Middle East Bank v. Sabetyian, 2026 ONSC 1432

CITATION: Middle East Bank v. Sabetyian, 2026 ONSC 1432

COURT FILE NO.: CV-18-00590217-0000

DATE: 20260313

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Middle East Bank, Plaintiff

AND:

Ali Sabetyian also known as Ali Sabetian and Future Way Holding Inc., Defendants

BEFORE: Parghi J.

COUNSEL: Alastair McNish and Chit Leung, for the Plaintiff

Ryder Gilliland and Jordana Haar, for the Defendants

HEARD: January 29, 2026

ENDORSEMENT

1The plaintiff, Middle East Bank (the “Bank”), alleges that the individual defendant, Ali Sabetyian, misappropriated funds and failed to repay a loan of which he was a guarantor. The funds at issue belonged to Tejarat Pars Siavoshan (“Siavoshan”), a trading company for agricultural products of which Mr. Sabetyian was a shareholder and director until 2015.

2The year after commencing this action in Ontario, the Bank, which is formed under Iranian law and has its head office in Tehran, brought a criminal complaint in Iran against Mr. Sabetyian and others. The parties characterize the nature and findings of the Iranian criminal proceedings differently, although it is common ground between them that the result of those proceedings was a decision to not pursue the criminal charge of “[o]btaining property through illegitimate means or abuse and fraud of privileges” against Mr. Sabetyian and the others.

3The defendants, Mr. Sabetyian and his Ontario company, Future Way Holding Inc. (“Future Way”), now seek to dismiss this action on the basis of issue estoppel or abuse of process. They assert that the Iranian criminal courts have already rejected the Bank’s central allegations against Mr. Sabetyian, and that the Bank now seeks to relitigate the same issues here and have the Ontario courts make findings that are inconsistent with those of the Iranian courts. In the alternative, the defendants seek to stay the action on the basis that Iran is a more appropriate forum for adjudication. In the final alternative, if the action is permitted to proceed in Ontario, they seek their security for costs.

4For the reasons below, I dismiss the defendants’ motions on issue estoppel, abuse of process, and forum non conveniens, but grant their motion for security for costs.

Background

The loan agreements and Siavoshan’s default

5In April 2015, the Bank and Siavoshan entered into five loan agreements. Each agreement was for 20 billion Iranian Rials; the total loaned amount of 100 billion Iranian Rials was equivalent at the time to about CAD $3.5 million. Mr. Sabetyian was one of two personal guarantors on the loan and pledged three of his properties in Iran as collateral. The borrowed funds were deposited into Siavoshan’s accounts with the Bank. (As discussed below, the Bank alleges that they were later improperly transferred into Mr. Sabetyian’s personal accounts at the Bank.)

6In November 2015, the loan agreements were renewed for six months. Mr. Sabetyian states that by this time he was no longer a shareholder or director of Siavoshan and therefore did not sign the Notice of Credit Approval. This resulted in a second series of loan agreements between the Bank and Siavoshan in January 2016, which did not include Mr. Sabetyian on the list of guarantors. Javad Fotouhi and Rajab Dehsari, who assumed management of Siavoshan when Mr. Sabetyian ceased being a shareholder and director in August 2015, were named as guarantors on the second loan agreements. The Bank continued to list Mr. Sabetyian’s properties as collateral under the second loan agreements until Siavoshan pledged replacement properties. Mr. Sabetyian says he understood these second loan agreements to supersede the first loan agreements. He says he has no direct knowledge of how the funds loaned under the second loan agreements were used.

7The Bank, for its part, describes the second loan agreements as an extension of the loan under the first contracts. The Bank asserts that Mr. Sabetyian was identified as the chairman of the board of directors of Siavoshan even in the second loan agreements, that he did not advise the Bank of his “intended or purported resignation or sale of shares,” and that he did not ask the Bank to release him from his guarantor’s obligations after the resignation and sale of shares. It asserts that he fraudulently altered the terms of the second loan agreements so as to remove his name from the list of guarantors. It says the second loan agreements do not contain any provision to the effect that the first loan agreements no longer bound Mr. Sabetyian, and that in fact he remained a guarantor for the full amount loaned. Those amounts were loaned out in full by March 1, 2016.

