One can easily recall in the aftermath of the Dell case, heard by the Supreme Court in December of 2006 further to which, the National Assembly of Quebec modified the Consumer Protection Act (R.S.Q. c. P-40.1, the "Act") and added section 11.1 on December 14, 2006 so as to prohibit the use of any stipulation in a consumer contract forcing the consumer to refer a dispute to arbitration or the use of any clause prohibiting the consumer from bringing a class action.
As the Act made no provision for any transitional measures with respect to the introduction of this prohibition, the principle of the immediate effect of laws resulted in the Act governing all contractual disputes arising after the coming into force of the amendments to the Act.
It is in this context that "disputes arising" had to be defined. In the Dell and Rogers cases, the Supreme Court referred to the concept of a "situation whose facts and effects have occurred in their entirety" at the time when the December 14, 2006 amendments came into force.
In a recent decision rendered on April 10, 2008 dealing with an arbitration clause inserted into a housing inspection contract, the Court of Appeal further clarified this notion of "situation whose facts and effects have occurred in their entirety". In the case before the Court, the plaintiff had sent a demand letter outlining certain defects in July of 2006. The Court of Appeal agreed with the appellant that the demand letter crystallized the dispute and thus the dispute arose prior to the entry into force of the amendments. The arbitration clause was thus declared valid.
Finally, it is important to remember that this exclusion of arbitration clauses does not apply to all consumer contracts. Indeed, the Act expressly excludes certain types of contracts, such as an insurance contract, a contract concluded pursuant to the Securities Act as well as a contract of sale, lease or construction of an immovable.
Read the Dell and Rogers decisions: