I thought I'd draw Slawyers' attention to a new student-run blog on international law, Legal Frontiers, run by law students at McGill University (my own alma mater). The site officially launched in January, and the content so far looks very interesting. Check it out and post a comment.

“[T]his regrettable result is a necessary consequence of Canada’s commitment to policies of international comity and reciprocity. Any time sovereign immunity is asserted, the inevitable result is that certain domestic parties will be left without legal recourse. This is a policy choice implicit in the Act itself.”

Re Canada Labour Code, [1992] 2 S.C.R. 50 at 91, per La Forest J.

Last week, in a Montreal courtroom, Justice La Forest’s observation was put to the test. For the past three and a half years, Stephan Hashemi, the son of the late Canadian photojournalist Zahra Kazemi, has been seeking to hold legally accountable Iran and various of its functionaries, whom he claims are responsible for his mother’s torture and murder while in Iranian custody in 2003. The first major obstacle for the plaintiff, and the subject of this past week’s hearing, is the defendants’ motion to dismiss the proceeding on the grounds that they are immune from being sued in Canada.

As I have previously noted in this space, state immunity prevents a foreign state from being brought before a Canadian court without its consent, subject to certain exceptions. The core of the dispute over immunity in Kazemi (Estate of) v. Islamic Republic of Iran is exactly what those exceptions are, and where they can be found.

According to the defendants, the answer is simple. The law of state immunity in Canada in civil matters is comprehensively governed by the federal State Immunity Act (“Act”). The Act states:

3(1). Except as provided for in this Act, a foreign state is immune from the jurisdiction of any court in Canada.

The Act then sets out certain specific exceptions to immunity, including waiver, commercial activity, death or bodily injury in Canada, and several others. None of them apply, so the case must be dismissed. Quod erat demonstrandum.

The plaintiff, together with the interveners Amnistie internationale (Canada) and the Canadian Centre for International Justice, take a different and more subtle view. They rely, among other things, on customary international law, treaty law, the Canadian Charter of Rights and Freedoms (“Charter”), and the Canadian Bill of Rights. They argue that not only is the law governing immunity not found solely in the Act, but also that to deny the plaintiff a hearing on the merits would be contrary to the Constitution and fundamental rights.

But before we get to that, let’s take a step back for a bit of recent history, because this isn’t the first time a Canadian court has been faced with a civil proceeding based on allegations of torture by a foreign state. It’s not much of an oversimplification to say that the key challenge for the plaintiff in the Kazemi case can be summarized in a word: Bouzari.

Bouzari v. Iran: an inconvenient precedent

Bouzari v. Iran was a 2004 decision by the Ontario Court of Appeal, concerning a lawsuit brought by Houshang Bouzari, an Iranian émigré, for alleged torture he had suffered several years before in Iran, at the hands of the Iranian government. Though Iran failed to defend, the court in Bouzari – as it was expressly required to do by Section 3(2) of the Act – considered of its own motion the applicability of state immunity. (While this case obviously raised a more conventional jurisdictional objection, namely the arguable lack of any “real and substantial connection” between Ontario and a dispute over matters which happened before the plaintiff moved to Canada, the courts nonetheless decided the case solely on the basis of state immunity.)

In a decision widely cited internationally, and widely criticized by human rights advocates, the Court of Appeal held, in part, as follows:

• In Canada, the common law of state immunity (which incorporates customary international law) has now been expressly supplanted by the Act, in view of Section 3(1). Any exceptions to immunity must be found in the words of the Act, and any new exceptions must come by way of legislative action, not jurisprudential development.
• While both customary and conventional (treaty) international law clearly prohibit torture, neither requires that a state provide a civil remedy for torture committed abroad by a foreign state.
• The immunity of foreign states from civil remedy for torture committed does not result in a breach of the right to security of the person guaranteed under Section 7 of the Charter, and even if it did, it would be consistent with the rules of fundamental justice.

To get around Bouzari, then, the plaintiff in Kazemi must do one or more of the following:‪

• Distinguish Bouzari on the basis that international law has evolved since then.‬‪
• Successfully raise a legal argument under Canadian law which was not considered by the court in Bouzari, or which was not available on the facts of that case.
• Convince the court that Bouzari was wrongly decided.

The submissions of the plaintiff, together with those of the two interveners, attempt all of these approaches.

1) The evolution of international law

There is no doubt that there is more support now than there was five years ago for the proposition that international law requires Canada to provide an effective civil remedy for torture abroad, including by foreign states. Italian courts, in particular, have issued a number of decisions permitting the bringing of claims by its citizens in Italian courts against Germany for actions in WWII, beginning with the Ferrini case. In addition, the United Nations Committee Against Torture, in its 2005 report on Canada’s compliance with the 1984 UN Convention Against Torture, criticized Canada’s narrow interpretation of Article 14 of the Convention (providing civil remedies against torture) and by implication also the court in Bouzari, which had rejected the view that Article 14 required Canada to permit civil recourse against torture abroad by foreign states. This is doubly significant, as the absence of such UN statements was relied upon by the Ontario Court of Appeal in interpreting Article 14, and further statements by international bodies such as the UN are considered sources of international law.

However, it is also fair to say that there is as yet no international consensus in this area. The House of Lords decision in Jones v. Saudia Arabia, likely better known to Canadians as the William Sampson case, upheld the immunity of Saudi Arabia and several of its functionaries against civil suits brought in respect of the wrongful imprisonment and torture of four British citizens. (Ironically, the House of Lords relied in part on Bouzari to show the absence of an international custom permitting such a suit to proceed against a state.) In addition, the Italian cases have been the subject of vigorous protest from the German government, including a case launched against Italy a year ago at the International Court of Justice, where Germany seeks a finding that Italy is acting contrary to international law in failing to respect Germany’s immunity.

2) New legal arguments

The immediate challenge in raising new arguments is that, quite frankly, this is very well-tilled ground. Bouzari had four interveners (including the Attorney General of Canada, who, as in the Kazemi case, defended the constitutionality of the Act). While Bouzari has been the subject of extensive commentary and analysis, both positive and negative, I am not aware of anyone suggesting it was per incuriam. Bouzari was also followed in a decision by the Ontario Superior Court released eight months later, dismissing Maher Arar’s suit against Syria and Jordan on state immunity grounds, thereby also settling any question of whether the result in Bouzari might have been driven by the plaintiff not having been a citizen or resident of Canada at the time of the events.

Nonetheless, Kazemi has so far seen some new arguments, as well as new variations on old arguments, given the different facts.

