This Guide provides non-Canadian business people with an introduction to the civil litigation and dispute resolution system in Canada, including a general description of the procedures in Canada's various civil courts (that is, courts dealing with non-criminal matters) and administrative tribunals and procedures for mediation and arbitration.

The discussion under each heading is intended to provide only general guidance and is not an exhaustive description of all procedures and laws that may apply in any particular proceeding or dispute. Particular cases may be subject to specific legal requirements not referred to in this Guide. For this reason, the reader should not rely solely upon this Guide, but should seek the advice of qualified counsel for assistance in dealing with any particular problem or dispute.

1. Overview

Canada is a federal system, comprised of 10 provinces and three territories. In addition to a federal government, each province and territory has its own government. At the federal level, the seat of government is in Ottawa, where Members of Parliament from across Canada convene to govern. Additionally, the people of each province elect members to a Provincial Legislative Assembly or a Provincial Parliament.

Canada’s Constitution, the Constitution Act, 1867, stipulates the areas in which each level of government can enact legislation. For example, the federal government has been allotted authority over the regulation of trade and commerce, banking, patents, copyright and taxation.

The provinces have authority over property and civil rights and the administration of justice in the province. As would be expected, there are areas of overlap. Indeed, the division of powers between the federal and provincial governments has been a longstanding source of contention among those who govern Canada.

Depending on the subject matter, legislation from both the federal and provincial level must be considered. There may be instances when it is more advantageous or appropriate to bring or defend an action in a particular province. A litigant must also consider which level of court in Canada has jurisdiction over the dispute.

2. The Court System

There are three types of court in Canada. Choosing the jurisdiction in which to commence or respond to an action is a critical step in the litigation process, regardless of whether you initiated the action.

The most commonly encountered court in Canada for commercial litigants is the Superior Court of each province. These are courts of general and inherent jurisdiction that hear both civil and criminal matters. The Superior Courts are split into a trial and appeal level, except in the Province of Quebec where the Superior Court and Court of Appeal of Quebec are distinct judicial courts.

Some provinces refer to the trial level as the Court of Queen's Bench or the Supreme Court and others, the Superior Court. Appeals from the Court of Appeal of any province are heard by the Supreme Court of Canada.

The second type of court in Canada is the Provincial Court, which obtains its jurisdiction from provincial legislation. Typically, the Provincial Court will have jurisdiction over some civil, criminal and family law matters. The Provincial Court’s jurisdiction over civil disputes is significantly restricted compared to the Superior Courts. For instance, in Alberta, the Provincial Court has no jurisdiction over land and it can only hear disputes where the value of the claim is less than or equal to C$25,000.

The third type of court, the Federal Court, has jurisdiction over federal legislation, such as the Income Tax Act and the Trade-marks Act, certain issues under the purview of the federal government pursuant to the division of powers and, importantly, over all are federally administered administrative boards, commissions and tribunals. There is a trial and appeal level at the Federal Court of Canada. Appeals from the Federal Court of Appeal lie with the Supreme Court of Canada.

3. Common Law and Civil Law

Understanding the hierarchy of the courts in Canada is important to understanding the role of precedent, or prior decisions, in Canadian law. With the exception of Quebec, all Canadian provincial jurisdictions are “common law”.

In a common law system, the principle of stare decisis applies, which means that precedents, or prior decisions from higher levels of Courts, will be binding on all lower level Canadian courts within the same jurisdiction. A decision of the Superior Court of one province will be persuasive in the Superior Court of another. Similarly, a decision of a Court of Appeal of one province is only binding in its own province, although it may be persuasive in the other provinces. There are many instances where two provincial Courts of Appeal have made different determinations on similar points of law. A decision of the Supreme Court of Canada, however, is binding on all other levels and types of courts in Canada.

4. Alternatives

Apart from the court system, litigants can resort to mediation or arbitration to resolve disputes. In many cases, parties can agree by contract that they will resolve all of their disputes by way of arbitration. In most cases, Canadian courts will enforce a pre-dispute arbitration clause in a contract by prohibiting the parties from litigating the dispute in court and requiring them to proceed by arbitration. Typically, parties wishing to arbitrate or mediate disputes are required to do so by agreement, although it is sufficient if that agreement is a provision in a pre-dispute contract.

In some Canadian jurisdictions, however, the court offers judicial mediation or dispute resolution procedures, which allow parties to take a dispute off the litigation track after a formal action has been commenced. Ontario and Alberta, for example, have mandatory alternative dispute resolution steps that must take place prior to trial for many civil actions.

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