) in a manner that is permitted by Article 10 of the Convention and that would be permitted by these rules if the document were being served in Ontario.

[9] The parties agree that rule 17.05(3)(b) does not apply in this case.

(2) The dispute between Khan Resources and ARMZ

[10] The appellant Khan Resources Inc. ("Khan") is an Ontario corporation engaged in uranium exploration and development in Mongolia. The other appellants are either direct or indirect subsidiaries of Khan. The respondent Atomredmetzoloto JSC ("ARMZ") is a Russian company in which Rosatom, the Russian State Atomic Energy Corporation, has a controlling interest. The other respondent is a subsidiary of ARMZ.

[11] Khan, ARMZ and other companies embarked on a joint venture to develop a uranium mining property in Mongolia known as the Dornod property. Khan had a 58 per cent share in the joint venture and ARMZ had a 21 per cent share through their respective subsidiaries.

[12] In August 2010, the appellants commenced an action against the respondents in Ontario. They allege that the Russian government, acting through ARMZ, sought to deprive them of their interest in the Dornod property by (i) entering into a new joint venture with the Mongolian government to develop the same property; (ii) attempting a hostile takeover bid of Khan; (iii) attempting to eliminate Khan's mining licences; and (iv) issuing misleading press releases regarding Khan's licences.

[13] Pursuant to rule 17.05(3)(a), the appellants tried to serve ARMZ in Russia. In December 2010, the Russian Ministry of Justice, the designated central authority, informed the appellants that it had refused service of their statement of claim, citing art. 13 of the Convention.

[14] The Russian government did not provide further reasons for its refusal. The appellants did not appeal the decision in the Moscow Arbitrazh Court because their counsel in Russia advised them that such efforts would be costly and time-consuming, and that the result may be driven by political considerations. The appellants also opted not to pursue any avenue of relief through art. 14 of the Convention, which provides [page5 ]that "[d]ifficulties which may arise in connection with the transmission of judicial documents for service shall be settled through diplomatic channels".

[15] In September 2011, the appellants brought a motion in the Ontario Superior Court for an order substituting or dispensing with service pursuant to rule 16.04 or validating service pursuant to rule 16.08. Those rules provide:

16.04(1) Where it appears to the court that it is impractical for any reason to effect prompt service of an originating process or any other document required to be served personally or by an alternative to personal service under these rules, the court may make an order for substituted service or, where necessary in the interest of justice, may dispense with service.

16.08 Where a document has been served in a manner other than one authorized by these rules oran order, the court may make an order validating the service where the court is satisfied that,

(a) the document came to the notice of the person to be served; or

(b) the document was served in such a manner that it would have come to the notice of the person to be served, except for the person's own attempts to evade service.

(Emphasis added)

Decisions Below

(1) The master's decision

[16] In October 2011, the master granted the appellants' motion to validate service of their statement of claim pursuant to rule 16.08.

[17] The master held that rule 17.05(3) did not oust the jurisdiction of Ontario courts to substitute, dispense with or validate service under rules 16.04 and 16.08. He explained, at para. 46: "The purpose of the Convention, similar to that of Rule 16, is to facilitate the service of legal documents outside their jurisdiction of origin, not to enable foreign states to immunize their own subsidiary corporations by arbitrarily refusing to effect such service."

[18] The master then applied rule 16.08 and found that the statement of claim had come to the respondents' attention either through the appellants' 2010 press release announcing the litigation, their public disclosure documents from 2010 and 2011 alleging ARMZ's wrongdoing, or their attempt to serve the document through the central authority. The master exercised his discretion to validate service. [page6 ]

(2) The Superior Court judge's decision

[19] Without attorning to the jurisdiction of the Ontario courts, the respondents appealed to a judge of the Superior Court to set aside the master's order. In March 2012, the judge allowed the appeal.