The plaintiff’s chief submission is based on Section 2(e) of the Canadian Bill of Rights. That section states:

Every law of Canada shall, unless it is expressly declared by an Act of the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgment or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to […]

(e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations;

In brief, the argument is that as the courts in Iran cannot provide a fair hearing, the application of state immunity would deprive the plaintiff of any hearing at all. The Act must be read to permit the plaintiff his day in court, or must be declared inoperative to the extent it cannot be so construed.

This argument is not without precedent. In Aristocrat v. National Bank of the Republic of Kazakhstan (2001), 21 C.P.C. (5th) 147 (Ont. Sup. Ct.), a self-represented plaintiff brought an action against the Kazakhstan central bank in relation to losses on shares he owned in a Kazakh private bank, which had been compulsorily purchased by the Kazakh government.

The court, of its own motion, considered whether the guarantee under Section 2(e) of the Canadian Bill of Rights might require an exception to the Act, where the foreign state in question cannot provide a fair hearing. Though the court left the issue undecided, as it had no evidence before it that Kazakhstan could not provide a fair hearing, it suggested that had there been evidence otherwise the Canadian Bill of Rights might render the Act inoperative and permit the plaintiff to bring his action in Canada.

Interestingly, Aristocrat appears to be the only case where the Canadian Bill of Rights has been raised in relation to state immunity. However, an analogous argument was raised in Bouzari based on the International Covenant on Civil and Political Rights, to which Canada is party. Section 14(1) is quite similar to Section 2(e) of the Canadian Bill of Rights, and reads in part as follows:

In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law.

Both the Superior Court and the Court of Appeal rejected the plaintiff’s interpretation of Section 14(1), finding that it has not been interpreted as requiring contracting states to provide domestic remedies in respect of acts carried out abroad by foreign states.

It is worth noting, however, that this analysis is open to some debate.

First, the decision by the Superior Court to admit into evidence expert opinion on the state of international law, and the approach of the Court of Appeal to give “due deference” to the lower court’s finding, has come under criticism. Gib van Ert has cogently argued that treating international law as a factual issue for expert evidence is misconceived – rather, it is a question of law, which is subject to appellate review on a correctness standard.

Second, the court’s conclusions had found support from the 2001 decision of the European Court of Human Rights in Al-Adsani v. United Kingdom. That case arose after the plaintiff’s suit in the English courts, in respect of his wrongful imprisonment and torture by Kuwait, was dismissed on the grounds that Kuwait was immune under the UK State Immunity Act, 1978. The plaintiff then brought an action at the ECHR, alleging that the United Kingdom, by blocking his suit on grounds of state immunity, had breached his right under Section 6(1) of the European Convention on Human Rights. That section states in part:

In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.

Though the plaintiff was not successful, the court split on the matter 9 votes to 8. Given the evolution in international practice referred to above, it is not unreasonable to question whether the court would rule the same way were the issue to come before it again. And, as it happens, the issue is before the court again, as a result of Jones v. Saudia Arabia: in 2006, the unsuccessful plaintiffs subsequently filed suit against the United Kingdom at the ECHR, a proceeding which is still pending at the time of this writing.

Should the right to a fair hearing in international law be held to require, at least in certain cases, an exception to state immunity, what might be the implications in Canadian law? The Supreme Court has noted, in Suresh v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 3, that “in seeking the meaning of the Canadian Constitution, the courts may be informed by international law […] We look to international law as evidence of these principles [of fundamental justice] and not as controlling in itself.” This would suggest that the scope of the “fair hearing” under Section 2(e) of the Canadian Bill of Rights might well be influenced by international practice.

The intervener CCIJ, in its submissions, has pushed this idea yet further. As noted above, in Bouzari, the plaintiff was unable to convince the court that his inability to bring an action even reached the level of a denial to his right to security of the person under Section 7 of the Charter. The courts therefore did not need to reach the issue of whether the denial of a hearing on the merits was in accordance with fundamental justice.

The facts in the Kazemi case, however, may be materially different for purposes of such an argument. CCIJ has argued that Canada, by prohibiting any remedy against the wrongful detention and murder of Canadians, has implicated itself in the actions of the foreign state, such that the Charter is engaged. Not only was Kazemi a citizen and a resident of Canada, but after her torture and hospitalization, the Iranian government, it is alleged, continued to refuse to allow her to return to Canada. Had she been permitted to return to Canada immediately, as the Canadian government and her family had requested, but nonetheless died as a result of her injuries, such death would have taken place in Canada, potentially lifting Iran’s immunity by virtue of Section 6(a) of the Act (death or bodily injury in Canada).

CCIJ notes that in cases such as Canada (Minister of Justice) v. Khadr, [2008] 2 S.C.R. 125, the courts have held that Canada may have an affirmative obligation to act in the face of unlawful actions by a foreign government, and that failure to do so may breach the Charter. Allowing Iran to avoid all accountability by immunizing it from civil suits, it argues, would implicitly encourage foreign states to compound any life-threatening crimes they may commit against Canadians abroad, by continuing to detain them – to ensure that if they die, they die abroad, so as to preserve the state's immunity. By promoting such conduct, CCIJ asserts, the Act's grant of immunity in these circumstances breaches the right to security of the person under Section 7 of the Charter.

It's an intriguing and novel argument, in my opinion – but for this very reason, I would hesitate to speculate on its chances of success. Can pre-existing legislation of general application, such as the Act, be analogized to specific ministerial or executive action of the type at issue in Khadr, Suresh, and other cases? I'm not so sure. Or, might one instead liken it to Chaoulli v. Quebec (Attorney General), [2005] 1 S.C.R. 791, where the Court found that a Quebec ban on purchasing private insurance, forcibly subjecting patients to the risk of waiting lists, was an impermissible infringement of Section 7?

One possible argument which was not raised by either the plaintiff or the two interveners is waiver of immunity by the foreign state. The argument, essentially, is that a notorious breach of international law which results in a civil fault, where the state at fault clearly will not provide any remedy under its own law, should be deemed a waiver of immunity.

At first blush such an argument may seem implausible – after all, how can Iran have waived immunity when it has spent the last several years seeking to have Kazemi’s suit dismissed on precisely that basis? And yet, treating certain acts by a state as entailing waiver of immunity has a historical pedigree, finding parallels in the origin of the restrictive doctrine. The commercial activity exception arose as an extension of the principle that a state could waive its own immunity. Therefore, it was argued, acta jure gestionis, where the state acted as a private commercial party rather than as a sovereign entity, were understood as a form of waiver.

