Ambrosia v. Blazesoft Ltd., No. 25 C 1723 (N.D. Ill. Oct. 21, 2025)[1]
Factual Background
Vincent Ambrosia, Jr. and Robert Houpt were customers of online gaming websites who brought a class action lawsuit against the operators of those websites. Plaintiffs alleged that Defendants preyed on them through addictive and illegal online gambling falsely marketed as free-to-play sweepstakes. Defendants moved to compel arbitration, relying on a broad arbitration agreement within the terms and conditions that Plaintiffs accepted in order to use the online gaming websites. Plaintiffs argued in response that the Ontario Arbitration Act governed Defendants’ motion to compel arbitration, and that the arbitration agreement would be invalid under the Act.
The Court Decision
The court noted that, in addition to invoking the Ontario Arbitration Act, the parties’ agreement stated that it would be governed by the laws of Ontario, Canada, and that Canada had adopted the New York Convention through implementing legislation that gave the Convention primacy over any other law.
Under the laws of both the United States and Canada, an agreement is governed by the New York Convention if: (1) it is a written agreement; (2) the agreement provides for arbitration in a signatory country; (3) the agreement arises out of a commercial legal relationship; and (4) a party to the agreement is not an American citizen, or the commercial relationship has some reasonable relation with one or more foreign states. Because those conditions were met here, the court concluded that the arbitration agreement was governed by the New York Convention.
The court next addressed the question of whether the claims should be sent to arbitration. Plaintiffs did not dispute that the claims fell within the scope of the arbitration clause, but argued that the clause was unenforceable because it was (1) barred by the Ontario Consumer Protection Act; (2) unconscionable; and (3) part of an unlawful gambling contract. In response to arguments that the parties had clearly and unmistakably delegated these issues of arbitrability to the arbitrator, Plaintiffs simply asserted that the delegation clause was unenforceable for the same reasons.
The court explained that, under the New York Convention, a court must enforce an arbitration agreement—and its included delegation clause—“unless it finds that the [ ] agreement is null and void, inoperative or incapable of being performed.” This “null and void” language must be read narrowly, for the signatory nations to the New York Convention jointly declared a general policy of enforceability of agreements to arbitrate. As a result, courts have held that only defenses that can be applied neutrally on an international scale—e.g., fraud, mistake, duress or waiver—render “null and void” an agreement governed by the New York Convention.
Here, Plaintiffs did not argue fraud, mistake, duress, or waiver, but only defenses that could not be applied neutrally on an international scale. First, the Ontario Consumer Protection Act was enacted to specifically discourage commercial arbitration agreements in certain contexts, which directly contradicts the international policy favoring arbitration. Second, the law applicable to an unconscionability defense is specific to each jurisdiction and has no common international standard. Finally, there is no common standard the court could apply to determine if the arbitration agreement constituted an unlawful gambling contract. Because each of these defenses would require application of law that is specific to a particular jurisdiction, as opposed to a standard recognized neutrally on an international scale, the court found the defenses did not fall within the scope of the New York Convention’s “null and void” clause.
The court concluded that, because the parties delegated the issues of arbitrability, Plaintiffs’ arguments that the agreement was barred by the Ontario Consumer Protection Act, unconscionable, and part of an illegal gaming contract, were all questions for the arbitrator.
This article has originally been published in the North America Newsletter.
