Abstract
The practice of arbitration has been expanding outside the commercial circle, reaching ‘new disputes’ that used to be decided by courts. The novelty is welcomed; nevertheless, for the practice of arbitration to be sustainable in the ‘new disputes’, a level playing field must be secured. Arbitration cannot be a mechanism to hinder justice. The aim of this chapter is to evaluate the problem of inequality of bargaining power in the context of arbitration clauses such as those which Uber used to solve disputes with its drivers. This clause was put to the test in three jurisdictions under the same challenge that the clause restricts the contracting parties’ right to bargain. Such an obstacle raises questions of how appropriate arbitration can be when it is used to obtain an advantage over weaker parties. Assessing the link between the validity of the arbitration agreement and inequality of bargaining power, the chapter first explains what is understood by inequality of bargaining power and how that works in arbitration and then highlights how this topic has been dealt with in disputes involving Uber and its drivers. The chapter concludes that a holistic approach is needed in such cases.
All mistakes of interpretation and translations are the author’s own.
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Notes
- 1.
See Barnhizer (2005), p. 194, Barnhizer explains that the doctrine’s origin ‘lies in the late nineteenth Century social and economic reactions to the perceived abuses of laissez-faire economic regulation and Lochner-era freedom of contract doctrine.’
- 2.
The entire play is available at http://shakespeare.mit.edu/merchant/full.html. Accessed 26 June 2021. Although this request was granted in the Merchant of Venice, it could only be done without a single drop of blood because the contract only allowed the removal of flesh. Moreover, if blood was spieled, under the laws of Venice, the perpetrator would have his goods and lands forfeited. Hence, there was no payment with human flesh.
- 3.
198 US 45 (1905).
- 4.
The Fourteenth Amendment states that no state shall ‘deprive any person of life, liberty, or property, without due process of law’. In this sense, in Lochner v. New York, the court was of the view that ‘The general right to make a contract in relation to his business is part of the liberty protected by the Fourteenth Amendment, and this includes the right to purchase and sell labor, except as controlled by the State in the legitimate exercise of its police power.’ The Lochner decision was technically overruled by West Coast Hotel Co. v. Parrish, 300 US 379 (1937).
- 5.
As it will be demonstrated in this chapter, inequality of bargaining power is an exception to pact sunt servanda and freedom of contract.
- 6.
See heading number 2.
- 7.
Ibid.
- 8.
Uber has terms and conditions for several countries. Not all terms and conditions have an arbitration clause such as the Brazilian terms (https://www.uber.com/legal/en/document/?name=general-terms-of-use&country=brazil&lang=pt-br Accessed 26 June 2021) and the Irish terms (https://www.uber.com/legal/en/document/?name=general-terms-of-use&country=republic-of-ireland&lang=en-gb. Accessed 26 June 2021). Looking at its terms and conditions for the UK, for instance, clause 6 states: ‘Any dispute, conflict, claim or controversy arising out of or broadly in connection with or relating to the Services or these Terms, including those relating to its validity, its construction or its enforceability (any “Dispute”) shall be first mandatorily submitted to mediation proceedings under the International Chamber of Commerce Mediation Rules (“ICC Mediation Rules”). If such Dispute has not been settled within sixty (60) days after a request for mediation has been submitted under such ICC Mediation Rules, such Dispute can be referred to and shall be exclusively and finally resolved by arbitration under the Rules of Arbitration of the International Chamber of Commerce (“ICC Arbitration Rules”). The ICC Rules’ Emergency Arbitrator provisions are excluded. The Dispute shall be resolved by one (1) arbitrator to be appointed in accordance with the ICC Rules. The place of both mediation and arbitration shall be Amsterdam, The Netherlands, without prejudice to any rights you may have under Article 18 of the Brussels I bis Regulation (OJ EU 2012 L351/1) and/or Article 6:236n of the Dutch Civil Code. The language of the mediation and/or arbitration shall be English, unless you do not speak English, in which case the mediation and/or arbitration shall be conducted in both English and your native language. The existence and content of the mediation and arbitration proceedings, including documents and briefs submitted by the parties, correspondence from and to the International Chamber of Commerce, correspondence from the mediator, and correspondence, orders and awards issued by the sole arbitrator, shall remain strictly confidential and shall not be disclosed to any third party without the express written consent from the other party unless: (i) the disclosure to the third party is reasonably required in the context of conducting the mediation or arbitration proceedings; and (ii) the third party agrees unconditionally in writing to be bound by the confidentiality obligation stipulated herein.’ In https://www.uber.com/legal/en/document/?name=general-terms-of-use&country=great-britain&lang=en-gb. Accessed 26 June 2021. At the time of drafting this chapter (June 2021), clauses with similar format could be found in the terms and conditions for Chile, Argentina, Bolivia, Mexico, Ivory Coast, Ecuador, Hong Kong, India, Jamaica, Morocco, Pakistan, Panama, Paraguay, Peru, Switzerland, Tanzania and Uganda.
