The Lexpert Guides to the Leading US/Canada Cross-Border Corporate and Litigation Lawyers in Canada profiles leading business lawyers and features articles for attorneys and in-house counsel in the US about business law issues in Canada.
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SPECIFIC PERFORMANCE Injunctions and Specific Performance, looseleaf (consulted on April 1, 2013), (Aurora, Ont.: Canada Law Book, November 2012).) In contrast to Canadian common-law provinces, given a party's entitlement to specific performance under the Code, where the agreement is governed by the laws of Québec and the parties wish to have the right to specific performance there is no need to include a specific contractual right to that effect. Where the agreement is governed by the laws of Québec and the parties wish to exclude specific performance, given a party's entitlement to it, the parties should consider including a clear and express clause excluding the right to demand specific performance. Such a clause should be enforceable given that article 1590 of the Code does not appear to be of public order. > DAMAGES IS THE REMEDY OF CHOICE CONCLUSION Where the parties decide that the remedy of choice is damages and that specific performance should be excluded, they should review the termination provision to make sure that, if the non-defaulting party terminates the agreement, it still has a recourse in damages. Where the agreement is governed by the laws of a Canadian common-law province, the parties may consider including a clause providing that they agree that damages are adequate in compensating any breach of the agreement and that, accordingly, a party may not seek to enforce the performance of the agreement by injunction or specific performance. Although a contractual prohibition to specific performance may be enforceable, a court under certain circumstances may choose to grant specific performance if a party asks for the remedy, despite the prohibition. (See for example, Romfo v. 1216393 Ontario Inc., 2007 BCSC 1375 (CanLII) and Le Soleil Hospitality Inc. et al. v. Louie et al., 2007 BCSC 595 (CanLII) confirmed by Le Soleil Hospitality Inc. v. Louie, 2008 BCCA 206 (CanLII).) Seeking specific performance in the context of an M&A transaction in a common-law province in Canada may be more difficult than in Québec, unless the property has been sold to a third party, in which case specific performance will be impossible in Québec; This said, both common-law and civil-law courts will consider similar grounds in determining whether specific performance is appropriate and in the context of a complicated M&A transaction a court under either jurisdiction may be reluctant to grant the same; Once the choice of remedy is made, properly drafted termination and remedy clauses in the purchase agreement may lessen the risk of an undesirable remedy that can be imposed by the chosen Canadian legal regime; and The practical concerns resulting from the time that is required to obtain specific performance may render the availability of the remedy theoretical. That said, the availability of the remedy may prove to be useful as bargaining leverage in arriving at a quick settlement. > HERE ARE SOME CONCLUSIONS THAT MAY BE DRAWN: Peter Castiel Stikeman Elliott LLP Tel: (514) 397-3272 Fax: (514) 397-3572 Peter Castiel is a partner in the Montréal office of Stikeman Elliott, where he is head of the Mergers and Acquisitions Practice Group, co-chair of the Associates Committee and a member of the Management Committee. Castiel's practice primarily focuses on cross-border mergers and acquisitions and financings. Castiel has extensive expertise in advising private-equity funds, sovereign wealth funds and leading public and private companies in connection with acquisitions, divestitures and investments. pcastiel@stikeman.com Tania Djerrahian Stikeman Elliott LLP Tel: (514) 397-3676 Fax: (514) 397-3420 Tania Djerrahian is a lawyer in the Knowledge Management Group at Stikeman Elliott's Montréal office. She is responsible for the development and enhancement of precedents and practice resources for the Private Mergers and Acquisitions group. She also works with practicing lawyers in the Private Mergers and Acquisitions group on various matters. Prior to joining the Knowledge Management Group, Djerrahian practiced in the areas of private mergers and acquisitions, private equity and corporate finance. tdjerrahian@stikeman.com www.lexpert.ca | LEXPERT • June 2013 | 51 C-00-Firm.indd 51 13-05-17 10:07 AM