In Vento Motorcycles, Inc. v. United Mexican States, 2024 ONCA 480 (CanLII) (for ease of reference, “Vento-CIPPIC“), the Court addressed The Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic’s (“CIPPIC’s”) application to intervene in Vento’s appeal of last year’s Ontario Superior Court of Justice’s dismissal of Vento’s application to set aside a 2020 international arbitration award [Vento Motorcycles, Inc. v. United Mexican States, 2023 ONSC 5964 (CanLII), (“Vento”)]. That and related decisions were discussed in several Arbitration Matters previous blogs, including 810, 796, 572, and 807. CIPPIC’s application was unsuccessful. The Court rejected its application for three reasons: (1) it hadn’t shown a sufficient link between its expertise and the issues in the appeal or its unique perspective; (2) the higher threshold to be granted leave to intervene in a private dispute; and (3) the risk CIPPIC’s intervention would unjustifiably expand the scope of the appeal.
The unsuccessful set-aside application – Very briefly, Vento applied to set aside a NAFTA Chapter 11 award dismissing Vento’s claim against Mexico. The main issues were Vento’s alleged inability to present its case contrary to Art. 34(2)(ii) of the Model Law and a finding that there was a reasonable apprehension of bias with respect to one of the three Tribunal members. (The first issue included a discussion of the Rule in Browne v Dunn in the arbitration context, as I discussed in my previous Arbitration Matters Case Note at 810. The second issue was discussed in Arbitration Matters Case Note 796.) On both issues, the Court was not satisfied the Tribunal’s conduct was “sufficiently serious to offend our most basic notions of morality and justice” and dismissed the set-aside application.
Vento’s appeal – In the appeal proper, a key issue is whether the applicable standard of review for a set-aside on the basis of procedural fairness is either:
- The “STET test” from Corporación Transnacional de Inversiones S.A. de C.V. v. STET International S.p.A, 2000 CanLII 16840 (ONCA) (“STET”), which provides that a breach of procedural fairness has to “offend our most basic notions of morality and justice”; or
- The “Gol Linhas test” from Gol Linhas Aereas SA v. MatlinPatterson Global Opportunities Partners, [2022] UKPc 21 (“Gol Linhas”), which provides that the breach of procedural fairness must deny a party the “basic minimum requirements which would generally, even if not universally, be regarded throughout the international legal order as essential to a fair hearing.”
CIPPIC motion for leave to intervene – CIPPIC sought leave to intervene on the issue of what test should be used to assess procedural unfairness under the Model Law. CIPPIC is a legal clinic based at the University of Ottawa. Its core mandate is, “to advocate in the public interest on matters arising at the intersection of law and technology. This includes access to justice concerns arising from standard form contracts and the arbitration and dispute resolution clauses contained in them.” It provides legal assistance to under-represented organizations and individuals on law and technology issues.
CIPPIC has intervened at the Supreme Court of Canada in several leading arbitration cases, including: Dell Computer Corp v. Union des consommateurs, 2007 SCC 34, [2007] S.C.R. 801; TELUS Communications Inc. v. Wellman, 2019 SCC 19, [2019] 2 S.C.R. 144; and Uber Technologies Inc. v. Heller, 2020 SCC 16, [2020] 2 S.C.R. 188.
CIPPIC elected not to file a draft factum but, in its Motion Record, provided a detailed review of the arguments and authority for its proposed intervention.
In assessing CIPPIC’s application, the Court applied the standard factors to consider in an application to intervene, namely, the nature of the case, the issues which arise and the likelihood of the applicant being able to make a useful contribution to the resolution of the appeal without causing injustice to the immediate parties.
Citing Jones v. Tsige, 2011 CanLII 99894 (ONCA) (“Jones”), the Court noted the more onerous standard to be applied to a proposed intervention in a private dispute, as opposed to a public one (one involving the state).
CIPPIC noted the standard of review issue was addressed in only seven of the 90 paragraphs in Vento’s appeal factum and that it intended to both elaborate on the background of the Gol Linhas test and situate it within the international and Canadian jurisprudence by: i) canvassing the thresholds elaborated by courts in other Model Law jurisdictions; ii) making statutory interpretation arguments, referencing international authority and the Model Law’s travaux préparatoires (i.e., the official record of the negotiation and drafting of the Model Law); iii) illustrating how the STET test applied by the Application Judge conflates Model Law Article 34(2)(a)(ii) (procedural fairness set-aside ground) with Article 34(2)(b)(ii) (public policy set- aside ground); and iv) canvassing procedural fairness protections in other contexts, such as judicial review of administrative action, in support of harmonizing the standard across different areas of law.