Section 4(2)(a) of the Act provides that a state waives its immunity where it “explicitly submits to the jurisdiction of the court by written agreement or otherwise”. This section has not, to my knowledge, received much judicial interpretation. However, in PSAC v. United States, 74 di 191 (C.L.R.B.), the Board (relying on international practice in this regard), held in obiter that “explicitly submitted by written agreement or otherwise” could include a treaty. The Federal Court of Appeal, to which the state immunity question was referred on a question of law, apparently agreed with this view: Re Canada Labour Code, [1990] 1 F.C. 332 at para 2 (C.A.), rev’d (without consideration of this point) [1992] 2 S.C.R. 50.

The “or otherwise” language in Section 4(2)(a) implies that waiver need not require a writing to that effect; arguably, then, if “written agreement” includes conventional international law, “or otherwise” could include customary international law‬, or even, in certain circumstances, a treaty to which Iran is not party. For example, in the context of arbitral awards against foreign states, my friend and former colleague Richard Desgagnés has recently argued that a foreign state's submission to international arbitration should, at a minimum, be treated as a concomitant waiver of immunity for the recognition and enforcement of the resulting award in other states which are party to the 1958 New York Convention – regardless of whether the foreign state is itself a party to that convention.

Though Iran is not a party to the Convention Against Torture, the Convention is at least in part a codification of customary international law, including the jus cogens norm (a non-derogable mandatory rule of international law) against torture, which clearly does bind Iran. Iran, it is argued, has committed torture, failed to investigate and punish it, and failed to provide any domestic civil remedy, thereby infringing customary international law as codified under inter alia Articles 2, 12, 13, and 14 of the Convention. In addition, Canada is a party to that Convention, which, as already noted, requires states to provide an "enforceable right to fair and adequate compensation" for victims of torture.‬

By this logic, Iran’s alleged behaviour, where it knowingly, deliberately and repeatedly breached customary international law and jus cogens norms, could be taken as an explicit waiver of its immunity from civil recourse in Canada, which is the only jurisdiction where the plaintiff can effectively seek it (a fact which Iran must be deemed to have known).

A potential advantage of such an argument is that it avoids requiring the court to find that there exists a new norm of customary international law requiring states to provide civil remedies for torture by foreign states – as noted, while international jurisprudence appears to have evolved closer towards this view since Bouzari, it is still very uneven. Further, importing such a norm into the exceptions in the Act would require the court to not follow the Ontario Court of Appeal’s holding in Bouzari that Section 3(1) of the Act displaced the common law. While Amnistie Internationale has eloquently and forcefully argued against this view in its intervener’s factum in Kazemi, its argument closely parallels that of the intervener Canadian Lawyers for International Human Rights (CLAIHR) in Bouzari, which the Court of Appeal rejected – and, unlike for customary international law, one cannot plausibly argue that the interpretation of Section 3 of the Act has evolved since 2004.‬‪

3) Bouzari was wrong

Litigators typically would prefer to avoid arguing before a lower court that a recent appellate court case was wrongly decided, for obvious reasons. Yet, as noted above, in order to present any argument based on the evolving common law of state immunity, apart from constitutional arguments, the plaintiffs have no other choice. They must challenge, at the very least, Bouzari’s holding that Section 3 of the Act excludes any role for changes in international law from adding exceptions or limiting immunity.

Canadian jurisprudence on the role of international law is clear that (a) domestic law will be construed, to the extent possible, to be consistent with customary and conventional international law, but (b) it is open to the Canadian legislator to enact laws that contravene international law, so long as the intent to do so is clear: see R. v. Hape, [2007] 2 S.C.R. 292. That is, where domestic and international law are in conflict, domestic law takes precedence.

Accordingly, if the Quebec court rules that the Act is a comprehensive code that excludes any future exceptions to state immunity that might be recognized in international law, the only argument remaining to lift Iran’s immunity would rely on a challenge to the constitutionality of the Act, whether under the Charter or the Canadian Bill of Rights.

Future directions

The judicial strategy to challenge the immunity of foreign state torturers has been an uphill battle so far, without question. However, the battle has proceeded on another front as well: that of legislative reform. There have been a number of private member’s bills in Parliament over the last several years which would create a new exception to state immunity for state sponsors of terrorism, ultimately culminating in the government’s Bill C-35, which received first reading this past June.

A recent private member’s bill by Liberal MP Irwin Cotler would go considerably farther than this, however. Bill C-483, if passed, would create an exception to state immunity for acts of genocide, torture, war crimes, and crimes against humanity. Furthermore, the amendment would apply to “all proceedings pending and initiated” at the time of the Bill’s coming into force. While that language might benefit from some strengthening to make clear it applies to proceedings under appeal (as in this case, for example), it does certainly suggest that the Kazemi affair has concentrated minds on Parliament Hill.

Concluding thoughts

The hearing on state immunity in Kazemi has been adjourned until March, to permit the defendant and the Attorney General to respond to the arguments of the plaintiff and the interveners. A decision may not come until some months afterward, with the possibility of appeals to follow. Meanwhile, supervening legislative change cannot be ruled out. Irwin Cotler's bill has attracted co-sponsors from members of the three other parties.

In addition, a major case on state immunity, Kuwait Airways Corp. v. Republic of Iraq, is currently pending before the Supreme Court of Canada, with the hearing scheduled for March 22. Though that case does not directly engage issues of human rights, the approach the Court takes to construing the Act will quite likely have ramifications for Kazemi. As well, jurisprudential trends abroad, such as the pending cases at the ECHR or the ICJ, may echo in Canada.

All this to say that this story is very far from over. Stephan Hashemi may yet have his day in court.

After months of deliberation, the CRTC today finally approved Al-Jazeera English for distribution in Canada, without conditions.

What's remarkable about this decision is, well, that it's entirely unremarkable. To all appearances, this should have been a relatively easy regulatory call: Al-Jazeera English fit squarely within the new regulatory framework announced a year ago for distribution of non-Canadian news services, where the CRTC stated that it would generally approve such services absent "clear evidence" that the service would violate Canadian regulations. There was strong demand for the service, as shown by the 2600 interventions in favour. Furthermore, Al-Jazeera English wisely engaged in extensive outreach to potential opponents, such as Jewish organizations, which had vocally objected to the request for approval of Al-Jazeera Arabic several years ago. These efforts were apparently successful: this time, those organizations stated that they would not oppose approval for Al-Jazeera English.

