What Does Enforcement of Foreign Judgments Mean in Ontario?
In Hilmer Motorsport GmbH v. Mason (2025 ONCA 875), the Ontario Court of Appeal explained how the enforcement of foreign court judgments works in Ontario and why a court decision from another country can still be enforced in Canada, even when the original contract includes an arbitration clause.
For individuals and businesses involved in international contracts, this decision offers an important lesson: ignoring a lawsuit abroad can have serious consequences at home, even years later. The case also clears up a common misunderstanding about arbitration clauses and how they actually work in practice.
This article breaks the decision down in plain language, explains why the Court ruled the way it did, and highlights what this means for anyone dealing with cross-border legal disputes. Visit the site to learn more about Ruzbeh’s expertise.
What Is “Enforcement of Foreign Judgments”?
A foreign judgment is a court decision issued outside of Canada. For example, a judgment from Germany, the United States, the United Kingdom, or another country is considered foreign in Ontario.
The enforcement of foreign judgments refers to the process by which a Canadian court recognizes a foreign decision and allows it to be enforced here, meaning the winning party can take steps in Canada to collect money or enforce legal obligations.
Canadian courts do not automatically enforce foreign judgments. Instead, they apply legal rules to decide whether the judgment should be recognized and enforced in Canada.
Why This Matters in a Global Economy
Many contracts today involve international businesses, cross-border services, foreign suppliers or clients, or work performed in more than one country. Disputes in these situations often arise in unexpected places. A lawsuit may begin in a country you did not expect or believe should have jurisdiction.
This case shows that what happens abroad does not stay abroad. A foreign judgment can follow you back to Canada. Visit the site for more information on cross-border disputes and litigation.
Background of the Case
Hilmer Motorsport GmbH is a German racing team. Nelson Mason is a Canadian race car driver. Jay Mason, Nelson’s father, acted as his manager and signed a guarantee related to the contract.
The parties entered into a racing driver agreement governed by German law, with Munich named as the venue, and including an arbitration clause, meaning disputes were expected to be resolved through arbitration rather than court litigation. Find the full case here.
The German Court Proceedings
When a dispute arose, Hilmer Motorsport started a lawsuit in Germany. Nelson and Jay Mason were properly notified of the proceedings but chose not to participate, believing the arbitration clause meant the matter should not be decided by a court.
As a result, in 2016, the German court issued a default judgment against them for more than €409,000, plus interest and costs. A default judgment occurs when a party does not respond or take part in a lawsuit.
Enforcement Proceedings in Ontario
Years later, Hilmer Motorsport asked an Ontario court to recognize and enforce the German judgment so it could be enforced in Canada. In October 2024, the Ontario Superior Court allowed enforcement of the judgment. Nelson and Jay Mason appealed that decision to the Ontario Court of Appeal.
The Main Issues on Appeal
The appeal focused on two arguments. First, the German court should not have had jurisdiction because the contract included an arbitration clause. Second, that enforcing the judgment would be unfair and against public policy.
How Ontario Courts Decide Whether to Enforce a Foreign Judgment
The Ontario Court of Appeal explained that the first question is whether the foreign court had a real and substantial connection to the dispute. In this case, there were strong connections to Germany, including the application of German law, the contractual venue in Munich, and payments owed to a German company.
Because of these connections, the German court was considered an appropriate place to decide the dispute.
Arbitration Clauses Do Not Automatically Stop Lawsuits
The Court made it clear that an arbitration clause does not automatically block a lawsuit. If a party wants arbitration instead of court proceedings, they must take active steps and ask the court to pause the case in favour of arbitration.
Nelson and Jay Mason never asked the German court to do this. They did not participate in the proceedings at all. As a result, they lost the opportunity to rely on the arbitration clause later in Ontario.
Was It Unfair to Enforce a Default Judgment?
The appellants argued that enforcing the judgment was unfair because they did not participate in the German proceedings. The Court rejected this argument, explaining that default judgments are not automatically unfair.
What matters is whether the defendants were properly notified and had a real opportunity to defend themselves. In this case, they did, and choosing not to participate was a decision with consequences.
Why Ontario Courts Do Not Retry Foreign Cases
Ontario courts do not re-examine the merits of foreign decisions. Their role is not to decide whether the foreign court was right or wrong, but to determine whether the legal requirements for enforcement are met.
This approach promotes legal certainty and cooperation between countries.
Practical Lessons from This Case
This decision offers several important lessons. First, never ignore a lawsuit abroad, even if you believe arbitration applies. Second, arbitration clauses must be actively enforced at the start of a dispute. Third, foreign judgments can be enforced in Canada years after they are issued.
Why This Decision Matters for Businesses and Individuals
For anyone involved in international contracts, this case highlights the importance of early legal advice. Issues like jurisdiction, arbitration, and enforcement risks should be addressed before a foreign judgment is issued, not after.
How Ruzbeh Hosseini Can Help
Understanding how the enforcement of foreign judgments works can make a significant difference when dealing with international disputes. Ruzbeh Hosseini advises individuals and businesses on cross-border litigation issues, including the recognition and enforcement of foreign court decisions in Ontario.
If you are facing a foreign lawsuit, dealing with an arbitration clause, or concerned about enforcing or resisting a foreign judgment, you can contact me to discuss your situation and understand your options before issues escalate:
Final Thoughts
The decision in Hilmer Motorsport GmbH v. Mason shows that foreign court decisions can follow parties into Canada. Arbitration clauses are important tools, but they must be used correctly and at the right time. When international disputes arise, early action and informed advice can prevent serious legal and financial consequences.