8Siavoshan defaulted on the loans under the second loan agreements. The Bank commenced enforcement proceedings in which Mr. Sabetyian says he was not identified as a guarantor and did not participate.

The Bank’s efforts to enforce its security

9In December 2016, the Bank brought a proceeding to enforce its security in the properties Mr. Sabetyian had pledged under the loan agreements. It did so before a branch of the Iranian judiciary called the Iranian Organization for Registration of Deeds and Properties, which the record indicates is not a court, but rather a body that carries out the administrative function of helping banks to realize pledged security.

10The Bank succeeded in recovering some of the funds through this proceeding. Mr. Sabetyian states that in the proceeding, he was not identified as a debtor or guarantor. Rather, Mr. Fotouhi and Mr. Dehsari were identified as official guarantors. The Bank counters that the Organization made no determination in the proceeding that Mr. Sabetyian would not be liable for repaying the loan under the first and/or second loan agreements in any civil proceedings.

11In 2017, the Bank released one of Mr. Sabetyian’s properties in exchange for payment by Siavoshan, but refused to release his remaining two properties, instead selling them in May 2018 and January 2019 for what Mr. Sabetyian says was much less than market value. Through these steps, the Bank recovered 72% of the initially loaned amounts.

The Ontario action

12In 2018, the Bank commenced this action against Mr. Sabetyian and Future Way, an Ontario corporation of which the Bank alleges Mr. Sabetyian is a shareholder, director, and directing mind. (Mr. Sabetyian states that he controlled Future Way only until its dissolution in 2012.) The Bank alleges breach of contract, inducing breach of contract, and fraud on the part of Mr. Sabetyian and Future Way, in the amount of $3.8 million. It asserts the following:

(a) That Mr. Sabetyian obtained a loan from the Bank, personally guaranteed repayment in the event of default, and, in January 2016, “began a course of conduct to cause Siavoshan to breach the terms of” both loan agreements “and to fraudulently divert the proceeds of the loans from the Bank to his personal account and benefit”;

(b) That Mr. Sabetyian induced the Bank to enter into the second agreements “for the stated purposes of renewing the term and adding an additional Guarantor of the Bank’s loans”, and the second agreements “were not otherwise intended to modify” the first five loan agreements “or affect their validity, enforceability, or terms as among the Bank, Siavoshan and [Mr. Sabetyian]”;

(c) That before the second agreements were signed, Mr. Sabetyian “fraudulently altered” their terms “[so as] to remove his name from the list of Guarantors”. There was “no consideration for this purported release” of Mr. Sabetyian from the terms of his guarantee, with the result that he was never released from his commitment as the principal of Siavoshan to perform all of the obligations of Siavoshan under the first loan agreements or as guarantor of the second agreements, including repayment of the loan amount from the Bank;

(d) That by March 1, 2016, the Bank had, in accordance with the terms of the first loan agreements and the second agreements, fully advanced the full loan sum of 100,000,000,000 (one hundred billion Iranian Rials, equivalent at the time to about CAD $3.5 million);

(e) That sometime thereafter, Mr. Sabetyian, in breach of both the first loan agreements and the second agreements, “fraudulently appropriated the remaining balance of the

Bank’s loan advances from Siavoshan and diverted them to his own personal use, appropriated or sold all of Siavoshan’s assets for his own benefit, and caused Siavoshan to cease all business operations.” He then moved to Canada; and

(f) That Mr. Sabetyian transferred the proceeds of his fraud against Siavoshan and the Bank to accounts in his own name or the name of Future Way.

13It is uncontested that the defendants attorned to the jurisdiction of the Ontario courts by filing a Statement of Defence in this action. Mr. Sabetyian states that his lawyer at that time, who is not his counsel now, did not advise him that by filing a defence, the defendants would be attorning to the jurisdiction of Ontario.

