Appeal denied. The recent decision in Hilmer Motorsport GmbH v. Mason, 2025 ONCA 875 (“Hilmer”) upholding the decision of Justice R. Lee Akazaki, highlights Ontario’s practical regime for enforcing foreign judgments and offers a caution to litigants about the hazards of seeking to rely on an arbitration clause at a late stage in enforcement proceedings.
In raising the arbitration defence, the factors of speed and quick decision-making at the Court of first instance proved to be just as essential for the outcome of the appeal in Hilmer, as they are on the racetrack.
The Hilmer appeal centered on two contracts between the Ontario residents Nelson and Jay Mason (“Appellants”), and the German GP3 series racing team Hilmer Motorsport (“Respondent”). First, there was a 2014 driver agreement worth €460,000 and governed by German law, which designated Munich as the place of jurisdiction and required disputes to be resolved under ICC arbitration rules. Second, there was Jay Mason’s guarantee of his son Nelson’s debt under the driver agreement to the extent of €409,512.13, which was also governed by German law with Munich as the chosen venue. Jay Mason’s guarantee did not contain an arbitration clause.
When the parties’ debt dispute arose, the Respondent Hilmer did not commence arbitration proceedings but instead sued the Appellants in Munich. The Appellants did not defend in the Munich proceeding and so the Respondent successfully obtained default judgment for the guaranteed amount of €409,512.13 plus interest and costs.
The Respondent then sought recognition and enforcement of the Munich judgment in Ontario and successfully obtained summary judgment. It was only at this stage, on appeal in Ontario, that the Appellants argued public policy should prevent enforcement because the underlying disputes were contractually committed to arbitration.
The late introduction of the Appellants’ arbitration defence proved unhelpful to their cause.
The Court of Appeal applied the two-step test from Chevron Corp. v. Yaiguaje, 2015 SCC 42, [2015] 3 SCR 69 and Beals v. Saldanha, 2003 SCC 72 (CanLII), [2003] 3 SCR 416. First, the Court asked whether the Munich Court properly assumed jurisdiction with a real and substantial connection. The Court of Appeal found that connection as the two contracts involved German law, Munich as the forum, and payment to the Respondent, a German racing team.
The Court of Appeal also held that the arbitration clause did not negate jurisdiction because the Appellants would have needed to have sought a stay of proceedings or referral to arbitration in the Munich Court, which steps were never taken.
At the second part of the test, the burden shifted to the Appellants to prove the narrow defences of natural justice, public policy, or fraud to prevent enforcement. These defences failed as the Court of Appeal emphasized that service of the Munich proceeding was “faultless”. In this context, enforcing the judgment did not offend natural justice.
Moreover, the Court of Appeal noted that the New York Convention, where applicable, contemplates referral to arbitration only “at the request” of a party. There was “no reasonable basis” for the Appellants not to have advanced the argument that the Munich proceeding should be stayed and the dispute referred to arbitration.
In the end, the Court of Appeal upheld enforcement. The decision in Hilmer demonstrates that arbitration clauses, while meaningful, cannot be taken for granted to defeat foreign judgments after the foreign proceeding has already run its course.