Changing Foreign Policy Factors Could Affect Saudi LAVs Deal

It all started out with a tweet.

Canada’s Foreign Policy twitter handle expressed concerns with human rights issues in Saudi Arabia, a position that was neither new nor novel. The resulting twitter spat turned into a full-blown diplomatic crisis, with expelling of the Canadian ambassador by the Saudi government, freezing of assets, banning new trade with Canada, and sale of Canadian assets.

The relationship between Canada and Saudi Arabia is certainly complicated, but it hasn’t been this strained since the oil crisis of 1973. For all of the various trade matters between Canada and Saudi Arabia, the most contentious has been that of sales of military weapons.

In 2014, the Federal government made a $15 billion deal to sell light armoured vehicles (LAVs), which are manufactured at General Dynamics Land Systems Canada (GDLS-C) in London, Ontario. GDLS-C employees 2,100 people in London, an supports a supply chain of about 500 small and medium-sized Canadian businesses. 

Saudi has been using LAVs manufactured by GSLS-C since the 1990s, but these transactions were negotiated between Saudi and the U.S., and then granted to GDLS-C under Canadian Commercial Corporation (CCC). Nearly 2,900 LAVs were were exported to Saudi between 1993-2015.

The 2014 deal only proceeded with American approval, and is governed by export control under the Export and Import Permits Act (EIPA). An export permit was provided for the production of these LAVs on April 8, 2016.

Of course this permit was incredibly controversial in Canada, and indeed in the international community, given some of the ongoing human rights issues in the country, as well as Saudi involvement from 2015 in the civil war in Yemen. The Ministry of Foreign Affairs, who approves the permit, acknowledged the human rights record, but determined there was a that there was no connection between the use of LAVs and domestic human rights abuses, or their use in Yemen.

One law professor at Université de Montréal, Daniel Turp, decided to challenge this permit under ss. 35 and 7 of the EIPA and the Export Control List, and the Geneva Conventions Act, applying for judicial review in 2017 in Turp v. Canada (Foreign Affairs) to the Federal Court. His position was that the Minister failed to properly assess the risk that these arms would be used to commit human rights violations, create instability, or further national or international conflicts.

Sections 3 and 5 of the EIPA indicates that the Minister can establish a list of goods for export to control in light of Canada’s national interests. LAVs are found under paragraph 2(a) of this list. Permits are issued under section 7 of the EIPA, and includes factors that should be considered, including peace, security or stability in any region or country in the world.

This court action was unique for another reason, namely that Turp was leading a team of law students in his challenge, providing a practical and clinical aspect to legal education, while providing scrutiny to governmental actions. One human rights issue they were particularly concerned about was Raif Badawi, the blogger who was become the center of the current political firestorm.

The government’s response to this suit was that the EIPA’s purpose was to allow them to regulate and control the export of certain goods and technology, but to do so in consideration of Canada’s economic and political interests. The sale of LAVs took into consideration all of the relevant factors, and the Minister concluded this was still in Canada’s best interests before providing the permit.

Although the Federal Court granted Turp public interest standing, they dismissed his procedural fairness arguments, referring to League for Human Rights of B’Nai Brith Canada v Odynsky,

[95] […] At common law, the Governor in Council is not subject to procedural fairness obligations where it is deciding matters with significant policy content that affect a wide range of constituencies : […]. On the other hand, there may be some scope for the imposition of procedural fairness obligations where the rights and privileges of an individual or a relatively discrete group of individuals are being directly affected on the basis of provisions that impose objective standards and criteria […].

[Citations omitted in original]

Procedural fairness claims properly belonged to GDLS-C, and not any public interest claimants who are not directly affected by the decision.

The Federal Court also concluded that the EIPA provides a broad discretion to the minister in issuing export permits under s. 7, and that incorporating an obligation that was not found in the statute would fetter the Minister’s ability to exercise his expert discretion,

[51] The impugned decision shows that the Minister, in reaching it, took into consideration Canada’s national and international security interests as well as its economic and trade interests. These factors are neither irrelevant nor extraneous to the statutory purpose.

[53] In my view, Parliament recognized the spirit of Article 1 of the Conventions in enacting subsection 7(1.01)of the EIPA and issuing the Handbook, which invite the Minister to assess human rights factors before authorizing the export of military goods to countries suspected of having violated fundamental rights and international humanitarian law.

[55] In short, the scope of this Court’s judicial review power is limited to making sure that the Minister’s discretion was exercised in good faith on the basis of the relevant considerations. In this case, the Court is satisfied that it was so exercised. It therefore cannot intervene, as the Minister’s decision constitutes a possible, acceptable outcome that is defensible in respect of the facts and law.

The court emphasized that the role of the judicial system is not to pass moral judgment on the Minister’s decision, but only to ensure that it is conducted legally. This mirrored the sentiment of the Federal Court in an earlier application by Prof. Turp over the withdrawal from the Kyoto Protocol.

On a review of this decision on a basis of reasonableness, the Minister’s broad discretion to issue the permit was conducted reasonably. Paul Daly criticizes this decision as treating human rights considerations as “soft law” that should not be provides such broad deference.