- 9.
Gordley (1981), p. 1638. Gordley asserts that the principle of laesio enormis can be found in the Code of Justinian 4.44.2.
- 10.
Cellini and Wertz (1967), p. 193.
- 11.
Ibid.
- 12.
(1872–73) LR 8 Ch. App. 484.
- 13.
Ibid. Lord Selborne said: ‘The truth is, that such terms as those imposed on the borrower in the present case are not less, but are more onerous and unconscionable than if a deferred security upon the reversionary interest had been taken.’
- 14.
(1888) 40 Ch. D. 312.
- 15.
Ibid.
- 16.
See Boustany vs Pigott (1995) 69 P & CR 298.
- 17.
Thal (1988), p. 29.
- 18.
Ibid.
- 19.
Ibid.
- 20.
Beale (1986), p. 125.
- 21.
Feinman (2004), p. 4.
- 22.
Posner (2003), p. 832.
- 23.
Ibid, p. 842.
- 24.
Ibid, p. 843.
- 25.
Ibid.
- 26.
Thal (1988), p. 33.
- 27.
Schmitz (2006), p. 76.
- 28.
Ibid.
- 29.
Peel (2011), p. 464.
- 30.
Capper (2010), p. 403. In Brian Strydom v. Vendside Limited [2009] EWHC 2130 (QB), at paragraph 37, Mr. Justice Blair stated: ‘In summary, therefore, before the court will consider setting a contract aside as an unconscionable bargain, one party has to have been disadvantaged in some relevant way as regards the other party, that other party must have exploited that disadvantage in some morally culpable manner, and the resulting transaction must be overreaching and oppressive. No single one of these factors is sufficient-all three elements must be proved, otherwise the enforceability of contracts is undermined.’
- 31.
[1974] EWCA 8.
- 32.
See Arrale v. Costain Civil Engineer [1976] 1 Lloyd’s Rep. 98 and Levison v. Patent Steam Carpet Cleaning Co [1978] QB 69.
- 33.
[1985] UKHL 2.
- 34.
Ibid. Lord Scarman said: ‘And even in the field of contract I question whether there is any need in the modern law to erect a general principle of relief against inequality of bargaining power. Parliament has undertaken the task – and it is essentially a legislative task – of enacting such restrictions upon freedom of contract as are in its judgment necessary to relieve against the mischief: for example, the hire-purchase and consumer protection legislation, of which the Supply of Goods (Implied Terms) Act 1973, Consumer Credit Act 1974, Consumer Safety Act 1978, Supply of Goods and Services Act 1982 and Insurance Companies Act 1982 are examples. I doubt whether the courts should assume the burden of formulating further restrictions.’
- 35.
The full wording of Article 2-302 is: ‘(1) If the court as a matter of law finds the contractor any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (2) When it is claimed or appears to the court that the contractor any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.’
- 36.
Knapp (2013), p. 310.
- 37.
