Court File and Parties
COURT FILE NO.: CV-20-82858
DATE: 2021/04/27
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CUSO INTERNATIONAL, Plaintiff, Responding Party
AND:
PAN AMERICAN DEVELOPMENT FOUNDATION a.k.a. PADF and FUNDACIÓN PANAMERICANA PARA EL DESARROLLO a.k.a. FUPAD, Defendants, Moving Parties
BEFORE: Regional Senior Justice Calum MacLeod
COUNSEL: Todd Burke for the Plaintiff, responding party Andrew Lenz, for the Defendants, moving parties
HEARD: February 22, 2021
DECISION AND REASONS
Introduction
[1] This is a forum motion in connection with a court proceeding brought in Ontario. The action brought by CUSO is for a declaration that it owes no money to the defendant and the only proper forum for the dispute is Ontario.[^1] It will be obvious from this that the defendant has a different view. FUPAD claims to be owed a substantial sum and it wishes the question decided in Colombia. The defendant brings this motion to stay the Ontario action until it is determined if the Colombian courts will hear the matter.
[2] The merits of the dispute are not to be decided on this motion. The only issue is whether the plaintiff should be allowed to litigate in Ontario or should await a decision that is pending in Colombia. There is some urgency to the matter as it involves a foreign aid grant from the Government of Canada. According to CUSO, if the dispute is not resolved before the funding deadline, the balance of the funds allocated to this project must be returned to Global Affairs Canada (GAC).
[3] For the reasons that follow, I have determined that the Ontario action should be allowed to proceed. As I will discuss, there is a choice of forum and choice of law provision in the contract between the parties and I have not been persuaded that this court should decline to exercise its jurisdiction. I will however comment on the unfortunate spectacle of two charities with common objectives litigating in two countries over what is essentially an accounting exercise.
[4] The Ontario rules require the parties to participate in mediation and I will be directing that occur as soon as possible. The parties have an obligation to make good faith efforts to resolve or narrow the issues. I urge them to do so.
Background and the Nature of the Dispute
[5] CUSO and PADF are charitable organizations involved in international initiatives in Colombia. The plaintiff is based in Canada with its head office in Ottawa, Ontario. The defendant is based in the United States of America with its head office in Washington, D.C. FUPAD is the Colombian office of PADF.[^2]
[6] At the heart of this dispute are a series of contracts and agreements which I will describe in detail only insofar as they are relevant to the forum decision. In simplest terms, however, the background is as follows. CUSO was and is involved in an anti poverty and capacity building project in Columbia known as SCOPE pursuant to an agreement with the Government of Canada.[^3] Under that agreement, CUSO is responsible for working with the Government of Colombia and with other NGOs and is to disburse the Canadian foreign aid dollars in accordance with the objectives and requirements of the funding agreement.
[7] One of the projects under the SCOPE umbrella is a project known as “Employment for Prosperity” which is also sponsored by the Government of Columbia through the Departamento Administrativo Para La Prosperidad Social (“Departamento” or “DPS”). As part of that project, CUSO signed an agreement with FUPAD under which FUPAD would be responsible for implementing SCOPE supported local training and employment initiatives and would receive funding and reimbursement from CUSO.
[8] CUSO has already paid out a significant sum of money but it is now withholding funds in the amount of approximately 2.6 billion Colombian Pesos or roughly 1.2 million Canadian dollars.[^4] It appears the dispute has arisen because CUSO has obligations only to fund certain types of expenses and must account for the funds it disburses. FUPAD has the same obligations to CUSO under the CUSO/FUPAD agreement. CUSO is not satisfied with the quality of documentation provided by FUPAD in relation to deliverables under the contract and has declined to reimburse FUPAD for expenses it has determined to be non-eligible.
[9] The agreement between CUSO and FUPAD contains a choice of law and forum selection clause which designates the law of Ontario and the courts of Ontario. The defendant argues that this provision should not be enforced because the agreement is part of a network of agreements which are subject to Colombian jurisdiction in relation to obligations and events located entirely in Colombia and apart from this agreement, drawn in Spanish.
[10] FUPAD commenced a legal proceeding in Colombia asking the Colombian court to annul the forum selection clause. It is this proceeding to which the Ontario court is now asked to defer.
Details of Contracts
[11] To understand the defendant’s argument, it is necessary to describe the contractual arrangements and the timing of those agreements in slightly more detail. Although there are many parties involved in the Employment for Prosperity program and a significant proportion of the project funding is Canadian foreign aid, there is no single multilateral agreement. Rather there is a series of bilateral contracts and sub-contracts.
