Why This Case Matters

The Supreme Court of Canada recently released its much anticipated decision in Uber Technologies Inc. v. Heller, in which a majority of the Court ruled that the arbitration clause in Uber’s standard form services agreement is unconscionable and therefore unenforceable.

In so doing, the Court cleared the way for a class action to be commenced in Ontario court, rather than for the dispute to be subject to mediation and arbitration in the Netherlands per the arbitration clause within the contract.

The majority’s decision raises serious questions about the enforceability of arbitration provisions in contracts of adhesion (i.e., standard form contracts), which are used frequently in the consumer context and by businesses in the gig economy, as noted in Justice Côté’s dissenting reasons. But perhaps more importantly, rather than increasing certainty for contracting commercial parties, the majority decision may have the effect of diluting recent jurisprudence protecting the right of private parties to agree to alternative methods of dispute resolution.

In Schuppener v Pioneer Steel Manufacturers Limited, the British Columbia Court of Appeal addressed the threshold for public policy concerns worthy of warranting judicial intervention in the context of forum selection clauses.

The Court reiterated the test for enforcement of forum selection clauses first set out in Z.I. Pompey Industrie v ECU-Line N.V. and recently followed in Douez v Facebook Inc. It also elaborated on what circumstances give rise to public policy concerns sufficient to override a forum selection clause in a contract. For a court to override a valid forum selection clause in a contract, there must be a compelling enough public policy reason to do so, and that requirement was not met in Schuppener.

The recent rekindling of protests against anti-Black racism has reignited conversations around race in every industry around the world. As society grapples with the issue of global racial inequality, the need for diverse representation in the context of international arbitration requires our attention, passion, and action. Right now, lawyers have the opportunity to lead by example through challenging the systemic discrimination facing racialized arbitrator practitioners and by creating an inclusive international arbitration community which values practitioners for their talent and expertise.

Arbitral panels are often homogenous in gender, nationality, ethnicity, race, and age. This is not surprising given that arbitral panels are generally selected by senior (and often white male) members of firms through word of mouth discussions with colleagues. As firms across prioritize diversity as a core value, lawyers and arbitrators must address the growing need for diversity in international arbitration.[1] “The objective of diversity is to ensure a well-thought through decision, taking into consideration various socio-political factors, ground realities and different perspectives and cultural backgrounds.”[2] Therefore, there is not only an important need to have gender diversity, but an ethnic and demographically diverse arbitrator to truly understand the issues in question and best serve clients.

In Comren Contracting Inc. v Bouygues Building Canada Inc., 2020 NUCJ 2, the Nunavut Court of Justice considered whether strict adherence to timelines set out in an arbitration provision was a necessary condition to compel arbitration.

Bouygues Building Canada Inc. (“Bouygues”), and its subcontractor, Comren Contracting Inc. (“Comren”) were engaged in a dispute relating to work on an airport. Comren applied to the Court for an order compelling Bouygues to submit to arbitration and for the Court to appoint an arbitrator. Bouygues argued that Comren was not compliant with the timelines set out in the dispute resolution provision of the subcontract and that the application should be dismissed.The Court found that Comren failed to invoke the arbitration process in a manner that would contractually compel Bouygues to participate, and dismissed the application.

Once again, a lower court has applied the Vavilov test when determining the appropriate standard of review of an arbitral decision. The Court’s decision in Freedman v. Freedman Holdings Inc., 2020 ONSC 2692 makes Ontario the third province to weigh in on a debate that has revealed divergent opinions and introduced some uncertainty into the standard of review for arbitral decisions.

Earlier this year, Courts in Manitoba and Alberta released decisions considering whether the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (and its companion, Bell Canada v. Canada (Attorney General), 2019 SCC 66) applied to the standard of review on an appeal of an arbitral decision. However, those courts reached opposite conclusions.

In Buffalo Point First Nation v. Cottage Owners Association, 2020 MBQB 20, the Manitoba Court of Queen’s Bench concluded that, in the wake of Vavilov, the standard of review for an arbitral decision on an extricable question of law is now correctness. Our review and analysis of that decision may be found here. The Buffalo Point Court applied the Vavilov framework without hearing full arguments from the parties about whether those cases applied to commercial arbitrations.

