AT&T MOBILITY V. CONCEPCION AND SEIDEL V. TELUS:
Whether mandatory arbitration clauses that effectively or
explicitly bar class proceedings are allowable in consumer
contracts has been the subject of much judicial comment in both
Canada and the United States. Following the release of two recent
supreme court decisions, AT&T Mobility LLC v. Concepcion et ux.
from the United States Supreme Court, and Seidel v. TELUS
Communications Inc., from the Supreme Court of Canada, mandatory
arbitration clauses barring class proceedings remain allowable in
both countries. That said, the case law in Canada makes it clear
that mandatory arbitration clauses barring class proceedings will
be inoperative where there are provincial statutory provisions
prohibiting them – such as in the consumer protection
legislation in Alberta, Ontario, and Québec.
In AT&T Mobility, district and circuit courts in California
ruled that an arbitration clause prohibiting class proceedings,
including class arbitration, was unconscionable, under the State of
California's Discover Bank rule. The US Supreme Court reversed
the decision, holding that the arbitration clause was not
unconscionable and that the state law was preempted by the Federal
SEIDEL V. TELUS
In Seidel v. TELUS, the Supreme Court of Canada concluded that
the arbitration agreement in the cell phone company's standard
form contract was partially unenforceable, because it required the
customer to waive rights granted by that Act, and which would not,
in the Court's view, be provided by arbitration. The Supreme
Court of Canada left open the possibility that absent a legislative
provision stating otherwise, a mandatory arbitration clause in a
consumer contract trumps class proceedings.
The customer sued the cell phone company for breaching its
contract by charging her for air time before her calls were
actually connected. She applied to certify her lawsuit as a class
proceeding under the provincial Class Proceedings Act. The contract
contained an arbitration agreement, in which the customer had
waived her right to sue in a class proceeding. The cell phone
company applied to stay the certification application. The B.C.
court decisions were complex, but ultimately resulted in the Court
of Appeal staying the application. The customer appealed to the
Supreme Court of Canada.
All the Supreme Court of Canada judges agreed that (unless there
is a legislated exception) any challenges to an arbitrator's
jurisdiction should be determined first by that arbitrator, unless
they are based on a question of law, or mixed fact and law, that
requires only a basic review of documentary evidence. The judges
agreed that the issue in this case was a question of law and so
they could decide it.
The majority of the Court partly overturned the decision of the
Court of Appeal, concluding that the B.C. legislature had intended
that claims under certain sections of the provincial Business
Practices and Consumer Protection Act (BPCPA) be made in court,
rather than resolved by arbitration, and that this right could not
be waived. The customer was allowed to continue her certification
application for those claims. The Court upheld the stay of her
other claims, concluding that arbitration agreements should be
enforced unless there is legislation to the contrary.
When an arbitration clause in a consumer contract is invoked in
Canada, it may trump class proceedings, but careful attention
should be paid to applicable provincial and federal statutes and
whether such statutes will render the arbitration clause
inoperative. In particular, various provinces (Québec,
Ontario, and Alberta) have enacted consumer protection legislation
expressly prohibiting mandatory arbitration agreements and
"waiver of class proceedings" clauses in consumer
It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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).