[12] In 2015, CUSO entered into an agreement with what was then the Department of Foreign Affairs, Trade and Development (DFATD) and is now Global Affairs Canada.[^5] That agreement provided funding to CUSO for the SCOPE Project to create local training centres and to provide employment opportunities for poor and vulnerable youth. CUSO was to receive funding from DFATD and to make its own contributions “in kind”.
[13] The funding was significant with DFATD to contribute almost $15 million and CUSO’s contribution to approximate $1.2 million. Under the agreement, CUSO was to seek additional funding of approximately $2.3 million from other organizations and partners. It was anticipated that CUSO would supply volunteers and other resources and would work in cooperation with other NGOs, Columbian national and local government agencies, as well as the local private sector.
[14] CUSO refers to its 2015 agreement with DFATD as the “contribution agreement” but for purposes of this motion I will call it the “Canadian Government Funding Agreement” or the “Funding Agreement” to distinguish it from the CUSO/FUPAD contract that is in issue in these proceedings.[^6]
[15] One of the projects under the SCOPE umbrella was the Employment for Prosperity Program. In June of 2016 CUSO wrote to the Colombian DPS to confirm that it would support this program and was prepared to commit resources worth $7.7 billion Pesos. I will refer to this as the “commitment letter”.
[16] FUPAD had its own relationship with the Departamento and in July of 2016 FUPAD signed an agreement with DPS under which it would receive funding from the government of Colombia and would also contribute its own resources and funding. Essentially this was a cost sharing agreement for the Employment for Prosperity Program. I will refer to this as the FUPAD/DPS agreement.
[17] Under the FUPAD/DPS agreement, FUPAD was to take responsibility for delivering portions of the Employment for Prosperity Program. Certain expenditures and disbursements would be reimbursed by DPS and other amounts would be funded by FUPAD itself. Significantly, it is FUPAD’s evidence that its monetary contribution under this agreement assumed and included the funds to be paid by CUSO under the commitment letter. It is clear, however, that there was no formal agreement between CUSO and FUPAD. The CUSO/FUPAD agreement was formalized later.
[18] In September 2016 CUSO signed what it describes as a “letter of intent” and what FUPAD describes as a “framework agreement”. In point of fact, at least in translation, it is titled “Framework Association Agreement”. This was an agreement between CUSO and DPS under which CUSO expressed its intention to fund various projects across Colombia with the approval of DPS. FUPAD is not a party to that agreement. It is an agreement between CUSO and DPS which provides for cooperation and communication to further the SCOPE project, carries no specific dollar value and does not contemplate CUSO or DPS providing funds to the other.
[19] The “Framework Association Agreement” does not mention FUPAD but does speak of “derivative agreements” with other national and international actors. According to the translation, it generally provides for cooperation and communication to realize anti-poverty objectives, recognizes the obligation to comply with both Columbian and Canadian government requirements, and identifies the purpose and objectives of the SCOPE program. There are provisions for mutual credit and recognition but no specific commitment of funds. There is provision for a technical committee to monitor performance under the framework agreement and the derivative agreements.
[20] There is also a provision in the CUSO/DPS Framework Association Agreement which requires that any disputes regarding the interpretation or application of that agreement and the obligations thereunder be settled using the contractual dispute resolution mechanisms in a Colombian statute governing public procurement. This provision is one factor in FUPAD’s argument that the forum clause in the CUSO/FUPAD agreement should be found invalid under the law of Colombia. It characterizes the CUSO/FUPAD agreement as a “derivative agreement” under the Association Agreement whereas CUSO characterizes it as a sub-agreement or sub-contract under its own agreement with DFATD.
[21] The commitments between CUSO and FUPAD to work together on the Employment for Prosperity project were ultimately formalized under the CUSO/FUPAD agreement. This agreement was prepared by CUSO’s lawyers and discussed between the two organizations after CUSO had considered who it should work with as a local partner in consultation with DFATD.
[22] On November 30, 2016 CUSO signed the CUSO/FUPAD agreement in Ottawa and FUPAD signed it in Bogota. The counterparts were then exchanged electronically.[^7]
[23] Under the CUSO/FUPAD agreement, CUSO agreed to fund certain expenditures and to reimburse FUPAD in order to implement the Employment for Prosperity project under the auspices of SCOPE. From the point of view of CUSO, the agreement with FUPAD was a “sub-agreement” under the Canadian Government Funding Agreement and certain terms required by the Canadian government were incorporated into its agreement to work with FUPAD.
