DELL COMPUTER CORP. V. UNION DES CONSOMMATEURS
2007 SCC 34 – JULY 13, 2007

The Supreme Court of Canada recently released a decision that originated from a case based in Quebec. A number of organizations were granted intervener status, including ADR Chambers and the ADR Institute of Canada.

The case involved Dell Computer Corporation and a Consumer (Olivier Dumoulin). Dell’s website had an error in pricing on it for 2 types of handheld computers. One handheld was priced at $89 instead of $379 and the other handheld was priced at $118 rather than $549. When Dell became aware of the errors, it blocked access to the order pages through it’s main website and posted a correction notice. However, a consumer (Olivier Dumoulin) was able to get into the page through a different route and ordered a handheld at the lower price. When Dell refused to honour Oliver’s order at the lower price, the Consumer Union and Oliver filed a motion to bring a class action against Dell. Dell applied for referral of Oliver’s claim to arbitration pursuant to an arbitration clause in the terms and conditions of sale and dismissal of the motion for to bring a class action. The Superior Court and the Court of Appeal both held that the arbitration clause could not be set up against Oliver and authorized the class action against Dell

The first issue before the Supreme Court was whether the arbitration clause was “internal” or “external” to the contract within the meaning of the Civil Code of Quebec. The Supreme Court found that the traditional test that is used to determine whether clauses in paper contracts are “external” could not be transposed without qualification to web-based contracts. The Court held that in web-based contracts, a clause that requires operations of such complexity that its text is not reasonably accessible could not be regarded as an integral part of the contract. In Dell’s case, the arbitration clause could be accessed through a hyperlink and was therefore NOT “external” within the meaning of Civil Code of Quebec.

The second issue before the Supreme Court was whether to allow the motion for authorization to institute a class action. The Union argued that because this is a class action, the dispute is of public order and therefore cannot be submitted to arbitration. The Supreme Court rejected the Union’s argument and held that a class action is a procedure, and its purpose is not to create a new right. In the case at bar, the parties agreed to submit their disputes to binding arbitration – in other words, “arbitration” is the procedure that they agreed to use in the event of a dispute.

The Supreme Court allowed the appeal and held that Oliver’s claim should be referred to arbitration and that the motion to bring a class action should be dismissed.

Interestingly, now, s. 11.1 of Quebec’s Consumer Protection Act, prohibits any stipulation that obliges a consumer to refer a dispute to arbitration. However, the facts triggering the application of the arbitration clause in this case occurred before the coming into force of that provision, so the Supreme Court held that it did not apply to the facts of this case.

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