The Iranian criminal proceedings

14In the spring of 2019, the Bank filed a criminal complaint with the Public and Revolutionary Prosecutor’s Office (Financial and Banking Crimes) in Tehran, also known as the Special Court. It is a specialized prosecutorial office for economic, monetary, and banking offences. The criminal complaint submitted by the Bank to the Special Court sought to initiate criminal proceedings, issue a prosecution order, and file a bill of indictment against Mr. Sabetyian, Mr. Fotouhi, and Mr. Dehsari. It alleged the following:

(a) That, “under the management of” Mr. Sabetyian and Mr. Fotouhi, Siavoshan entered into the second agreements with the Bank, with maturity dates between December 18 and 21, 2014;

(b) That, “[b]ased on these agreements, the [Bank] extended credit facilities accordingly”;

(c) That, “[i]n addition to executing the contracts and guarantees on behalf of” Siavoshan, Mr. Sabetyian “also provided a personal guarantee for repayment. However, after the funds were disbursed into [Siavoshan’s] account, he knowingly diverted the amounts by opening long-term deposit accounts in his name, later liquidating them and withdrawing the funds – despite the contractual obligation to use the facilities as working capital for” Siavoshan;

(d) That subsequently, Siavoshan, “unable to fulfill its repayment obligations, requested successive three-month extensions.” Mr. Sabetyian, “in collusion with” Mr. Fotouhi and Mr. Dehsari, “fraudulently withdrew from the board of directors and refused to sign renewal agreements. The final extensions were signed by Mr. Fotouhi and Mr. [Dehsari], who lacked legitimate authority within [Siavoshan] and were merely employees of” Mr. Sabetyian;

(e) That, when Siavoshan was unable to pay its debts, the Bank “had to initiate legal action against the Company and its guarantors. However, [Mr. Sabetyian’s] strategic resignation, absence from renewed contracts, and departure from the country to obtain Canadian residence – all financed by the misappropriated bank funds – obstructed enforcement efforts”; and

(f) That “[f]urther investigation revealed that [Mr. Sabetyian] had deposited the disbursed funds into his personal accounts, falsely declaring them as personal assets to Canadian immigration authorities in support of his residency application.”

15In support of the criminal complaint, the Bank provided details and supporting documentation about its payment of the loan amounts to Siovoshan, Siovoshan’s subsequent withdrawals of funds from its account, and Siovoshan’s subsequent deposit of those funds into accounts held by Mr. Sabetyian. Several such sequences of transactions, all from September 2014, are narrated in the materials provided by the Bank to the Special Court. In each such sequence, the Bank suggests it loaned money to Siovoshan further to the loan agreements, and Siovoshan, upon receiving the loaned funds, withdrew them and transferred them to Mr. Sabetyian’s personal accounts.

16In June 2019, the Special Court issued a non-prosecution order, meaning that it would not pursue the criminal charges that the Bank asked it to seek. The Special Court characterized the “charge” under consideration as “[o]btaining property through illegitimate means or abuse and fraud of privileges”. The Prosecutor decided as follows:

The Prosecutor, considering the case contents, whereas the Bank’s basis for alleging crime is that the company and individual defendants did not spend the received amount in the agreed manner and purpose, this argument is not valid because the defendant used the received amount, which should have been used as working capital, as a deposit in the complainant Bank itself and under the direct supervision of the same Bank and the same facility-providing branch. Therefore, it is evident that with this action, a secondary and practical mutual consent occurred and affected the initial agreement, and the mentioned actions lack criminal character.

[In addition], although in the extension contracts the subject of the contract was declared as the company’s working capital, the allocated facilities were used to settle the previous debts. Therefore, in this case too, the parties’ mutual consent was operationalized differently from what was written, and in this extent of actions, no crime is conceivable.

Therefore, while providing legal guidance to the complainant to file a civil lawsuit, … a non-prosecution order for the defendant is issued and declared.

17The Bank appealed the non-prosecution order to the Criminal Court II. In its appeal materials, the Bank submitted that the loans were “intended to serve as working capital for [Siavashan’s] commercial operations”, and that the use of the loans “was strictly limited to the procurement of authorized goods directly related to [Siavashan’s] declared business activities – namely, the importation of agricultural and food products”. The Bank urged that the “issuance of a non-prosecution order disregards clear evidence of breach of trust, fraud, and unlawful acquisition of property” (emphasis in original). The Bank asked the court to revoke the non-prosecution order, initiate proceedings to trace the funds, pursue legal action against the implicated individuals, and impose statutory penalties.

