In Chung v. Merchant Law Group, 2020 QCCS 398, Mr. Justice Sylvain Lussier held that a clause, removing jurisdiction from the courts of Québec for an employment dispute, had no effect because it violated a rule of public order in Québec’s Civil Code of Québec, CQLR c CCQ-1991. Though the case dealt with a clause by which the parties submitted any issues to the exclusive jurisdiction of Saskatchewan’s Court of Queen’s Bench, the rule has application to related attempts to submit similar employment relationships to arbitration.
Plaintiff was called to the Québec Bar in 2012 following his articles in law (called the “stage” in Québec). Once called to the Bar, Plaintiff sought employment and, on August 11, 2013, Plaintiff saw an ad from Defendant, a Saskatchewan partnership (“MLG”). Plaintiff applied on August 14, 2013 and started working in September 2013 as MLG’s representative in Québec. MLG signed the Agreement on September 25, 2013. Plaintiff received the Agreement and signed it on November 1, 2013. The Agreement contained the following clause:
“12.05 This Agreement is made in Saskatchewan and shall be governed by the law of the Province of Saskatchewan, and any court resolution of issues related to this Agreement may only be resolved in the Court of Queen’s Bench of Saskatchewan.”
Plaintiff remained with MLG until early 2017. After he left, Plaintiff filed an action in Québec Superior Court claiming unpaid compensation, employee benefits and wrongful termination. MLG applied to have the Superior Court decline jurisdiction and dismiss Plaintiff’s action.
Lussier J. noted that the closing lines of article 3148 of the Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.” of “Civil Code”) stipulate that Québec courts have no jurisdiction when the parties have submitted their disputes to another jurisdiction.
“Article 3148 C.C.Q. In personal actions of a patrimonial nature, Québec authorities have jurisdiction in the following cases:
(1) the defendant has his domicile or his residence in Québec;
(2) the defendant is a legal person, is not domiciled in Québec but has an establishment in Québec, and the dispute relates to its activities in Québec;
(3) a fault was committed in Québec, injury was suffered in Québec, an injurious act or omission occurred in Québec or one of the obligations arising from a contract was to be performed in Québec;
(4) the parties have by agreement submitted to them the present or future disputes between themselves arising out of a specific legal relationship;
(5) the defendant has submitted to their jurisdiction.
However, Québec authorities have no jurisdiction where the parties have chosen by agreement to submit the present or future disputes between themselves relating to a specific legal relationship to a foreign authority or to an arbitrator, unless the defendant submits to the jurisdiction of the Québec authorities.”
That said, Lussier J. also noted that article 3149 of the same Civil Code stipulated that such clauses, mentioned in the closing lines, cannot be set up against employees or consumers who have their domicile or residence in Québec.
“Article 3149 C.C.Q. Québec authorities also have jurisdiction to hear an action based on a consumer contract or a contract of employment if the consumer or worker has his domicile or residence in Québec; the waiver of such jurisdiction by the consumer or worker may not be set up against him.”
Lussier J. highlighted, as a departure point, the components in civil law for a contract of employment, set out at article 2085 C.C.Q., flagged the elements identified by the Supreme Court in Cabiakman v. Industrial Alliance Life Insurance Co., 2004 SCC 55 (CanLII),  3 SCR 195 and cited a “useful list of criteria” from Leclerc v. Constructions Louis-Seize & Associés inc., 2012 QCCS 5885.
Lussier J. completed his introductory comments by stating that, to determine Plaintiff’s status, he “must look at the terms of the Agreement as well as the extent to which [Plaintiff] was, in practice, subordinated to the direction” of MLG and “at the way the parties have presented the relationship to the outside world”.
Lussier J. then examined the Agreement and considered: (a) signing of the Agreement – paras 20-24; (b) definitions – paras 25-26; (c) performance of work – paras 27-29; (d) remuneration – paras 30-32; (e) risk of losses – para. 33; (f) tax treatment – paras 34-36; (g) work schedule – paras 37-38; (h) property of professional tools – paras 39-40; (i) professional liability insurance and Bar fees – paras 41-42; and, (j) property of files and client relationships – paras 43-45.
He next turned to the conduct of the parties and considered: (a) degree of subordination – paras 46-54; (b) representations to the Québec Bar – paras 55-57; and, (c) integration with MLG – paras 58-59.
In his analysis, Lussier J. readily observed that the facts listed in this review of the Agreement and the parties’ conduct pointed in both directions.
“As can be seen, the relationship between the parties can be said to comprise elements of an employment contract and of a contract for services. (Article 2098 C.C.Q.). These have to be weighed in order to determine the fundamental nature of the contractual relationship.”
At paras 60-82, Lussier J. weighed those elements and concludes, on a prima facie basis for the purpose of the declinatory motion, that the “sum of these elements convinces the Court that the relationship of the parties was that of a contract of employment”.
The consequence of this determination had a decisive impact.
“ Given the public order nature of article 3149 C.C.Q., the Court has no discretion to exercise and must dismiss MLG’s Motion to Dismiss for Declinatory Exception”.
urbitral note – First, Lussier J.’s determination of the nature of the contract is only on a prima facie examination of the evidences, applying only for the purpose of the declinatory exception. The determination does not rule on the merits.
Second, Lussier J.’s analysis relies on the closing words of article 3148 C.C.Q. which refers to agreements to submit disputes “to a foreign authority or to an arbitrator”. Therefore, the reasoning and result in this case applies to situations in which the employee and consumer, having either a residence or domicile in Québec, has signed a contract containing a clause submitting disputes, present or future, “to an arbitrator”. The wording of that clause does not require the word “foreign” to modify “arbitrator” as the preposition “to” appears before “arbitrator”. The rule thus applies to prevent employees, with a residence or domicile in the province of Québec, from being bound by contracts they sign which contain requirements to arbitrate their disputes.
Third, Lussier J. held that a court is not bound by identification or qualification given by the parties to the contractual agreement. Rather, the court will analyse the contract’s terms and the parties’ conduct to qualify the nature of the agreement. The determination of the sum of those elements removes all discretion from the court once the sum convinces the court, on a prima facie basis, that a party to such a contract is an employee and therefore not bound by such clauses.
Fourth, many employees can be bound by both employment contracts and shareholding or share option contracts. It is also common that both the employment status and shareholding may be, by their respective contracts, submitted to arbitration. Despite such agreement and despite any agreement to consolidate such arbitrations in the future, the result of article 3149 C.C.Q. can be that part of an ex-employee’s dispute is subject to determination by the courts and part by arbitration.
Fifth, to apply the terms of article 3149 C.C.Q. the party to the contract must not only qualify as an employee but demonstrate a residence or domicile in Québec. It is not expressly provided if the residence or domicile is established at the time the contract was entered into, at the time the litigation commences or both.