In Williams v. Walker-Thomas Furniture Company 350 F.2d 445 (DC Cir. 1965), Judge J Skelly Wright said: ‘Congress has recently enacted the Uniform Commercial Code, which specifically provides that the court may refuse to enforce a contract which it finds to be unconscionable at the time it was made. 28 D.C. CODE § 2-302 (Supp. IV 1965). The enactment of this section, which occurred subsequent to the contracts here in suit, does not mean that the common law of the District of Columbia was otherwise at the time of enactment, nor does it preclude the court from adopting a similar rule in the exercise of its powers to develop the common law for the District of Columbia. In fact, in view of the absence of prior authority on the point, we consider the congressional adoption of § 2-302 persuasive authority for following the rationale of the cases from which the section is explicitly derived. Accordingly, we hold that where the element of unconscionability is present at the time a contract is made, the contract should not be enforced.’
- 38.
The dichotomy was presented by Leff (1967), p. 487.
- 39.
Prince (1995), p. 472.
- 40.
Ibid, p. 473.
- 41.
Ibid, p. 472.
- 42.
Ibid, p. 474.
- 43.
See Johnson v. The Cash Store 68 P.3d 1099 (Wash Ct. App. 2003).
- 44.
144 Ohio Misc. 2d 68, 2007-Ohio-6580 (2007).
- 45.
303 S.W.3d 177 (Mo. Ct. App. 2010).
- 46.
Ibid.
- 47.
Stewart et al. (2019), p. 380.
- 48.
(1948) 76 CLR 646.
- 49.
Ibid.
- 50.
Ibid. The court stated: ‘It has always been considered unconscientious to retain the advantage of a voluntary disposition of a large amount of property improvidently made by an alleged donor who did not understand the nature of the transaction and lacked information of material facts such as the nature and extent of the property particularly if made in favour of a donee possessing greater information who nevertheless withheld the facts.’
- 51.
[1983] HCA 14.
- 52.
Ibid at p. 461.
- 53.
[2003] HCA 18.
- 54.
The claim was supported by Section 51AA of the Trade Practices Act in force at the time of the trial. The provision stated: ‘A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.’ Today, this provision is part of Section 20 of the Australian Consumer Law.
- 55.
Chief Justice Gleeson declared at paragraph 11: ‘A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests.’
- 56.
[2013] HCA 25.
- 57.
[2017] HCA 49.
- 58.
Ibid at para 38.
- 59.
Ibid.
- 60.
Ibid.
- 61.
Section 20 of the Australian Consumer Law.
- 62.
Amariles et al. (2018), p. 149. Also, The French legislation uses the same language implemented by the EU Council Directive 93/13/EEC of 5 April 1993, regarding unfair terms in consumer contracts. Article 3(1) of the directive states: ‘A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’
- 63.
Article L132-1 of the Consumer Code says: ‘In contracts concluded between professionals and non-professionals or consumers, clauses which have the object or effect of creating, to the detriment of the non-professional or the consumer, a significant imbalance between the rights and obligations of the parties to the contract are abusive.’
- 64.
Article 1117 of the Civil Code says: ‘In an adhesion contract, any clause which creates a significant imbalance between the rights and obligations of the parties to the contract is deemed unwritten. The assessment of significant imbalance must not concern either the main subject- matter of the contract nor the adequacy of the price in relation to the act of performance.’
- 65.
Article L442-1 I (2) says: ‘I - A party acquires responsibility and is obliged to repair the damages caused by the fact that, within the framework of the commercial negotiation, the conclusion or the execution of a contract, by any person carrying out activities of production, distribution or services … (2) Subject or attempt to subject a business partner to obligations creating a significant imbalance in the rights and obligations of the parties.’
- 66.
See Živković (2016).
- 67.
Kühner (2014), p. 807.
- 68.
Cardoso (2020), p. 125.
- 69.
Ibid.
- 70.
Moyano (2017), p. 635.
- 71.
Ibid, pp. 132–138.
- 72.
Ibid, p. 134.
- 73.
Ibid. See also Fabbri (2018), pp. 74–78.
- 74.
Jun (2020), p. 498.
- 75.
Ibid, p. 500.
- 76.
Arrêt n° 556 du 30 Septembre 2020 (18–19.241) – Cour de cassation – Première chambre civile.
- 77.
Article 6, 1 has the following wording: ‘1. Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’
- 78.
