The decision in Douez v. Facebook, Inc.provides some comfort to online businesses that rely upon forum selection clauses in their online contracts. For providers and users of international online services and social media, the Facebook decision serves as a useful reminder that online terms and conditions must be taken seriously and the users may be bound by foreign laws and have to litigate in foreign courts. 

Background

Ms. Douez was a resident of B.C. and member of facebook.com. When she signed up for her Facebook account, she accepted Facebook’s Terms of Use which included a unilateral forum selection clause in favour of the courts of Santa Clara, California.  Ms. Douez alleged that her name and portrait were featured in “sponsored stories” without her consent and commenced an action against Facebook in the B.C. Supreme Court, relying on a statutory tort created by thePrivacy Act, R.S.B.C. 1996, c. 373. She alleged that Facebook violated users’ privacy by using their names and images in paid advertisements without their consent. Facebook responded seeking a stay of the proceedings and relied upon the forum selection clause in the Terms of Use. Facebook took the position that the dispute should be heard in California. The trial judge accepted that the forum selection clause was valid, clear and enforceable but declined Facebook’s application to stay the B.C. proceedings because the B.C. Privacy Act “overrides” the forum selection clause and Ms. Douez had shown strong cause to not enforce the forum selection clause. The judge also concluded that B.C. is not forum non conveniens under section 11 of the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28 (“CJPTA”).

Facebook appealed arguing that B.C. is forum non conveniens and that the dispute should be heard in California according to the terms of the forum selection clause agreed to by Ms. Douez.

Appellate decision

Chief Justice Bauman of the B.C. Court of Appeal wrote a unanimous decision and allowed the appeal by Facebook. The B.C. Court of appeal held that:

  1. when considering whether to decline to exercise territorial competence because of a forum selection clause, the test in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27 (“Pompey”) applied and the party relying on the forum selection clause must show it is valid, clear and enforceable, and that it applies to the cause of action. If this is established, the persuasive burden then switches to other party to show “strong cause” for the court to decline to enforce the forum selection clause. In this regard the plaintiff may choose to adduce expert evidence that the foreign forum would lack territorial competence under its own law, as this may (on its own or in combination with other factors) amount to strong cause.  If the plaintiff shows strong cause, the defendant may submit that the B.C. Court should nonetheless find it is forum non conveniens on the analytical framework set out in section 11 of the CJPTA; and
  2. the Pompey test is a separate, standalone inquiry that is conducted first and the forum non conveniens analysis under section 11 of the CJPTA may be conducted second, if necessary.

In ordering a stay of the B.C. proceedings, the B.C. Court of Appeal held that:

  1. Facebook’s forum selection clause was valid, clear and enforceable, and that it applies to the cause of action;
  2. the trial judge erred in the interpretation of the B.C. Privacy Act when she held that it overrode the forum selection clause; in that she failed to give effect to the principle of territoriality and that the B.C. Privacy Act was not intended to render void any foreign selections clauses and deprive California courts of territorial competence. In other words, B.C. law applies only in B.C. and the legislature of British Columbia is powerless to affect the law of other jurisdictions. To the extent B.C. law has any effect outside B.C., it is because other jurisdictions choose, for reasons of comity, to provide in their own law that this shall be the case;
  3. Ms. Douez had failed to adduce evidence that the dispute could not be heard in the relevant courts in California (i.e. that those courts did not have territorial competence) and she failed to prove “strong cause” for the BC Court to decline to enforce the forum selection clause. As such, the B.C. Court of Appeal could not conclude that such a claim was impossible in California and it had no basis from which to decline to enforce the forum selection clause; and
  4. Facebook’s forum selection clause applied and the Courts in California would be a better forum to hear this dispute. 

Practical implications

For users of international online services and social media, the Facebook decision should serve as a useful reminder that online terms and conditions must be taken seriously before one clicks “I accept” and uses the services offered by, or purchases products from, the foreign supplier. The courts do not lightly decline to exercise contractually agreed forum selection clauses and one may be bound by that provision and have to litigate abroad. For service providers, the message is clear: your terms and conditions must include forum selection and choice of law provisions to address or potentially remove the risk of liability and litigation costs in foreign jurisdictions.