The appeal to the Federal Court of Appeal, released last month, claimed that the judge had erred by finding the Minister could limit himself to a mere consideration of the relevant policy considerations, instead of providing significant weight to these concerns.

Justice Nadon dismissed the appeal, with the concurring reason by Justice Gleason noting that it was unnecessary to comment on the reasonableness of the LAVs permit generally. Instead, she stated that the relevant consideration was whether at the time the decision was made there was reasonable grounds to conclude there was no reasonable risk that LAVs would be used improperly.

Similar challenges internationally have also proved unfruitful to date. A 2017 application for judicial review by an NGO in the U.K. was dismissed by the High Court of Justice, but an appeal has been granted for the matter to proceed further.

Prior to the Federal Court appeal, Prof. Turp brought another application for judicial review earlier this year, citing new evidence including information that suggested that LAVs were in fact being used domestically against civilians in Saudi Arabia. The government brought a motion to strike, but the Federal Court at this juncture refused to strike the proceedings as an abuse of process, redundancy, or risk of contradictory judgments, despite similar matters being before the court,

[74] …the irrefutable evidence of the use of Canadian LAVs by the Saudi State against innocent civilian populations in 2017 – a new and determinative fact that must be must be taken as proved – raises a new cause of action, since in such a case the Minister has the power to amend, suspend, or cancel an export permit under section 10 of the EIPA. Even though the Court is not bound by the judgment dated January 24, 2017, Justice Tremblay-Lamer nevertheless recognized that the risk of the use of Canadian LAVs against civilian populations was a determinative factor in exercising the ministerial power to issue an export permit to GDLS under section 7 of the EIPA.

[106] If the facts alleged in the notice of amended application are taken as proved – which are in passing supported by the documentary evidence relied on by the applicant in the notice of amended application – the Minister has new facts and tangible evidence in her possession (including public reports and videos) to the effect that Canadian LAVs have in fact been used by the Saudi State against civilian populations in 2017, in this case, in the largely Shiite city of Awamiya in the Qatif region. The allegation that, despite this new evidence, the Minister has refused to suspend or cancel the export permits issued to GDLS under the 2016 ministerial approval must also be taken as proved at this stage. It is not plain and obvious at this stage that the Minister’s implicit or express refusal to exercise the authority under section 10 of the EIPA is not reviewable or that the applicant does not have a reasonable cause of action.
[emphasis added]

Although this judgment did not decide the matter on the merits, the court noted at para 95 that the Minister’s refusal to reconsider the exercise of power under the EIPA in light of these new facts was on its face a new and independently reviewable decision.

There is another public policy consideration highlighted in this motion that can be found in the position of the government, in that they prefer that a review of s. 10 of the EIPA should be limited to where a person is directly impacted, which would provide this right of judicial review to the exporter alone. If the promised deliveries of LAVs are not made, the CCC as a party to the military goods supply contract could face a demand for payment or some form of penalties.

These contractual obligations may also explain in part the government’s position on the sale. Although the Conservative government brokered the Saudi deal, it was continued by the subsequent Liberal government. The NDP, even when in opposition, did not resist it significantly given the impact on unionized jobs.

Stéphane Dion, Foreign Minister at the time, told CBC,

We have said during the campaign — the prime minister has been very clear — that we will not cancel this contract or contracts that have been done under the previous government in general.

We’ll review the process by which these contracts are assessed in the future. But what is done is done and the contract is not something that we’ll revisit.

Matthew Behrens disputes this characterization,

“That’s just insulting to anyone who knows the facts,” says the Rideau Institute’s Peggy Mason, a former Canadian Disarmament Ambassador to the UN.

“First off, the deal is between a Crown corporation, Canadian Commercial Corporation, and the Saudi Royal Family. Secondly, whatever type of contract it is, that in no way absolves the government of its duty to uphold Canadian export control policy.”

Given the confidentiality provisions in the contract, the actual financial impact of any termination remains speculative.

Despite whether the government can continue to issue a permit, a more pertinent question might be whether it should. Asad Ismi of the Canadian Centre for Policy Alternatives quotes Cesar Jaramillo, of Project Ploughshares, a peace-oriented NGO,

He points out there “are very strong ethical questions to be asked about linking the economic well-being of Canada to the suppression of human rights in other countries.”

If jobs are the key consideration, he asks, “then what’s to stop Canada from selling weapons to ISIS or to the Mexican drug cartels?

Sadly whenever commercial interests are pitted against the protection of human rights, the former often win.”

Aside from the new human rights considerations raised in Turp’s second judicial review, there are other grounds upon which this permit could be reconsidered.

The initial permit was premised on Saudi Arabia’s strategic military partnership in the region, and the importance of the trade relations between Canada and Saudi Arabia. Both were cited heavily in the reviews of discretion considered by the Federal Court.

If these two factors diminish in importance given the ongoing diplomatic tiff, it could provide the appropriate political and legal basis for terminating this military relationship. Prof. Turp’s judicial reviews may highlight these changes further, but it is just as plausible that the government could choose to act decisively instead.

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