[24] Under the CUSO/FUPAD agreement, FUPAD agreed to contribute a maximum of 1,148,000,000 COP to the project and CUSO was to contribute 7,700,000,000 COP. The contract was drawn up in English and it contained a governing law and forum clause as follows:
17.15 Governing Law.
The construction, interpretation and performance of the Agreement are governed by the applicable laws of the Province of Ontario and Canada, without regard to conflicts of laws principles. The Parties have expressly agreed to have this Agreement drafted only in the English language….The Parties expressly exclude application of the United Nations Convention on Agreements for the International Sale of Goods. Any and all disputes between CUSO International and Local Partner relating to the Agreement, if not resolvable on an amicable basis, will be submitted to a competent court of the Province of Ontario.
[25] Under the Canadian Government Funding Agreement, CUSO could only submit certain types of expenses for reimbursement by DFATD. Both the Funding Agreement and the CUSO/FUPAD agreement contain the same definitions of eligible and non-eligible costs. For example, remuneration of employees, remuneration for local employees and independent contractors and travel costs are eligible. Entertainment costs, gifts and memberships are not eligible. Certain other categories of expenses were eligible only if approved in advance such as travel insurance and certain medical costs.
[26] As described above, each of CUSO and FUPAD have independent agreements with the Colombian government. It appears those agreements are quite different. CUSO may be given a tax exemption and other forms of cooperation but FUPAD is eligible for direct funding. Neither CUSO nor FUPAD are parties to the agreement between the other and DPS. In the result, although there were multiple parties cooperating in the Employment for Prosperity Program, the structure appears to have engaged a series of bilateral contracts.
[27] DFATD and CUSO had an agreement. CUSO had an agreement with FUPAD. Each of CUSO and FUPAD had agreements with DPS. The project had many contractual moving parts all designed to further the same objective of delivering programs on the ground in Columbia. FUPAD was entitled to be reimbursed for some expenditures by DPS and for others by CUSO.
[28] CUSO argues that its only obligation to FUPAD is pursuant to the bilateral CUSO/FUPAD contract drawn in English in Ontario and containing an enforceable choice of law and forum clause. In that case, the forum clause is specific and clear. The dispute appears to be a matter of contractual interpretation. The only question would be whether or not FUPAD has discharged all of its contractual obligations to CUSO and is owed further funds.
[29] Contractual interpretation is not only a question of reading the document. Particularly if there is any ambiguity in the written text or it is necessary to consider how the parties conducted themselves under the agreement, surrounding circumstances may be important.[^8] FUPAD argues that the network of agreements must be interpreted together. If that is the case, many of the documents are in Spanish, the locus of the work was in Colombia and most of the witnesses would be there.
The Legal Proceedings
[30] On or about January 24, 2020, FUPAD initiated a request in Colombia for “extra judicial conciliation” which is apparently the first step in initiating a legal proceeding in Colombia. A date was set for that conciliation in February of 2020. In the meantime, CUSO launched this proceeding in Ontario.
[31] It is apparent from the translation of the request for conciliation that FUPAD seeks to tie its agreement with CUSO to the framework agreement that CUSO has with DPS by classing the CUSO/FUPAD agreement as a “derivative agreement”. It is also apparent from that conciliation document that FUPAD asserts the forum clause in the CUSO/FUPAD agreement is illegal under Colombian law and is an arbitrary and “leonine” clause that should not be recognized in Columbia.[^9]
[32] The plaintiff has tendered the opinion of a Colombian lawyer that the filing of a conciliation request is not technically the start of litigation. The defendant’s expert acknowledges that from a strictly procedural point of view it is correct that filing a complaint with the court is the start of the actual litigation. She also deposes that under Colombian law, conciliation is a legal prerequisite to issuing a claim and so it is entirely legitimate to view the demand for conciliation as the start of a litigation process.
[33] The only point of this debate is to deal with a “race to the fleetest” argument if it is necessary to determine in which jurisdiction litigation was first commenced. There are circumstances where that technical question may be determinative, but I do not consider this to be one of them. Whether or not there was actual litigation before a Colombian court on the day the plaintiff commenced the Ontario proceeding, there is no doubt that CUSO had been served with the demand for conciliation and knew that FUPAD intended to pursue the matter in Colombia.
