Foresight Shipping Co. Ltd. v. Union of India et al.

This was an appeal from an Order of a Prothonotary in which the Prothonotary had set aside the seizure of the ship. The facts were that the Plaintiff had obtained an arbitral award against the Union of India and the Food Corporation of India and registered the judgment in the Federal Court. The award/judgment was not paid and in an effort to obtain payment the Plaintiff seized the ship “Lok Rajeshwari” at Sorel, Quebec. The owner of the ship, the Shipping Company of India Ltd., brought an application to set aside the seizure, which was granted by the Prothonotary. On appeal, the appeal Judge initially addressed the question of the standard of review from orders of Prothonotaries. She referred to the test enunciated in Canada v Aqua-Gem Investments, [1993] 2 F.C. 425 where it was held that discretionary orders of Prothonotaries should not be disturbed unless they are clearly wrong or raise questions vital to the final issue of the case. She also referred to the more recent formulation of this test in Merck & Co. Inc. v Apotex, [2004] 2 F.C. R. 459 where it was said that the first inquiry now concerns whether questions vital to the final issue of the case are raised. It was on this basis that the appeal Judge determined her discretion should be exercised de novo. The appeal Judge reviewed conflict of laws principles and determined that the law of India, not the law of Canada, should be applied to determine whether the ship was an asset of the Union of India subject to execution proceedings. She then reviewed the affidavits of foreign law and held that the law of India regarded the Shipping Company of India as having a distinct legal personality separate and apart from its major shareholders and that under the law of India the lifting of the corporate veil was allowed only in exceptional cases such as fraud. The appeal Judge was not prepared to disregard the distinct legal personality of the ship owner and dismissed the appeal.