Kore Meals LLC v. Freshii Development LLC:
In Kore Meals LLC v. Freshii Development LLC, 2021 ONSC 2896, Justice Morgan of the Ontario Superior Court of Justice was faced with the question of whether, in the age of Zoom, any forum is more non conveniens than another.
The defendant, Freshii Development LLC (“Freshii Development”), a Chicago-based company, entered into an agreement with the plaintiff, a Houston-based company, to develop Freshii franchises in Texas. The plaintiff claimed breach of the agreement and unjust enrichment.
The parties’ agreement contained an arbitration clause that required disputes between the parties to be submitted for arbitration by the American Arbitration Association in the city where Freshii Development had its business address, which was identified as Chicago. The plaintiff included Freshii Development’s parent company, Freshii Inc., an Ontario corporation, in the lawsuit, which the plaintiff said justified litigation in Toronto. Freshii Inc. was not a party to the agreement.
The defendants moved for a stay of proceedings in favour of arbitration in Chicago.
The court’s decision
The test for a stay of proceedings in the face of an arbitration clause is a relatively low one; as explained by the Court of Appeal in Ontario Medical Association v. Willis Canada Inc., 2013 ONCA 745, the governing principle is deference to the method contracted for by the parties.
When asked by Morgan J., the parties confirmed that the arbitration hearing was to take place online, since the pandemic had moved most proceedings of this nature to a digital forum. According to Morgan J., “[i]f hearings are held by videoconference, documents filed in digital form, and witnesses examined from remote locations, what is left of any challenge based on the unfairness or impracticality of any given forum?”
Freshii Inc. could likely be made party to the arbitration despite not being a party to the parties’ agreement, based on the plaintiff’s theory that the parent is the real directing mind of Freshii Development.
Morgan J. reasoned that “[a] digital-based adjudicative system with a videoconference hearing is as distant and as nearby as the World Wide web. With this in mind, the considerable legal learning that has gone into contests of competing forums over the years is now all but obsolete.” Further, “Chicago and Toronto are all on the same cyber street… No one venue is more or less unfair or impractical than another.”
In granting the defendants’ motion for a stay of proceedings, Morgan J. held that the arbitration provision in the parties’ agreement was valid and enforceable.
As previously discussed in this newsletter series, there is little doubt that virtual proceedings have proven effective and readily available; there is also little doubt that virtual proceedings are here to stay, either on their own or in some hybrid live/virtual format.
That being the case, it remains to be seen whether, when in-person hearings become more common, forum non conveniens arguments will become a thing of the past.