Canada: Supreme Court Weighs In On Interplay Between Class Actions And Arbitration Clauses In Consumer Contracts

Arbitration clauses have been used in Canada, with mixed results, as a mechanism by which potential defendants have attempted to lessen their exposure to class actions. Arbitration clauses are frequently contained in consumer contracts and, in particular, in service contracts. These clauses typically require consumers to participate in mediation or arbitration and, often, to waive all rights to participate in class action proceedings.

A recent decision from the Supreme Court of Canada has provided guidance on the interplay between these arbitration clauses and consumer-based class actions in Canada's common law jurisdictions. In Seidel v. Telus Communications Inc.,1 the Supreme Court of Canada overruled, in part, a 2009 British Columbia Court of Appeal decision that granted a stay of proceedings in a proposed class action in favor of arbitration. The narrow 5-4 majority concluded that certain provisions of British Columbia's Business Practices and Consumer Protection Act (BPCPA) created statutory rights that could not be waived by contract. For claims that arise under those provisions, arbitration clauses of the type contained in consumer agreements could not prevent access to the courts and could not constitute a waiver of a plaintiff's right to participate in a class action.

The decision upheld the stay imposed for the remaining allegations that were not advanced directly under s. 172 of the BPCPA.

Seidel, a proposed class action, was commenced by a Telus subscriber whose service agreement contained a standard arbitration clause and a clause that purported to bar class action proceedings. The Plaintiff's proposed class action was based, in part, on alleged violations of the BPCPA. Telus applied for a stay of the intended class action, arguing that the arbitration clause bound the parties. In doing so, Telus relied on earlier Supreme Court decisions in Dell Computer Corp. v. Union des consommateurs2 and Rogers Wireless Inc. v. Muroff3. These Quebec decisions found that procedural class action legislation could not modify the substantive rights created by arbitration clauses contained in consumer agreements. In both cases, the proposed actions were stayed and the plaintiffs were forced to seek remedies in arbitration.

At first instance, the British Columbia Supreme Court dismissed Telus' application for a stay. The stay was dismissed based on the court's view that the reasoning used in Dell was not applicable to the laws of British Columbia. The British Columbia Court of Appeal overturned the decision and stayed the proposed class action, finding that Dell and Rogers did apply in British Columbia. This decision would have forced the Plaintiff to advance his claim through arbitration and would have prevented any class action. Leave to appeal to the Supreme Court was granted in November 2009.

The Supreme Court of Canada found that allegations falling under s. 172 of the BPCPA, a statutory provision which confers rights similar to those provided to consumers under the Consumer Protection Act, 2002 in Ontario, could be advanced in a class proceeding because that section expressly provided consumers with a right to court access that could not be waived by the existence of an arbitration clause in consumer contracts.4 The Court observed that s. 172 of the BPCPA demonstrated a clear legislative intention to intervene and relieve consumers of contractual commitments to pursue disputes only through private, confidential mediation or arbitration.5 As a result, to the extent an arbitration clause purported to restrict a consumer's right to bring a claim before the courts, such a clause was invalid.

The Plaintiff's claims that fell under other provisions of the BPCPA, the now repealed Trade Practice Act or at common law continued to be stayed pursuant to British Columbia's Commercial Arbitration Act.6

Prior to the Supreme Court's decision in Seidel, several Quebec decisions appeared to support the denial of certification of class actions in circumstances where a consumer agreement contained an arbitration clause. The Supreme Court's decision in Seidel has limited the effect of these Quebec cases. While the BPCPA contains a provision that provides consumers with a specific right of access to the court for alleged violations, the Quebec legislation at issue in Dell did not. To the extent that a proposed class or individual action alleges a violation of consumer protection legislation that provides a similar right of access to the court, Seidel suggests that courts will uphold the parties' right to pursue the claim in court over arbitration. Clauses purporting to waive class action rights, where tied to an arbitration clause contained in a consumer service agreement, will likely not prevent plaintiffs from pursuing a class action.7

While the Seidel decision will likely be characterized as welcome news for consumers and consumer groups seeking to invalidate arbitration clauses commonly found in consumer agreements, the impact of the decision will be limited to consumer agreements, and particularly those which are governed by legislative provisions preserving consumers' access to the courts. This decision will not affect arbitration clauses in non-consumer contracts such as franchise and insurance agreements, which will continue to have the effect of presumptively staying intended class or individual actions.

The Seidel decision corresponds with the general approach adopted in Ontario, as reflected in the Court of Appeal's decision in Griffin v. Dell Canada Inc.8 That said, it remains to be seen what effect, if any, this decision will have in Quebec, a civil law jurisdiction, and in other common law jurisdictions which lack consumer protection legislation with provisions comparable to those in British Columbia and Ontario.


1. 2011 SCC 15 [Seidel].

2. [2007] 2 S.C.R. 901 [Dell].

3. 2007 SCC 35 [Rogers].

4. Supra note 1 at para. 7.

5. Supra note 1 at para. 2.

6. S.B.C. 1986, c. 3, c.15.

7. Supra note 1 at para. 46.

8. 2010 ONCA 29 [Griffin].

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Amanda C. McLachlan
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.