“Uber chose this arbitration clause in order to favor itself and thus take advantage of its drivers”- Justice Nordheimer

The Ontario Court of Appeal has recently determined that the uber’s arbitration clause that sends matters for arbitration to the Netherlands, represents an “unfair bargain” and is “unconscionable.”

In Heller v. Uber Technologies Inc. 2019 ONCA, the plaintiff entered into a service agreement with UberEATS on Dec. 15, 2016, with the arbitration clause stating “mediation proceedings under the International Chamber of Commerce Mediation Rules (ICC Mediation Rules).” The clause further adds that disputes unsettled within 60 days “shall be exclusively and finally resolved by arbitration under the Rules of Arbitration of the International Chamber of Commerce (ICC Arbitration Rules)” and that the place of arbitration would be Amsterdam. The main issue, in this case, was: “(i) whether the Arbitration Clause amounts to an illegal contracting out of the ESA and is thus invalid and (ii) whether the Arbitration Clause is unconscionable and thus invalid on that separate basis.”

As per the court, drivers have to pay a US$2,000 non-refundable filing fee to start mediation proceedings against Uber as per the ICC Mediation Rules. If the disputes are under US$200,000, it would mean drivers “must pay an additional administrative fee, which may be as much as US$5,000. These fees do not cover the mediator’s fees or legal fees.” The court stated that “the up-front administrative/filing-related costs” for a driver to engage in a mediation-arbitration process in the Netherlands is US$14,500. The court found this fee to be high and expressed that an UberEATS driver, the plaintiff earns “about $20,800-$31,200 per year, before taxes and expenses.

Justice Nordheimer held that Uber’s arbitration clause “constitutes a contracting out of the ESA” and further added  

“It eliminates the right of the appellant (or any other driver) to make a complaint to the Ministry of Labour regarding the actions of Uber and their possible violation of the requirements of the ESA. In doing so, it deprives the appellant of the right to have an ESO [Employment Standards Officer] investigate his complaint,” he wrote, adding that this is important because if a complaint is made then the “Ministry of Labour bears the burden of investigating the complaint.”

The court further found that Uber has no dispute resolution mechanism “either in Ontario, or elsewhere, short of the Arbitration Clause.” The other places drivers may turn to with a complaint are in the Philippines or in Chicago and are “completely controlled by Uber.

Justice Nordheimer states that:

“Uber chose this arbitration clause in order to favor itself and thus take advantage of its drivers, who are clearly vulnerable to the market strength of Uber. It is a reasonable inference that Uber did so knowingly and intentionally.”

Lior Samfiru, a co-founding member of Samfiru Tumarkin LLP explained that with respect to the arbitration clause, the Court of Appeal’s reasoning could be similarly applied to any province across Canada. He further stated:

“To me, the key here is legal rights are meaningless if there’s no mechanism to enforce them. I think [for] lawyers, especially those acting for employers, this is just another reaffirmation that if there’s any doubt in terms of which way employment laws are going to come down, on the side of the employer or the employee, it’s clearly going to be the employee. Lawyers have to keep that in mind and not assume that just because there’s a piece of paper that says something, that piece of paper is going to be enforceable.”

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