[34] In fact, the Ontario litigation would be pointless unless there was the threat of litigation elsewhere. The plaintiff seeks no damages or other remedy. It simply seeks a declaration that it owes no money to FUPAD and that Ontario is the only proper forum for the dispute. The clear purpose of that action is either to prevent enforcement of a foreign judgment in Ontario or to persuade the foreign court not to take jurisdiction. It is abundantly clear that the plaintiff knew it was facing a legal proceeding in Colombia.
[35] There is litigation now. As I understand the documents and the evidence, FUPAD has launched a “Contractual Clause Nullity Declaration Proceeding” in Colombia before the 21^st^ Civil Circuit Court (Juzgado 21) asking the court to annul the forum clause in the CUSO/FUPAD agreement. On August 20^th^, 2020 the court issued a decision “admitting” the Nullity Declaration Proceeding. This is not a decision on the merits, it is simply a procedural step indicating the court has agreed to hear the matter and the proceeding may continue. As I understand the evidence, it is still open to the Colombian court to decline jurisdiction or, having assumed jurisdiction, to find that the forum clause is binding and should not be annulled.
[36] On the evidence before me, it is impossible to determine what Juzgado 21 might ultimately decide on annulling the forum clause. The expert opinions are divided. The plaintiff’s expert opines that forum clauses such as this in a commercial contract would be recognized as binding by a court in Colombia. The defendant’s expert opines that the court is likely to annul the clause on the grounds of public policy. This is because the project in question is in Columbia, supported by the Colombian government, for the benefit of Colombians. All of the contractual obligations were to take place in Colombia and payment was to be made in Colombian pesos.
[37] Of course, even if the court in Colombia does decide that it should annul the forum clause because it is contrary to law of Colombia, that is only one step in the process. Presumably, if the forum clause is annulled, a Columbian court can then be asked to determine if CUSO is in breach of contract and can be ordered to pay damages to FUPAD or conversely if CUSO is correct that FUPAD has not properly accounted for the funds. At this point the Colombian court has only taken cognizance of the preliminary demand by FUPAD that the forum clause be annulled.
[38] In the meantime, CUSO has apparently filed for reconsideration of the decision to admit the Contractual Clause Nullity Declaration Proceeding. I am advised that reconsideration is an option distinct from an appeal and is apparently available at each step of the proceeding. According to the defendant’s expert, the reconsideration itself may take up to 6 months and whichever way the judge decides, the matter is then open to appeal:
“We must indicate that the reconsideration can last approximately 6 months and the declarative process could take between a year and a half and two years. In case of an appeal it could take between 6 to 10 months more. Of course, it must be taken under consideration that due to COVID, times are difficult to calculate.”
[39] On February 14, 2020, CUSO commenced this action in Ontario. It seeks a declaration by this court that no funds are owing to FUPAD and that Ontario is the only appropriate forum for legal proceedings between the parties. In essence the Ontario action is a mirror copy of the proceeding or intended proceeding in Colombia. FUPAD argues that it is akin to an anti-suit injunction insofar as its main purpose is to halt the Colombian proceeding although FUPAD also states that if the action continues, it will bring a counterclaim in Ontario.
[40] The defendants now bring this motion to stay the Ontario action. I am asked to defer to the Colombian court and to stay the action at least until that court has determined if the forum clause is enforceable under Colombian law.
[41] In summary, the chronology is as follows:
a. January 24, 2020 – FUPAD launches a request for conciliation in Colombia
b. February 14, 2020 – CUSO launches this litigation in Ontario
c. February 18, 2020 – Conciliation in Bogota, Colombia – no agreement
d. March 20, 2020 – FUPAD files a demand to annul the jurisdiction clause by way of Demanda de Nulidad del Acuerdo de Contribucion in 21 Civil del Circuito de Bogata (Juzgado 21) in Colombia.
e. August 21, 2020 – Juzgado 21 decision whereby the court in Columbia agrees to hear the demand for a declaration of nullity.
f. October 2^nd^, 2020 – FUPAD launches this motion in Ontario to stay the Ontario action.
g. November 23, 2020 – CUSO files a Request for Reconsideration of the August 21, 2020 decision in the 21^st^ Circuit Court in Bogota.
h. February 22, 2021 – this motion is heard in Ottawa.
[42] I note that there is no evidence before me that the Government of Colombia is involved in this dispute in any manner. FUPAD has apparently completed its obligations under the Employment for Prosperity Program to the satisfaction of the Departamento. There is no evidence that the DPS believes itself to be in a dispute with CUSO or has invoked the dispute resolution provisions of the CUSO/DPS framework agreement. Nor is there any suggestion that parties in Colombia other than FUPAD are unpaid.