18In August 2019, the Criminal Court II issued a final decision upholding the decision of the Special Court. Its reasons included the following:

(a) If the Bank intended the loaned funds to be used in a specific way, it should have included “conditions and supervisory mechanisms in the contract and in administrative and executive procedures to achieve this purpose, otherwise these matters are inherently civil and contractual in nature”;

(b) Changes in the composition of a company’s shareholders and managers, “reasonably and inherently, do not appear to be fraud, except in special and exceptional circumstances”;

(c) The Bank’s claim that the funds were used “to demonstrate financial solvency for obtaining Canadian residence permit might be considerable in special circumstances, but in this case, this claim is not supported by documents, and considering the severance of political relations and lack of judicial assistance agreement with said country, expecting investigation from the prosecutor’s office in that matter is unbearable”; and

(d) The fact that real estate collateral had been realized, allowing for part of the debt to be recovered, “weakens the probability of criminal intent at the beginning of the facility request, which itself conforms to the presumption of innocence.”

19The Iranian criminal court proceedings discussed above lie at the heart of the defendants’ claims of issue estoppel and abuse of process.

Analysis

Issue estoppel

20The defendants claim issue estoppel on the basis that the Iranian criminal proceedings made a final determination on the questions now between the parties in this action.

21Issue estoppel arises where a court of competent jurisdiction has made a final and direct determination as between the parties and their privies in respect of a right, question, or fact in issue (Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para. 24). Issue estoppel forms one strand of the doctrine of res judicata, which is concerned with finality in litigation and the principle that no one should have to defend the same action twice (Canadian National Railway Company v. The Corporation of the City of Kitchener, 2025 ONSC 73, at para. 21).

22For issue estoppel to estop a party from litigating an issue, it must be shown that the issue to be estopped is the same as the one decided in the prior proceeding, the prior decision was final, and the parties in both proceedings were the same or their privies (Toronto (City)

v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 23). The question must have been actually litigated and determined in the prior proceeding and its determination must have been necessary to the result (Pennyfeather v. Timminco Ltd., 2016 ONSC 3124, at para. 60). Even if the required elements are all present, the court has discretion to not

apply issue estoppel if its application would work an injustice (Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, [2013] 2 S.C.R. 125, at para. 29). In considering potential injustice, I may consider the nature of the decision maker, the parties, the decision making process, the statutory scheme, and the underlying legislative objectives (Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach Development Inc., 2012 ONCA 850, 113 O.R. (3d) 673, at paras. 62-64).

23Applying this test here, I find that issue estoppel does not apply to preclude this action.

24The defendants say that the first requirement for issue estoppel – that the same question was decided in the prior proceeding – is satisfied here. They state that the Iranian courts, by issuing a non-prosecution order, determined that no crime had been committed, and therefore “necessarily found that the loan amounts were deposited with the Bank under the Bank’s own supervision and that the allocated loan facilities were used to settle … Siavoshan’s previous debts.” The Criminal Court II held that the evidence provided by the Bank did not support the claim that Mr. Sabetyian had deposited the funds into his personal accounts. In the defendants’ view, the Ontario action asks this court to “make determinations that are inconsistent with those findings.”

25I do not agree. The questions considered in the Iranian proceedings are different from the one at issue in this proceeding. In the Iranian proceedings, an “investigator judge” considered the evidence provided by the complainant Bank to assess whether a crime had been committed, such that the government should prosecute Mr. Sabetyian and others for the criminal charge of “obtaining property through illegitimate means or abuse and fraud of privileges.” By contrast, in this action, the underlying question is whether the Bank is entitled to damages from Mr. Sabetyian for breach of contract, inducing breach of contract, and fraud. The defendants’ own expert acknowledged that an Iranian criminal court lacks jurisdiction to make a finding of liability under a personal guarantee. In this action, that is exactly what the Bank asks the court to do. It did not, and could not, make such a demand in the Iranian criminal proceedings.

26Moreover, the requirement, clearly articulated in Pennyfeather, that the question must have been actually litigated and determined in the prior proceeding, is not met here. There was no actual trial, and accordingly, no finding was made in the Iranian proceedings. A Non-Prosecution Order was issued and then upheld. Had the “investigator judge” decided that a crime might have been committed, there would eventually have been a trial before a judge. But there was no trial, and, as such, no actual litigation of the question. The defendants’ submission that the Iranian court made findings that the loan amounts were not improperly diverted overlooks this point.

