British Columbia Court held that arbitration terms incorporated by reference through online terms of sale were enforceable and not “inoperative” where the buyer signed order forms referring to those terms.

Facts

Fisher bought insulated concrete foam products from Quad-Lock Building Systems (Quad-Lock). Quad-Lock’s sales order forms, signed electronically by Fisher, referred to the “Terms and Conditions of Sale” on the seller’s website, which contained a mandatory arbitration clause. Fisher sued in court alleging the goods were defective. Quad-Lock sought a stay in favour of arbitration under section 8 of the British Columbia International Commercial Arbitration Act (“ICAA”), relying on the arbitration clause in those online terms. Fisher argued the clause was “inoperative” because the parties had a shared assumption that they would litigate in court.

Decision

The Court granted the stay. It accepted that Fisher’s signing of order forms referring to the Terms and Conditions provided evidence he agreed to those incorporated terms, including the arbitration clause. On Fisher’s argument that the clause was “inoperative” on estoppel grounds because of a supposed shared assumption that arbitration would not be used, the Court found no evidence of such shared assumption or any representation by the seller. As a result, there was no estoppel, and the arbitration clause was enforceable.

Analysis

This case demonstrates that courts are notionally willing to enforce an arbitration agreement incorporated by reference when that reference is clear. This aligns with basic contract formation principles, namely that a document incorporated by reference can become a binding contract term. As a practical matter, this is a useful case for businesses that house standard terms and conditions on their websites as long as those terms are clearly and unambiguously incorporated into contract documents down the road. Parties wishing to oppose a stay in these circumstances will likely need to lead objective evidence showing that the clause was inaccessible or not clearly incorporated by reference.

Further, the Court found that an arbitration agreement is not inoperative based on mere belief or assumption. Fisher’s claim that the clause was rendered inoperative because the parties allegedly assumed they would litigate in court failed because there was no evidence of any shared assumption or of a representation that arbitration would not be invoked. The decision underscores that courts will require evidence of actual conduct or representation to displace an arbitration clause on estoppel grounds.

Finally, the Court applied the established two-stage Peace River framework for stays under the ICAA. Under that framework, the seller needed only to show an arguable case for each of the four technical prerequisites:

  1. An arbitration agreement exists;
  2. Court proceedings have been commenced by a party to the arbitration agreement;
  3. The court proceedings are in respect of a matter that the parties agreed to submit to arbitration; and
  4. The party applying for a stay does so before taking any step in the court proceedings.

Quad-Lock succeeded in establishing these prerequisites. The burden then shifted to Fisher to show one of the subsection 8(2) exceptions applied—that the arbitration agreement was null and void, inoperative, incapable of performance—on a balance of probabilities. As noted, Fisher’s estoppel argument failed at this stage.

Fisher v. Airfoam Industries Ltd. (Quad-Lock Building System), 2025 BCSC 758