The Court relied upon three reasons to reject CIPPIC’s application:
- It was not satisfied CIPPIC’s advocacy work and mandate aligned with the arguments it intended to make as an intervener. Rather, it held the case, “does not engage law and technology issues, or involve under-represented organizations, individuals, and consumers whose legal rights may be affected by terms in standard form contracts.”
- There is a stricter onus to intervene in a private dispute:
- The case involves two sophisticated parties with capable counsel in a complex international trade dispute.
- The appeal focuses on narrow, fact-specific issues that turn on particular findings below and certain decisions made during the arbitration process.
- No access to justice or constitutional issues are engaged.
- Mexico and Vento have advanced detailed arguments for and against the test applied by the Application Judge.
- The Court shared, “Mexico’s concerns that CIPPIC’s intervention r[an] an unjustified risk of expanding the scope of the appeal, increasing cost and complexity, and causing injustice to the immediate parties. For example, if CIPPIC’s intervention ‘canvasses how procedural fairness protections are addressed in other contexts, such as judicial review of administrative action’ and suggests the standard should be harmonized across different areas of Canadian law ‘in a manner that assures access to justice in the arbitral forum’, the issue on appeal will have gone well beyond the question of whether Vento’s inability to respond to a credibility challenge left it unable to present its case within the meaning of Article 34(2)(a)(ii) of the Model Law.”
Contributor’s Notes:
I see two takeaways from this case, one narrow and one broad.
The narrow takeaway relates to the law with respect to interventions in Ontario. In Vento-CIPPIC, the Ontario Court of Appeal has reaffirmed the test for intervention is harder to meet in a private dispute (i.e., a dispute between private parties) than it is in a public one (i.e., a dispute involving a state actor). That isn’t new law (see, e.g., Jones) but it is confirmation that it remains so. Perhaps more importantly, the Court appears to have raised the bar on the materials needed to support an intervention application. There is no formal requirement to file a draft factum as part of an intervention motion. However, in Vento-CIPPIC, the Court made much of the fact CIPPIC had elected not to file a draft factum even though CIPPIC’s Motion Record contained a detailed description of its intended argument. Having had the opportunity to review that Motion Record, it’s fair to say CIPPIC’s description of its proposed argument was fulsome to say the least. However, not it seems, enough to satisfy the Court of Appeal. Without trying to read too much into the tea leaves, this may suggest the Court is becoming stricter in allowing interventions. Regardless, it would now be unwise to seek intervention without filing a draft factum.
Which leads to the broader takeaway. Looking at the bigger picture, I would debate the Court’s conclusion this case did not raise broader law and technology issues. From a policy perspective the line between public and private disputes isn’t quite as clear as it once was. As Uber amply demonstrated, there’s an unclear and uneasy relationship that arises when “traditional” arbitration principles intersect with the modern economy. In my view that intersection needs to be explored by the courts.
On its face Vento is a private dispute. However, the issues it raises regarding set-aside for a breach of procedural fairness go far beyond these two parties and the idiosyncratic facts of their dispute.
Like so much of contract law, arbitration law is premised on a meeting of minds between parties of relatively equal bargaining power. The “private vs public dispute” concept is built on that premise. But in today’s economy I don’t think the premise holds as well as it once did. Internet-based commerce has exponentially compacted supply chains. Small business consumers now regularly deal directly with large suppliers to secure goods and services. Those small businesses are presented with contracts of adhesion or near-adhesion and those contracts commonly contain arbitration agreements. The end-users typically have limited bargaining power. They’re just trying to keep their businesses working; they need the product or service so will take the terms and conditions presented to them. They certainly aren’t going to dicker over the niceties of an arbitration clause. Party autonomy – the ability to design a dispute resolution mechanism to suit the parties’ (plural) needs – is a myth in these cases. In reality, the end-users have neither the time, the resources, nor the knowledge to do other than simply accept the dispute resolution clause the supplier has imposed.
So, can we really say Vento is a “private dispute”? It’s a safe bet those small business consumers aren’t going to be the ones to litigate the arcana of arbitration law. Nonetheless, whatever the Court of Appeal ultimately decides in Vento will directly impact all of them subject to an arbitration clause. It will shape their rights under the arbitration agreements they’ve been stuck with. It seems to me their voice ought to be heard somewhere along the way. So I say it’s unfortunate the Court in Vento CIPPIC chose to go the traditional route of “sophisticated parties” with “capable counsel” in a “complex case” and say no access to justice issues are engaged.
CIPPIC is the only legal clinic in Canada dedicated to representing the public interest in matters of law and technology. If not them, who? If not this case, which one?