And yet, the CRTC took nine months to finally grant approval to Al-Jazeera English. Compare, for example, the recent approval for Russia Today, like Al-Jazeera English a non-Canadian, English-language news service. Like Al-Jazeera English, Russia Today is funded by the government of a state, and like Al-Jazeera English, some outside observers have accused Russia Today of serving the propaganda interests of that state.

Unlike Al-Jazeera English, though, the number of interventions on the record in support of Russia Today were – two. Yes, two. And unlike Al-Jazeera English, Russia Today was approved in just three and a half months.

Personally, I have no objection to the speedy approval of Russia Today. This is, after all, exactly the way the process was intended to work. But from a business perspective, I don't doubt that the uncertainty is deeply frustrating. Al-Jazeera English should have had every reason to believe that its service should eventually be approved, but it had no way of knowing when. Originally, it had stated it hoped to be broadcasting in Canada by the fall. The record for the proceeding had closed by the end of June, and the CRTC said it would issue a decision by the end of the summer.

In fairness, the CRTC's statutory mandate for broadcasting is complex and often rather cumbersome. I can't help wondering, though, whether there aren't ways to further streamline the process. The CRTC has already set out a more light-handed regime for approval of non-Canadian news services, or third-language Canadian and non-Canadian services. What if, for example, the CRTC could also set out timelines within which such decisions will be issued (perhaps in a summary fashion) where a licensing application or distribution request raises no novel regulatory issues?

One other striking aspect of today's decision was the unusual dissent by Commissioner Marc Patrone, who objected, among other things, to the absence of sufficient evidence that Al-Jazeera English is truly free of "bias", the absence of proof that the Qatari government will not interfere in its content, and the absence of proof that Al-Jazeera Arabic and Al-Jazeera English are sufficiently separate. With all due respect to the Commissioner, however, his approach seems to have effectively placed the burden on Al-Jazeera English to prove a negative, as well as finding it guilty by association. As a viewer of the Canadian broadcasting system, moreover, I find rather patronizing – not to mention alarming – the suggestion that the government's regulator must protect me from potential editorial biases. Thanks, but no thanks.

Canadian expatriates are up in arms about the recent amendment to the Citizenship Act, which came into effect on Friday, implementing a "one generation" rule limiting transmission of citizenship by Canadians born or adopted from outside Canada (section 3(3)).

Is this amendment really so terrible? Let's consider a few examples.

Jane Canuck is born in the U.S. of Canadian parents, while her family is living there briefly. When she is a month old, her family returns to Canada, where she grows up and lives.

Under which of the following circumstances will Jane's child be born a Canadian citizen?

(a) Jane moves to England as an adult, where she has a child by her English husband.

(b) Jane is living in Canada with her husband, a landed immigrant. She is scheduled to give birth in Toronto, but at the last minute is diverted to Buffalo because of a hospital bed shortage.

(c) Jane is living in Canada but working temporarily abroad for a Canadian NGO, when she becomes pregnant by her non-Canadian boyfriend. She plans to return to Canada to give birth, but the child is born prematurely, while she is still abroad.

If you answered "none of the above", well done. That's correct: Canadians who acquire citizenship by being born abroad to (or adopted abroad by) Canadian parents cannot pass along their citizenship to their children unless those children are born in Canada – regardless of how many years they live in Canada, the strength of their connection to this country, or the circumstances under which they gave birth to the second generation abroad (aside from military or diplomatic service). In all three scenarios, Jane's child would have to be sponsored by her mother as an immigrant, then be naturalized, in order to acquire Canadian citizenship.

The government insists that the "one generation rule" is merely to prevent indefinite transmission of Canadian citizenship across multiple generations, to people who were neither born nor have ever lived here, and have no connection at all to Canada other than ancestry: according to Citizenship Minister Jason Kenney, "we want to limit it to those people who have some kind of enduring presence or commitment to Canada." Not an unreasonable policy, on its face – but in my view section 3(3) is an ill-thought out way to go about it. I doubt many people would argue that the latter two examples above are the sorts of situations intended to be captured by the rule. Even the result in the first example seems inequitable, given that had Jane been born just a month later her child would automatically be a Canadian citizen.

Now let's consider another example: Sam Yankee is born in Canada of U.S parents, while his family is living here briefly. When he is a month old, his family returns to the U.S., where he grows up and lives, never returning to Canada. Should his children with a non-Canadian partner inherit Canadian citizenship? Under the new rules, they would. (One can understand if Jane, on hearing this, might feel more than a bit annoyed.)

In short, the new rule creates two tiers of citizenship: those who acquire citizenship by being born or naturalized here, regardless of their lack of connection to Canada, automatically pass citizenship to their children. Those who acquire citizenship solely by virtue of being born to (or adopted by) Canadians, however connected to Canada they may be, cannot pass citizenship to their children.

The government was certainly aware of the problem: it was discussed at length in committee, and the Senate committee also highlighted the problem in its report. Even the legislative summary of the bill prepared by the Library of Parliament, somewhat surprisingly, appeared to criticize the amendment – noting in particular the problem of rendering stateless many children born to Canadians abroad:

Bill C-37 cuts off citizenship by descent after the first generation born abroad. [...] The major problem with this approach is that it may result in some people not being Canadian citizens at birth even though they and their parents have a substantial connection with Canada.

A third criticism the bill is likely to attract arises because of the proposed cut-off described above. Under the bill, a person who is the second or subsequent generation born abroad to a Canadian parent may be stateless if he or she does not acquire citizenship of the state of birth, or through his or her other parent. Canada is a contracting state to the United Nations’ Convention on the Reduction of Statelessness. Under article 4 of that Convention, a contracting state is required to grant its nationality to a person not born in the territory of the contracting state, who would otherwise be stateless, if the nationality of one or both of the person’s parents at the time of the person’s birth was that of the contracting state. Such a grant of nationality may be subject to certain stipulated conditions, however. The provision included in Bill C-37 to deal with statelessness is compliant with the Convention, but only minimally so. [emphasis added]

What seems especially unfortunate to me is that there exists another model for addressing this problem, which the government was either unaware of, or chose not to follow. Section 301 of the U.S. Immigration and Nationality Act, 8 U.S.C. 1401 simply imposes a minimum residency requirement on any U.S. citizen parent who has children abroad, whether the U.S. citizen parent was born in the U.S. or not – thus both ensuring that expatriates demonstrate a connection to the U.S., and avoiding the "two-tier citizenship" problem created by the Canadian amendment. Section 301 provides in part as follows:

The following shall be nationals and citizens of the United States at birth [...]