[43] The only question is whether or not CUSO is obligated to reimburse FUPAD if it is not satisfied that FUPAD has properly accounted to CUSO under the terms of the contract.
[44] While conceding that the Ontario court has jurisdiction to hear this matter, FUPAD argues that it should be stayed in order for the matter to be argued in Colombia which is otherwise the natural forum for the dispute and where legal proceedings are underway.
The Law
[45] Under Canadian law, there are two steps in a forum dispute. The first is to determine if the court has jurisdiction at all. This is “jurisdiction simpliciter”. The second step is to consider whether another court could also take jurisdiction and, in that case, whether it is in the interests of justice to halt the Canadian proceeding in favour of the other jurisdiction. This is the forum non conveniens determination.[^10] A forum clause has significance in both steps of this analysis because a forum clause naming Ontario will generally mean that the court has jurisdiction simpliciter whereas a forum clause naming another jurisdiction is a powerful reason for the Ontario courts to decline jurisdiction under the forum non conveniens analysis. [^11]
[46] For a court in this province to have jurisdiction, the case must be one which may legally be brought in Ontario. In this case the plaintiff has its head office in Ontario, was administering funds pursuant to a program of the Government of Canada and, according to its own evidence at least, the contract was drafted in Ontario and executed by the plaintiff in Ottawa. Arguably the contract was made in Ontario because when the defendant executed the counterpart of the agreement in Bogota, it was transmitted electronically to CUSO.[^12] This fact is disputed and it is possible the contract was formed in Colombia or even that it was formed simultaneously in more than one place at the same time. [^13] I do not have to decide the question of where the contract was formed because of the existence of the forum clause. The parties do not dispute jurisdiction simpliciter.
[47] Since there is a forum selection clause and sufficient factual nexus to tether the dispute to this province, jurisdiction simpliciter is readily established. The defendant concedes that the forum clause presumptively fixes the jurisdiction in Ontario and it falls to the defendant to persuade the court that there is “strong cause” not to assume jurisdiction. Once the parties have freely and clearly agreed to a forum by contract, the existence of the forum clause weighs heavily in a forum conveniens analysis. The agreement made by the parties is to be given effect in all but “exceptional circumstances”. [^14]
[48] The question becomes simply whether despite the contractual agreement to forum, are there factors weighing so heavily in favour of the foreign jurisdiction that it would be unfair and unjust to compel the defendant to litigate in Ontario? To be clear, there is no attack on the enforceability of the contract. The defendant does not argue unconscionability, duress, non est factum or any other principle which might render the agreement void or voidable. Nor could it. The defendant seeks to enforce the contract, but it argues correctly that in some circumstances a court should decline jurisdiction despite a forum clause.
Analysis & Conclusion
[49] There is no question that this case can be adjudicated in Ontario and that the legal proceeding in this jurisdiction will result in a determination as to whether or not CUSO owes money to FUPAD. In fact, the defendant has been candid in saying that if the action continues, it will file a defence and a counterclaim.
[50] The defendant, however, asks that I stay the action until it is determined if the Colombian court will assume jurisdiction and in that case the matter should proceed in Colombia. In its factum, the defendants advance the following arguments:
• PADF had projects all over Latin America, including in Colombia and has assisted over 2 million people there;
• FUPAD is located in Bogota and has a legal presence there, as does CUSO;
• All CUSO officers with whom Soraya Osorio dealt were in Colombia;
• The main contributor to the Employment for Prosperity project was the Departmento. CUSO was contributing none of it own money;
• All milestones associated with the Contribution Agreement were memorialized in the agreement between the Departmento and FUPAD;
• The Employment for Prosperity Program was well underway and being implemented long before the Contribution Agreement was signed with CUSO;
• Every document but one is in Spanish and that was translated immediately thereafter;
• Every witness which would eventually be called either is in Colombia or would only be a witness because of what occurred in Colombia;
• The SCOPE Project was entirely associated with assisting populations in Colombia. The agreement between GAC and CUSO does not require a forum selection clause choosing Ontario but does contain one of its own;
• The SCOPE project planned to target 4,000 direct beneficiaries in Colombia and 12,000 indirect beneficiaries in Colombia. It also provided for the development of partnerships with 70 Colombian private sector organizations, 3,800 Colombian internships and for the leverage and partnership of 98 government and civil society organizations in Colombia;
• In particular, the Employment for Prosperity Program sought to assist 9,345 beneficiaries across 6 different Colombian cities;
• The Employment for Prosperity project is a derivative project to the SCOPE and is contemplated in the Framework Agreement with was signed by CUSO and the Departmento with a Colombian forum selection clause;
• In her letter of April 19, 2019, Osorio responded to the various requests and comments made by Matos in his letters. Osorio detailed how FUPAD had satisfied the requests for thousands of documents, in Spanish, justifying the involvement of thousands of Colombian participants in the Employment for Prosperity Program. The documents she sent in response were extremely voluminous and in Spanish;
• Simply by looking at the sample supporting documentation and sample payments that were provided by Osorio, and that they represent a mere fraction of the entirety of the evidence for this matter, it is evident that the payees are in Colombia, the suppliers are in Colombia, the beneficiaries are in Colombia and the workplaces involved are in Colombia; and
• Significantly, the Colombian Court has indicated – at least on a presumptive basis, its view that the matter might need to be dealt with in Colombia and that it might assert jurisdiction over the matter notwithstanding the existence of the forum selection clause.
