For the London Free Press – March 1, 2010

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Companies have been sent a clear message — deal with complaints because dispute resolution is too impractical to pursue.

A recent Ontario Court of Appeal ruling confirms an evolving trend to protecting consumers from enforcement of mandatory arbitration clauses in consumer agreements.

The plaintiff in Griffin v. Dell Canada alleged Dell had sold computers with latent defects that made them prone to overheating, power failure, inability to “boot up” and unexpected shutdowns.

Griffin sought certification of the case as a class action. In reply, Dell moved to stay the proceeding in favour of private individual arbitration under the mandatory arbitration clause in each consumer contract. The arbitration clause directed that complaints must be taken to the (now defunct) National Arbitration Forum in Minnesota.

Dell relied on sec. 7(1) of the Ontario Arbitration Act, which requires the court to stay a proceeding where there is a valid mandatory arbitration clause.

A lower court had dismissed Dell’s motion and conditionally certified the case as a class action. The appeal court dismissed Dell’s appeals and refused to stay the class proceeding.

The appeal court relied on provisions of the Consumer Protection Act that invalidate mandatory arbitration clauses in consumer contracts. These provisions took effect in 2005, after the consumer contracts with Dell were entered into. But the court chose to rely on them because damages did not arise until after the provisions took effect.

Interestingly, the court also ensured the rights of non-consumers within the class were protected. The Consumer Protection Act restricts the definition of a “consumer” to an individual who “acts for personal, family or household purposes and does not include a person who is acting for business purposes”. But the court found it unreasonable to separate the claims of consumers and non-consumers.

In applying the consumer protection law, the appeal court made a point of noting that Dell’s mandatory arbitration clauses were simply unfair to Canadian consumers.

Writing for the court, Justice Robert Sharpe said: “In my view, it is clear beyond any serious doubt on this record that staying any claims advanced in the action will not result in any of the stayed claims being arbitrated. I agree with the motion judge that there is a lack of reality to Dell’s argument that the claim should proceed by way of arbitration. There will be no arbitration. The choice is not between arbitration and class proceeding; the real choice is between clothing Dell with immunity from liability for defective goods sold to non-consumers and giving those purchasers the same day in court afforded to consumers by way of the class proceeding.”

The appeal court has sent a clear message that consumer rights must be taken seriously. Large corporations will now have more difficulty avoiding responsibility for addressing consumer complaints by making dispute resolution too impractical to pursue.

For the London Free Press – May 25, 2009

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Online alternative dispute resolution (ADR) may be the future of dispute resolution.

ADR has been used for many years to resolve disputes outside the court system. It involves parties agreeing to mediate or arbitrate their dispute rather than pursue it through the courts.

ADR has become increasingly popular as parties find themselves frustrated by prolonged court cases and rising costs.

Arbitration works much like a court trial, in that the arbitrator makes a decision based on evidence presented by the parties.

Mediation is more like a facilitated negotiation, in which the parties reach a decision based on the efforts of the mediator to help them find common ground.

ADR, especially mediation, can offer participants numerous advantages. It’s more cost-effective and significantly faster than going through the courts.

Mediation also can preserve the relationship between the parties. That can be vitally important, whether it be a martial dispute in which disputing parties must be able to maintain a civilized relationship for their children, or a business relationship both parties hope to continue.

As technology advances and our global economy grows, more and more people are expanding ADR beyond in-person mediations and arbitrations and conducting them by phone or video conference. Telephone and video ADR presents significant cost and time advantages, whether the parties are across town or in different countries.

As the costs of the tools and programs that allow such virtual ADR drop, this will be a growing option for the future of alternative dispute resolution. What used to require very expensive video conference facilities can now be done with tools available to most of us on our desktops.

Some people are skeptical about the efficacy of virtual ADR, especially over the phone where you can’t see the other party. Missing key body language cues or facial expressions may hinder effective ADR.

On the other hand, that disadvantage affects both parties equally and thus creates a level playing field to which both parties must adapt. And much of the problem can be addressed by using video technology.

In many instances, these disadvantages are outweighed by the numerous advantages of ADR.

Ultimately, as the world keeps getting smaller, and parties do business with clients around the world, online ADR offers a sensible, efficient and cost -effective way to resolve disputes. And it means difference can be addressed early before they escalate and become harder to settle.

Online ADR has the potential to significantly change the way disputes are resolved.

Perhaps we’ll see a world where virtual ADR is used, subject to cooling-off periods, for almost instantaneous mediation of disputes, whether they’re business, political, or personal.

Given the right factual situations and the right parties, the use of virtual ADR could positively influence Canada’s legal landscape.