This assertion was made by the Cassation Court based on the CJEU decision in OTP Bank v. OTP Faktoring, C-51/17 at para 89: ‘In addition, the Court of Justice has held that, in view of the nature and importance of the public interest underlying the protection which Directive 93/13 confers on consumers, Article 6 thereof must be regarded as a provision of equal standing to national rules which rank, within the domestic legal system, as rules of public policy (see, to that effect, judgment of 17 May 2018, Karel de Grote – Hogeschool Katholieke Hogeschool Antwerpen, C-147/16, EU:C:2018:320, paragraph 35 and the case-law cited).’
- 79.
The wording of Article 7,1 is: ‘Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.’ The 24th recital says: ‘Whereas the courts or administrative authorities of the Member States must have at their disposal adequate and effective means of preventing the continued application of unfair terms in consumer contracts.’
- 80.
Article 1448 of the French Code of Civil Procedure states: ‘When a dispute subject to an arbitration agreement is brought before a court, such court shall decline jurisdiction, except if an arbitral tribunal has not yet been seized of the dispute and if the arbitration agreement is manifestly void or manifestly not applicable. A court may not decline jurisdiction on its own motion. Any stipulation contrary to the present article shall be deemed not written.’
- 81.
See CA Paris, 27 Jan. 2015, n° 14/05126; CA Paris, 10 March 2015 n° 13/20664; CA Paris, 14 June 2016, n° 14/16113; CA Paris, 11 Sep. 2018, n° 16/19913; CA Paris, 21 May 2019, n° 17/07210; CA Paris, 2 June 2020, n° 17/18900 and CA Paris, 15 Sep. 2020, n° 18/01360.
- 82.
The investigation is based on the provision in Book IV - Pricing freedom and competition, Title IV - Transparency, restrictive competitive practices and other prohibited practices, of the French Commercial Code.
- 83.
This was focused on the provision in Article L-442-6 I (2) of the Commercial Code in force in 2016 (today Article L442-1 of the Commercial Code): ‘To subject or attempt to subject a business partner to obligations creating a significant imbalance in the rights and obligations of the parties.’
- 84.
The claim targeted several clauses such as the insurance clause, the duration of the contract, the contract formation clause and the opening times clause.
- 85.
Tribunal de Commerce de Paris, 1 Ere Chambre, Jugement Prononce le 13/10/2020, RG 2017005123.
- 86.
561 U.S. 63.
- 87.
Ibid. According to the judgement, two provisions in the agreement to arbitrate were relevant, one titled ‘Claims Covered by the Agreement’ and another titled ‘Arbitration Procedure’.
- 88.
Ibid. The judgment says: ‘In his brief to this Court, Jackson made the contention, not mentioned below, that the delegation provision itself is substantively unconscionable because the quid pro quo he was supposed to receive for it – that “in exchange for initially allowing an arbitrator to decide certain gateway questions,” he would receive “plenary post-arbitration judicial review” – was eliminated by the Court’s subsequent holding in Hall Street Associates, LLC v. Mattel, Inc., 552 US 576 (2008), that the non-plenary grounds for judicial review in §10 of the FAA are exclusive. Brief for Respondent 59–60. He brought this challenge to the delegation provision too late, and we will not consider it. See 14 Penn Plaza LLC v. Pyett, 556 US ___, ___ (2009) (slip op., at 24).’
- 89.
See Cherry and Aloisi (2017) for a comparative view of the ‘misclassification’ of workers as employees in the gig economy.
- 90.
For instance, in the UK, the Supreme Court in Uber BV and others v. Aslam [2021] UKSC 5 recognised that Uber drivers are workers and granted them protections under the National Minimum Wage Act 1998, Working Time Regulations 1998 and the Employment Rights Act 1996.
- 91.
2020 SCC 16.
- 92.
Ibid at para 11: ‘Mr. Heller is an Ontario resident who entered into contracts with corporations that are part of the Uber enterprise to be a driver.[3] He earns approximately $400–$600 per week based on 40 to 50 hours of work, or $20,800–$31,200 per year, before taxes and expenses. The costs to arbitrate a claim against Uber equal all or most of the gross annual income he would earn working full-time as an Uber driver.’
