Court of Appeal for Ontario

Date: 2019-05-07

Docket: C65957

Judges: Doherty, Rouleau and Brown JJ.A.

Between

Forbes Energy Group Inc. Plaintiff (Appellant)

and

Parsian Energy Rad Gas, Pergas Oil & Gas DMCC and Frontier Corporate Holdings Ltd. Defendants (Respondents)

Counsel

Robert Staley and Jason Berall, for the appellant

Martin Mendelzon, for the respondents

Heard

May 1, 2019

Appeal

On appeal from the order of Justice Sandra Nishikawa of the Superior Court of Justice, dated August 29, 2018, with reasons reported at 2018 ONSC 5103.

Reasons for Decision

Issue

[1] At issue on this appeal is whether the motion judge erred in staying the Ontario action commenced by the appellant, Forbes Energy Group Inc. ("Forbes"), on the basis of forum non conveniens. In that action, Forbes seeks a declaration that it is under no obligation to make certain payments to the respondents, Pergas Oil & Gas DMCC ("DMCC"), Parsian Energy Rad Gas ("Parsian") and Frontier Corporate Holdings Ltd. ("Frontier"), under the Term Sheet entered into by the parties regarding an upstream oil and gas rights transaction in Iran.

The Forum Selection Clause

[2] The Term Sheet contains the following clause: "This term sheet shall be governed by and construed in accordance with the laws of England and the Parties agree to attorn to the courts of England" (hereafter the "Clause").

Background

[3] In December 2016, DMCC and Parsian demanded that Forbes make certain payments under the Term Sheet. Forbes disputed its obligation to do so and commenced this action in Ontario for a declaration that it was under no obligation to make the payments, together with other relief.

[4] Relying on the Clause, DMCC and Frontier moved to stay the action in favour of the courts of England. The motion judge granted a stay. Although she found that Ontario courts had jurisdiction over the subject-matter of the dispute, she declined jurisdiction on the basis that Forbes had failed to demonstrate strong cause that the Clause should not be enforced: Douez v. Facebook, Inc., 2017 SCC 33, [2017] 1 S.C.R. 751, at para. 29; Novatrax International Inc. v. Hägele Landtechnick GmbH, 2016 ONCA 771, 132 O.R. (3d) 481, at para. 5. Applying the strong cause test and the factors relevant to the forum non conveniens analysis, she held that England is the more appropriate forum than Ontario. The motion judge stayed the action. Forbes appeals.

The Strong Cause Test

[5] On this appeal, the parties agree that the strong cause test only applies to forum selection clauses that by their terms grant exclusive jurisdiction to a foreign jurisdiction. Forbes submits that the motion judge made no finding that the Clause was an exclusive jurisdiction clause. The respondents counter that she did.

[6] We are unable to read the reasons of the motion judge as containing any finding that the Clause amounted to an exclusive jurisdiction clause. In light of the jurisprudence referred to by the parties, we are not persuaded that the language used in the Clause amounts to an exclusive jurisdiction clause. That being the case, in light of the parties' consensus on the applicable legal principles, we conclude that the motion judge erred in using the strong cause test.

Fresh Forum Non Conveniens Analysis

[7] Given that conclusion, we accept Forbes' submission that this court should conduct a fresh forum non conveniens analysis in which the respondents must demonstrate that England clearly is the more appropriate forum: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, at para. 108.

[8] While the Clause remains a factor in the forum non conveniens analysis, it does not have determinative weight but must be considered together with all the other factors set out in para. 26 of Young v. Tyco International of Canada Ltd., 2008 ONCA 709, 92 O.R. (3d) 161. Examining those factors:

(i) There was no evidence that the Term Sheet was signed in either England or Ontario;

(ii) We agree with the motion judge that: (a) there does not appear to be a strong connection between the subject matter of the Term Sheet and England; and (b) since the witnesses are scattered around the world, there is no one location that would be more convenient for all of the witnesses;

(iii) Although the Term Sheet provides that the law of England is the governing law, it is a common occurrence for an Ontario court to apply foreign law: A1 Pressure Sensitive Products Inc. v. Bostik, Inc., 2009 ONCA 206, at para. 4;

(iv) There is no suggestion of the loss of a legitimate juridical advantage; and

(v) On the record before us, there is nothing to suggest that the respondents contemplate bringing an action concerning the Term Sheet in England, thereby triggering Forbes' obligation under the Clause to attorn to the jurisdiction of the English courts.

Conclusion

[9] Taken together, the evidence does not persuade us that the respondents have demonstrated that England is a clearly more appropriate forum in which to litigate the parties' dispute. Consequently, we are not prepared to decline the exercise of jurisdiction by the Ontario courts to hear the action.

[10] For those reasons, we allow the appeal and set aside the stay granted by the motion judge. Forbes is entitled to its costs of the appeal fixed at $10,000, inclusive of disbursements and H.S.T. In accordance with the agreement of the parties, Forbes is also entitled to its costs of the motion below in the amount of $13,140.53, inclusive of disbursements and H.S.T.

"Doherty J.A."

"Paul Rouleau J.A."

"David Brown J.A."