[51] In my view this is a valiant effort to entangle the adjudication of this bilateral contract in a web of other contracts, to raise the spectre of legions of witnesses and to paint Colombia as the natural forum for this dispute. The objective is to overwhelm the forum selection clause. To my mind the argument is overstated.
[52] First and foremost, the Court in Colombia has not asserted jurisdiction over the merits of the dispute. At this point it has simply indicated that it will hear the question as to whether or not the forum selection clause should be invalidated. As indicated earlier, that hearing will not take place for many months, the outcome of the hearing is far from certain and will be subject to potential appeal. It is not a hearing which will deal with the merits of the debt claim although it would open the door to such a hearing. It is not the case that a proceeding dealing with the merits of the claim is currently underway in Colombia. It is certainly not the case that the Colombian legal process is significantly more advanced than this process in Ontario.
[53] It is important to any forum analysis that there is another forum where the litigation could be hosted but in the face of a forum clause, it is not sufficient that it might be more convenient to one of the parties to proceed in the other forum. In addition, the Supreme Court of Canada has rejected the idea of a “first to file” system. A foreign court’s prior assertion of jurisdiction is not an overriding or determinative factor.[^15]
[54] There is no doubt that performance under the contract took place in Colombia and most of the documentary evidence is in Spanish. It does not follow that a trial in Ontario is impossible or impractical. Decisions are rendered every day in this province using translated documents and evidence received through interpreters. As measures adopted during the COVID pandemic have amply demonstrated, distance and geography are of diminished importance since witnesses can testify remotely. While the ultimate shape of the dispute and the nature of the evidence cannot be assessed until there has been an exchange of pleadings, it seems highly unlikely that this is a case which will involve a broad inquiry into the Employment for Prosperity project. The project was intended to benefit large numbers of individuals and organizations, but this is not a measurement of the number of witnesses who must be called.
[55] It is not at all clear that it will be necessary to call witnesses to delve deeply into the manner in which DPS has measured performance under its own agreement with FUPAD or that there are disputes about the precise work done by interns or other organizations. It is also not clear whether the details of any of the other network of contracts will be relevant to this dispute and in any event just for this motion, many of those documents have already been translated. More to the point, the courts in Canada have held that the inefficiency of bringing foreign witnesses to the forum or having to testify through interpreters cannot be given too much weight in the face of a forum selection clause. This is because the parties presumably knew all that when they agreed to select Ontario as a forum.[^16]
[56] At one level the dispute between CUSO and FUPAD is a narrow question of paperwork and contractual interpretation. The question is whether FUPAD has provided the proper documents, receipts, and information to entitle it to reimbursement. FUPAD acknowledges it was required to provide CUSO with documents justifying the expenses incurred and demonstrating that the work was being performed as planned. This is not a situation in which the intended beneficiaries of the project are prejudiced or affected. FUPAD’s evidence is that it completed the necessary work using its own funds and is entitled to reimbursement.
[57] As I noted earlier, there is no evidence that there are unpaid contractors, trainers or apprentices or that the DPS or any other government agency in Colombia has a dispute with either FUPAD or CUSO. This appears to be an internal dispute over accounting. CUSO feels that despite numerous demands for information and despite granting indulgences and extensions, FUPAD is simply unable or unwilling to provide what it must provide in order to qualify for reimbursement. FUPAD is of the view that CUSO is being unreasonably rigid and literal and is seeking to impose demands for information that is not readily available or may be impossible to obtain because the demands do not conform to the realities of the project itself.
