Court of Appeal Rules that NYSE and London Stock Exchange Purchasers Cannot Pursue Securities Class Action Claims Against BP in Ontario
Today, the Court of Appeal for Ontario ruled that a proposed securities class action against BP, PLC cannot proceed on behalf of Canadians who purchased their securities in the United States and United Kingdom. The Court of Appeal overruled the lower court’s decision. Osler, Hoskin & Harcourt LLP represented BP in the proceedings.
In Kaynes v. BP, the plaintiff sought to bring a proposed securities class proceeding on behalf of Canadian residents who acquired securities of BP – regardless of where those securities were acquired. The plaintiff’s claim related to the April 2010 Deep Water Horizon oil spill in the Gulf of Mexico and subsequent alleged effect on share price. The vast majority of the proposed class members acquired their shares over the New York Stock Exchange or London Stock Exchange, although some acquired their securities over the Toronto Stock Exchange.
The Court of Appeal held that, although an Ontario court could exercise jurisdiction over the claims of foreign exchange purchasers, it should decline to do so in the circumstances. Courts of the United States and United Kingdom had jurisdiction on the basis that the securities were traded over their stock exchanges. In this case, the principle of comity strongly favoured declining jurisdiction in favour of the systems of laws of the other countries. The Court of Appeal noted: “Order and fairness will be achieved by adhering to the prevailing international standard tying jurisdiction to the place where the securities were traded”. The Court of Appeal also observed that cross-border transactions in securities markets are routine and “the maintenance of an orderly and predictable regime for the resolution of claims is imperative”.