In June, the Supreme Court ruled in its Uber v Heller decision that the arbitration clause in Uber’s contract with one of its drivers, Mr. Heller, was invalid. The clause was “unconscionable”: it placed disproportionate expense on Mr. Heller ($14,500 up front) when compared to the size of the award that he could reasonably expect. And it effectively prevented him from obtaining any dispute resolution mechanism at all.

Ironically, the same reasoning the Court uses to expose the unfairness of Uber’s arbitration clause also exposes inequalities facing individuals and small businesses attempting to access Canada’s domestic justice system. Access to justice has always been for the rich – I find it surprising that the Court appears so struck by this reality in the contract setting.

The relevant circumstances were summarized by the Court as follows:

“The arbitration clause, in effect, modifies every other substantive right in the contract such that all rights that Mr. Heller enjoys are subject to the apparent precondition that he travel to Amsterdam, initiate an arbitration by paying the required fees and receive an arbitral award that establishes a violation of this right. It is only once these preconditions are met that Mr. Heller can get a court order to enforce his substantive rights under the contract. Effectively, the arbitration clause makes the substantive rights given by the contract unenforceable by a driver against Uber. No reasonable person who had understood and appreciated the implications of the arbitration clause would have agreed to it.” (See the decision at para 95).

An “unconscionable” contractual term exists where:

  1. There is an inequality of bargaining power between the parties; and,
  2. The resulting bargain is “improvident” – i.e. – it unduly advantages the stronger party or disadvantages the weaker (see the decision at paras 65 and 74).

Applying this test, the Court found that the arbitration clause – requiring the payment of an up-front $14,500 arbitration fee and travel to the Netherlands – was indeed unconscionable and therefore invalid. The Court went so far as to say that “when arbitration is realistically unattainable, it amounts to no dispute resolution mechanism at all” (see the decision at para 97).

The decision is a welcome one for many employees, particularly those working in the gig economy, where standard form contracts invariably leave them with the bare minimum. At the same time, it is interesting that the Court is so critical of a contractual provision that bears some resemblance to most Canadians’ current relationship with our own legal system. Canadians seeking to enforce their rights in court, domestically, will face cumbersome fees, too. For example, the average cost of a five-day trial in a family law matter is over $25,000.

The decision will have no legal consequence on access to justice for Canadians outside of contract law (and was not meant to). However, perhaps it marks one of many important mental milestones in our drawn-out paradigm shift toward universal access to justice.

Disclaimer: This article is provided as an information resource. This article should not be relied upon to make decisions and is not intended to replace advice from a qualified legal professional. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. Please note that this information is current only to the date of posting. The law is constantly changing and always evolving. I encourage you to reach out with any specific questions.