Employment & Labour

Class action fails due to arbitration clause

By Barry B. Fisher

In this case, the judge was faced with a motion by the defendants to stay a class action seeking to declare drivers as employees for the purposes of the Ontario Employment Standards Act. He ruled that the arbitration clause, which required that all disputes arising from the agreement must be resolved through a mediation/arbitration procedure in Amsterdam, according to Dutch law in accordance with the ICC Arbitration rules, which require a minimum fee of approximately $7,500 to be paid by the driver, required a stay of the class action.

The court held the following:

1) This relationship might be a commercial relationship, even though it may also be an employment one, and as such the International Commercial Arbitration Act, not the Arbitration Act, 1991 applies.

2) The issue of whether the arbitrator has jurisdiction in this matter is to be first decided by the arbitrator. This is called the Competence – Competence Principle,

3) As the ESA does not preclude resorting to arbitration, the Court should not refuse to stay the action on that basis.

4) It is not unconscionable to prevent an employee from pursuing his ESA rights through the Courts where there is an arbitration clause.

An appeal is likely, according to Plaintiff’s counsel.

Query: What if the drivers all filed separate ESA complaints with the Ministry of Labour instead of a class action?

Would the OLRB rule that they did not have jurisdiction to hear the case because the parties have decided that the matter must be decided in a foreign country? Does not the “no contracting out” section of the ESA (s. 5) relate to this issue? Sections 97, 98 and 99 (2) of the ESA deal with when a complaint under the ESA cannot be filed with the Ministry. Is this an exhaustive list or can there be non-statutory exceptions?

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