I'd need to go to the books, because I'm not an employment specialist.
The Arbitration Act subjects arbitration agreements in *consumer* contracts to review for fairness (including cases where the consumer is a legal person): ss 88 et seq. The Employment Rights Act 1996 gives rights (e.g. in relation to unfair dismissal) which are independent of choice of law (see s 204) and also prevents "contracting out" of the right to go to an Employment Tribunal (see s 203), but there are very elaborate qualifications to that. At least, one might say, the problem has been thought about specifically.
I believe the "domestic arbitration" provisions were never brought into force because it was decided that they gave rise to a risk of discrimination against EU nationals, because they result in treating UK nationals differently. Because EU states are, for these purposes, New York convention states, they couldn't simply be extended to EU nationals without breaching the New York convention. ... But they couldn't not be extended to them without breaching the EU Treaties. So catch 22.
P
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From: Tettenborn A.M. <a.m.tettenborn@swansea.ac.uk>
Sent: 27 June 2020 17:22
To: Paul Stanley QC
Cc: frederick.wilmot-smith@all-souls.ox.ac.uk; obligations@uwo.ca
Subject: Re: Supreme Court of Canada on Unconscionability in Contract
Assuming Uber is not a UK corporation, could this problem also arise here? Is there a case for a precautionary extension of the s.86 exceptions to s.9 of our own Arbitration Act 1996?
Andrew
Sent from BlueMail<
http://www.bluemail.me/r?b=13187>
On 27 Jun 2020, at 16:02, Paul Stanley QC <pstanley@essexcourt.net<mailto:pstanley@essexcourt.net>> wrote:
I don't have a strong view on the decision itself, partly because I find the whole "unconscionability" debate difficult (the use of a portentous but essentially /meaningless/ jargon word is a sort of red flag ...) and partly because it looks to have been dancing around a thicket of statutory thorns, and that often demands some intellectual sleight of hand.
But aren't there bigger issues?
We get here at all because arbitration (which is an *industry*, with some powerful industry interest-groups, all the more dangerous because they wrap themselves disarmingly in the mantle of public interest) has made special claims over the past 50 years, and has been extraordinarily successful in getting them satisfied. The essential articles of faith are: (1) arbitration agreements should *almost always* be enforced by keeping the parties out of court; (2) things that /superficially look/ like arbitration agreements should *almost always* be enforced too ("competence competence", "kompetenz kompetenz"); (3) bits of a contract that contain an arbitration agreement should be enforced even if the contract as a whole wouldn't be ("separability"); (4) 1-3 apply regardless of how expensive, time-consuming, pointless, or downright unreliable the result of the arbitration process may be; (5) to a considerable degree, the entire process should remain shrouded in secrecy, so that we can never even *find out* just how expensive, time-consuming, pointless, or downright unreliable it might be. That mightily assists the vested interests in presenting a sometimes heavily photoshopped image.
Those attitudes are more-or-less justifiable given an assumption that arbitration agreements are things that find themselves into business-to-business commercial contracts, though even there arbitration has some real drawbacks. But commercial actors can take advice, and they can decide if the gain exceeds the pain, which it certainly can. They spend their lives making bad deals, and in the long run we do best to make them live by and with them.
To apply those principles to contracts which are likely to be entered into by ordinary people who have no reasonable way of understanding what they are agreeing to is absurd. To apply them in cases where the practical effect of the arbitration agreement is as good as a clause which said "Under no circumstances will you be able to obtain any remedy for breach of this agreement" is revolting.
The bigger question, for me, is whether this case shows that the "older way" was right: the courts preserved the power to decide whether to enforce an arbitration agreement, i.e. where the parties agreement to "avoid the courts" was regarded as an interesting decision which might or might not be allowed). As late as 1996, when England reformed its arbitration law, it had been intended to preserve that power outside the sphere of "international commercial" cases (see Arbitration Act 1996, ss 85-86, never brought into force). It looks as if the position in Canada is similar, and that provinces have adopted "pro-arbitration" statutes that extend the New York Convention regime to non-Convention cases.