[58] In many of the reported cases, the action has been brought in Ontario despite a forum selection clause naming another jurisdiction. In that case it will be rare that the Ontario court would not stay the Ontario action and hold the parties to their bargain. In cases such as this one, the action is brought in Ontario pursuant to the forum selection clause. In that case, pursuant to the “strong cause” test, it takes more than difficulty, inconvenience, or expense to persuade this court to abstain from exercising its jurisdiction. It must be fundamentally unfair to the moving party to hold it to its bargain and unjust to permit the litigation to proceed in Ontario.
[59] There are cases in which a forum clause should not be enforced due to changed circumstances or because enforcement of the forum clause would lead to an absurd result. I was referred to one of my own decisions in Skyway v. Clara.[^17] In that case there was a forum clause in only one contract involved in a construction dispute but there were no forum clauses in the sub-contracts or other contracts that would have to be adjudicated together. I dealt with a similar situation in Chateau Des Charmes Wines Ltd. v. Sabate, USA Inc.[^18] In that case a forum clause was contained in a bill of lading and I found that the forum clause was only applicable to the second shipment of goods. In both of those cases, strict enforcement of the forum clause would not only have resulted in multiple lawsuits in different jurisdictions but would also have split the case.
[60] The parties to this litigation are both sophisticated, experienced North American charities. On the facts of this case which is, after all, a debt claim between an American based charity and an Ontario based charity, albeit concerning the funding of a project in Colombia, I am not persuaded that the defendant has met the onus of demonstrating that there is strong cause to defer to Colombia as the proper forum for the dispute and to override the choice of forum in the contract. I would add that the parties were very well aware that CUSO’s role in administering these funds is a stewardship role for funds raised by the Government of Canada from the taxpayers of Canada. There is nothing unnatural or peculiar about CUSO including a forum clause in the CUSO/FUPAD agreement and there is no evidence that the agreement or the forum clause would be voidable on ordinary principles of contract.
[61] In summary, while there are legal proceedings in Colombia and there is no doubt that FUPAD had signaled clearly that it was intending to proceed in that jurisdiction before this action was commenced, there is no prospect of an imminent hearing on the merits in Colombia. There is a proceeding to annul the forum clause preliminary to litigating the claim.
[62] Although there are many factors which establish that litigation in Colombia might be more efficient from the point of view of the language of litigation, the language of documents and the location of witnesses, there is insufficient evidence to show any juridical advantage to the parties in proceeding in Colombia. The evidence does not persuade me that it would be unjust to proceed in Ontario and just to both parties to proceed in Colombia despite the prior agreement. Indeed, there are various procedures available in Ontario which the parties may access to ensure that the adjudication takes place as swiftly and efficiently as possible.
[63] I decline to stay the action on an interim basis to await the decision in Colombia. The Ontario action may proceed.
Further Direction
[64] This motion was well argued by two of the most able and experienced lawyers in Ottawa. It was a pleasure to watch them exercise their craft and to have well organized materials supported by succinct and focused factums. It was also extremely interesting as the court reviewed details of the SCOPE project, the anti-poverty initiatives in Colombia and the operation of the Colombian legal system. So, from a selfish point of view, it was the kind of hearing judges too seldom experience. But from the point of view of the administration of justice and the best interests of the parties, I am forced to observe how unfortunate it is that two charitable organizations with similar objectives are now locked in expensive litigation in two countries.
[65] I will not speculate on what steps the parties will take in response to this decision. Certainly, they could co-operate and agree to proceed in only one forum or for that matter they could agree on a dispute resolution process such as an audit or arbitration. I will simply observe that they ought to have a mutual interest in a speedy resolution on the merits rather than further procedural wrangling in a public forum.
[66] Under the Ontario Rules of Civil Procedure, the parties are obliged to engage in a good faith mediation process at the earliest time that mediation is likely to be effective. Under Rule 24.1.09 (1) that mediation session must take place within six months of the time when a defence is filed unless the court otherwise orders, or the parties mutually agree to postpone it. I urge the parties to take advantage of that process. Given the amount of material that has already been exchanged in bringing this motion, this should not be a case in which further production or discovery is required before the parties make a significant effort to resolve the issues.
[67] Mediation is often described as a search for win-win solutions. In this case, continued litigation seems probable to be a lose-lose proposition. This observation has played no role in my determination of the motion and I am sure it has already been part of the legal advice given to the parties. I would be remiss, however, in not underscoring it here. Lengthy complex litigation which may distract from or impede the charitable objectives and concerns of these organizations and their donors and sponsors is not in the public interest either here or in Colombia.