[20] In his reasons, the Superior Court judge addressed three discrete issues. First, he held that all of the relevant articles of the Convention, including art. 13, have been incorporated into domestic law through the enactment of rule 17.05(3). Second, he held that the Convention applied to the case before him and therefore its procedure governed service of the claim. Finally, he held that the combined effect of rule 17.05(3) and art. 1 of the Convention is that the Convention applied to the exclusion of domestic law.

[21] The Superior Court judge then considered his interpretation in light of the dual purposes of the Convention. He found the first purpose, ensuring that documents served abroad are brought to the notice of the addressee, was not met if states were able to use art. 13 to prevent service. The second purpose, simplifying and expediting the procedure, was met, however, through the creation of an international standard for service abroad free from divergent domestic laws.

[22] To resolve this discrepancy, the Superior Court judge considered several sources and agreements between Convention parties, including the Practical Handbook on the Operation of the Hague Service Convention, 3rd ed. (Montreal: Wilson & Lafleur, 2006), published by the Permanent Bureau of the Hague Conference on Private International Law. He accepted the handbook's conclusion that the Convention is of exclusive character. Therefore, the Convention operates exclusively in the sense that when it applies, it specifies the only service channels available to parties.

[23] The Superior Court judge concluded that courts in Ontario have no discretion to substitute, dispense with or validate service pursuant to rules 16.04 or 16.08 where the Convention applies.

[24] Alternatively, the Superior Court judge held that if he had found that the master had discretion to substitute, dispense with or validate service pursuant to the rules, he would have still allowed the appeal. In his view, the court could not permit the appellants to circumvent the Convention simply because complying with it would be costly or tedious.

Issue on Appeal

[25] The appellants argue that the Superior Court judge erred by holding that the Convention, through rule 17.05(3), is a [page7 ]complete code for service in a contracting state. They submit that rule 17.05(3) provides the prima facie means of service in a contracting state, but it does not oust the court's discretion under rules 16.04 and 16.08 to substitute, dispense with or validate service in appropriate circumstances. Rather, rule 17.05(3) should be read purposively to advance the Convention's objective, which is to bring notice of a legal proceeding to a foreign defendant's attention.

Analysis

[26] I cannot accept the appellants' submissions. There are several reasons why.

[27] First, the appellants cast the purpose of the Convention too narrowly. As its preamble reflects, the Convention has two purposes. One is undoubtedly to give a defendant in another jurisdiction notice of a legal proceeding. But the other purpose is to improve the system of giving notice, by establishing a uniform procedure in all contracting states. The appellants' interpretation of rule 17.05(3) undermines the latter objective.

[28] Second, the appellants' interpretation of rule 17.05(3) is not supported by the provenance of the rule itself. Rule 17.05(3) was added to the Rules of Civil Procedure in 1989, the year Canada's accession to the Convention took effect.

[29] Prior to 1989, the rules provided that originating documents could be served outside Ontario in the same manner as provided for by the rules of service in Ontario. Then-rule 17.05(1) stated:

17.05(1) An originating process or other document to be served outside Ontario may be served in the manner provided by these rules for service in Ontario, or in the manner prescribed by the law of the jurisdiction where service is made if that manner of service could reasonably be expected to come to the notice of the person served.

[30] This rule was amended when rule 17.05(3) was added. The rule, now numbered 17.05(2), reads:

17.05(2) An originating process or other document to be served outside Ontario in a jurisdiction that is not a contracting state may be served in the manner provided by these rules for service in Ontario, or in the manner provided by the law of the jurisdiction where service is made, if service made in that manner could reasonably be expected to come to the notice of the person to be served.

(Emphasis added)

[31] To repeat, rule 17.05(3) states:

17.05(3) An originating process or other document to be served outside Ontario in a contracting state shall be served, [page8 ]

(a) through the central authority in the contracting state; or

(b) in a manner that is permitted by Article 10 of the Convention and that would be permitted by these rules if the document were being served in Ontario.

