The Ontario Courtroom of Attraction has confirmed that arbitration clauses in employment agreements are, normally, an efficient technique of referring a dispute to arbitration versus being decided in civil court docket.
An arbitration clause is an settlement between contracting events that sure disputes will likely be resolved by an arbitrator, not a civil court docket. Arbitration proceedings are sometimes sooner, less expensive and extra non-public than these in a court docket. If an settlement incorporates an arbitration clause and one get together brings a civil declare, the defendant might ask the court docket to remain the declare and order the matter to arbitration as a substitute.
Two years in the past, the Supreme Courtroom of Canada launched its determination Uber Technologies Inc. v Heller, 2020 SCC 16, which some have interpreted as limiting the enforceability of arbitration clauses, notably in employment contracts or unbiased contractor agreements. Nevertheless, the Ontario Courtroom of Attraction’s current determination Irwin v Protiviti, 2022 ONCA 533 confirms that (1) the exception articulated in Uber is a uncommon exception to the overall rule that challenges to arbitration clauses must be referred to the arbitrator, and (2) most arbitration clauses could be relied upon to refer a dispute to arbitration, even within the face of arguments that the clause will not be enforceable.
A refresher on Uber v Heller
In Uber v Heller, the SCC developed a narrow exception to the enforceability of arbitration agreements. It discovered that the employment dispute between Uber and its drivers fell exterior of the traditional framework for imposing these agreements.
Usually, if a celebration brings a civil declare, arguing its arbitration settlement doesn’t apply, a court docket will keep the declare, leaving the query of the appliance of the settlement to an arbitrator. A court docket will determine the matter provided that the problem to the arbitration clause raises (i) pure questions of regulation; or (ii) questions of blended reality and regulation that require solely superficial consideration of the proof within the report.
The SCC majority defined that there are “irregular” instances not contemplated by this framework, and acknowledged that the framework doesn’t ponder a situation the place the dispute would by no means be resolved if a keep is granted. This was the circumstance seen in Uber v Heller: the contract required pricey arbitration within the Netherlands, which might be a “brick wall” to the participation of Canadian Uber drivers within the arbitration.
The SCC carved out a uncommon exception to the overall rule of referring disputes to arbitration when the phrases of the arbitration settlement would successfully insulate the settlement from problem. In “irregular” instances akin to Uber v Heller, a court docket might decide the validity of the arbitration settlement, versus the arbitrator.
Irwin v Protiviti
In Irwin v Protiviti, the difficulty was, very like in Uber v Heller, the enforceability of an arbitration clause in an employment contract. The arbitration clause supplied that any declare associated to terminating the appellant’s employment have to be submitted to arbitration. The plaintiff worker argued the arbitration clause was unconscionable, and was additionally illegal as a result of it prevented the worker from making statutory claims underneath Ontario’s Employment Requirements Act, 2000 and Human Rights Code. In response, the employer moved to remain the motion. The movement decide held that the validity of the arbitration clause was itself a matter for arbitration.
On attraction, the worker argued that the movement decide ought to have decided whether or not the arbitration clause was invalid. The Ontario Courtroom of Attraction confirmed the overall rule of arbitral referral set out in Dell: a court docket can solely decide the enforceability of an arbitration settlement the place the problem raises a pure query of regulation, or of blended reality and regulation requiring no more than a superficial consideration of proof.
On this case the arbitration clause couldn’t be decided by a superficial consideration of the proof. A dedication of unconscionability is a “probing factual inquiry,” requiring findings of credibility, and assessing the events’ sophistication, bargaining energy, and the details associated to drafting the settlement. The query of the arbitration clause’s consistency with the Ontario employment laws was a query of blended reality and regulation, and couldn’t be determined with out deciphering the employment settlement.
Notably, there have been no entry to justice issues like these in Uber v Heller. There was no suggestion that the prices of arbitration could be a “brick wall” to the claimant’s participation, or that boundaries to arbitration would successfully depart the dismissed worker and not using a treatment.
Implications
Irwin v Protiviti, 2022 ONCA 533 reinforces the overall rule that courts ought to decline jurisdiction to find out the enforceability of an arbitration provision in an employment contract. Courts might decline jurisdiction to take action even the place there are questions concerning unconscionability and compliance with employment-related laws.
The priority flagged by the SCC in Uber v Heller – that in very uncommon instances the construction of an arbitration settlement would possibly successfully forestall a dispute from ever reaching arbitration – was particular to the details in Heller. This exception to the rule is unlikely to come up in typical employment contracts that comprise arbitration agreements, notably the place there aren’t any entry to justice points that may successfully bar the worker’s participation in arbitration.
