Arbitration clause in marketing associate's contract didn't include personal injury claim
The British Columbia Supreme Court has refused to stay a personal injury action so that it can be referred to arbitration because the defendants failed to meet the legal requirements under the International Commercial Arbitration Act (ICAA).
In Harris v. Isagenix International, 2022 BCSC 268, Chera Harris, enrolled in the multilevel marketing program of the defendant corporations, Isagenix International LLC and Isagenix Canada. She eventually became an associate under the program, which bound her to several contractual documents, including the Isagenix Policies and Procedures containing an arbitration clause.
The Isagenix Policies allowed associates to purchase products for their own personal use. Harris advanced a claim for personal injury which stemmed from her use of the defendants’ wellness products. She alleged that the defendant corporations were negligent in the design, manufacture, distribution, marketing and supply of the products, amounting to tort and in violation of the Business Practices and Consumer Protection Act.
The defendants applied to stay the matter so that it could be referred to arbitration. They brought the application under the ICAA because the designated place of arbitration was outside of British Columbia. The court said that under the ICAA, there were three requirements that must be satisfied for a stay order to be granted in favor of arbitration.
First, the applicant must show that a party to an arbitration agreement has commenced legal proceedings against another party to the agreement. Second, the legal proceedings must be in respect of a matter agreed to be submitted to arbitration. Lastly, the application must be brought before the applicant takes a step in the proceedings.
The court emphasized that these requirements established a low threshold to reflect the principle of “competence-competence,” which affirms arbitrators are competent to determine their own jurisdiction in the first instance.
In this case, the court was not satisfied that the subject matter was one agreed to be submitted to arbitration. The court noted that under the Isagenix Policies, the parties agreed to settle by confidential arbitration any controversy or claim “arising out of, or relating to these policies and procedures, the compensation plan, or the guidance documents.”
The court found that the claim advanced by Harris was not dependent on any of the documents specifically mentioned in the arbitration clause. Further, the court said that the plaintiff brought the personal injury claim not as an associate of the defendant corporations but as a consumer of their products.
The court concluded that, “the plaintiff is not seeking to enforce any rights that were granted to her
under the contract. Rather, she is relying primarily on her right to be free from the foreseeable consequences of negligent behaviour on the part of a supplier of a product designed for personal consumption.” The court dismissed the defendants’ stay application.