(g) a person born outside the geographical limits of the United States and its outlying possessions of parents one of whom is an alien, and the other a citizen of the United States who, prior to the birth of such person, was physically present in the United States or its outlying possessions for a period or periods totaling not less than five years, at least two of which were after attaining the age of fourteen years [...]

I think one can reasonably debate what should be required to establish a connection to Canada. Perhaps five years is not enough, or the parent should be required to have resided in Canada recently, for example. (Though it's worth noting that the Act requires a permanent resident, to obtain citizenship, to live in Canada for only three years within the four years preceding the application.) Alternatively, perhaps any residency rule alone is too strict, and should provide for other ways to show connection to Canada, depending on the circumstances.

I personally don't have a problem with the principle of drawing a line limiting the transmission of citizenship to subsequent generations lacking any real connection to this country. I do, however, think the approach the government has adopted to do so is quite arbitrary and unfair. The only justification I have heard so far relies on the (relative) simplicity of sponsoring a dependent child to come to Canada as a permanent resident, and the fast-track under section 5(2) of the Act for obtaining citizenship in such cases – an argument that in my view really misses the point. Maybe Slawyers have a better idea?

The Supreme Court of Canada announced this morning that it has granted leave to appeal the decision of the Alberta Court of Appeal in Yugraneft v. Rexx Management. This decision has been the subject of considerable discussion among arbitration practitioners: as was discussed several months ago on Slaw, the case raises a number of difficult questions about how international arbitration and Canada's treaty obligations in that respect interact with local procedural law – specifically limitation of actions – when seeking to enforce the award, and more generally whether foreign judgments and arbitral awards should continue to be treated, for limitations purposes, as mere contract debts.

A brief description of the issues in the case is available from the news release on Lexum.

Following up on Simon's vaccines post from earlier this week comes the encouraging news that on Thursday (happy 200, Charles Darwin) the U.S. Court of Federal Claims issued decisions in three vaccine-related test cases rejecting any causal link between vaccines and autism.

Yet, much like with the Pennsylvania victory in the battle over teaching evolution, I can only manage a half-hearted cheer at this latest triumph of science over superstition and ignorance. That it is even necessary to take this to trial – to say nothing of the refusal of so many to accept the correctness of the verdict – bears witness to how dismally science has failed to deliver its message to the broader public. The vaccine-autism hypothesis has been repeatedly debunked, yet millions of people still prefer to get medical information from Jenny McCarthy than from the Centers for Disease Control.

Let's be clear: this is not about fearlessly questioning prevailing wisdom. Science, at its core, is a method of inquiry, premised on the idea that objective phenomena are governed by consistent, knowable and experimentally provable rules. Scientific knowledge has always advanced by building on, refining, and not infrequently rejecting what has come before. But to refuse to accept any results that one doesn't like, insisting that observable reality conform to the Procrustean bed of one's own dearly cherished misconceptions irrespective of all evidence to the contrary – this is to embrace magical thinking, denying the validity of scientific inquiry itself. One is reminded of the apocryphal tale about Bertrand Russell, who, when giving a talk on astronomy, was challenged by an elderly woman who insisted the world was in fact a flat plate, resting on the back of an enormous turtle. When Russell asked her what held up the turtle, she defiantly responded, "You're very clever, young man. But it's turtles, all the way down!"

To choose a different, perhaps more controversial example, the Government of Ontario's Health Professions Regulatory Advisory Council report from April 2006, entitled "Regulation of Health Professions in Ontario: New Directions", said the following about homeopathy:

Clinical trials to establish efficacy of remedies are rarely used [...] Instead, a process called “proving”, which is a single trial with a single individual, purports to establish the medicinal effect of the substances used in homeopathic practice. [...] HPRAC notes that homeopathic principles are not accepted by all. A significant number of conventional medical practitioners, allied professions and clinical scientists seriously question the efficacy of homeopathy and regard it as unsafe. They point to the fact that there is no body of evidence that shows that homeopathic principles when translated into practice are efficacious.

I am aware that many people with more scientific training than my bachelor's degree in chemistry are satisfied that homeopathy is valid. Nonetheless, I find it at the least jarring to now see a statute giving, in some sense, state imprimatur to a therapeutic treatment that the government's own experts concede lacks reproducible, credible scientific studies supporting its efficacy, despite years of effort.

Both as citizens and as lawyers, this is our battle as well. Science and the rule of law go hand in hand. We want courts to decide guilt or liability based on causality and reliable evidence, not on mere hunch or coincidence. We expect one set of laws to apply to everyone, and that people cannot pick and choose only those they find convenient or agree with. We assume that laws are neither arbitrary nor secret, so that we can know the rules we are expected to adhere to.

A society that fails to understand or respect science implicitly endangers respect for the rule of law, and vice versa. And, I would argue, when the law tolerates or, worse, endorses pseudoscience, it eventually risks undermining its own legitimacy.

Courtesy of the Northern European law firm Roschier comes news of this most alarming decision from the Finnish Supreme Court: running an ice fishing competition without a lottery licence.

Supreme Court Rules on Lottery Offence in Ice Fishing Competition Case

The Supreme Court ruled on 30 December 2008 that an ice fishing competition can constitute a lottery in accordance with the Lotteries Act. [...]

[T]he participants were entitled a prize of monetary value for each fish caught based on the weight of that single fish. The value of this prize rose substantially along with the weight classes, but at the same time the probability of catching the weightier fish decreased dramatically since there was only a small number of such fish in the lake. Further, there was only one fish that would have entitled to the first prize of one million euro. Therefore, the Supreme Court concluded that at least the catching of the heaviest fish was no longer based on the skill of the fisher but mainly on chance.

I'm not sure if we're likely to see such problems here; sections 206(3) and 206(3.1) of the Criminal Code might provide a defence. Still, caveat piscator.

Link to summary of case here, with link to full text (in Finnish).

For those interested in the legal challenges posed by the "war on terror", this Friday's broadcast of "The Agenda", on TVOntario, will have an interview with my good friend Ben Wittes, a scholar at the Brookings Institution and author of the recent book Law and the Long War: The Future of Justice in the Age of Terror. Well worth a look, especially for those who comfort themselves with the idea that maximal protection for human rights entails no trade-offs in terms of security – or vice versa.

The visibility and relevance of foreign state (or sovereign) immunity has grown significantly in recent years. States and state-related entities are playing a growing role in international investment and commerce, while seeking civil remedies against states in domestic courts is increasingly seen as an important tool in holding states accountable for torture or other breaches of human rights.

