Case information

Contracts — Arbitration agreements — Contract of adhesion — Validity — Whether arbitration agreement is unconscionable as improvident bargain — Whether arbitration agreement contrary to public policy — Arbitration Act, 1991, S.O. 1991, c. 17, s. 7(2).

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In this proposed class action, some, but not all, of the proposed class members are parties to mandatory arbitration agreements. These agreements cover the subject matter of the dispute between the proposed class members and the respondents. The respondents applied under s. 7(1) of Ontario’s Arbitration Act, 1991, S.O. 1991, c. 17, for an order staying the class proceeding in favour of arbitration. The applicant resisted the stay order, arguing that the agreements are unconscionable or contrary to public policy, making them invalid.

The motion judge granted the stay order. Assuming that the proposed class members were the weaker party in an unequal bargaining environment, they were not unduly disadvantaged by terms they did not understand or appreciate. That arbitration is mandatory and precludes access to the courts is not unconscionable; it is a feature of virtually all arbitration agreements.

None of the agreements in this case contract out of available statutory employment law remedies. Their explicit waiver of class proceedings, which is contrary to public policy when the waiver is free-standing, is not contrary to public policy when attached to an arbitration agreement. Furthermore, the agreements’ waiver of representative or collective arbitrations is not contrary to public policy. There is no statutory prohibition on the waiver in question; it is a pure matter of contracting and the court is bound to enforce it.