(Emphasis added)

[32] The mandatory language of rule 17.05(3) regarding contracting states stands in contrast to the permissive language of rule 17.05(2) regarding non-contracting states. Further, the old rule 17.05(1), which permitted service outside Ontario in the manner provided by the Ontario rules or by the rules of the other jurisdiction, stands in contrast to the current rule 17.05(2), which permits such service only in jurisdictions that are not contracting states under the Convention. The "manner provided by these rules for service in Ontario" referenced in rule 17.05(2) obviously includes the Rule 16 provisions for substituted service, validated service and dispensing with service. Rule 17.05(3) contains no such reference. The clear implication is that rule 17.05(3) is intended to provide a complete code for service in contracting states.

[33] Third, interpreting rule 17.05(3) as a complete code for service is consistent with the principle that domestic law should be read, where possible, to comply with Canada's international legal obligations. In Bouzari v. Iran (2004), 2004 871 (ON CA), 71 O.R. (3d) 675, [2004] O.J. No. 2800 (C.A.), Goudge J.A. explained, at para. 64:

Where Canada has undertaken treaty obligations, it is bound by them as a matter of conventional international law. Parliament is then presumed to legislate consistently with those obligations. Thus, so far as possible, courts should interpret domestic legislation consistently with these treaty obligations.

(Emphasis added; citation omitted)

[34] See, also, R. v. Hape, [2007] 2 S.C.R. 292, [2007] S.C.J. No. 26, 2007 SCC 26, at paras. 53-54.

[35] In Bouzari, Goudge J.A. went on to state the key exception to this rule, at para. 66: "[W]hether Canada's obligations arise pursuant to treaty or to customary international law, it is open to Canada to legislate contrary to them. Such legislation would determine Canada's domestic law although it would put Canada in breach of its international obligations." See, also, J.H. Currie, Public International Law, 2nd ed. (Toronto: Irwin Law, 2008), at pp. 241-43, where the author explains that this principle applies to laws passed by provincial legislatures as well as by Parliament.

[36] The appellants submit that Ontario's rule 17.05(3) does not incorporate the whole of the Convention and does not require that the Convention apply exclusively. They submit that [page9 ]Ontario did, in fact, explicitly legislate against Canada's treaty obligations under the Convention.

[37] In support of this argument, the appellants contrast rule 17.05(3) of Ontario's Rules of Civil Procedure with rule 137(2) of the Federal Courts Rules, SOR/98-106, which they say "fully" enacts the Convention. That rule provides:

137(2) Where service is to be effected in a contracting state to the Hague Convention, service shall be as provided by the Convention.

[38] I reject this submission. I see no meaningful difference in the wording of the Ontario rule and the Federal Court rule.

[39] Fourth, my interpretation is also consistent with the guidance provided in the practical handbook the Superior Court judge consulted in the decision under appeal. At para. 44, the handbook instructs:

[T]he Convention's exclusive nature is now undisputed. Thus, if under the law of the forum a judicial or extrajudicial document is to be transmitted abroad for service, the Convention applies and it provides the relevant catalogue of possible means of service abroad. In this sense, the Convention is "exclusive."

(Emphasis in original)

[40] See, also, Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 108 S. Ct. 2104 (1988), where O'Connor J. explained, at p. 705 U.S.: "[C]ompliance with the Convention is mandatory in all cases to which it applies."

[41] The notion of the Convention's exclusive character was recently affirmed by the Alberta Court of Appeal in Metcalfe v. Yamaha Motor Powered Products Co., [2012] A.J. No. 919, 2012 ABCA 240, 536 A.R. 67.

[42] Rule 11.26(1)(b) of the Alberta Rules of Court, Alta. Reg. 124/2010 provides that unless the court orders otherwise, a document served outside Alberta "must be served" in accordance with the Convention. Rule 11.27 provides that on application, the court may make an order validating service of a document served outside Alberta in a manner that is not specified by the rules "if the Court is satisfied that the method of service used brought or was likely to have brought the document to the attention of the person to be served".

