In Gupta v.
Why This Decision Matters
The
In Gupta, the
Background to the Dispute
In
Lindal brought a motion to stay the action - arguing that as a result of the arbitration clause within their standard form contract, the Purchase and Sale Agreement (PSA), all disputes must be brought before an arbitrator.
Interestingly, none of the parties could locate the PSA that was allegedly made between Lindal and
The Decision
The Court reviewed the language of the two possible arbitration clauses and determined that they were practically identical with minor differences that did not impact the reasoning.
As part of the analysis in determining whether the action should be stayed in favour of arbitration, the Court examined the elements of the analytical framework developed by the
1) Is there an arbitration agreement?
2) What is the subject matter of the dispute?
3) What is the scope of the arbitration agreement?
4) Does the dispute arguably fall within the scope of the arbitration agreement?
5) Are there grounds on which the court should refuse to stay the action?
In addition to other arguments as to why the action should not be stayed in favour of arbitration, the Plaintiffs argued that the arbitration clause is unconscionable, relying on the recent decision in Uber. As articulated in Uber, unconscionability requires "inequality of bargaining power and a resulting improvident bargain"1 in order to justify relief.
However, the
The Plaintiffs argued that re-starting the process in arbitration might make it unaffordable, but failed to provide evidence and particulars to support such assertion.
Although the PSA was a standard form contract, the Court was quick to point out that "standard form contracts do not by themselves establish an inequality of bargaining power" as found in Uber.4 The Court found, through evidence, that
Finally, concerned about the forum selection clause in the arbitration agreement, the Plaintiffs argued that the bargain was improvident and that they met the "strong cause" test to avoid the forum selection clause. The arbitration agreement stipulated
Conclusion
Showing great deference for the arbitration process and the jurisdiction of the arbitrator, the Court determined that the action should be stayed on the basis of the arbitration clause while leaving all other issues (including jurisdiction and forum selection) to be dealt with by the arbitrator.
The Court also provided pause on the concerns associated with standard form contracts raised by the recent Uber decision. Although there was no evidence that Lindal would have allowed alterations to the standard form contract before execution, the Court took great comfort in the knowledge that
Further, the arbitration clause was simple and allowed for the arbitrator to create much of the process thereby distinguishing it from the Uber decision. The Court appears to be signaling that standard form agreements do not lead in and of themselves to unconscionable arbitration clauses provided they allow for a fair and proportionate arbitration process to occur between the parties.
Footnotes
1. Uber, para 65.
2. Gupta, para 43.
3. Gupta, para 44.
4. Gupta, para 46 with reference to Uber, para 88.
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