HAGUE CONVENTION: Kanitz V Rogers Cable Inc — Time to rethink Article 4 of the proposed Hague Convention?

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Abstract

On the 22 February 2002, the Ontario Superior Court of Justice handed down its judgment in the dispute between Stefan Kanitz1 and Rogers Cable Inc (hereinafter referred to as Rogers).2 The defendant, Rogers, argued that the plaintiff, Kanitz, was prevented from taking action in court due to an arbitration clause in the service agreement between the plaintiff and the defendant. Justice Nordheimer, the judge in the case, agreed with Rogers and ordered a stay of proceedings. On its surface, such a conclusion seems justified; if two parties agree to settle a potential dispute by means of arbitration, it would not be fair to allow one of the parties to bluntly disregard the agreement and take the matter to a court of justice. However, as will be demonstrated below, we will find ourselves in an unreasonable situation unless non_negotiated standard clauses3 relating to a central issue, such as the means of dispute resolution, have to meet a certain standard. The aim of this article is to illustrate the potential danger of an inappropriate application of Article 4 of the proposed Hague Convention on Jurisdiction and Enforcement of Foreign Judgments in Civil and Commercial Matters, by using the Kanitz case as an example.

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ARTICLE 4 OF THE PROPOSED HAGUE CONVENTION

The Kanitz v Rogers Cable Inc case is relevant to the ongoing negotiations of the proposed Hague Convention on Jurisdiction and Enforcement of Foreign Judgments in Civil and Commercial Matters as it illustrates what kind of standardised choice of forum clauses Article 4 might end up validating on a global level.4 At a meeting in The Hague (April 2002) it

SOME BACKGROUND FACTS OF THE KANITZ V ROGERS CABLE INC CASE

Rogers provides Internet access service in certain parts of Canada. The plaintiffs were all subscribers to that service, called “Rogers@Home”. However, some of them had become subscribers of Rogers@Home due to a “swap of territory” between another Internet service provider, Shaw, and Rogers, while others were “original” customers of Rogers’ services.

At the time of becoming a subscriber of Rogers’ services the “original” customer had to sign a service agreement,8

THE AMENDMENT CLAUSE

The amendment clause found in Rogers’ service agreement states that:

Amendment. We may change, modify, add or remove portions of this Agreement at any time. We will notify you of any changes to this Agreement by posting notice of such changes on the Rogers@Home web site, or sending notice via email or postal mail. Your continued use of the Service following notice of such change means that you agree to and accept the Agreement as amended. If you do not agree to any modification of this

THE ISSUE OF NOTIFICATION

The amendment clause stated that Rogers would notify the customers of changes made to the original agreement. This could, in accordance with the clause, be done by “posting notice of such changes on the Rogers@Home web site, or sending notice via email or postal mail”. As Nordheimer J choose not to discuss the reasonableness of the clause in general, nor was the reasonableness or suitability of these forms of notification discussed. In fact, Nordheimer J happily accepted that the only issue

Notification of what?

Moving on to a deeper analysis of the text in the amendment clause, we find that the exact meaning of at least one part of it is ambiguous and can be interpreted in more than one way. The clause states that Rogers will notify the customers of any changes to the agreement. This could be interpreted to mean that Rogers will notify the customers of the changes, and thus, the mere notification of the updated version of the agreement, without specifically bringing the customers attention to what has

THE ARBITRATION CLAUSE

Justice Nordheimer noted that: “if it is found that there is an arbitration agreement, it is clear that the disputes raised in this action would fall within its scope”.22 Looking at the extremely broad wording of the arbitration clause, such a conclusion is hardly surprising:

Arbitration. Any claim, dispute or controversy (whether in contract or tort, pursuant to statute or regulation, or otherwise, and whether pre_existing, present or future) arising out of or relating to: (a) this

HOW DOES THE KANITZ CASE RELATE TO ARTICLE 4?

The Kanitz case contains several elements that distinguish it from the situations Article 4 of the proposed Hague Convention sets out to regulate. Firstly, the choice of forum clause in the Kanitz case was an arbitration clause. Article 4 only regulates choice of court provisions, and as a matter of fact, the Hague Convention as such does not deal with arbitration.30 Secondly, it appears that Kanitz was a consumer and as such would fall outside

CONCLUSIONS

Having examined the Kanitz case closer it is obvious that it would be undesirable to have this sort of fundamentally unfair judgments enforced on a global level. Starting with the arbitration clause itself, and working our way backwards we can note that:

  • the arbitration clause is very broad and was a result of an inappropriate use of the power imbalance between the parties. Furthermore, it arguably prevents the plaintiff from effective remedies. Based on that, the arbitration clause should be

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1

And four other subscribers of the defendant’s Internet access service (hereinafter referred to only as Kanitz).

2

Kanitz v Rogers Cable Inc [2002] O.J. No. 665.

3

And the manner in which such clauses are introduced into the agreement.

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