The policy rationales that underpin enforcing arbitration agreements may potentially be at odds with those underpinning the class actions regime (see our previous posts here and here). These policy rationales collide when confronting the question of whether plaintiffs can waive their right to participate in a class action through a mandatory arbitration clause and, if so, when this is permissible. Canada and the United States continue to have different approaches to the question of who decides whether a dispute is arbitrable – the arbitrator or the court? With respect to enforcement in the class action context, courts in the United States tend to enforce arbitration clauses such that class actions are precluded. However, in Canada an arbitration clause that acts as a barrier to dispute resolution may be unenforceable and precluded by certain legislation.

Last year, we reported on how Canadian courts will uphold mandatory arbitration clauses in some cases, depending on how the plaintiffs are classified.

In 2019, the Supreme Court of Canada held in TELUS Communications Inc. v Wellman that a mandatory arbitration clause found in telephone service contracts prevented a proposed class of business customers from advancing a class action proceeding against TELUS, but the same clause did not preclude a class action of consumers from bringing forward their claim. Mandatory arbitration clauses were only generally unenforceable against consumers under Ontario's Consumer Protection Act, 2002, and that other types of parties to an agreement, such as business customers, are held to the strict terms of a mandatory arbitration clause.