Dell Computer Corp. v. Union des consommateurs et al., (2007) 366 N.R. 1 (SCC)

• Judge: McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ.
• Court: Supreme Court (Canada)
• Case Date: July 13, 2007
• Jurisdiction: Canada (Federal)
• Citations: (2007), 366 N.R. 1 (SCC);2007 SCC 34

Dell Computer v. Union des consommateurs (2007), 366 N.R. 1 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

Temp. Cite: [2007] N.R. TBEd. JL.003

Dell Computer Corporation (appellant) v. Union des consommateurs and Olivier Dumoulin (respondents) and Canadian Internet, Policy and Public Interest Clinic, Public Interest Advocacy Centre, ADR Chambers Inc., ADR Institute of Canada, Inc., and London Court of International Arbitration (interveners)

(31067; 2007 SCC 34; 2007 CSC 34)

Indexed As: Dell Computer Corp. v. Union des consommateurs et al.

Supreme Court of Canada

McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ.

July 13, 2007.

Summary:

Some April 2003 order pages on the Dell Computer website stated a too low price for certain computers. Dell blocked access to those pages from its regular address but did not remove them from its site. Before Dell could correct the pages, several Quebec consumers used a deep link to get around the barrier, accessed the blocked pages and ordered computers. Dell refused to honour those orders. The plaintiff, a consumer, applied for authorization to institute a class action. Dell moved for a declinatory exception and sought referral of the matter to arbitration pursuant to the arbitration clause in the electronic sales contract.

The Quebec Superior Court dismissed Dell's motion. Dell appealed.

The Quebec Court of Appeal, in a decision reported [2005] R.J.Q. 1448; 2005 QCCA 570, dismissed the appeal. Dell appealed.

The Supreme Court of Canada, Bastarache, LeBel and Fish, JJ., dissenting, allowed the appeal. The court ordered referral to arbitration and dismissed the application for authorization to institute a class action.

Arbitration - Topic 102

Right to arbitration - What matters arbitrable - [See Quebec Procedure - Topic 9001 ].

Quebec Civil Law - Topic 43

General principles - The Civil Code - Interpretation - [See first Quebec Civil Law - Topic 9032 ].

Quebec Civil Law - Topic 9032

Conflict of laws - International jurisdiction of Quebec authorities - Requirement of foreign element - The Supreme Court of Canada held as follows: "To ensure the internal consistency of the Civil Code of Québec ... ('C.C.Q.'), it is necessary to adopt a contextual interpretation that limits the scope of the provisions of the title on the international jurisdiction of Quebec authorities to situations with a relevant foreign element. The prohibition in art. 3149 C.C.Q. against waiving the jurisdiction of Quebec authorities is found in that title and accordingly applies only to situations with a relevant foreign element" - See paragraphs 1, 12 to 67.

Quebec Civil Law - Topic 9032

Conflict of laws - International jurisdiction of Quebec authorities - Requirement of foreign element - The Supreme Court of Canada held that arbitration did not have in itself any foreign element where it was, in essence a neutral institution - An arbitration tribunal had only those connections that the parties to the arbitration agreement intended it to have - The simple fact that the parties chose arbitration did not create a foreign element - Such an interpretation would empty the foreign element concept of all meaning - An arbitration that contained no foreign element in the true sense of the word was a domestic arbitration - The rules on the international jurisdiction of Quebec authorities applied only to an arbitration containing a foreign element, such as where a defendant in a case involving a personal claim was domiciled in another country - See paragraphs 3, 38 to 54.

Quebec Civil Law - Topic 9032

Conflict of laws - International jurisdiction of Quebec authorities - Requirement of foreign element - An arbitration clause in a 2003 electronic sales contract between Dell Computer and a Quebec consumer referred dispute settlement to a mandatory arbitration organized by the National Arbitration Forum (U.S.) - The Supreme Court of Canada ruled that the arbitration clause was not a foreign element that engaged the international jurisdiction of Quebec - Furthermore, when it was invoked, the arbitration clause was not prohibited by legislation - As a result, art. 3149 of the Civil Code of Québec, which prohibited setting up against a consumer a waiver of the jurisdiction of Quebec authorities, did not apply to the present dispute - See paragraphs 3, 12 to 67.

Quebec Civil Law - Topic 9033

Conflict of laws - International jurisdiction of Quebec authorities - Waiver of - [See first Quebec Civil Law - Topic 9032 ].

Quebec Obligations - Topic 2505

Effect of contracts - Between contracting parties - External clause - Dell Computer sold computers by Internet - A purchasing consumer could access the "Terms and Conditions" of the electronic sales contract by clicking once on the highlighted "Terms and Conditions" hyperlink - The "Terms and Conditions" contained an arbitration clause under which disputes had to be referred to arbitration - The Supreme Court of Canada held that the arbitration clause was not an external clause within the meaning of art. 1435 of the Civil Code of Lower Canada - A consumer's access to the arbitration clause was not impeded by the configuration of the clause - See paragraphs 90 to 102, 230 to 241.