Invalidating unfair arbitration agreements is a rather crude technique. Deciding whether or not to give effect to them /after/ a "dispute" arises allows more flexibility, which may be very useful. I think it's worth asking not just whether the court here usefully navigated the difficult terrain on which the statutory provisions placed it, but whether it should have had to navigate that terrain at all.
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Paul Stanley QC
D +44 20 7147 7340
T + 44 20 7813 8000
________________________________
From: Frederick Wilmot-Smith <frederick.wilmot-smith@all-souls.ox.ac.uk>
Sent: 27 June 2020 12:11
To: Obligations
Subject: Re: Supreme Court of Canada on Unconscionability in Contract
I’ve only read the opinions once, but even on my superficial grasp of the issues, Brown J’s analysis seems plainly superior to the majority’s.
The majority’s framework is inapt to analyse the problems of contracts of adhesion. Consider this: a contract is ‘unconscionable’, we are told, if there is "an inequality of bargaining power, stemming from some weakness or vulnerability affecting the claimant and . . . an improvident transaction”. (The majority has, in one fell swoop, abolished any knowledge requirement.) But Heller’s contract wasn’t obviously improvident on the date it was agreed (majority at 74). Uber’s model seems to be to make legal enforcement essentially impossible and then to act as judge and jury in their own disputes with their clients and drivers. This has advantages for clients and drivers: Uber saves the costs of vexatious disputes and can allocate some of the resultant benefits to resolving some facially justified complaints without any issue, and to keeping the good employees on side. (The record, I think, was that Heller had complained c.200 times, and those complaints had been resolved. Maybe some of those ‘remedies’ weren’t strictly warranted as a matter of law: Uber has to keep its drivers sufficiently sweet to stick around.) So: if, ex ante, you’re likely to be a net beneficiary of this contractual structure, you may not be improvident in agreeing to it.
The majority analysis on improvidence, if you can call it that, is at 94. It’s not clear they’ve even seen the problem. And they follow it up at 95 with a clanger it’s painful to see in print, let alone as the product of a Supreme Court decision: "The arbitration clause, in effect, modifies every other substantive right in the contract”. Substantive rights are not modified by their unenforceability; their unenforceability is a problem precisely because the rights are still there.
All this means that the majority’s choice of framework is something of a wolf in sheep’s clothing: Uber (and their ilk) will argue that the clauses are not improvident; and, if the courts are honest, some such arguments will succeed. But this is a dumb road to take Canadian law down: the agreement should not be enforced even if the driver was ex ante rational. Which, I take it, is part of Brown J’s point.
Another problem. The arbitration contract’s terms are only contingently bad—i.e. when the driver’s grievance is not resolved consensually. Compare that to ‘classic' unconscionability (cf. majority at 4), where a drunk heir agrees to pay 74,982% interest on a loan so they can buy more liquor: the interest rate is bad sans phrase; there’s no contingency to it. This shows that the injustice here just isn’t the same as substantive injustice in the matrix contract.
Relatedly, the court’s concern is different in these two cases. One problem with the 74,982% clause is that the court and the state should not implicate themselves in such outrageous agreements—which they do if they enforce the agreements. The problem with outrageous arbitration contracts is the opposite: the courts and the state should not wash their hands of contractual enforcement. So: something has gone wrong if you’re using the same analytic tools for both cases.
And another problem. If the majority’s framework were correct, Uber was right to run the case on competenz-competenz grounds. But it’s ridiculous to think that an ICC arbitral tribunal should determine Canadian public policy on access to justice (all the more so when the clause is designed to ensure that the tribunal will never even get to the question). If, then, Brown J is right (as he is) that the core issue is Canadian public policy, all Uber’s argument on this essentially misses the point.
