Interprovincial Inter-Insurer Interactions: Unifund v. ICBC

Vaughan Black

Abstract


The underlying issue in the Ontario Court of Appeal's decision in Unifund Assurance Co. v. Insurance Corporation of British Columbia was whether Ontario or British Columbia law governed a first-party insurer's right to indemnity from a third-party liability insurer in respect of no-fault automobile benefits the former had paid to its insured. Ontario law allows such recovery. British Columbia's does not, but rather requires the amount of such benefits to be deducted from the sum the defendant's liability insurer would otherwise be required to pay to the injured plaintiff.

However, the question actually before the appeal court was a preliminary procedural one. It concerned which of the two provinces the inter-insurer indemnity claim should be resolved in, and the nested procedural issue of who should decide this question of the proper forum, an Ontario judge or an arbitrator. British Columbia had the following affiliations with the dispute: the accident had taken place there, the tort litigation had proceeded there, and the three defendants and their liability insurer were resident there. Ontario, on the other hand, was where the plaintiff in the tort action was resident and where the policy under which she had received the no-fault benefits had been issued.

When the first-party insurer applied to an Ontario court for the appointment of an arbitral tribunal to address its claim for indemnification from the liability insurer, the latter moved for a stay. It argued that Ontario law was inapplicable and that Ontario was forum non conveniens. The judge agreed with the latter submission and granted a stay. The Ontario Court of Appeal reversed, not on the grounds that the court below had incorrectly applied the law of forum non conveniens (an issue the appeal court did not address), but rather on the basis that the judge should have simply appointed the arbitrator and left all issues of jurisdiction,including forum non conveniens, to be addressed at arbitration.

In November 2001 the Supreme Court of Canada granted leave to appeal. Possibly the Supreme Court's resolution of this matter will be confined to the narrow point of whether forum non conveniens is a question which should be left to an insurance arbitrator or addressed by the judge who is asked to appoint such arbitrator. Potentially, and I think more likely, it will extend to other matters: (1) the elucidation of the substantial connection test for jurisdiction simpliciter (and, by extension, for enforcement of foreign judgments) and (2) the purpose and scope of the Power of Attorney and Undertaking (PAU) which Canadian automobile insurers have executed and deposited with the various provincial superintendents of insurance. The court may even find it difficult to resolve this matter without saying something about choice of law and about how the forum non conveniens test should operate in situations where there are parallel proceedings in two Canadian provinces.

Keywords


Conflict of Laws

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