27Nor am I persuaded that the second requirement – that the prior decision was final – is met. The Criminal Court II’s decision upholding the Special Court decision was final insofar as the Bank may not make a new request to prosecute Mr. Sabetyian criminally. However, both of the Iranian decisions were expressly restricted to the criminal context. They did not purport to address, let alone make any findings on, civil liability, and in fact conspicuously left the door open to future civil proceedings. The Special Court held that the impugned actions of Mr. Sabetyian “lack criminal character” and that “no crime is conceivable” in

the parties’ actions. However, it concluded by encouraging the Bank to commence civil proceedings notwithstanding its decision not to prosecute Mr. Sabetyian criminally: “[t]herefore, while providing legal guidance to the complainant to file a civil lawsuit, … a non-prosecution order for the defendant is issued and declared” (emphasis omitted). The Criminal Court II, for its part, opined that the “matters” of how the funds were used “are inherently civil and contractual in nature” and that the ability of the Bank to realize on the real estate collateral “weakens the probability of criminal intent at the beginning of the facility request”.

28The defendants submit that the third requirement, that the parties in the two proceedings be the same or their privies, is satisfied, even though the Iranian proceedings were criminal and not civil. They acknowledge that Canadian criminal proceedings do not give rise to issue estoppel in relation to subsequent civil proceedings, but state that such an approach, while appropriate in Canada, does not apply readily here, because the complainant in Iranian criminal proceedings plays a role that goes far beyond that of a witness or complainant in a Canadian criminal proceeding. The complainant must prove its claim before the Special Court, and decides whether to appeal the decision of the Special Court to the Criminal Court II (as indeed the Bank did here).

29I do not agree. It is not clear that the Bank, as a complainant before the Special Court, played any more active or substantive a role in the proceedings than a complainant in Canada typically would. I agree that the Bank made written submissions to the Special Court. But the Bank remained a complainant in, and not a party to, the proceedings in Iran. As the defendants’ own expert indicated, the Iranian proceedings were criminal ones, prosecuted not by the Bank but by the public prosecutor on behalf of the state and society. The Bank was the complainant. Had the prosecutor decided to press charges, the trial would have been a criminal one involving the state against Mr. Sabetyian and the others. I am therefore unable to find that the parties to the two proceedings are the same.

30As such, I conclude that the requirements for issue estoppel are not met.

Abuse of process

31The defendants say that if issue estoppel does not apply, then the doctrine of abuse of process warrants the dismissal of this action.

32Abuse of process is a flexible doctrine. It is intended to preclude proceedings that are “unfair to the point that they are contrary to the interests of justice” (C.U.P.E., at para. 35; Behn v. Moulton Contracting Ltd., 2013 SCC 26, [2013] 2 S.C.R. 227, at paras. 39-40). A claim may be abusive of process if it effectively seeks to reopen or relitigate factual findings that have already been made (Regan v. Esterbauer et al, 2023 ONSC 2905, at para. 75; Saskatchewan (Environment) v. Métis Nation – Saskatchewan, 2025 SCC 4, 500

D.L.R. (4th) 279, at para. 35), or arises “from the same relationships and subject matter that have already been dealt with” (Winter v. Sherman Estate, 2018 ONCA 703, 42 E.T.R. (4th) 181, at para. 8). “Relitigation” here is to be understood as something broader than issue estoppel or res judicata, although it engages the same underlying principles,

including judicial economy, consistency, finality and the integrity of the administration of justice (C.U.P.E., at paras. 37-38).

33The defendants submit that the allegation in this action is that Mr. Sabetyian withdrew the loaned funds from Siavoshan’s account into his personal account. The Special Court held that “the allocated facilities were used to settle the previous debts” of Siavoshan. Mr. Sabetyian calls this a “conclusive finding as to what was done with the loaned funds” that runs contrary to what the Bank alleges in this action, and which engages abuse of process concerns. In a similar vein, the Criminal Court II held that the documents did not support the Bank’s assertion that Mr. Sabetyian transferred the funds to his personal accounts. The defendants state that this, too, establishes that it would be an abuse of process to let this action continue.