[43] In Metcalfe, the Alberta plaintiffs obtained an order for leave to serve ex juris a copy of a statement of claim on Japanese defendants pursuant to the Convention. The central authority in Japan advised that it would take several months to effect service, so the plaintiffs acting through a Japanese law firm asked the defendants to accept service and dispense with the formality of complying with the Convention. The defendants refused. In [page10 ]due course, the defendants applied in the Alberta court for an order setting aside the purported service ex juris, and the plaintiffs brought a competing application to validate service.

[44] The chambers judge allowed the plaintiffs' application [[2011] A.J. No. 1515, 2011 ABQB 807]. He held that service ex juris does not require strict compliance with the Convention, and observed that rule 11.27 gives the court discretion to validate service outside Alberta even where the service is not effected according to the Rules. He concluded that the defendants had been properly served and so he validated the service.

[45] The Alberta Court of Appeal set aside the chambers judge's decision on the primary ground that the original order granting the plaintiffs leave to serve ex juris was premised on service "pursuant to the Hague Convention". Since the purported service did not comply with the Convention, it did not comply with the order and was invalid.

[46] However, a majority of the court went further and concluded that the chambers judge had no discretion to validate service under rule 11.27.[^1] McDonald J.A. explained, at para. 48: "In order to conform to international law, rule 11.27 should not be interpreted so as to circumvent the methods of service provided in the Hague Convention unless done so in clear and unequivocal language. Such clear and unequivocal language does not appear in rule 11.27."

[47] Reflecting on the dual purposes of the Convention, and especially the goal of establishing an international standard for service, McDonald J.A. continued, at para. 50:

Allowing courts to validate service which fails to comply with the international standard would undermine that purpose, as the Hague Convention would no longer be a comprehensive authority for service abroad involving the signatories to that Hague Convention. Canadian law is presumed to comply with that purpose. Therefore, rule 11.27 should not be used to avoid the international standard created by the Hague Convention. There are many other nations that are not signatories to the Hague Convention and rule 11.27 undoubtedly applies to service situations within those nations.

[48] On its face, Alberta's rule 11.27 appears explicitly to grant the type of discretion that the appellants urge us to read into the Ontario rules. The Alberta Court of Appeal insisted that rule 11.27 be narrowly construed to conform to Canada's treaty obligations and to uphold the principle of exclusivity. A fortiori, rule 17.05(3) should be interpreted that way as well. [page11 ]

[49] Finally, my conclusion that rule 17.05(3) should be regarded as a complete code for service in contracting states is strengthened by three earlier cases in which plaintiffs in Ontario sought substituted or validated service, or to dispense with service altogether, rather than comply with the Convention. All three cases stand for the same proposition: where service must be effected through the Convention, a plaintiff cannot circumvent this requirement even if the defendant has actual notice of service.

[50] In Dofasco Inc. v. Ucar Carbon Canada Inc., [1998] O.J. No. 3745, 27 C.P.C. (4th) 342 (Gen. Div.), the plaintiff sought to effect substituted service on a Japanese corporation through its U.S. subsidiary because, it claimed, going through the central authority in Japan would take too long. Without deciding whether he had the discretion to substitute service if the plaintiff had tried and failed to serve in accordance with the Convention, Campbell J. refused the motion. He explained, at p. 344 C.P.C.: "[I]t would appear that rule 17.05 is now a code for matters relating to service abroad in Convention states. . . . I agree with the Master that it is necessary for a plaintiff to comply with the terms of the Convention for service abroad and this has not been done."

[51] Similarly, in Samina North America Inc. v. H3 Environmental II LLC, [2004] O.J. No. 6229, 2004 65382 (S.C.J.), affd on other grounds [2005] O.J. No. 4644 (C.A.), the plaintiffs did not serve the American defendants through the applicable central authority in accordance with the Convention. The plaintiffs did not argue that it was impractical to effect service in this manner; rather, they simply requested validated service because the defendants had actual notice of the claim. Echlin J. refused, holding that mere notice of an originating process is not sufficient where service must be effected pursuant to the Convention. If notice were the only objective, then substituted or validated service could be ordered whenever foreign defendants in a contracting state learned of the proceeding against them.

