Aceris Law is pleased to announce that it has secured a decisive victory in a commercial arbitration administered by the American Arbitration Association (“AAA”), in which a three-member arbitral tribunal (the “Tribunal”) dismissed a multi-million-dollar claim brought against its client (the “Respondent”) by one of the world’s largest technology companies (the “Claimant”).
The dispute arose out of a commercial relationship governed in part by online contractual terms. The Claimant argued that the Respondent had agreed to arbitrate through a sign-in wrap-style contracting process, under which users were presented with online terms through hyperlinks and related contractual documents.
Aceris Law challenged the Tribunal’s jurisdiction on the basis that its client had not validly consented to arbitration. The case therefore turned on whether the online contracting process used by the Claimant provided sufficiently clear and conspicuous notice of the arbitration provision alleged to bind the parties.
The Tribunal upheld Aceris Law’s jurisdictional objection, finding that the Claimant had failed to establish the existence of a valid agreement to arbitrate.
Successful Challenge to an Online Arbitration Agreement
The parties made detailed submissions concerning the formation of contracts through online interfaces and the circumstances in which contractual terms may be incorporated by hyperlink or reference.
Aceris Law argued that, although the Respondent had interacted with online terms as part of the relevant commercial relationship, the particular terms in which the arbitration provision was contained had not been presented in a sufficiently direct or conspicuous manner to establish consent.
In particular, the Tribunal was required to consider whether a reasonably prudent user would have understood, from the design and structure of the online contracting process, that proceeding with the relevant transaction or relationship would amount to acceptance of an agreement to arbitrate.
The Tribunal agreed with Aceris Law’s position. It found that the contractual materials relied upon by the Claimant did not provide sufficiently conspicuous notice of the arbitration provision and that the manner in which the relevant terms were incorporated was insufficient to establish the Respondent’s consent to arbitration.
In reaching this conclusion, the Tribunal examined the relationship between the various online terms and contractual documents relied upon by the Claimant, as well as the evidence concerning the online contracting process. It considered which terms had actually been presented to the Respondent and whether the Claimant had demonstrated that the arbitration provision formed part of the terms to which the Respondent had assented.
Ultimately, the Tribunal concluded that the mere presence of an arbitration clause within a broader suite of online terms was insufficient to establish an agreement to arbitrate, holding that the Claimant had not met its burden of proving the existence of a valid arbitration agreement under the applicable law.
Arbitration Dismissed for Lack of Jurisdiction
As a result, the Tribunal sustained Aceris Law’s jurisdictional objection and dismissed the arbitration for lack of jurisdiction. The Tribunal did not reach the merits of the underlying claims.
The decision is a useful reminder of the importance of consent in the context of online contracting.
Sign-in wrap and similar forms of online agreement can be effective mechanisms for contract formation, but the enforceability of an arbitration clause may depend heavily on how the relevant terms are presented to the user. Factors such as the prominence of the notice, the clarity of the hyperlinking process, the relationship between the relevant contractual documents and the proximity of the terms to the user’s act of assent may all prove significant.
The outcome of the case reflects Aceris Law’s ability to identify and successfully pursue decisive jurisdictional arguments in complex commercial arbitrations, including against the world’s largest and best-resourced companies.
Aceris Law’s experienced arbitration team has built a strong track record of securing favourable outcomes in high-value international and commercial disputes through focused strategy and rigorous legal analysis. The firm is regularly entrusted with complex mandates involving difficult questions of jurisdiction, contract formation, consent to arbitration and the validity of arbitration agreements.
This latest result further demonstrates Aceris Law’s capacity to achieve decisive outcomes for clients in challenging disputes against major global counterparties.