- 93.
Ibid at para 94: ‘The improvidence of the arbitration clause is also clear. The mediation and arbitration processes require US$14,500 in up-front administrative fees. This amount is close to Mr. Heller’s annual income and does not include the potential costs of travel, accommodation, legal representation or lost wages. The costs are disproportionate to the size of an arbitration award that could reasonably have been foreseen when the contract was entered into. The arbitration agreement also designates the law of the Netherlands as the governing law and Amsterdam as the “place” of the arbitration. This gives Mr. Heller and other Uber drivers in Ontario the clear impression that they have little choice but to travel at their own expense to the Netherlands to individually pursue claims against Uber through mandatory mediation and arbitration in Uber’s home jurisdiction. Any representations to the arbitrator, including about the location of the hearing, can only be made after the fees have been paid.’
- 94.
This is because the FAA excludes its application to transportation workers. The FAA at 9 US Code § 1states: ‘“Maritime transactions”, as herein defined, means charter parties, bills of lading of water carriers, agreements relating to wharfage, supplies furnished vessels or repairs to vessels, collisions, or any other matters in foreign commerce which, if the subject of controversy, would be embraced within admiralty jurisdiction; “commerce”, as herein defined, means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation, but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.’ Such exclusion was dealt with in New Prime Inc. v. Oliveira 586 US ___ (2019) where the Supreme Court considered that a contract to hire a driver as an independent contractor was an employment contract and therefore the exception in the FAA was applicable. The judgment stated that ‘[w]hen Congress enacted the Arbitration Act in 1925, the term “contracts of employment” referred to agreements to perform work.’ Thus, a contract to hire a driver as an independent contractor.
- 95.
The author is not aware if new cases were tried in other court of appeals. At the time of drafting this chapter, to the Author’s knowledge, there were two cases decided by the courts of appeal in the USA.
- 96.
848 F.3d 1201.
- 97.
Ibid, p. 1209.
- 98.
Ibid, p. 1210.
- 99.
Ibid, p. 1211.
- 100.
Ibid.
- 101.
904 F.3d 1087 (9th Cir. 2017).
- 102.
2020 WL 497487 at 7* (CD Cal).
- 103.
138 S. Ct. 1612 (2018). Here the USA Supreme Court decided that the National Labor Relations Act of 1935 did not provide for barriers to arbitration, making it possible for parties to waive the right of collective redress in favour of arbitration.
- 104.
939 F.3d 210.
- 105.
The grounds were: ‘(1) Uber failed to meet its burden to show that the provision was a constitutional waiver of the Seventh Amendment right to a jury trial; (2) the provision is excluded under the residual clause of § 1 of the FAA; (3) the provision violated the National Labor Relations Act (“NLRA”), the Norris-LaGuardia Act, and the New Jersey Wage and Hour Law (“NJWHL”); and (4) the provision was unconscionable.’
- 106.
236 F.Supp.3d 711.
- 107.
Ibid, p. 725.
- 108.
Ibid, p. 730.
- 109.
The provision stated: ‘You will not be required to bear any type of fee or expense that You would not be required to bear if You had filed the action in a court of law […] Any disputes in that regard will be resolved by the Arbitrator as soon as practicable after the Arbitrator is selected, and Uber shall bear all of the Arbitrator’s and arbitration fees until such time as the Arbitrator resolves any such dispute.’
- 110.
Besides Saizhang Guan, there are more District Court cases with the same result such as: Gunn v. Uber Techs., Inc., 16–CV–1668, 2017 WL 386816, at *7 (SD Ind. 27 Jan. 2017); Lee v. Uber Techs., Inc., 15–C–11756, 208 F.Supp.3d 886, 891, 2016 WL 5417215, at *4 (ND Ill. 21 Sept. 2016); Suarez v. Uber Techs., 8:16–CV–166, 2016 WL 2348706, at *4 (MD Fla. 4 May 2016); Varon v. Uber Techs., Inc., 15– CV–3650, 2016 WL 1752835, at *6 (D. Md. 3 May 2016) and Sena v. Uber Techs. Inc., 16–CV–02418, 2016 WL 1376445, at *3–4 (D Ariz. 7 April 2016).
