Ontario – Court holds that the doctrine of “forum non conveniens” is no longer relevant in the age of virtual hearings, as all forums are equally convenient. The action was stayed in favor of a virtual arbitration.
Kore Meals LLC v. Freshii Development LLC (“Kore”)
2021 ONSC 2896 (CanLII)
E.M. Morgan, J., April 16, 2021
A contract dispute arose between Kore Meals LLC (“Kore Meals”), based in Texas and Freshii Development LLC (“Freshii”), an Illinois based company, as to development of Freshii franchises in Houston.
The agreement provided for AAA arbitration in the city where Freshii had its business address, namely, Chicago, where Freshii had a post office address but no business operations. It was agreed that due to COVID, any arbitration would be virtual. Kore Meals brought an action in Toronto against Freshii and Freshii Inc., a Toronto Company. The Defendants moved for a stay of proceedings.
Justice Morgan held that the International Commercial Arbitration Act, 2017, S.O. 2017, c.2 (“ICCA”) applied. The ICCA incorporates, the UNICITRAL Model Law (“Model Law“).
Under the “competence–competence” doctrine, at first instance, the arbitral tribunal is considered to have competence to determine its own competence for the arbitration, unless the challenge to jurisdiction relates to a question of law only. (Uber Technologies Inc. et al. v. David Heller, 2020 SCC 16 at paras. 34 and 122).
Generally, in Ontario, the stay is granted, where it arguable that the dispute falls within the terms of the agreement to arbitrate, unless the court finds “that the agreement is null and void, inoperative or incapable of being performed.” (Kore at para. 12)
The 5-point test to determine if the proceeding should be stayed is set out in Haas v. Gunasekaram, 2016 ONCA 744, para. 17 and is the same test as in the ICAA:
- Is there an agreement to arbitrate?
- What is the subject matter of the dispute?
- What is the scope of the agreement to arbitrate?
- Does the dispute arguably fall within the scope of the agreement to arbitrate?
- Are there grounds on which the court should refuse to stay the action?
The Court held that unless the 5th prong of the test was answered in the affirmative and there is some cogent reason to ignore the agreement to arbitrate, the stay of proceedings should be granted.
Forum non conveniens factors, such as domicile of the parties, witness location, evidence, parallel proceedings, interests of the parties and access to justice can be considered to determine if an arbitral venue is impractical or burdensome on a party. However, these factors do not apply in the age of Zoom virtual hearings where evidence is filed electronically, witnesses are examined remotely, and the hearing is held via a video platform.
In Kore, Justice Morgan noted that “Chicago and Toronto are all on the same cyber street” (para. 32), and therefore, equally accessible to all parties. What is true for forum non conveniens is equally true for the access to justice approach to the arbitration question. Chicago and Toronto are all on the same cyber street. They are accessed in the identical way with voice command or click of a finger. No one venue is more or less unfair or impractical than the other.
The Court stayed the action in favour of a virtual arbitration.