The Supreme Court of Canada recently released its much anticipated Uber Technologies v. Heller decision, a landmark ruling with significant implications for the validity of online contracts and for employment relations in the gig economy. The court rejected an arbitration clause in an Uber contract with its drivers, finding the clause unconscionable.
The decision unsurprisingly quickly caught the attention of many in the legal, technology, business, and consumer advocacy communities. Professor Marina Pavlovic is a friend and colleague at the University of Ottawa, who appeared before the Supreme Court representing the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic as an intervener in the case. She joined me on the podcast to discuss the decision and to explain why she believes it is an earth shattering ruling for online contracts in Canada.
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Yesterday’s federal budget included plans to amend the law to ensure that GST/HST is applicable to ride sharing services such as Uber. The budget states that the government will:
Amend the definition of a taxi business under the Excise Tax Act to level the playing field and ensure that ride-sharing businesses are subject to the same GST/HST rules as taxis.
This change should not be particularly controversial. No one likes paying taxes, but equal application of sales taxes ensures appropriate revenue collection and a level-playing field for all businesses in the sector. As I noted in an earlier post, I expect that this is a first step toward extending requirements to collect and remit sales taxes on foreign digital services such as Netflix and Spotify. Applying sales taxes to all foreign digital services is complicated – there needs to be thresholds implemented to ensure that administrative costs do not outweigh revenues collected – but Uber is well established in Canada with many local jurisdictions establishing a regulatory framework for the service.
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From the moment the Liberal government took office last fall, it left no doubt that innovation was going to be a top priority. Gone was Industry Canada, replaced by the Ministry of Innovation, Science, and Economic Development, with Navdeep Bains, a close confidant of Prime Minister Justin Trudeau, installed as the responsible minister.
Last week’s budget continued the emphasis on innovation, promising $150 million in 2017-2018 for an innovation agenda. The full details have yet to be revealed, but the budget also added tax reforms to create investment incentives (and quietly dropped a tax change that would have hurt start-up companies), support for innovation clusters, and increased dollars for scientific research.
My weekly technology law column (Toronto Star version, homepage version) notes that the government says its goal is to make Canada a “centre of global innovation”, a significant challenge given that studies persistently point to Canada’s innovation gap. Last year, the Science, Technology and Innovation Council (STIC), a government-backed group, concluded that Canada “was not globally competitive” and that “it is falling further behind global competitors and facing a widening gap with the world’s top five performing countries.”
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Yesterday’s Trouble with the TPP post focused on the possibility that the agreement could restrict the ability for the Quebec government to regulate online gambling, as it is currently seeking to do in Bill 74. While that might be a good outcome – the Quebec bill is ill-advised and sets a dangerous precedent – it raises the question of whether a trade agreement is the right way to dictate provincial laws.
In fact, the TPP leaves behind a complex array of regulations for services industries that is almost certain to result in unintended consequences. Many trade agreements feature obligations to specific service sectors based on commitments from negotiating parties. These are relatively clear and make it easy for business to understand the new rules and for governments to identify their regulatory requirements. The TPP adopts a much different approach that is likely to lead to confusion and regulatory complexity. It features a series of generally applicable restrictions or requirements for services (the big four are national treatment, most favoured nation, market access, and no local presence requirements) and then seeks to exclude specific sectors in the hope of identifying problems with the general rules. As the Quebec gambling example illustrates, however, there are invariably new sectors or new issues that fall through the cracks.
Another possible complication could come from demands to regulate ride sharing services such as Uber.
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The very public fight over ride sharing services such as Uber was in the spotlight again last week as taxi drivers took to the streets in Toronto to protest against the ongoing availability of unregulated services. The result was a public relations nightmare: drivers comparing Uber to ISIS, engaging in dangerous activity with cars on the road, slowing the ability for an ambulance to arrive at its destination, and even injuring a police officer riding a bicycle.
My weekly technology law column (Toronto Star version, homepage version) notes that the hysterics are unlikely to generate much support from the public, but they do point to the need for local municipalities to address the festering policy issue. Uber and other ride sharing services are too popular among consumers to be banned. Nor should they be. The injection of new competition and innovation is good for the public, offering more consumer choice and new economic opportunities for drivers. Indeed, much of the demand for alternatives reflects frustration with poor service that can emerge in an artificially closed market.
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