Does iCloud use client-side encryption?
No.
Apple securely transmits and stores the data to the cloud by using secure tokens for authentication - as officially stated in the iCloud security and privacy overview1 and the iCloud design guide2.
Apple also states they they will &quot;never provide encryption keys to any third parties&quot;, which of course is not entirely true due to the Patriot Act3.
ArsTechnica states that Apple holds a master encryption key4 and is able to unencrypt any personal data - i.e. also for government requests. &quot;This includes contacts, notes, unencrypted e-mails, application preferences, Safari bookmarks, calendars, and reminders.&quot; The data is only encrypted during transit and again when stored on Apple's servers. This is a necessity if Apple wants to provide browser access to iCloud data.
The Electronic Frontier Foundation  notes5 that Apple is not inclined to be transparent about government requests.
As far as I understand the concept of client-side encryption, it suggests that all encryption must happen by the client as keys are not stored on the server (zero-knowledge policy).
Because Apple encrypts the data itself on the server for browser access it must store a key. Hence this is no client-side encryption.
1 - http://support.apple.com/kb/HT4865
2 - https://developer.apple.com/library/.../iCloudDesignGuide
3 - http://en.wikipedia.org/wiki/Patriot_act
4 - http://arstechnica.com/...apple-holds-the-master-key.../
5 - https://www.eff.org/pages/who-has-your-back/