On February 14, 2013, the Federal Court of Appeal in Kerry Murphy v. Amway Canada Corporation confirmed that Canadian courts will hold parties’ to their agreement to arbitrate, unless there is express legislative language in a statute that excludes or prohibits arbitration agreements or class action waivers.
Kerry Murphy (“Murphy”) brought a proposed class action proceeding against the respondent, Amway Canada Corporation (“Amway”). Murphy claimed that Amway’s business practices violated various sections of the Competition Act, alleging that Amway was running a multi-level marketing plan, that it had failed to provide its distributors with accurate information concerning compensation, and that it operated an illegal pyramid-selling scheme. Murphy sought to have the action certified as a class, and in response, Amway brought a motion to stay the court proceedings and compel arbitration, pursuant to the arbitration agreement between Murphy and Amway, which included a class action waiver.
The Federal Court of Appeal found that the class action waiver in the arbitration agreement barred Murphy from bringing a motion to certify the action as a class. Further, it held that Murphy’s claims under the Competition Act were arbitrable, as there was nothing in the Act which could be interpreted or read to exclude or prohibit arbitration. The Court echoed the Supreme Court’s decision in Seidel v. Telus confirming that express legislative language in a statute is required before a court will refuse to give effect to the terms of an arbitration agreement. In Seidel, the Court held that claims under section 172 (read together with section 3) of the British Columbia Business Practices and Consumer Protection Act (“BPCPA“) was not arbitrable because section 3 provided that any waiver of a person’s rights, benefits or protections under the BPCPA is void, unless the waiver or release is expressly permitted in the BPCPA. The Federal Court of Appeal found that the BPCPA is not analogous to the Competition Act, which contains no language evidencing the intent of the legislature to invalidate an arbitration clause.
Kerry Murphy v. Amway confirms the non-interventionist approach of Canadian courts asked to stay court proceedings in favour of a valid arbitration clause and to stay class proceedings where there is a valid class action waiver. This case adds to a line of Canadian case law that deals with arbitrability and staying court proceedings in favour of arbitration (see Seidel, Dell Computer Corp. v. Union des consommateurs et al, Rogers Wireless Inc. v. Muroff, Desputeaux v. Éditions Chouette (1987) Inc.).
