Choice of Law and Forum – The Red Seal Experience

1. Red Seal is an Ontario (Canada) tour operator. 2. It entered into three “Guarantee Contracts” with the Ontario-based representative of six Caribbean hotels. The Guarantee Contracts dealt with general issues such as no black-out periods, no bumping of Red Seal pax, no better terms to a Red Seal competitor, etc. None of these Guarantee Contracts contained a choice of law or a choice of forum clause. 3. After the first two of them were signed, Red Seal entered into a separate “Operating Contract” (i.e. for specific space on particular dates) with each of the six Caribbean hotels. Each specified that the law of Florida and the Courts of Aruba would apply. 4. Disputes arose, and Red Seal sued the Ontario “rep” company in the Courts of Ontario. 5. That company sought to oust Ontario law and Courts, and bounce the case to Aruba pursuant to Florida law, based on the terms of the Operating Contracts. 6. In a mid-September decision, the Ontario Courts ruled that one of the disputes involved site-specific issues and thus was governed by the relevant Operating Contract. Florida/Aruba applied to it. 7. But it ruled that the balance of the disputes related to the subject matter of the Guarantee Contracts. The Florida/Aruba provisions of the Operating Contracts were thus irrelevant. As the Guarantee Contract was silent re courts and law, the Ontario Court was free to determine (as it did) that there was a sufficient nexus with Ontario to allow Red Seal to maintain those actions in the Ontario courts.(Originally posted by Doug Crozier)

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