Brown J makes these points, and more. So it is depressing that he is on his own—and that the majority do not even bother to say why they disagree with his analysis.
Not a good decision.
On 26 Jun 2020, at 18:41, Stéphane Sérafin <Stephane.Serafin@uottawa.ca<mailto:Stephane.Serafin@uottawa.ca>> wrote:
Yet Justice Brown at least attempts to outline what the distinction between public policy and unconscionability might be, by contrast with the majority which, on a cursory reading, appears to take us further down the road taken in Douez by subsuming public policy under equitable considerations. Frankly, this strikes me as a victory of sorts for proponents of (near-)absolute freedom of contract.
From: Jack Enman-Beech <jenmanbeech@gmail.com<mailto:jenmanbeech@gmail.com>>
Sent: June 26, 2020 1:17 PM
Cc: Obligations <obligations@uwo.ca<mailto:obligations@uwo.ca>>
Subject: Re: Supreme Court of Canada on Unconscionability in Contract
Attention : courriel externe | external email
As when a gang uses high pressure door-to-door sales tactics to push its protection racket—the resulting agreements are likely to be both inequitable and against public policy. The case was argued on unconscionability grounds probably for pragmatic reasons: unconscionability is relatively developed in Canadian law and commentary. Arguing for a public policy ensuring access to courts would have seemed riskier, particularly in the face of legislative support for arbitration. Academic support for such a public policy approach might have forestalled the extension of unconscionability. Justice Brown had almost no scholarship to cite in support of his public policy position, while the majority sees its unconscionability arguments reflected in work by most of the leading Canadian contract scholars.
Jack Enman-Beech
SJD Candidate, University of Toronto Faculty of Law
On 26 Jun 2020, at 16:28, Robert Stevens <robert.stevens@law.ox.ac.uk<mailto:robert.stevens@law.ox.ac.uk>> wrote:
Seems very odd indeed to me to think this is about "unconscionability". The case isn't properly about the parties' rights and obligations inter se. The "arbitration agreement" (sic) doesn't purport to alter those. It should be about whether an agreement between the parties can oust the court system's ability to hear a claim. It is an attempt by agreement to exclude civil recourse for wrongdoing. That doesn't require the court to embark on the sexy and exciting question of inequality of bargaining power. It is a public policy matter. It isn't about the proper limits on the powers of the parties to bind themselves by agreement (ie "freedom of contract"). It shouldn't matter if the driver were a bit richer, the form a bit more individually negotiated, or its terms a bit less egregious.
Brown J looks right to me. The approach of the majority both a mistake, and the source of future litigation.
________________________________
From: Stephen Pitel <spitel@uwo.ca<mailto:spitel@uwo.ca>>
Sent: 26 June 2020 15:01
To: Obligations <obligations@uwo.ca<mailto:obligations@uwo.ca>>
Subject: ODG: Supreme Court of Canada on Unconscionability in Contract
The Supreme Court of Canada has released its much-awaited decision in Uber Technologies Inc. v Heller:
https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdecisions.scc-csc.ca%2Fscc-csc%2Fscc-csc%2Fen%2Fitem%2F18406%2Findex.do&data=02%7C01%7CA.M.Tettenborn%40Swansea.ac.uk%7Cd18aab824f0a4b8ddd5a08d81aab1ad0%7Cbbcab52e9fbe43d6a2f39f66c43df268%7C0%7C1%7C637288669479053930&sdata=STdBxIEvnUsR8xauTLi0n2XqIheKzGRQl5orVpI3aLw%3D&reserved=0
I have not read it yet, but it seems to cite a great deal of academic authority around unconscionability.
Stephen
[Western Law]
Professor Stephen G.A. Pitel
Faculty of Law, Western University
(519) 661-2111 ext 88433
Vice-President, Canadian Association for Legal Ethics/Association canadienne pour l’ethique juridique
Past President, University of Western Ontario Faculty Association