The Second Opinion: International Uranium Dispute Undermined By The Hague Convention

A very recent ruling of the Ontario Court of Appeal, Khan Resources Inc. v. Atomredmetzoloto JSC, 2013 ONCA 189, is significant for two reasons: first, it provides appellate authority addressing the interaction between domestic civil procedure rules and international conventions; and, secondly, it highlights a potential pitfall facing Canadian companies doing business with foreign entities (and particularly state-controlled foreign entities).

In order to develop a uranium mine in Mongolia, a Canadian mining company and two of its affiliates had entered into a joint venture with two Russian companies, both of which were controlled by the Russian State Atomic Energy Corporation. A dispute arose between the parties. The Canadian entity (and its affiliates) commenced an action in Ontario, and attempted to serve the two Russian companies in Russia with notice of the commencement of the proceeding.