- 111.
Case number 0002-003894/2019, Tribunal de Apelaciones de Trabajo de Primer Turno, decided on 3 June 2020.
- 112.
This argument was supported by Article 7 of the Uruguayan Constitution which says: ‘The inhabitants of the Republic have the right of protection in the enjoyment of life, honour, liberty, security, labour, and property. No one may be deprived of these rights except in conformity with laws which may be enacted for reasons of general interest.’
- 113.
The Court referred to Article 472 of the General Procedure Code. It states: ‘Any individual or collective dispute may be submitted by the parties for resolution by an arbitral tribunal, unless the law provides the contrary. The law fully recognizes awards issued by arbitrators appointed, either by the parties, or by a judicial court, as well as those dictated by the courts formed by the arbitration chambers, to which the parties have submit their dispute.’
- 114.
Article 473 says: ‘Arbitration Agreement: 473.1 In any contract or subsequent act, it may be established that the disputes arising between the parties must be settled in the arbitral jurisdiction. 473.2 The arbitration clause must be recorded in writing, under penalty of nullity.’
- 115.
The court said: ‘Finally, waiving the jurisdiction of the State Judiciary cannot be admitted when, as in the case, the adherence to the arbitration clause has been adopted by someone who was in a position to seek work in a community in which work is a good scarce. Therefore, being what normally happens, interpreting the factual platform, it is inferred in a degree of high probability, that Esteban Queimada, under conditions and restriction of his freedom to self-determination, submitted to accept the arbitration because of the need to work. This is the only reason that can be attributed to the fact that Esteban Queimada, who was going to work in Uruguay, accepted that “the seat of arbitration will be in Amsterdam, the Netherlands”.’
- 116.
Section 112 of the Labour Relations Act no 66 of 1995 establishes the Commission states: ‘112. Establishment of Commission for Conciliation, Mediation and Arbitration the Commission for Conciliation, Mediation and Arbitration is hereby established as a juristic person.’ Section 115 (1) explains the purpose of the Commission: ‘115. Functions of Commission (1) The Commission must (a) attempt to resolve, through conciliation, any dispute referred to it in terms of this Act; (b) if a dispute that has been referred to it remains unresolved after conciliation, arbitrate the dispute if (i) this Act requires arbitration and any party to the dispute has requested that the dispute be resolved through arbitration; or (ii) all the parties to a dispute in respect of which the Labour Court has jurisdiction consent to arbitration under the auspices of the Commission; (c) assist in the establishment of workplace forums in the manner contemplated in Chapter V; and (d) compile and publish information and statistics about its activities.’ Section 191 (1) and (5) regulate the procedure for arbitration in cases of unfair dismissals and unfair labour practices, it says: ‘191. Disputes about unfair dismissals and unfair labour practices (1) (a) If there is a dispute about the fairness of a dismissal or a dispute about an unfair labour practice, the dismissed employee or the employee alleging the unfair labour practice may refer the dispute in writing within to (i) a council, if the parties to the dispute fall within the registered scope of that council; or (ii) the Commission, if no council has jurisdiction … (5) If a council or a commissioner has certified that the dispute remains unresolved, or if 30 days have expired since the council or the Commission received the referral and the dispute remains unresolved- (a) the council or the Commission must arbitrate the dispute at the request of the employee if (i) the employee has alleged that the reason for dismissal related to the employee’s conduct or capacity, unless paragraph (b)(iii) applies; (ii) the employee has alleged that the reason for dismissal is that the employer made continued employment intolerable or the employer provided the employee with substantially less favourable conditions or circumstances at work after a transfer in terms of section 197 or 197A, unless the employee alleges that the contract of employment was terminated for a reason contemplated in section 187; (iii) the employee does not know the reason for dismissal; or (iv) the dispute concerns an unfair labour practice; or (b) the employee may refer the dispute to the Labour Court for adjudication if the employee has alleged that the reason for dismissal is (i) automatically unfair; (ii) based on the employer’s operational requirements; (iii) the employee’s participation in a strike that does not comply with the provisions of Chapter IV; or (iv) because the employee refused to join, was refused membership of or was expelled from a trade union party to a closed shop agreement.’
