Facts
- Rogers Wireless Inc. provided mobile phone service to Canadian subscribers, including roaming in the United States, generally at $0.95 per minute but $4.00 per minute in certain “excluded areas.”
- Frederick I. Muroff, a Quebec resident and Rogers subscriber, was charged the $4.00 per‑minute roaming rate and disputed the charges.
- The service agreement included an arbitration clause requiring arbitration of disputes and barring customers from commencing or participating in class actions.
- Muroff sought authorization to institute a consumer class action in Quebec challenging both the $4.00 roaming rate and the arbitration clause as “abusive” under Quebec civil law.
- The Superior Court declined jurisdiction and referred the dispute to arbitration without deciding whether the arbitration clause was abusive.
- The Quebec Court of Appeal set aside that decision and directed the Superior Court to determine the arbitration clause’s validity before declining jurisdiction.
- While the matter was pending, Quebec enacted legislation limiting enforcement of consumer arbitration clauses where consumers seek class actions; the Supreme Court assessed the dispute under the prior legal regime.
Issues
- When an arbitration clause is invoked under Quebec’s Code of Civil Procedure, must the court decide in the first instance whether the clause is invalid or abusive before referring the parties to arbitration?
- Do allegations that a consumer arbitration clause is “abusive,” including a class-action waiver, require court determination at the authorization stage, or do they fall within the arbitrator’s first-instance jurisdiction?
Decision
- The Supreme Court allowed the appeal and set aside the Quebec Court of Appeal’s decision.
- The Court restored the Superior Court’s referral of the dispute to arbitration.
- Applying the competence-competence approach articulated in Dell, the Court held the arbitrator should decide jurisdictional objections first, including most validity/abusiveness challenges to the arbitration clause.
- The Court characterized the “abusive clause” challenge as a mixed question of fact and law requiring a detailed factual inquiry, making it inappropriate for prior judicial determination on the record at the referral stage.
Legal Principles
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Under Quebec arbitration procedure, when a party invokes an arbitration agreement, the court must refer the parties to arbitration unless the agreement is null, inoperative, or impossible to perform.
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Competence-competence gives the arbitrator priority to decide its own jurisdiction in the first instance, including challenges to the arbitration clause’s validity.
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A court may decide the validity/jurisdictional challenge first only where it presents:
- a pure question of law; or
- a mixed question of fact and law that can be resolved on a superficial examination of the record without significant evidence.
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Allegations that a consumer arbitration clause is abusive (including a class-action waiver) will ordinarily require fact-intensive inquiry and therefore should be determined first by the arbitrator.
Conclusion
The Court held that the trial court properly declined jurisdiction and referred the consumer dispute to arbitration without first adjudicating the alleged abusiveness of the arbitration clause, because the challenge required a detailed factual inquiry that, under competence-competence and Quebec arbitration procedure, belongs initially to the arbitrator.