State immunity, in its most traditional formulation, is the rule that a domestic court will not implead a foreign state in its proceedings without the state's consent. It is, in effect, the expression of judicial deference to the executive's responsibility for international relations. A state properly requires compliance with its laws from its citizens, or other persons located or acting within its jurisdiction. By contrast, disputes between foreign states, equals under international law, are ordinarily mediated through diplomacy. However, the exceptions to state immunity have grown over time, so that the modern doctrine provides for several other exceptions besides waiver by the foreign state.

The courts of Quebec have played a particularly significant role in the development of state immunity in Canada. They have consistently decided more cases involving state immunity than courts in any other Canadian jurisdiction. They were the first (and arguably the only) in Canada to accept the "restrictive doctrine" of state immunity in customary international law, under which a state was not immune from proceedings relating to its commercial activities. The restrictive doctrine, in turn, formed the basis for the 1982 statutory codification, the federal State Immunity Act (“Act”).

Quebec courts have continued to punch well above their weight in generating jurisprudence under the Act, and the last few months have been no exception. Last week's decision of the Quebec Court of Appeal in the case of Trudel v. Nahmiash (sub nom New Jersey (Department of the Treasury of the State), Division of Investment v. Trudel), 2009 QCCA 86 (“Trudel”) raised a number of important issues well worth exploring in further detail.

1.     The facts

The dispute underlying Trudel initially arose from a number of class action lawsuits by investors against Nortel Networks in the U.S. and Quebec in 2004 and 2005. The plaintiff in one of the U.S. actions was the New Jersey Department of the Treasury, Division of Investment (“New Jersey”), an organ of the State of New Jersey and thus a "state" within the meaning of the Act.

Subsequent to a settlement in the U.S. actions in June 2006, the Quebec Superior Court approved the extension of the settlement to include the pending Quebec class action. Philippe Trudel and Bruce Johnston, the lawyers acting for the Quebec plaintiffs' class, submitted their proposed fees; New Jersey, together with several other parties to related actions, intervened to make joint submissions questioning the amount of the fees. Trudel and Johnston, believing that the intervenors' submissions were defamatory, then brought an action against the intervenors and their lawyer, Laurent Nahmiash.

The defamation action was filed in November of 2007. The plaintiffs Trudel and Johnston obtained leave to serve the originating process on New Jersey by registered mail. New Jersey promptly brought a motion to set aside service and, further, pleaded irrecevabilité du recours on grounds of state immunity.

The Superior Court set aside service on the basis that it failed to confirm to the requirements of the Act, but declined to decide the merits of the immunity claim on the basis that there were insufficient facts to determine at this stage whether immunity applied. The Court of Appeal reversed in part on the latter point, finding that immunity applied.

2.     Service on a foreign state

Section 9(1) of the Act provides as follows:

9. (1) Service of an originating document on a foreign state, other than on an agency of the foreign state, may be made

(a) in any manner agreed on by the state;

(b) in accordance with any international Convention to which the state is a party; or

(c) in the manner provided in subsection (2) [service by diplomatic means]

9. (1) La signification d’un acte de procédure introductif d’instance à l’État étranger, à l’exclusion de ses organismes, se fait :

a) selon le mode agréé par l’État;

b) selon le mode prévu à une convention internationale à laquelle l’État est partie;

c) selon le mode prévu au paragraphe (2).

This section has raised some dispute in the caselaw because of the apparent ambiguity in the English version. "May" on its face seems permissive, suggesting that the rules of service on a state under the Act are not exclusive of those under the local rules of court. Several previous cases had touched on the issue: most agreed that s. 9(1) was mandatory, such that where the plaintiff serves an originating document by any other means, any judgment obtained against the state will be set aside.

The question had been considered in particular detail in Cegir Inc. v. Banque algérienne de développement, [1989] R.J.Q. 1965 (C.S.), where the court contrasted the French and English versions of s. 9. As noted above, the French version states "signification se fait" ("service is made"), which, unlike the English version, clearly indicates that the service provisions are mandatory. The court in Cegir preferred the French version, which in its view better accorded with the intention of the legislator. Nonetheless, a subsequent case in Alberta, Ritter v. Donell, took the opposite view, holding (in obiter) that the English "may" must be read as permissive. The Superior Court's decision in Trudel, which regrettably remains unreported, canvassed all the previous decisions on s. 9(1) and chose to follow Cegir.

Though the service issue was not appealed and therefore not addressed by the Court of Appeal, the meaning of s. 9(1) should, in my view, now be treated as conclusively settled. The arguments in favour of s. 9(1) being mandatory are compelling. First, with the greatest respect to the Alberta court, it is simply not correct that "may" in English is always permissive: as Sullivan and Driedger note, it may be permissive or mandatory, depending on context. Read together with the French version, the rules of bilingual interpretation would support the narrower, mandatory meaning. (It is telling that Ritter made no mention of Cegir, nor considered the French version of the Act: once again, perhaps, an example of the limitations imposed by the unilingual character of most of the English Canadian bar and bench, a perennial problem that seems to resist solution.) The surrounding context also supports the mandatory interpretation: s. 9(3)(c) of the Act specifically authorizes the use of the rules of court for serving agencies of a foreign state. The absence of any similar provision for foreign states in s. 9(1) implies that the rules of court may not be used. While s. 17 of the Act preserves the applicability of the local rules of court except where inconsistent, it is circular reasoning, as the court in Cegir noted, to use that section to interpret s. 9 – as the court did in Ritter. Section 17 is a residual provision, to be used only after interpreting and giving full effect to the Act.

3.     When and how immunity is adjudicated

The Court of Appeal in Trudel reversed the Superior Court on the issue of when immunity is adjudicated, holding that being a matter of public order, immunity must be determined as early as possible on the basis of the pleadings. This point is, in fact, uncontroversial. Ordinarily state immunity will be raised by the defendant as an interlocutory motion at the earliest opportunity, and resolved at that stage.

Yet, the Supreme Court has held that even where the immunity plea is rejected on a preliminary motion, it may be raised again at a later stage of the proceedings. Clearly this implies that there may exist circumstances where the record is inadequate to establish whether immunity applies. The Court of Appeal in Trudel suggested similarly, stating that [my translation] “the judge seized with a motion pleading immunity on the part of the foreign State is required to decide the question, absent particular circumstances that do not apply here.” Arguably, then, the real difference between the Court of Appeal and the motions judge was less the stage when immunity is determined than the nature of the burden of proof to establish its (in)applicability.