[52] He explained, at para. 4:

[Counsel for the applicant] urged that I validate the service pursuant to Rule 16.08. I cannot do so. Even though the Statement of Claim may have come to the notice of [the defendants], that is not the test. To correct such irregularity would undermine the objectives of the Hague Convention and encroach upon the sovereignty of the United States. There is a difference in treatment between inter-provincial and international service.

(Emphasis added; citation omitted) [page12 ]

[53] In Campeau v. Campeau, [2004] O.J. No. 4788, 2004 42942 (S.C.J.), the court held that the plaintiff could not serve the defendant, a resident of Austria, with a statement of claim drafted in English. In attempting to do so, the plaintiff was acting contrary to the Convention which requires translation into the official language of the state addressed. Even though there was evidence that the defendant had the ability to communicate in English, the court concluded that the claim must nevertheless be served in accordance with the Convention.

[54] One question remains: if the appellants had in fact pursued all possible remedies under the Convention and were still unable to effect service, would they then be permitted to move to validate or dispense with service?

[55] This question was answered in the affirmative in Zhang v. Jiang (2006), 2006 24131 (ON SC), 82 O.R. (3d) 306, [2006] O.J. No. 2909 (S.C.J. -- Master). The plaintiffs in Zhang were members of the Falun Gong spiritual movement who sought to sue top officials in the Chinese Communist Party for alleged persecution. The plaintiffs attempted to serve the defendants through China's central authority, but the request was refused pursuant to art. 13 with no mechanism to appeal. The plaintiffs then tried to serve the statement of claim under the State Immunity Act, R.S.C. 1985, c. S-18, but Canada's Department of Foreign Affairs took the position that the Act did not apply. The plaintiffs were advised that there was no appeal or judicial review of that decision either.

[56] In these circumstances, Master Glustein granted the plaintiffs' motion to dispense with service under rule 16.04. He explained, at para. 19: "The evidence is compelling that the plaintiffs have taken all reasonable steps to serve the defendants . . . The plaintiffs have exhausted all means to serve the defendants, and no other means are available." He distinguished Dofasco and Campeau on their facts and concluded that in this case, the interests of justice favoured dispensing with service.

[57] The respondents argue that Master Glustein's ruling in Zhang is no longer good law in light of the Superior Court judge's decision in the case at bar. That was Perell J.'s conclusion in Gray v. SNC-Lavalin Group Inc., [2012] O.J. No. 2898, 2012 ONSC 3735 (S.C.J.), where he stated, at para. 39, that Zhang "should be treated as overturned".

[58] We do not have to decide whether Zhang is correctly decided, and even if it is correctly decided, in my view Zhang is distinguishable from the case at bar in two respects. First, the plaintiffs in that case had exhausted all avenues available under [page13 ]the Convention before seeking alternative methods of service. Second, their claim sought to vindicate the basic human rights of the Falun Gong and to expose torture and other crimes against humanity allegedly perpetrated by the defendants. In these circumstances, the master in Zhang essentially recognized an "access to justice" exception to the otherwise prevailing rule that the Convention is exclusive.

[59] Here, the appellants rely on Zhang and argue that the interests of justice favour dispensing with or validating service in light of the time, expense and uncertain outcome of an appeal from the art. 13 refusal in Russia. I disagree. In my view, none of these considerations rise to the levels that were present in Zhang. I am particularly unmoved by the appellants' argument that they should be excused from complying with the Convention because an appeal in Russia could take "up to a year or longer" and "cost approximately US$100,000". The appellants' claim is for $300 million. Their attempts to circumvent the Convention in the Ontario courts have taken over a year and a half and have presumably been expensive. Further, there is nothing on the record to indicate that they have attempted to pursue a remedy through diplomatic channels, as art. 14 permits them to do.

Conclusion

[60] Accordingly, I would dismiss the appeal.

[61] If the parties cannot agree on costs they may file brief written submissions.

Appeal dismissed.

[^1]: The concurring judge, Hunt J.A., found it unnecessary to comment on the larger issues addressed by the majority.