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Barristers and Solicitors |
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Sep. 13, 2004. 01:00 AM
Ontario residents denied justice
Arbitration Act gives business immunity from class-action lawsuits,
says J. Gardner Hodder
The Ontario Arbitration Act impairs the legal rights of everyone in Ontario, not just Muslim women.Recently,
the act has come under public scrutiny because of a proposal by the Islamic
Institute for Civil Justice to apply the act to resolve family law issues
in accordance with Muslim law. Critics say the result will be to force unfair
verdicts on Muslim women.The act already deprives Ontario residents, particularly employees and consumers, of important legal rights.Ironically,
the objective of the Arbitration Act is a noble one. It permits persons and
businesses to agree to settle their disputes privately and without the intervention
of the courts. In the commercial arena, the act provides an important dispute
resolution mechanism for parties of equal bargaining power.For consumers
and employees, however, the act hurts far more than it helps. This is because
Ontario courts have consistently enforced arbitration clauses in standard
form contracts. For consumers and employees, this denial of access to the
courts usually means a denial of any remedy at all.For example, in
2001, a group of subscribers to Rogers Cable Inc.'s high-speed Internet service
launched a class-action lawsuit alleging the company had breached its subscriber
contracts by failing to provide the level of service advertised. They alleged
that service interruptions affected some 370,000 subscribers, with a typical
rebate claim worth about $240.The allegations have not been proven in court, and because of the Arbitration Act, they never will. Rogers
Cable posted an arbitration clause on its website, and the Ontario Superior
Court held this was sufficient to require disgruntled consumers to take on
Rogers Cable one at a time in separate arbitration proceedings. The court,
therefore, ordered that the class action could not proceed. The court
said it did not matter that there was an obvious inequality of bargaining
power between Rogers Cable and its subscribers. Equally, it did not matter
that individual subscribers might not bother to commence an arbitration proceeding
to claim $240.Class actions are by far the most effective way for
consumers to assert their rights, but a standard form contract can provide
corporations with immunity. Indeed, one large Toronto law firm, which services
large corporations, describes on its website how an appropriately drafted
arbitration clause "may serve to inhibit resort to class actions."Colin
Stephenson, lawyer for the proposed plaintiff class, said corporations often
use arbitration clauses to avoid class actions. He said he is not aware that
any Rogers subscribers have commenced arbitrations seeking a rebate."Individual
claims are too expensive. Arbitration clauses of this kind defeat the interests
of justice," according to Stephenson.The act deprives employees of rights, as well.Coincidentally,
it was in the same year as the Rogers class action that an Ontario employee
sued his former employer for wrongful dismissal, only to have that lawsuit
stopped in its tracks by an arbitration clause in his standard form employment
contract. The Superior Court ordered a stay of proceedings because
the clause stipulated that any dispute would have to be arbitrated in a U.S.
state whose laws provided for "at-will" employment.The court said
it did not matter that the arbitration clause required the application of
"at-will" employment law, which permits employees to be dismissed without
notice or termination pay, contrary to Ontario law.On the basis of
this court ruling, there is no reason why any foreign corporation, operating
in Ontario, could not require its employees to agree, as a term of their
employment, that all disputes be arbitrated anywhere in the world, such as
Europe or the Far East, and require the application of any country's law
of employment, no matter how unfair. Since dismissed employees typically
do not have the financial resources to commence arbitration proceedings overseas,
the effect is to deny access to justice.Employment law lawyer Jeffrey
Goodman of Toronto's Heenan Blaikie agrees that the Arbitration Act can have
the practical effect of depriving employees of their legal remedies."The
important thing here is that the Ontario Employment Standards Act requires
employers to provide to all their employees minimum notice of termination,
and it is illegal to make a contract that says otherwise. Any contract that
attempts to do so is unenforceable in an Ontario court. It cannot even be
brought to the court's attention, leaving the employee entitled to receive
a much higher common law damage award. However, if that same employee's contract
requires him or her to commence an arbitration in a U.S. at-will state under
that state's law, then the employee's statutory and common law rights have
been effectively eliminated," he said.It is indeed ironic that the
Arbitration Act, which was designed to facilitate access to justice, can
deny justice to so many people. There is nothing much courts can do to help
since the act permits virtually no flexibility in deciding whether to enforce
arbitration clauses in contracts. Also, whenever a court applies the Arbitration Act to shut down a lawsuit, the act specifies that there can be no appeal.
J. Gardner Hodder is a Toronto litigation lawyer.