A full recording of the webinar can be streamed here. A text summary of the webinar is being prepared and will be posted here when it is ready.

CJCA Hosts Webinar, "Uber v Heller: First Impressions"

Christina Tang

 

On July 3^rd, 2020, the Canadian Journal of Commercial Arbitration presented “Uber v Heller: First Impressions”, a webinar to discuss the Supreme Court of Canada’s (SCC) decision in the much-anticipated case, Uber v Heller [1] and its implications for arbitration, employment law, consumer protection, and the gig economy.

A very distinguished panel of speakers participated in the discussion: Prof. Kevin Banks (Queen’s University), Pierre Bienvenu (Norton Rose Fullbright), William G. Horton (Independent Arbitrator), Tina Cicchetti (Cicchetti Arbitration), Prof. Janet Walker (Osgoode Hall Law School, York University, CJCA Executive Editor), and Prof. Anthony Daimsis (University of Ottawa Faculty of Law – Common Law zsection, CJCA Case Comments and Recent Developments Editor). The Honorable Thomas Cromwell, former Supreme Court Justice, joined the panel as special commentator and Prof. Joshua Karton (Queen’s University), managing editor for the CJCA, served as the moderator.

Overview of Uber v Heller

Professor Karton began the webinar by thanking Arbitration Place for hosting and sponsoring the session. Then, he proceeded to provide a brief overview of the salient points in the Uber v Heller decision:

In 2017, David Heller, an UberEats driver, launched a class action against Uber. Mr. Heller claimed the corporation violated provisions in Ontario’s Employment Standards Act (ESA), including failing to treat Uber drivers as employees rather than contractors.[2]

Uber moved for a stay in proceedings on the ground that Uber’s standard form services agreement contained a binding dispute resolution clause that mandated any mediation followed by arbitration in the Netherlands under the International Chamber of Commerce (ICC) rules. The motions court judge granted the stay, but the Ontario Court of Appeal overturned, holding that the arbitration agreement as an unconscionable contract.

At the SCC, the majority upheld the ONCA’s refusal of a stay. To reach this decision, the majority first determined that Ontario’s Arbitration Act (AA),[3] as opposed to its International Commercial Arbitration Act (ICAA),[4] applied to the dispute. The majority then outlined a new exception to competence-competence, and held it could retain the matter of the arbitration agreement’s validity without first referring that question to a tribunal, if the arbitration agreement is such that an arbitrator would not ever actually be in a position to resolve the dispute—here, because the chosen dispute resolution procedure was so expensive that Uber drivers in practice lacked all ability to access it. Finally, the majority concluded that the arbitration agreement was unconscionable, as there was an inequality of bargaining power and an improvident bargain.

Justice Brown’s concurrence agreed that court should refuse to grant a stay but disagreed with the majority’s reasoning. Justice Brown explained that arbitration agreements that effectively prevent arbitration are void as contrary to public policy, in this case the public policy in favour of access to justice as an aspect of the rule of law.  

Justice Côté dissented, as she would have referred the matter of validity to arbitration. In her opinion, the SCC ought to have upheld party autonomy and preserved the ability of parties to choose the kind of justice they could access.

Following this overview, the panelists engaged in a lively discussion on each of the main issues that the SCC had addressed.

Threshold Issue: Determining whether the Arbitration Act or International Commercial Arbitration Act Applied

Like most Canadian provinces and territories, Ontario has two distinct arbitration regimes: arbitration that is both international and commercial is governed by the ICAA, and all other arbitration is governed by the AA. Before the SCC could address the question of validity, it needed to determine which arbitration legislation governed Uber’s motion for a stay. While the parties agreed that Uber’s arbitration agreement was “international”, it was unclear whether the dispute was “commercial”. Ultimately, the court decided that the question of whether someone is an employee or a contractor is a question of employment law, which was not intended to fall under the purview of the ICAA.

Tina Cicchetti explained that this threshold issue was  significant one. First, applying the domestic arbitration statute effectively insulated international arbitration from the impact of the SCC’s judgement, which had caused some consternation among the international arbitration community. Second, since the SCC majority’s decision all stemmed from its finding that employment agreements are not “commercial” for the purposes of the ICAA, Cicchetti speculated that commercial parties entering into commercial agreements which do not give rise to employment disputes should not be affected by Uber.

It is interesting to note that this threshold issue would not have arisen had this case been tried in Quebec. As Pierre Bienvenu explained, when Quebec incorporated the UNCITRAL Model Law[5] into its Code of Civil Procedure,[6]it did not limit the legislation’s application to international and commercial relationships, as the common law provinces have done. Regardless of whether the dispute in Uber was commercial or non-commercial, the same arbitration regime—applicable to international disputes—would have applied due to Uber’s Dutch legal personality.

Looking at the case from a labour and employment law perspective, Kevin Banks expressed agreement with the SCC’s decision to classify the dispute as one of employment law. Not only is the question of whether someone is an employee “the most fundamental of employment disputes”, [7] it is also a question that is frequently raised. The effectiveness of Canada’s labour and employment law system depends on its ability to resolve this precise question in a low-cost and expeditious manner. One of the main issues in Uber, then, was whether attempts to refer such a fundamental question to arbitration would thwart the efficiency of Canada’s existing system of employment law.

Janet Walker challenged the view that there were only two potential ways for the SCC to resolve the threshold issue. She noted that arbitrability – questioning whether this was the kind of dispute that could be submitted to arbitration at all – is a third option that the SCC ought to have considered. For example, it could have followed the lead of some civil law jurisdictions in holding employment disputes to be un-arbitrable.

