The proper law of the contract, which may be named in a governing law clause, is the substantive law or Lex Causae of the contract. The law of the forum, also known as Lex Fori, is the procedural law that applies to the dispute process itself. If the Lex Causae and the Lex Fori are the same, the difference does not really matter.
For example, if the governing law of a contract is the laws of the Province of Ontario and the Forum in which disputes are heard are courts in Ontario, you don’t really have to worry about Lex Causae and Lex Fori. Regardless of the issue, substantive or procedural, Ontario law will apply.
If a court decides that its own procedural rules apply to a case, but determines that the substantive rules from another jurisdiction apply, the content of the substantive law must be proven to the point of being fact. Canadian courts will rely on expert testimony when deciding what the foreign law is: see Tezcan v. Tezcan, 1992 (British Columbia Court of Appeal).
If a court decides that its jurisdiction’s substantive law applies but the procedural law may be different, the issue is handled somewhat differently. Since the Lex Fori can time-bar an action and limit the remedies available, courts approach defining Lex Fori with the goal of deterring forum shopping.
What does Lex Fori include? In Livesley v. E. Clemens Horst Co. [1924], the Supreme Court of Canada concluded that the concept of procedure includes elements such as the process of the court, questions of evidence, methods of execution after judgment, rules of limitation affecting the remedy, and the manner in which relief could be granted.
It is important to note that when determining whether a law is substantive or procedural, courts have made many comments suggesting that the matter is to be determined by policy and practical considerations, as opposed to logic. Also, the dividing line may not be the same from case to case.
For example, In 243930 Alberta Ltd. v. Wickham (C.A.), (1990), the Ontario Court of Appeal concluded that if the foreign law, whether of right (Lex Causae) or remedy (Lex Fori), is not too inconvenient to apply or not contrary to the public policy of the Lex Fori, the foreign law is substantive and should be applied. Exclusions based on public policy are very rare.
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