An arbitration clause in Modern Standard Form contract invalid if unconscionable.
Appellant had an arbitration clause in its standard form of contract entered into by the corporation with its employee Mr. Heller, the defendant in this case. The clause claimed that any dispute over the parties shall be deemed to be referred to International Chamber of Commerce situated at Netherlands. Finding the corporation flouting terms of the contract, a class proceedings was initiated by Defendant in 2017. Such a clause did not have a fortiori and was plausible to be devoid of any employment standards legislation. However, the motion judge stayed the class proceeding. An appeal was thereafter filed by Defendant in the Court of Appeal on the impugned decision of the motion judge which was reversed. Supreme Court of Canada has taken the charge over the case where appellant appealed against defendant in which he argued on Ontario Arbitration Act and Employment Standards Act, 2000. But, appellant pertains towards Ontario International Commercial Arbitration Act [ICCA]. To embark upon on the clarity of jurisdiction, court set out a structure by relying on precedents Dell Computer Corp v. Union des consommateurs, 2007 and Seidel v. TELUS Communications Inc., 2011. The only question at this stage was concerning a predictability that if the case was passed to an arbitrator’s jurisdiction, it would result in the challenge never being resolved. This is because the defendant highlighted his impossibility to reach physical location of ICC at Netherlands combined with the inflated fee for arbitration which was as high as US$14,500 excluding all legal fees, administrative costs that defendant will have to account for. Defendant is in devastating condition to pay such exorbitant costs as his annual salary is $20,800- $31,200, thus making it disproportionate for him to plead for. Hereby in the light of issues of accessibility, the Court allowed to decide on the issue that whether the clause of arbitration was unfair.
The next issue which comes in is Doctrine of unconscionability which has two elements – inequality of bargaining power and a resulting improvident bargain. In this case, the appellant has taken undue advantage of defendant’s vulnerability which cannot be ignored reckoning on rule of law by denying access to justice. Based on both the financial, logistic inabilities and/or International Chambers of Commerce’s rule that entails payment of fees which lays on proposition that the case is prejudiced to defendant’s interest and also in order to protect his bargaining interests and on the biased terms that resulted, the majority of the judges viewed the arbitration clause to be unconscionable, therefor unenforceable and invalid. Henceforth, the arbitration clause was declared void and appeal of appellant was dismissed with costs.