Justice Cromwell canvassed the panelists’ opinions on whether there has been an evolution in the underlying rationale for judicial respect for arbitration. In response, William Horton noted that Uber provided the court with an opportunity to explore certain aspects of arbitration they have previously taken for granted, such as party autonomy. Furthermore, Uber appears consistent with a recent line of cases, including Bazza v Canada (Minister of Citizenship and Immigration)[8] and Canada (Minister of Citizenship and Immigration) v Vavilov,[9] that express a greater desire for the court to retain for itself the final say over what a “just” result is.

Carving Out a New Exception to the Competence-Competence Principle

In Dell v Union des Consommateurs[10] and Seidel v TELUS Communications Inc.,[11] the SCC established two exceptions to the general principle that arbitral tribunals should have the first opportunity to rule on their own jurisdiction. Courts may only refuse to stay proceedings when the dispute over the arbitrator’s jurisdiction is a pure question of law, or when it is a question of mixed fact-and-law that requires only a superficial consideration of the evidence to resolve.

According to Bienvenu, the newly-created exception in Uber does not represent a fundamental shift in the Court’s approach to competence-competence. All nine SCC judges in Uber agreed that arbitrators should normally rule on their own jurisdiction, and the new exception endorsed by the majority is a narrow one that only applies to clauses which “effectively prevent” access to arbitration. However, Bienvenu qualified his opinion by noting that the new exception will require the court to engage in an inquiry that extends beyond a prima facie review of the case. While the majority is alert to the risk of a “mini-trial”, their proposed means of preventing it are unconvincing. Hence, Bienvenu cautioned that we may see increased delays and costs involved with validity challenges to arbitration agreements.

Continuing along the same line of discussion, William Horton and Anthony Daimsis offered contrasting interpretations of a particular statement in Justice Brown’s concurrence. Paragraph 125 reads:

An arbitrator cannot reasonably be tasked with determining whether an arbitration agreement, by its terms or effects, bars access to that very arbitrator.[12]

Daimsis noted this statement indicates that Brown J does not perceive arbitrators as competent to determine questions of jurisdiction. After all, aren’t all questions of jurisdiction essentially questions about whether the case should be decided by that very arbitrator? In response, Horton suggested that Brown was not questioning the competence of arbitrators, but rather stating that arbitration agreements which effectively prevent arbitration cannot be subject to competence-competence because no arbitrators will actually be appointed pursuant to such agreements.

Walker, who has written extensively about civil procedure and class actions, remarked that that the newly created exception should not be a cause for concern. This is due to fact that Uber v Heller is a special case, as it brings together the realms of arbitration, class actions, and employment law. When it comes to finding the right forum and means of resolving such an exceptional dispute, the court should be given a degree of flexibility in interpreting legislation to provide authoritative rulings for all possible plaintiffs.  

Upon Justice Cromwell’s intervention, the discussion shifted to Justice Côté’s dissent. First, the panelists considered the merits of Côté J’s claim about an “unstated assumption” in the majority’s access-to-justice argument. Multiple speakers acknowledged that there was force behind this observation, and William Horton suggested ways that the majority’s reasoning could have been better substantiated. However, the panel also criticized Côté’s opinion. In particular, Cicchetti noted that Côté’s approach, involving near-automatic referral to arbitration, had the potential of expanding the commercial arbitration system to include disputes it was not designed to resolve.

Assessing the Validity of Arbitration Agreements & Determining the Test for Unconscionability

For Daimsis, who discussed the matter of unconscionability before the court as counsel for the intervenor Canadian Federation of Independent Business, the test for unconscionability put forth by the SCC bears many similarities with Marshall v Canada Permanent Trust Co, a classic case that expresses the traditional view of unconscionability in at least some of the common law provinces.[13] However, while it is a simple test, it is not without drawbacks. In particular, Daimsis drew attention to the majority’s apparent presumption that parties who incorporate foreign choice of law clauses are doing so abusively. This presumption adds an extra step to the framework in Dell, and its implications in the international law context remain unclear: when a party – such as Uber – makes a motion for a stay, will it need to prove that the foreign law chosen in its dispute resolution agreement does not flout the domestic law? If so, this would constitute a major departure from Dell.  

Conclusion: Broader Implications of Uber v Heller

The webinar concluded with the panelists offering their thoughts on the broader implications of Uber. Walker explained that Uber advances our thinking on the type of support international arbitration needs from the courts, and the limits on the categories of disputes it can resolve. Furthermore, Bienvenu and Cicchetti speculated that, due to the narrowness of the newly created exception to competence-competence, Uber will likely not pose a risk to commercial parties resolving commercial disputes. However, it would be prudent to warn commercial parties seeking to avoid dispute resolution of the exception, and to draft arbitration agreements with it in mind.

From a labour and employment law perspective, the Uber case is essentially about the way that the gig economy is redefining traditional employment and commercial relationships. Banks noted that, while the SCC provides some additional clarity to the age-old legal question of “who is an employee”, it leaves other matters unanswered. For example, is arbitration still a potentially viable forum for dispute resolution in the gig economy, provided that it is low-cost and accessible to individual litigants? What actually constitutes unequal bargaining power in a gig economy relationship with contracts concluded through an app?

The Uber v Heller saga has ended, but questions about its legacy are only beginning to surface. More litigation will be needed to determine whether the principles of this case will stand the test of time.