This case is my top pick as the facts and issues between the parties serve to highlight the value of the arbitration process, including characteristics related to enforceability, neutral forum, party autonomy, confidentiality and arbitrator selection. It also shows how these matters can deliver tangible benefits to parties.
The decision by Justice MacLeod in CUSO International v. Pan American Development Foundation involved an application to stay Ontario litigation pending the outcome of litigation in Colombia. The underlying dispute between a Canadian charity (“CUSO”) and a US charity (“PADF”) concerned the delivery of charitable anti-poverty and capacity building programs in Colombia through PADF’s Colombian office (“FUPAD”).
A variety of documents, including contracts and letters of intent, were before Justice MacLeod. Among those, CUSO and FUPAD had independent agreements with the Government of Colombia through the Departamento Administrativo Para La Prosperidad Social, but neither CUSO nor FUPAD was a party to the agreement between the Columbian Government and the other. CUSO initiated litigation in Ontario and argued that the proper forum for the dispute was Ontario. FUPAD argued that the dispute should be decided in Colombia and applied to stay the Ontario action, pending a decision by the courts in Colombia as to whether they would hear the dispute.
Justice MacLeod relied on forum non conveniens principles to dismiss stay application. He commented that, as a result of his decision, the parties might wish to consider dispute resolution outside the courts, such as arbitration, to avoid litigation in multiple jurisdictions:
“ 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”.
As noted in an earlier Case Note, Ontario – complex contractual matrix and lack of privity prompts court to propose arbitration – #471, Justice MacLeod’s detailed summary of the numerous relevant contracts demonstrated his awareness of the privity issues and competing venues for dispute resolution when he proposed arbitration as the suggested next step in the process. Although these issues are usually raised by litigants as an obstacle to arbitration, Justice MacLeod relied on them to suggest that the litigants enter into a submission agreement (an agreement to engage in arbitration which is negotiated after a dispute arises and can be negotiated by litigants with no clear or admitted contractual relationship). This approach supports the value of arbitration as a solution to difficult procedural processes and promotes a post-dispute arbitration agreement to resolve them.
This case is significant because it highlights how many of the salient features of the arbitration process can work to the advantage of parties as a preferred means to resolve complex, transnational disputes. On the facts of CUSO International, it is easy to discern that the features of enforceability, neutral forum, party autonomy, confidentiality and arbitrator selection would lend themselves well to the dispute. The flexibility of the arbitration process would allow the parties to focus on the substantive issues and provide a neutral forum for resolution without having to submit to the jurisdiction of the other party’s national courts. Further, proceeding by way of arbitration before one or more arbitrators with the appropriate experience may also neutralize potential future problems arising from enforcement, as both Canada and Colombia are signatories to the 1958 New York Convention. Ultimately, this case serves to highlight what arbitration has to offer and how the process can deliver tangible benefits.
For an earlier Case Note on this decision see Ontario – complex contractual matrix and lack of privity prompts court to propose arbitration – #471.