The question of which party has the burden of proof with respect to state immunity is not fully clear. Pursuant to s. 3(2) of the Act, the court itself is charged with responsibility for determining whether state immunity applies, and with giving effect to it, even if the parties do not raise the issue. This might suggest neither party has the burden of proof as such. This was the position taken by the Supreme Court of Canada, albeit pre-Act, in Congo v. Venne, where it stated that whether a state act is commercial in nature "should be decided on the record as a whole without placing the burden … on either party." The Court of Appeal in Trudel, like most of the more recent cases, took the view once the state has made out a prima facie case for immunity (in this case, establishing that the defendant is a "foreign state" within the meaning of the Act), the burden shifts to the plaintiff to establish that the criteria for an exception are met. However, a minority of cases appear to have taken the view that the burden remains with the state to demonstrate the non-applicability of any exceptions. Regardless of where the burden lies, the standard of proof is the ordinary civil standard. The Court of Appeal in Trudel, following the decision of the Ontario Court of Appeal in Schreiber v. Federal Republic of Germany (2001), 52 O.R. (3d) 577, held that a motion to dismiss based on state immunity need not meet the "plain and obvious standard".

A somewhat unusual aspect of Trudel was the manner in which New Jersey raised its substantive immunity plea, as an motion for irrecevabilité du recours. For those unfamiliar with Quebec procedure, this bears some explanation.

Quebec civil procedure distinguishes between "declinatory exceptions", which are preliminary motions to stay or dismiss based on absence of personal or subject-matter jurisdiction (compétence) [Quebec Code of Civil Procedure, arts. 163-164] and "exceptions to dismiss" (moyens de non-recevabilité), which are motions to stay or dismiss on other grounds: (i) res judicata or lis pendens, (ii) lack of legal capacity to sue or be sued, (iii) plaintiff’s lack of standing, and (iv) no reasonable cause of action [C.C.P., arts. 165-167]. The majority trend in previous Quebec cases has been to plead state immunity as a declinatory exception, thereby treating it as a question of compétence, not recevabilité.

Interestingly, common law cases addressing state immunity have more typically turned first to questions of personal jurisdiction, addressing immunity only once jurisdiction has otherwise been established, thereby suggesting that immunity is a question of recevabilité. However, the analysis in the common law jurisprudence is less clear, in part because civil procedure rules in the common law provinces treat exceptions based on irrecevabilité and subject matter jurisdiction similarly, or do not even distinguish them, while personal jurisdiction is addressed separately through the rules on service.

The Court of Appeal observed that ordinarily the motions judge has a margin of discretion in when exceptions based on recevabilité are adjudicated: they may be addressed as a preliminary motion, or deferred to the trial on the merits. By holding that state immunity must be addressed as soon as possible, arguably the Court may have in fact implied that the plea of immunity should have been treated as a matter of compétence, not recevabilité. Nonetheless, I am aware of no example where a court has rejected the plea of immunity solely on the basis that it was brought using the incorrect rule. In any event, as already noted, the court must raise immunity of its own motion even if the state has not made any submissions.

4.     Scope of the commercial exception

The plaintiffs in Trudel argued several distinct exceptions to state immunity, which the Court of Appeal rejected. Their argument as to the applicability of the commercial activity exception is in my view the most interesting, as it raises a question that has received comparatively little jurisprudential attention.

The commercial activity exception, as previously noted, codifies the restrictive doctrine of state immunity. The restrictive doctrine drew a distinction between acts jure imperii (acts of sovereign power) and acts jure gestionis (private or commercial acts), granting immunity only to the former. According to the restrictive doctrine, where a state acts like a private commercial businessperson or investor, it should be subject to the same liabilities as any private party.

According to the Supreme Court, determining the application of the commercial activity exception requires a two-step analysis: first, determining the nature of the activity, and second, whether the proceedings were "related to" the activity. Most of the caselaw on the commercial activity exception has focused on whether the state activity at issue is "commercial". The application of the exception in Trudel, however, turned solely on the second part of this test. The question at issue was, in effect, how far does "related to" extend?

The plaintiffs put forward a kind of "commercial-by-transitivity" argument: the defamation proceedings were "related to" New Jersey's commercial activity because the allegedly defamatory statements were made in the context of separate proceedings where the commercial activity exception admittedly applied. The court rejected this argument, relying on the analytical framework used by the Ontario Court of Appeal in Bouzari v. Iran. In Bouzari, the plaintiff brought suit in relation to his imprisonment and torture by Iran. The plaintiff alleged his arrest resulted from Iranian government efforts to force him to pay a percentage of his consultant’s commission from a joint venture between the Iranian national oil company and a foreign consortium. In rejecting the application of the commercial exception in the circumstances, the court held that the ultimate intention or purpose of the state acts of torture did not make them "commercial" in nature; rather, the acts themselves must be commercial. The damages sought in the proceedings must be related to the alleged commerciality of the activity.

However, the proposition that the damages sought in the Canadian proceeding must relate directly to the commercial activity at issue raises a troublesome question: can the commercial activity exception properly apply to the enforcement of foreign judgments and arbitral awards? Might it not be argued – especially in light of their treatment (at least at common law) as contract debts for limitations purposes – that the proceedings to enforce them are distinct from the underlying activity that gave rise to the dispute?

As a practical matter, such an approach would render arbitral awards considerably more difficult to enforce, at least where the applicable state immunity statute lacks a specific exception for arbitration (as is the case for the Canadian Act). Moreover, numerous cases have in fact enforced commercial arbitral awards against states and state-related entities, without any suggestion that the commercial activity exception is per se inapplicable. Furthermore, the suggestion that a foreign award or judgment should be treated as divorced from its factual underpinnings is something of a fiction in any event, to be discarded when inconvenient: for example, when determining whether the Federal Court has subject-matter jurisdiction over the enforcement of a foreign judgment, it is routine to look at the character of the underlying dispute.

Another approach to avoid this concern might be to regard immunity as inapplicable to a proceeding which relates directly to another, non-immune underlying proceeding only where it is a necessary or readily foreseeable corollary of that underlying proceeding – as is the case with proceedings to enforce a foreign arbitral award, but not, presumably, with a defamation action arising from statements made in an earlier proceeding.