Shortly after the Buffalo Point ruling, the Alberta Court of Queen’s Bench issued a decision to the contrary in Cove Contracting Ltd. v. Condominium Corporation No. 012 5598 (Ravine Park), 2020 ABQB 106, holding that Vavilov did not change the standard of review for appeals of arbitral decisions. As we explained in our analysis of that decision here, the Alberta Court concluded that extricable questions of law should continue to be reviewed on a reasonableness standard unless they raise constitutional issues or issues of central importance to the legal system as a whole that fall outside the adjudicator’s expertise.

In Freedman, the Ontario Superior Court considered the impact of Vavilov on s. 46(1) of Ontario’s Arbitration Act, 1991. Pursuant to s. 46(1), a Court may set aside an arbitral award on various grounds. Although the Court did not cite Vavilov as a conclusive authority on the matter, it reasoned by analogy and applied the Vavilov framework indirectly when concluding that reasonableness is the appropriate standard of review under s. 46(1). This decision adds further uncertainty to the question of whether Vavilov’s framework applies to arbitral awards on appeal or review.

The Ontario Court’s use of the Vavilov criteria in determining the standard of review pursuant to s. 46(1) may also introduce new questions about the potential application of Vavilov in the context of international arbitrations. Unlike Buffalo Point and Cove Contracting, which dealt with appeals of an arbitral decision, the language of s. 46(1) regarding the circumstances in which a Court may “set aside” an arbitral decision is strikingly similar to the language in art. 34 of the UNCITRAL Model Law on International Commercial Arbitration, which is incorporated into provincial legislation governing international arbitrations in Canada. However, parties to international arbitrations may be reassured that Vavilov was applied in this case to find that the standard of review under s. 46(1) is reasonableness, consistent with the standard of review set out by the Supreme Court of Canada for appeals of arbitrations in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53.

In March 2020, we previewed anticipated changes the British Columbia (“BC”) government had tabled to the Arbitration Act, R.S.B.C. 1996, c. 55 (the “Old Act”). By way of Order in Council, these changes will come into force on September 1, 2020.

The Arbitration Act, S.B.C 2020, c. 2 (the “New Act”), which will repeal and replace the Old Act, contains a regenerated set of rules for domestic arbitrations which will bring BC in line with international best practices and enhance its profile as a desirable venue for domestic arbitrations.

The new Arbitration Regulation (“Regulation”) will also come into force on September 1, 2020, at which time the Arbitration Act Application Regulation, B.C. Reg. 96/2019, will be repealed.

The Supreme Court of British Columbia has provided yet another reminder of the up-hill challenge faced by parties appealing arbitral awards in its recent decision in Gormac Developments Ltd. v Teal Cedar Products Ltd., 2020 BCSC 712.

Following Teal Cedar Products Ltd. v British Columbia, 2017 SCC 32 and MSI Methylation Sciences Inc. v Quark Venture Inc., 2019 BCCA 448, the Court’s decision in Gormac reiterates the endorsement of arbitration as a final and binding means of dispute resolution.

On May 5, 2020, 23 of the Member States of the European Union signed the Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union. This move invalidates all Bilateral Investment Treaties between these EU Member States and disallows any future claims from being made thereunder.

On May 1, 2020, the Secretariats of the ICSID and UNCITRAL released their long-awaited draft Code of Conduct for Adjudicators in Investor-State Dispute Settlement (“Draft Code of Conduct”).

This Draft Code of Conduct is the result of the ICSID and UNCITRAL coming together to address an ethical issue which is often the source of criticism in Investor-State Dispute Settlement (“ISDS”), namely “the lack or apparent lack of independence and impartiality of ISDS tribunal members.” In doing so, the Draft Code of Conduct serves to reinforce the legitimacy of the ISDS process. 

The Draft Code of Conduct sets the table for the adoption of a Code of Conduct for Adjudicators which will “contain concrete rules rather than guidelines.” In other words, Member States have yet to come to an agreement on the common standards they share before this Draft Code of Conduct gives place to a binding (or non-binding) corpus of rules.