HELLER V. UBER TECHNOLOGIES INC., 2019 ONCA 1: QUESTIONING DEFERENCE IN CASES OF UNCONSCIONABILITY

This year’s decision in the case of Heller v. Uber Technologies has already generated an enormous amount of case notes, articles, summaries and blogs.  Most of these writings focus on the impact that the decision of the Ontario Court of Appeal has had and will have on class action litigation and employment law in the new “gig” economy.

While the impact on class action litigation and employment law is of course an important development, the influence the decision will have on arbitration and the enforcement of arbitration agreements and application of the jurisprudential principle of “competence-competence” should not be understated.

Heller involved an UberEATS driver from Toronto, who, as the representative plaintiff, brought a proposed class action on behalf of other Uber drivers.  The point of contention was a Driver Services Agreement and an UberEATS services agreement, each containing an arbitration clause.

The arbitration clause provided that any dispute would be submitted to mediation under the International Chamber of Commerce Mediation Rules, and if unsuccessful, to be referred to arbitration in Amsterdam, The Netherlands, under the Rules of Arbitration of the International Chamber of Commerce.

Perell J. at the Ontario Court of Justice granted an interim motion by Uber to stay the proceedings, determining that the dispute was both international and commercial in character and the International Commercial Arbitration Act applies, as well as resorting to the principle of “competence-competence” to stay that the initial challenge to the arbitrator’s jurisdiction ought to be heard by the arbitrator himself.

When the matter reached the Court of Appeal, the Court disagreed and found that Uber’s arbitration clause was an “illegal contracting out of an employment standard” and was therefore invalid on the basis of unconscionability.

The Court’s analysis and reasoning may signal what could have a severe impact on the enforcement or arbitration agreements in Ontario.  In the past, where the Courts have routinely deferred to arbitrators in issues of jurisdiction and validity of arbitration clauses, the Court’s decision in Heller may lend support in further cases where the unconscionability of an agreement is considered in the context of consumer protection or employment.