34I am unable to agree. As discussed above, the Iranian proceedings did not actually litigate any issues. There cannot be any “relitigation” in such circumstances. Nor were the issues before the Iranian courts the same as the ones in issue here, as discussed above. To be sure, there is overlap in the facts underlying the criminal charges that the Iranian courts considered laying, on the one hand, and the facts underlying the civil claim for damages the Bank advances here, on the other. But this kind of factual overlap is not uncommon where conduct gives rise to both criminal and civil proceedings. And the existence of such factual overlap does not, in itself, point to abuse of process. It merely reflects the reality that criminal and civil proceedings may have partly shared factual foundations.

35I therefore reject the claim of abuse of process. I am not of the view that allowing this action to proceed would reopen or relitigate previously made findings, would be unfair to the point of contradicting the interests of justice, or would undermine the goals of judicial economy, consistency, and finality.

Forum

36In the alternative to their claims of issue estoppel and abuse of process, the defendants assert that the action should be stayed because Iran is the more appropriate forum for litigating the issues in this action. Both parties agree that the defendants attorned to the jurisdiction of Ontario by serving a defence in this action. The question before me, however, is whether, even though jurisdiction in Ontario has been established, the court may decline jurisdiction in favour of another “clearly more appropriate” forum – Iran – based on the doctrine of forum non conveniens.

37The Supreme Court of Canada held, in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, at para. 109, that a party advancing this argument must show on a high standard that considerations of fairness and efficiency favour another jurisdiction:

The burden is on a party who seeks to depart from this normal state of affairs to show that, in light of the characteristics of the alternate forum, it would be fairer and more efficient to do so, and that the plaintiff should be denied the benefits of his or her decision to select a forum that is appropriate under the conflicts rules. The court should not exercise its discretion in favour of the

stay solely because it finds, once all relevant concerns and factors are weighed, that comparable forums exist in other provinces or states. It is not a matter of flipping a coin. A court hearing an application for a stay of proceedings must find that a forum exists that is in a better position to dispose fairly and efficiently of the litigation.

38The factors to be considered when assessing forum are not exhaustive and may vary depending on the context. The courts have considered factors such as the comparative convenience and expense for the parties and their witnesses in litigating, the law to be applied to issues in the proceeding, the desirability of avoiding multiple legal proceedings, the desirability of avoiding conflicting decisions and different courts, the enforcement of an eventual judgment, and the fair and efficient working of the Canadian legal system as a whole (Van Breda, at para. 105; Bridging Finance Inc. et al. v. Sharpe et al., 2025 ONSC 1836, at para. 92).

39I accept that some of these factors would suggest that Iran would be a more convenient forum. For instance, both the first and second loan agreements were entered into in Iran and are governed by the laws of Iran, with the result that expert evidence on Iranian law would be required if the action were tried in Ontario. The loan agreements and other relevant documents are in Farsi and would require translation into English if the litigation were to proceed in Ontario. The witnesses, other than Mr. Sabetyian, are in Iran. Most of the fact witnesses would require interpreters if they were to testify in Ontario.

40In my assessment, however, these factors do not collectively show, to the high standard required by the jurisprudence, that Iran is in a better position to efficiently and fairly deal with the litigation. The Ontario courts hear expert evidence on foreign law routinely, and there is no evidence before me to suggest that it would be impracticable to find experts on Iranian law who can speak to the issues in this action. Virtual examinations for discovery are commonplace, trial witnesses travel from other jurisdictions to Ontario routinely, and the uncontroverted evidence before me is that the Bank’s witnesses would not have any difficulty giving evidence in Ontario and would be willing to make any accommodations required. Interpreters assist at trial and examinations for discovery routinely, and there is no evidence to suggest that qualified Farsi interpreters are in short supply. I would make the same observation in respect of the translation of documents from Farsi to English, and add that for the purposes of this motion, both sets of loan agreements and the decisions of the Iranian criminal courts were translated into English and filed with the motion records, seemingly without difficulty. Additionally, the defendants have defended the claim in Ontario and provided an Affidavit of Documents, again seemingly without difficulty.

41In the result, I am not persuaded that Iran is the clearly preferable forum. I agree that aspects of the litigation might be logistically easier if carried out in Iran, but that is not enough to warrant ousting the jurisdiction of the Ontario courts over this matter, to which the defendants have already attorned, and declining the Bank the benefits of its decision to select a forum that is appropriate under the conflicts rules.

