Is an arbitration agreement invalid if it interferes with a class proceeding?

Ontario, Canada


The following excerpt is from Smith Estate v. National Money Mart Company, 2008 CanLII 27479 (ON SC):

In Ontario, whether an arbitration agreement is “invalid” under one of the exceptions to granting a stay because it interferes with a class proceeding is a legal issue for the court and not the arbitrator to determine. Whether or not a proposed class action satisfies the certification criteria of s. 5(1) of the Class Proceedings Act, which would make the arbitration agreement invalid or inoperative, is an issue of law or of mixed fact and law that can only be decided by the court and not the arbitrator. It is an exception to the general referral to the arbitrator and clearly a matter outside of his or her jurisdiction under any arbitration agreement. Whether an action may be certified as a class proceeding is clearly outside the scope of any arbitration agreement. Even when parties agree or consent to certification, the court must still rule on whether the criteria for certification have been satisfied: Markle v. Toronto (City), [2004] O.J. No. 3024 (S.C.J.) at para. 2; Vezina v. Loblaw Companies Ltd., [2005] O.J. No. 1974 (S.C.J.) at para. 13.

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