On February 14, 2013, the Federal Court of Appeal unanimously
affirmed a Federal Court decision declining jurisdiction to hear a
motion to certify a class action in the presence of a binding
arbitration agreement and class action waiver. The decision was
drafted by the Honourable Justice Nadon (Justices Gauthier and
Trudel concurring) in
Murphy v. Amway Canada Corporation.
The Procedural Context
On October 23, 2009, the plaintiff, an Independent Business
Owner who distributed Amway's products, instituted a proposed
class action before the Federal Court of Canada on behalf of all
Canadian residents who distributed Amway's products starting
October 23, 2007. He claimed that Amway had breached various
dispositions of the Competition Act of Canada (the Act) and sought
damages of C$15,000 under section 36 of the Act.
Amway, represented by Blakes, filed a motion to stay and to
compel arbitration on the basis that the contract with its
distributors contains an arbitration agreement and a class action
waiver, so that the action had to be stayed and the matter referred
to individual arbitration. The class action waiver provides,
notably, that neither party is to "assert any claim as a
class, collective or representative action if (a) the amount of the
party's individual claim exceeds $1,000...".
The motion to stay and to compel arbitration was heard by the
Honourable Justice Richard Boivin of the Federal Court in the
context of a three-day hearing which included the hearing of the
plaintiff's motion to certify a class action. The Court found
it unnecessary to rule on this motion in light of its decision to
grant Amway's motion to stay and to compel arbitration, and to
permanently stay the plaintiff's action.
The Judgment at First Instance
In a decision rendered on November 23, 2011, Justice Boivin
found that the wording of the arbitration agreement and class
action waiver was clear, and thus prohibited the plaintiff from
bringing his C$15,000 claim (a) before a court and (b) as
a class action. Rather, it had to be submitted to individual
On the basis of these decisions, Mr. Justice Boivin concluded
that class actions are a procedural vehicle whose use neither
modifies nor creates substantive rights, that arbitration
agreements and class action waivers must be enforced by courts
absent specific legislative language to the contrary, and that such
language was nowhere to be found in the Act.
On appeal, the plaintiff argued, notably, that a private claim
for damages pursuant to section 36 of the Act would not be
compatible with private arbitration in light of the legislative
objectives of the Act, which are of public order. Put another way,
section 36 claims under the Act would not be arbitrable under
The Court of Appeal, on a thorough analysis of Seidel, found
that, despite its public interest objectives, there is nothing
sacrosanct about competition law that trumps an arbitration
agreement, in keeping with the jurisprudence of the Supreme Court
that matters of public order are capable of being the object of
arbitration. The Court held that there was no basis to conclude
that claims brought under section 36 cannot be determined by
arbitration, and that it is only where the relevant statute
contains language prohibiting arbitration that courts will refuse
to give effect to valid arbitration agreements.
The Amway decision applies Seidel to re-affirm the principle
that arbitration agreements and class action waivers are valid and
enforceable in Canada, in the absence of specific legislative
language to the contrary. The fact that the claim is brought under
a public order statute, such as the Competition Act, or that the
plaintiff seeks to have his action certified as a class action,
cannot affect the validity and enforceability of an arbitration
agreement and class action waiver. This represents a clear and
forceful endorsement by the Federal Court of Appeal of consensual
arbitration as a fair, efficient, and cost-effective way to resolve
disputes in Canada, even in the face of a proposed class
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Please join members of the Blakes Commercial Real Estate group as they discuss five key provisions of a commercial real estate purchase agreement that are often the subject of much negotiation but are sometimes misunderstood.
Emotional culture is influenced in great part by the mindset and actions of leadership, although employees also play more of a role than they may realize in creating the culture that exists in the group.
The session will be led by Dr. Robert Brooks, an award-winning author and psychologist. In his presentation, Dr. Brooks will describe the mindset and realistic practices of leaders and staff that help to nurture and sustain a culture characterized by positive emotions, satisfying, respectful relationships, a sense of meaning and ownership for one’s work, and enhanced job performance. Examples will be offered to illustrate strategies for developing a positive emotional culture in an organization.
Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.
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).