[68] If the case cannot be resolved, then it is a candidate for case management. It will be in the interests of the parties and the administration of justice to adopt a streamlined litigation process and to reach a hearing on the merits as efficiently as possible.
Order
[69] For the reasons outlined above, the court orders and directs as follows:
a. The motion is dismissed, and the Ontario action may continue.
b. The defendant shall have 30 days to file a defence and the parties shall proceed to mediation within 180 days after a defence is filed pursuant to Rule 24.1.
c. At the request of either party, a case conference may be convened before a Master or an Associate Judge.[^19]
d. If counsel are not able to resolve the question of costs, they may arrange to speak to the matter or to make written submissions.
COURT FILE NO.: CV-20-82858
DATE: 2021/04/27
ONTARIO SUPERIOR COURT OF JUSTICE
RE: CUSO INTERNATIONAL, Plaintiff, Responding Party
AND:
PAN AMERICAN DEVELOPMENT FOUNDATION a.k.a. PADF and FUNDACIÓN PANAMERICANA PARA EL DESARROLLO a.k.a. FUPAD, Defendants, Moving Parties
BEFORE: Mr. Justice Calum MacLeod
COUNSEL: Todd Burke for the Plaintiff, responding party Andrew Lenz, for the Defendants, moving parties
DECISION AND REASONS
Mr. Justice C. MacLeod
Released: April 27, 2021
[^1]: Although there are two defendants named in the title of the proceedings, they are a single legal entity. I will refer to the defendant as FUPAD.
[^2]: Pan American Development Foundation (PADF) is known as Fundación Panamericana Para El Desarrollo (FUPAD) in Spanish.
[^3]: Sustainable Colombian Opportunities for Peacebuilding and Employment.
[^4]: All references to dollars are to Canadian Dollars and all references to pesos are to Colombian Pesos.
[^5]: In November 2015 DFATD was renamed Global Affairs Canada. Prior to that, I understand that in 2013 DFATD had absorbed the responsibilities of the former Canadian International Development Agency (CIDA).
[^6]: FUPAD refers to the CUSO/FUPAD agreement as the “contribution agreement” whereas CUSO uses this term for the DFATD/CUSO funding agreement and refers to the CUSO/FUPAD agreement as the “sub-agreement”.
[^7]: FUPAD disputes the weight to be given to CUSO’s evidence on this point as the affiant of the affidavit was not the person who signed the agreement on behalf of CUSO. FUPAD’s signing officer was in Bogota.
[^8]: See Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, [2014] 2 SCR 633 regarding the use of the factual matrix in Canadian contract law.
[^9]: A leonine contract is an unconscionable agreement typically foisted on a weaker party who has little or no ability to negotiate more favorable terms. The point being that it should not be enforced.
[^10]: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 SCR 572 and see Chateau Des Charmes Wines Ltd. v Sabate USA Inc., [2005] O.J. No. 4604 (SCJ – master)
[^11]: Expedition Helicopters Inc. v. Honeywell Inc. 2010 ONCA 351, (2010) 100 O.R. (3d) 241
[^12]: See Eastern Power Ltd. v. Azienda Communale Energia & Ambiente, (1999) 178 DLR
[^13]: See Inukshuk Wireless Partnership v. 4253311 Canada Inc., 2013 ONSC 5631;(2013) 117 O.R. (2d) 206
[^14]: Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 SCR 450; Honeywell Helicopters Inc, supra; Momentous Corporation v. Canadian American Association of Professional Baseball Ltd., 2010 ONCA 722, (2010) 103 O.R (3d) 467
[^15]: Teck Cominco Metals Ltd. v. Loyd’s Underwriters, 2009 SCC 11, [2009] 1 SCR 321 @ para. 29
[^16]: Expedition Helicopters Inc. v. Honeywell Inc., supra @ para. 12
[^17]: Skyway Canada Ltd. v. Clara Industrial Services Ltd., [2005] O.J. No. 4887, (2005) 47 C.L.R. (3d) 311 (Ont. Master)
[^18]: Chateau Des Charmes Wines Ltd. v. Sabate, USA Inc., 2005 CarswellOnt 5271, [2005] O.J. No. 460 (Ont. Master)
[^19]: Pursuant to the Accelerating Access to Justice Act, 2021, S.O. 2021, c.4 the title of “Case Management Master” will be changed to “Associate Judge” upon proclamation of the relevant sections.