42I therefore dismiss the motion to stay the action on the basis of forum non conveniens.

Security for Costs

43The defendants say, in the final alternative, that if the action proceeds in Ontario, the Bank should have to pay security for costs. They ground this request in rule 56.01(1)(d) of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194, which provides:

56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,

(d) the plaintiff or applicant is a corporation … , and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;

44To obtain such security, the defendants must demonstrate that the Bank has no presence in Ontario. The Bank must then establish that an order for security for costs would be unjust (Rules of Civil Procedure, r. 56.01(1)(d); River City Christian Reformed Church v. Singh et al., 2025 ONSC 4237, at para. 21).

45The uncontroverted evidence before me is that the Bank has no presence or assets in Ontario. As such, the first prong of this test is met.

46The onus then shifts to the Bank to demonstrate that making an order for security for costs would be unjust in the circumstances. A party can do this by, for example, demonstrating sufficient exigible assets in Ontario or a reciprocating jurisdiction (Coastline Corporation Ltd. et al. v. Canaccord Capital Corporation et al., 2009 21758 (Ont. S.C.), at para. 7; The Vancor Group Inc. v. 2744364 Ontario Ltd. et al., 2025 ONSC 5925, at para. 54).

47The Bank does not have assets in Ontario. It has assets in Iran, which it acknowledges would be difficult to enforce against from Ontario. The Bank also states that it has assets in Germany on which it would rely to satisfy any costs order. After the hearing, the Bank gave an undertaking that it would comply with any costs order that might be made against it. The defendants maintain their motion despite the Bank’s undertaking.

48I am not persuaded that it would be unjust to order security for costs. Given that the Bank has no presence or assets in Ontario, the Bank’s undertaking would be unenforceable. Additionally, while the Bank does appear to have assets in Germany, Germany is not a reciprocating state with Ontario (Reciprocal Enforcement of Judgments Act, R.S.O. 1990,

c. R. 5, s. 2(1); Application of Act, O. Reg. 322/92, s. 1). Even if Germany were a reciprocating state, it would be unfair to force the defendants to commence proceedings in Germany to recover on any costs award. Finally, collecting against the Bank in Germany may be difficult given the existing sanctions against the Iranian regime, including the Bank itself. To this end, the defendants have provided evidence that the existing sanctions against Iran have made it difficult for the Bank to transmit funds to its counsel in Ontario.

49In considering the amount of the security to be posted, the principles I am to consider are substantially similar to those that apply to the exercise of my discretion in fixing costs under Rule 57.01 of the Rules of Civil Procedure. The amount of security ordered must fall within the reasonable contemplation of the parties, and I am to be guided by what is reasonable and fair (In the Matter of a Plan or Compromise or Arrangement of BZAM Ltd. et al., 2024 ONSC 3902, at para. 81; The Vancor Group, at para. 61). I am to balance the entitlement of the defendants to a reasonable measure of protection for costs against the impact on the Bank of any order requiring security to be posted (BZAM, at para. 80; The Vancor Group, at para. 61).

50The defendants ask in their Notice of Motion for security for costs in the amount of

$175,000. The Bank did not address quantum in its materials or its submissions.

51The parties will have to invest significant amounts of money and time advancing and defending this litigation. While the issues are not unduly complex, there are likely to be several witnesses and higher costs than would ordinarily be the case given the need for interpreters, expert witnesses, and travel-related disbursements. Additionally, given the fraud allegations at play, it is possible that, if the defendants are ultimately successful, they will be awarded costs on an elevated scale.

52In my view and having considered all the relevant factors, an appropriate order is one that requires the Bank to post security for costs in favour of the defendants of $175,000, inclusive of fees, disbursements, and HST.

Conclusion

53For the reasons above, the defendants’ motions on issue estoppel, abuse of process, and forum non conveniens are dismissed. Their motion for security for costs is granted in the amount of $175,000.

54The parties are strongly encouraged to work together to resolve costs. If they are unable to do so within 30 days, they may advise my judicial assistant, and I will set a timetable for the exchange of brief submissions. The parties have already provided their respective Costs Outlines; the submissions may refer to the Costs Outlines as needed without repeating their contents.

Parghi J.