In a case decided under the civil law of Québec,
the Supreme Court of Canada has upheld the validity of an
arbitration agreement contained in the hyperlinked terms and
conditions of an online consumer purchase order. The Court also
found that such a commitment to arbitrate cannot be avoided by
bringing a class action. The decision has broad implications
for the arbitration of consumer disputes and for class actions
in all Canadian jurisdictions.
In 2003 Dell Computer Corporation posted incorrect prices on
its web order pages for two products. Dell corrected the error
three days later, but not before hundreds of consumers had
placed online orders at the posted prices. Dell declined to
process the orders. This resulted in an attempt by the Union
des Consommateurs (a non-profit organization) to initiate a
class action against Dell in the Superior Court of
Québec. Dell resisted the proposed class action by
invoking the arbitration agreement contained in the terms and
conditions page hyperlinked to its website order pages. Dell
applied to have the claim referred to arbitration and to have
the application to institute a class action dismissed. Dell
failed at first instance and again on appeal, but prevailed on
further appeal to the Supreme Court of Canada.
A threshold issue was whether the courts or an arbitrator
should rule first on a challenge to the validity or
applicability of an arbitration agreement. The Court confirmed
that, as a general rule, in any case involving an arbitration
agreement such a challenge must be resolved first by the
arbitrator. The Court held that a departure from that rule
should be made only if the challenge is based solely on a
question of law – and even then, only if the court is
satisfied that it is not a delaying tactic and will not unduly
impair the conduct of the arbitration. The Court held that this
case ought to have been first referred to arbitration.
Nevertheless, the Court addressed the case on its merits.
The Union challenged the arbitration agreement’s
validity primarily in reliance on Article 3149 of the Civil
Code of Québec, which protects the jurisdiction
of the Québec courts over consumer matters and
invalidates any purported waiver of it. Although the Union had
relied successfully on that provision at trial and on appeal,
the Supreme Court of Canada rejected this argument because the
case lacked the "relevant foreign element" needed to
trigger the article.
The Court then rejected the Union’s remaining
challenges to the arbitration agreement’s
Article 1435 of the Civil Code nullifies an
"external" clause in a consumer contract unless the
clause is expressly brought to the consumer’s
attention or the consumer already knows of it. The Court held
that this arbitration clause was not external, because it was
reasonably accessible by hyperlink.
Article 2639 of the Civil Code precludes
disputes over matters of "public order" being
submitted to arbitration. The Union maintained that this
dispute could not be submitted to arbitration because, as a
class action, it was a matter of public order. The Court held
that, while class actions are clearly of public interest,
they are only a legal procedure and do not create new rights.
That conclusion may have implications for the Canadian cases
that have treated class certification as a reason to favour
litigation of disputes that are otherwise subject to
The Supreme Court of Canada has gone a long way to resolving
issues that continue to vex the courts of other jurisdictions,
particularly the United States.
Sellers of goods and services to Canadians via the internet
will be encouraged by the Court’s willingness to
enforce agreements, including arbitration agreements, made in
an electronic environment. The Court’s view that the
commitment to arbitrate should prevail over the procedural
right to commence a class action will undoubtedly inspire
sellers of consumer goods to include arbitration agreements in
their standard-form documents. Whether such agreements will be
effective to prevent class actions may depend in part on the
steps taken to bring them to the consumer’s
After the events that gave rise to this dispute took place,
Ontario and Québec enacted legislation prohibiting
consumer agreements from requiring that disputes arising out of
them be submitted to arbitration (s. 7(2) of
Ontario’s Consumer Protection Act, 2002, and
s. 11.1 of Québec’s Consumer
Protection Act). Class action plaintiffs in Canada may
prefer to bring proceedings in these provinces. It remains to
be seen whether other Canadian jurisdictions follow suit.
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.
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