- 117.
The decision was based on Section 213 of the Labour Relations Act no 66 of 1995: ‘213. Definitions. In this Act, unless the context otherwise indicates … “employee” 54 means: (a) any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration; and (b) any other person who in any manner assists in carrying on or conducting the business of an employer, and “employed” and “employment” have meanings corresponding to that of “employee”;’.
- 118.
(C449/17) [2018] ZALCCT 1.
- 119.
Section 145 regulates how the court can review the commission’s decision; it states: ‘145. Review of arbitration awards (1) Any party to a dispute who alleges a defect in any arbitration proceedings under the auspices of the Commission may apply to the Labour Court for an order setting aside the arbitration award (a) within six weeks of the date that the award was served on the applicant, unless the alleged defect involves corruption; or (b) if the alleged defect involves corruption, within six weeks of the date that the applicant discovers the corruption.’
- 120.
Uber South Africa Technology Services (Pty) Ltd. v. National Union of Public Service and Allied Workers (NUPSAW) and Others at para 57: ‘In her analysis of the evidence and argument in the proceedings under review, the commissioner refers to the definition of “employee” in s 213 and the test used to determine the existence of an employment relationship. She records that the statutory Code of Good Practice: Who is an Employee? (the Code) establishes a ‘new comprehensive test’, this being what she describes as the ‘reality of the relationship test’. The nature and extent of that test is apparent from the following extract from her award: … 41) Although not stated in so many words, the Code introduces a new comprehensive test, which includes as factors the past tests. This is the “reality of the relationship” test. This requires that, despite the form of the contract, a person deciding whether someone is an employee or an independent contractor must consider the real relationship between the parties. Item 52 states: ‘Courts, tribunals and officials must determine whether a person is an employee or independent contractor based on the dominant impression gained from considering au relevant factors that emerge from an examination of the realities of the parties’ relationship.’ And para 60: ‘The commissioner’s conclusions are recorded in the following terms: (52) I am of the view that in applying the Code of Good Practice, in particular the realities of the relationship test, there is sufficient basis for finding that Uber drivers are employees of Uber SA. However, I accept that certain factors indicate that drivers are employees and others indicate that they are not and I accept that the identity of the employer is blurred. In the event that I have adopted what appears to be a broad or generous interpretation of section 213 of the LRA, I believe this is justified by the requirement to adopt an interpretation which is in compliance with the Constitution and which promotes social justice and effective dispute resolution… (59) My conclusion is that even though Uber BV provides the app and generates the contracts, Uber SA is, for all intents and purposes, Uber in South Africa. Uber SA directs operations in the country and the city in question. Insofar as Uber BV is the party that concludes contracts with drivers, it is anonymous and has no relevance for drivers.’
- 121.
Ibid at para 78: ‘What is apparent from all of the judgments of the LAC is that the test to determine the existence of an employment relationship ultimately remains a multi-factoral one. In terms of the prevailing law, the ‘realities of the relationship’ cannot be reduced to a single, substantive test – a conspectus of all of the relevant facts and circumstances is required, including an examination of the realities of the relationship where this is warranted, typically in circumstances where contractual arrangements are used to disguise those realities.’
- 122.
Ibid at para 97: ‘In summary, in relation to the facts that served before the commissioner, the commissioner erred by failing to distinguish between Uber SA and Uber BV as discrete legal entities. There was no dispute of fact before the commissioner regarding the delineation of functions as between Uber SA and Uber BV. Each of the building blocks of the drivers’ case pertains to Uber BV and not Uber SA. Given the nature of the enquiry before her, and in particular, the undisputed facts before disclosed on the affidavits, the commissioner was obliged to consider the respective roles of Uber BV and Uber SA in relation to the drivers. She failed to embark on this enquiry and, as I have recorded, simply conflated the two entities. Had the commissioner maintained the critical distinction between Uber BV and Uber SA and considered (as she was obliged to do), only whether the drivers were employees of Uber SA, she would have come to the conclusion that on the drivers’ own version, they had failed to discharge the onus they bore to establish the existence of an employment relationship with Uber SA.’
