Lessons for Canadian Businesses While the Telus case dealt with related proceedings against the same defendant, the court’s reasoning appears to also address cases where a single plaintiff adds non-signatory defendants to its litigation against a party to the arbitration clause. Although those situations may involve a single “proceeding”, as long as the claim asserted against a signatory defendant falls within the scope of the arbitration clause, it should be stayed by a court. In light of the Telus decision, Canadian businesses seeking to ensure the enforceability of their arbitration clauses should: • Use broadly-worded clauses: A stay of proceedings can only be fully effective if the arbitration agreement is sufficiently broad to deal with all of the matters in dispute. Parties should use language that covers all claims arising out of their relationship regardless of whether the claims are contractual or not. • Ensure a fair arbitration procedure: Both the majority and minority opinions in Telus signaled that courts will look more closely at whether contracts of adhesion containing arbitration clauses are unconscionable. Indeed, the majority cited with approval a recent Ontario Court of Appeal decision finding that Uber’s use of a widely accepted set of international arbitration rules was unconscionable in its contracts of adhesion with drivers.[10] Companies should incorporate arbitration rules that all can handle smaller disputes fairly and efficiently, e.g. without imposing large filing fees on the parties. Consider the potential for consolidation: The Telus decision notes that the potential for a multiplicity of proceedings is a foreseeable result of the contracting parties’ choice of arbitration. In some cases, parties may wish to obtain the advantages of arbitration while still consolidating related claims. Some, but not all, arbitration rules allow for consolidation of related claims provided that all relevant parties have consented to this possibility in their agreements. Businesses should review their contracts to determine whether or not their arbitration agreements provide for consolidation of related disputes.
[1] 2019 SCC 19 [“Telus”] [2] Consumer Protection Act, 2002 S.O. 1992, c.30 [3] Class Proceedings Act, 1992 S.O.1992, c.6 [4] Arbitration Act, 1991 S.O. 1991, c17, s.7 [5] Telus at para.33 [6] For example, in Radewych v. Brookfield Homes (Ontario) Ltd., 2007 ONCA 721, the Court of Appeal refused to stay a claim by a homeowner against a builder where the plaintiff had named the home’s architect and a sub-contractor as co-defendants. [7] Arbitration Act, s.7(1) [8] Arbitration Act, s.7(2) [9] Arbitration Act, s.7(5) [10] Heller v. Uber Technologies Inc., 2019 ONCA 1 [invalidating a standard ICC arbitration clause]
ABOUT THE AUTHOR
Robert Wisner Litigation partner
Robert Wisner is a Litigation partner at McMillan LLP and its Co-Chair, International Arbitration. His practice focuses on international dispute resolution and corporate litigation.