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CIPO: The (Un)Enforceability of Mandatory Arbitration Clauses

Sat, 1 Aug 2005 09:32:11 EST

"In Ontario, the courts considered the enforceability of mandatory arbitration clauses in the context of proposed class proceedings in the two cases: Huras v. Primerica Financial Services Inc. and in Kanitz v. Rogers Cable Inc [...] The amendments authorize a consumer to commence a class proceeding arising out of a consumer...

"In Ontario, the courts considered the enforceability of mandatory arbitration clauses in the context of proposed class proceedings in the two cases: Huras v. Primerica Financial Services Inc. and in Kanitz v. Rogers Cable Inc [...] The amendments authorize a consumer to commence a class proceeding arising out of a consumer transaction notwithstanding a term in an agreement precluding such proceedings." "In response to the proliferation of consumer class actions, many companies in the service industry incorporate mandatory arbitration clauses into consumer contracts so to preclude any court action, including class proceedings. However, a trend appears to be emerging in the law which favours class proceedings over arbitration. Recent authority from the British Columbia Court of Appeal allowed a class proceedings certification hearing to proceed in the face of a mandatory arbitration clause, noting that an application to stay proceedings in favour of arbitration was premature until there is a finding that a class proceeding was not the preferable procedure. Further, pending legislation in Ontario renders "inoperative" and unenforceable a mandatory arbitration clause in a consumer contract-which itself is not unconscionable or otherwise void-simply by a consumer commencing a proposed class action with respect to any dispute arising under the contract."

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