This morning the Supreme Court of Canada released written reasons in the case of Uber v. Heller, 2020 SCC 16. This is an incredibly fascinating decision about whether Uber’s mandatory arbitration clause for its Ontario drivers is unconscionable.
For context, the Uber arbitration clause governing its drivers states the following:
Effectively the clause states that all disputes (including employment standards issues) are subject to the law of the Netherlands and the seat of arbitration is Amsterdam, The Netherlands. Importantly, the mandatory up front fees for arbitration is USD $14,500. So a driver who wishes to seek a legal remedy would have to pay USD $14,500 before getting in front of an arbitrator. The ultimate legal issue is whether or not the clause is unconscionable because it acts as a brick wall to a driver getting a legal remedy.
The following headnote speaks volumes about the Court’s final analysis:
H’s [Heller’s] claim that the arbitration clause is unconscionable requires considering two elements: whether there is an inequality of bargaining power and whether there is a resulting improvident bargain. There was inequality of bargaining power between Uber and H because the arbitration clause was part of an unnegotiated standard form contract, there was a significant gulf in sophistication between the parties, and a person in H’s position could not be expected to appreciate the financial and legal implications of the arbitration clause. The arbitration clause is improvident because the arbitration process requires US$14,500 in up-front administrative fees. As a result, the arbitration clause is unconscionable and therefore invalid.
Uber v. Heller, 2020 SCC 16
So not only do we have clarity on the unconscionability test, but also the determination that the Uber arbitration clause is unconscionable.
The full Supreme Court of Canada decision is available here.