The jurisdiction where a contract is executed is the forum that should be used to resolve coverage issues

A representative Plaintiff from a class action in Illinois against the Insured brought a motion for a stay of proceedings in an Ontario proceeding. The Ontario proceeding was for a declaration that the Insurer was not required to defend the Insured against the representative Plaintiff’s complaint, nor indemnify the claim. The Court dismissed the motion on the basis that Ontario was the forum conveniens.

ING Insurance Co. of Canada v. Health Craft Products Inc., [2007] O.J. No. 825, Ontario Superior Court of Justice, A. Panet J., March 8, 2007

A representative Plaintiff, CE Design Ltd. (CE Design), brought an action against Health Craft Products Inc. (“Health Craft”) in Illinois. Health Craft had a commercial general liability policy issued by ING Insurance Co. of Canada (“ING”). Health Craft and CE Design entered into a Settlement Agreement, which was approved by an Illinois Court. The Settlement Agreement provided that Health Craft consented to judgment against it in the amount of $543,000 USD and would assign to the Illinois Plaintiffs any rights it had under the ING policy. ING was not a party to the Settlement Agreement.

ING brought an Application in Ontario for a declaration that it was not required to defend nor indemnify Health Craft. The Court found that because the insurance contract was issued in Ontario and both ING and Health Craft carried on business in Ontario, the proper law of the contract was Ontario and there was a real and substantial connection to Ontario. The Court found that Ontario was also the forum conveniens on the basis that if Health Craft had brought a claim for coverage, the proper forum would clearly have been Ontario, and it was fair and equitable that the forum would continue to be Ontario since the assignee, CE Design, stood in the shoes of Health Craft.

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