Quebec Procedure - Topic 8407

Arbitration - General - What matters arbitrable - Dell Computer refused to honour computer purchases by several consumers - One consumer sought authorization to institute a class action against Dell - Dell sought referral to arbitration on the basis of the arbitration clause contained in the electronic sales contract - The matter raised questions of law relating to the application of Quebec private international law rules and questions of fact that included whether there was a foreign element - An issue was raised as to how far, on a referral application, the Superior Court could go in scrutinizing an arbitration clause - More specifically, who should first rule on the validity or applicability of an arbitration agreement, the arbitrator or the court? - The Supreme Court of Canada laid down a general rule that in any case involving an arbitration clause, a challenge to the arbitrator's jurisdiction must be resolved first by the arbitrator - A court should depart from the rule of systematic referral to arbitration only if the challenge to the arbitrator's jurisdiction was based solely on a question of law - If the challenge required the production and review of factual evidence, the court should normally refer the case to arbitration - In the present case, the matter should have been referred to arbitration - However, given the status of the case, the court found that it would now be counterproductive to refer the matter to arbitration and thus expose the parties to a new round of proceedings - It was preferable to deal with all the questions now - See paragraphs 68 to 89, 163 to 178.

Quebec Procedure - Topic 8407

Arbitration - General - What matters arbitrable - [See Quebec Procedure - Topic 9001 ].

Quebec Procedure - Topic 9001

Class action - General - Nature of - Dell Computer, on the basis that the wrong price had been given, refused to honour computer purchases by several consumers - One consumer sought authorization to institute a class action against Dell - Dell sought referral to arbitration on the basis of the arbitration clause contained in the electronic sales contract - The consumer invoked art. 2639 of the Civil Code of Lower Canada and argued that since this was a class action, the dispute was of public order and therefore could not be submitted to arbitration - Thus, Dell was not entitled to request arbitration and the class action had to be heard on its merits - The Supreme Court of Canada rejected the argument and referred the matter to arbitration - Class action was a procedure and its purpose was not to create a new right - See paragraphs 105 to 110.

Statutes - Topic 6745

Operation and effect - Commencement, duration and repeal - Prospective enactments - Effect on matters in progress - In 2003, Dell Computer refused to honour computer purchases by several consumers - One consumer sought authorization to institute a class action against Dell - Dell sought referral to arbitration on the basis of the arbitration clause contained in the electronic sales contract - The two applications proceeded before a judge and an appeal and, on December 13, 2006, an appeal was heard by the Supreme Court of Canada - On December 14, 2006, Quebec amended its Consumer Protection Act to prohibit a stipulation that obliged a consumer to refer a dispute to arbitration and restricted their right to go to court, particularly by class action - The new legislation did not provide for retroactive application - The Supreme Court of Canada held that the new legislation did not apply to the dispute before it - The arbitration agreement had been concluded and the facts triggering the application of the arbitration clause had occurred before the new legislation came into force - See paragraphs 111 to 120, 155 to 162.

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Counsel:

Mahmud Jamal, Anne-Marie Lizotte and Dominic Dupoy, for the appellant;

Ronald Bourguignon, Yves Lauzon and Careen Hannouche, for the respondents;

Mistrale Goudreau and Philippa Lawson, for the interveners, Canadian Internet Policy and Public Interest Clinic and Public Interest Advocacy Centre;

J. Brian Casey, Janet E. Mills and John Pirie, for the intervener, ADR Chambers Inc;

Stefan Martin and Margaret Weltrowska, for the intervener, ADR Institute of Canada;

Pierre Bienvenu, Frédéric Bachand and Azim Hussain, for the intervener, London Court of International Arbitration.

Solicitors of Record:

Osler, Hoskin & Harcourt, Toronto, Ontario, for the appellant;

Lauzon Bélanger, Montréal, Quebec, for the respondents;

University of Ottawa, Ottawa, Ontario, for the interveners, Canadian Internet Policy and Public Interest Clinic and Public Interest Advocacy Centre;

Baker & McKenzie, Toronto, Ontario, for the intervener, ADR Chambers Inc.;

Fraser Milner Casgrain, Montréal, Quebec, for the intervener, ADR Institute of Canada;

Ogilvy Renault, Montréal, Quebec, for the intervener, London Court of International Arbitration.

This appeal was heard on December 13, 2006, by McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ., of the Supreme Court of Canada.

The judgment of the Supreme Court was delivered in both official languages on July 13, 2007, and the following reasons were filed:

Deschamps, J. (McLachlin, C.J.C., Binnie, Abella, Charron and Rothstein, JJ., concurring) - see paragraphs 1 to 121;

Bastarache and LeBel, JJ. (dissenting) (Fish, J., concurring) - see paragraphs 122 to 242.