- 123.
Ibid at para 98 ‘Finally, it warrants mention (and emphasis) that this judgment does no more than conclude that on the facts, the drivers were not employees of Uber SA, and that they therefore have no right to refer an unfair dismissal dispute to the CCMA as against Uber SA Whether the drivers are employees of Uber BV (either alone or in a co-employment relationship with another or other parties), or whether they are independent contractors of Uber BV, is a matter that remains for decision on another day. It was not the question before the commissioner, and it is not the question before this court.’
- 124.
Information about the system can be found at https://www.att.com/support/article/wireless/KM1045585/. Accessed 26 June 2021.
- 125.
At https://www.att.com/support/article/wireless/KM1041856. Accessed 26 June 2021, AT & T explains: ‘Arbitration Fees: If AT & T initiates arbitration or if you initiate arbitration of claims valued at $75,000 or less, AT & T will pay all AAA filing, administration, case-management, hearing, and arbitrator fees, so long as you have fully complied with the requirements in section 2 for any arbitration you initiated. In such cases, AT & T will pay the filing fee directly to the AAA upon receiving a written request from you at the Notice Address or, if the AAA requires you to pay a filing fee to commence arbitration, AT & T will promptly reimburse you or arrange for the AAA to reimburse you for the filing fee and will remit the filing fee to the AAA itself. If you seek relief valued at greater than $75,000, the payment of the AAA filing, administration, case-management, hearing, and arbitrator fees will be governed by the AAA rules. In addition, if the arbitrator finds that either the substance of your claim or the relief sought in the arbitration demand is frivolous or brought for an improper purpose (as measured by the standards set forth in Federal Rule of Civil Procedure 11(b)), then the payment of all such fees will be governed by the AAA Rules. In such case, you agree to reimburse AT & T for all monies previously disbursed by it that are otherwise your obligation to pay under the AAA Rules.’
- 126.
Ibid.
- 127.
Ibid. AT & T states: ‘Any arbitration under this Agreement will take place on an individual basis; class arbitrations and class actions are not permitted.’
- 128.
563 US 333 (2011).
- 129.
The Supreme Court emphasized that bilateral arbitration is better suited to solve the disputes envisaged by AT & T in its dispute resolution system. The Court declared: ‘Third, class arbitration greatly increases risks to defendants. Informal procedures do of course have a cost: The absence of multilayered review makes it more likely that errors will go uncorrected. Defendants are willing to accept the costs of these errors in arbitration, since their impact is limited to the size of individual disputes, and presumably outweighed by savings from avoiding the courts. But when damages allegedly owed to tens of thousands of potential claimants are aggregated and decided at once, the risk of an error will often become unacceptable. Faced with even a small chance of a devastating loss, defendants will be pressured into settling questionable claims. Other courts have noted the risk of “in terrorem” settlements that class actions entail, see, e.g., Kohen v. Pacific Inv. Management Co. LLC, 571 F. 3d 672, 677–8 (CA7 2009), and class arbitration would be no different.’
- 130.
Section 91(1) of the Act states: ‘A term which constitutes an arbitration agreement is unfair for the purposes of the Consumer Rights Act 2015 so far as it relates to a claim for a pecuniary remedy which does not exceed the amount specified by order for the purposes of this section.’
- 131.
The full wording of paragraph 20 is: ‘A term which has the object or effect of excluding or hindering the consumer’s right to take legal action or exercise any other legal remedy, in particular by: (a) requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions.’
- 132.
South Park, Season 15, episode one entitled ‘HumancentiPad’.
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de Oliveira, L.V.P. (2023). Inequality of Bargaining Power and Arbitration: The Tale of Uber. In: Andenas, M., Heidemann, M. (eds) Quo vadis Commercial Contract?. LCF Studies in Commercial and Financial Law, vol 1. Springer, Cham. https://doi.org/10.1007/978-3-031-14105-8_12
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