Friday, November 20, 2015

Ontario Courts Refuse to Stay Action Against Nigerian Defendants


The Court of Appeal for Ontario released its decision in James Bay Resources Limited v. Mak Mera Nigeria Limited, 2015 ONCA 781  this week.  This is an appeal by Nigerian appellants who had lost a motion to stay an action brought by James Bay Resources Limited (“James Bay Resources”) on the ground that the Ontario courts lacked “jurisdiction simpliciter” and Ontario was not the convenient forum for the determination of the dispute between the parties. 

 

James Bay Resources entered into a Memorandum of Understanding (“MOU”) with the appellant, Adewale Olorunsola (“Sola”) on March 3, 2011.  The MOU was negotiated and signed in Ontario.  It set out an arrangement between the parties with respect to the acquisition of Nigerian oil and gas assets. 

 

On February 12, 2012, James Bay Resources and the appellant, Mak Mera Limited (“Mak Mera”) entered into a letter agreement which replaced the MOU (“Agreement”).  The Agreement was far more detailed than the MOU.  Sola signed both the MOU and the Agreement.

 

A dispute arose between the parties in respect of the contractual arrangements.  The dispute was fueled by a letter sent by Mak Mera to Royal Dutch Shell PLL on July 2, 2014.  The letter was copied to James Bay Resources, as well as to many others, including the Nigerian Ambassador to Canada and a number of officials of the Nigerian government.  Madam Justice MacFarland of the Court of Appeal found that absence truth, the statements made in the letter were "quite clearly defamatory" of James Bay Resources.

 

On September 4, 2014, James Bay Resources commenced proceedings against Mak Mera and Sola in Ontario.  On September 16, 2014, Mak Mera, Sola and Sola’s father-in-law (a Nigerian resident and Chairman of Mak Mera), commenced an action in Nigeria against numerous parties including James Bay Resources and its CEO, Stephen Shafsky.  Some of the claims in the Nigerian action were similar to those in the Ontario action. 

 

James Bay Resources moved in The Federal High Court of Nigeria to strike the Nigerian action on the grounds that the Nigerian court lacked jurisdiction.  It was unsuccessful.  James Bay Resources is appealing that order.

 

On March 2, 2015, Mak Mera and Sola moved to strike or permanently stay the Ontario action.  Justice Paul Perell of the Ontario Superior Court of Justice concluded that Ontario had jurisdiction simpliciter and identified several presumptive factors that would apply, including that Sola is an Ontario resident and both the MOU and the Agreement were negotiated and signed in Ontario.  Justice Perell also found that the Agreement provides that it is governed by Ontario law and contains a choice of forum clause that names Ontario as the jurisdiction where any disputes would be resolved.  He noted, “Neither Mak Mera nor Mr. Sola has advanced any cogent argument that there is a rebuttal of the contractual connection as a presumptive factor.  Their arguments may be relevant to the issue forum conveniens, but jurisdiction is not rebutted.”.  Mak Mera and Sola appealed to the Court of Appeal. 

 

The appellants made no oral submissions rebutting the contractual connection as a presumptive factor.  Justice MacFarland held that the arguments raised on appeal went to the merits of the claims, not to jurisdiction of the Ontario courts.  Those issues did not displace or challenge the fact that both agreements (the MOU and the Agreements) were negotiated and signed in Ontario and that Sola is an Ontario resident – both are strong, presumptive factors.   

 

The appellants also argued that Justice Perell had erred in law by failing to specifically consider comity in his analysis.  Justice MacFarland embarked on a detailed analysis of the goal of comity in jurisdictional motions.  She referred to the decision of the Supreme Court of Canada in Van Breda v. Village Resorts, [2012] 1 SCR572:

 

The goal of the modern conflicts system is to facilitate exchanges and communications between people in different jurisdictions that have different legal systems.  In this sense it rests on the principle of comity.  But comity itself is a very flexible concept.  It cannot be understood as a set of well-defined rules, but rather as an attitude of respect for and deference to other states and, in the Canadian context, respect for and deference to other provinces and their courts.  Comity cannot subsist in private, international law without order, which requires a degree of stability and predictability in the development and application of the rules governing international or inter-provincial relationships.  Fairness and justice are necessary characteristics of a legal system, but they cannot be divorced from the requirements of predictability and stability which assure order in the conflicts system.   In the words of LaForest J., in Morguard, “what must underlie a modern system of private, international law and principles or order and fairness, principles that ensure security of transactions with justice”.

 

Accordingly, Justice MacFarland found that comity is not a stand-alone factor.  She held that it was part and parcel of the forum non conveniens assessment in a given case.  In dismissing the appeal, Justice MacFarland held that Justice Perell had considered the issue of comity in his analysis.  He had done so implicitly when he outlined and considered all of the relevant factors in coming to his conclusion that Nigeria was not the more convenient forum. 

 

Justice Perell was aware of the Nigerian litigation which was started after the Ontario action.  He was aware that James Bay Resources had filed a statement of defence in that action, and brought an unsuccessful motion to strike and was appealing the dismissal of its motion.  The appellants had cited no law for their argument that by filing a statement of defence in the Nigerian action, James Bay Resources had attorned to the jurisdiction of the Nigerian courts. 

 

Justice MacFarland agreed with Justice Perell’s conclusion that “balancing all factors, Nigeria is not clearly the appropriate forum for the dispute and Ontario is not forum non conveniens.”.

Regards,

Blair

 

 

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