5.     Conclusion

Though more than twenty five years have passed since the Act came into force, Canadian courts continue to be faced with quite significant and fundamental questions as to its interpretation and application. For example:

• In the recent Quebec Superior Court decision in Kuwait Airways v. Iraq, the court held that the defendant was immune from the enforcement of a U.K. judgment, though the U.K. court had held the opposite in the underlying proceedings. Though immunity is a question of the law of the forum, should the enforcing court give any deference to the determination of the tribunal that renders a foreign judgment or arbitral award, where the foreign law is materially similar to the Canadian Act?
• Questions remain as to the scope of the service provisions: does the Act permit the initiation of proceedings ex parte, as is not uncommon in the enforcement of arbitral awards? While the UK practice permits it, the Canadian position remains unsettled.
• In execution proceedings, does the Act permit courts to issue pre-judgment attachment orders? And how does one execute on assets when it is unclear what property is in fact owned by the state (a not uncommon problem in states whose governments are less than transparent)?
• Numerous actions have sought to challenge the immunity of foreign states for torture carried out outside Canada – for example, in the notorious case of Zahra Kazemi, where a motion challenging the applicability of state immunity to an action against Iran is scheduled to be heard next week in Quebec Superior Court.

As the world gets smaller, these types of questions will only multiply. Those who enjoy those strange juxtapositions found at the interfaces of domestic and international law have much to look forward to.

December 30 update: OK, so this does seem like one of those topics only a confirmed law geek could love. But the Post (again) thinks the importance of the Court of Appeal's decision to the general public is worth underlining in today's editorial.

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The Ontario Court of Appeal, on December 24, released its long-awaited decision in the companion cases of Telezone v. Canada, G-Civil v. Canada, Fielding Chemical Technologies v. Canada, and McArthur v. Canada. Each of the four cases concerned a challenge to the jurisdiction of the Ontario Superior Court to hear a suit in contract or tort against the federal government, on the basis that the plaintiffs must first seek judicial review in Federal Court of the government's underlying conduct.

In the lower Ontario courts, the federal government had argued – twice successfully, twice unsuccessfully – that the plaintiffs' actions were necessarily a collateral attack on the validity of the government's decisions. The argument was based on a decision by the Federal Court of Appeal in 2005, in Grenier v. Canada, which had thrown out an tort claim by a federal imate in respect of his disciplinary and administrative segregation by the prison. According to the FCA in Grenier, as the inmate had never challenged the validity of the decision by way of judicial review, he was precluded from seeking damages resulting from the segregation. The decision remained "legally effective" until invalidated. Moreover, permitting actions for damages in respect of the effects of the decision would lead to "a dysfunctional dismemberment of federal administrative law" as the lawfulness of federal decisions would be challenged both in Federal Court and in provincial superior courts.

It is ironic, then, that the Ontario Court of Appeal refused to follow Grenier – even referring to it several times as "wrongly decided" – in part because of the same policy concerns of avoiding "split or multiple proceedings in different forums" and the concomitant waste of judicial resources. A decision can be correct (or at least unchallenged) in an administrative law sense, but nonetheless give rise to damages in private law. Requiring that the plaintiff always challenge the decision first by way of judicial review, in its view, would be highly inefficient, as well as unfair.

I found it striking that the Ontario Court of Appeal cast its reasoning so broadly. Rather than merely distinguish Grenier on the facts – as had the motions judge in Telezone, for example – it seemed to go so far as to say that no action in contract or tort could ever be a collateral attack on the government decision. The Court also placed great reliance on the Federal Courts Act, which assigns exclusive jurisdiction to the Federal Court to hear applications for judicial review of Federal government actions, but expressly preserves the concurrent jurisdiction of the provincial superior courts for claims in contract or tort against the federal Crown. The Court concluded that the concurrent jurisdiction for claims against the federal Crown indicates that the provincial superior courts should be free to render judgment and award damages without requiring prior judicial review.

To play devil's advocate for a moment, however: What if one of the essential elements of the private law claim against the Crown is the illegality (or lack of legal justification) of the government action? For example, in the absence of a successful judicial review application, can a plaintiff bring an action for negligent misrepresentation against the Crown for incorrect information allegedly supplied by its agents in respect of the transfer and renewal of a fishing licence? On the one hand, the plaintiff does not seek to challenge the decision denying him a licence. On the other hand, in the absence of a right to the licence, can the defendant establish any damage? The Newfoundland Supreme Court, Trial Division, in Perrot v. Canada, agreed with Grenier, holding that the plaintiff was out of luck.¹

Arguably a more nuanced approach is truer to principle: in some cases a private law claim will entail a collateral attack, whereas in others it will not, depending on the particular facts (see for example the decision of the Newfoundland Court of Appeal in Canada v. Genge). But the Ontario Court viewed that as a principled muddle leading, in practice, to a Dickensian nightmare à la Jarndyce v. Jarndyce, the claimants bounced from court to court in search of relief.

This seems such a characteristically Canadian dispute, bringing to mind the old chestnut about whether the elephant is a federal or provincial responsibility. As such, I'm sure we haven't heard the end of it. Supreme Court of Canada, anyone?

(And a tip of the hat to today's National Post for thinking this story was worth covering!)

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¹  (January 2 update:) The Newfoundland Court of Appeal disagreed, reversing Perrot on appeal, yet affirmed the result in two companion cases with very similar facts, Duffett v. Canada and Donovan v. Canada.

The Supreme Court of Canada this morning released its reasons for judgment in BCE Inc. v. 1976 Debentureholders, 2008 SCC 69. Oddly, this doesn't yet appear to have received much coverage in the news sites. Perhaps we're all eager to get home early and shovel our driveways?

Having not yet finished digesting the decision, I can't say much. There's a wealth of interesting and essential material here: a restatement of the directors' fiduciary duty to the corporation, and the extent to which consideration of other stakeholders' interests may enter into that duty; the "business judgment" rule; the obligation of a court in approving an arrangement under s. 192 of the Canada Business Corporations Act and the test to be used; and the nature of the s. 241 oppression remedy and the interests protected.

What immediately jumped out at me was the rather pointed criticism aimed at the reasoning of the Quebec Court of Appeal – which, it should be noted, was a unanimous decision rendered by an expanded 5-judge panel. In the concluding paragraph of its reasons, the Supreme Court stated:

The Court of Appeal’s contrary conclusion rested, as suggested above, on an approach that incorporated the s. 241 oppression remedy with its emphasis on reasonable expectations into the s. 192 arrangement approval process. Having found that the debentureholders’ reasonable expectations (that their interests would be considered by the Board) were not met, the court went on to combine that finding with the s. 192 onus on the corporation. The result was to combine the substance of the oppression action with the onus of the s. 192 approval process. From this hybrid flowed the conclusion that the corporation had failed to discharge its burden of showing that it could not have met the alleged reasonable expectations of the debentureholders. This result could not have obtained under s. 241, which places the burden of establishing oppression on the claimant. By combining s. 241’s substance with the reversed onus of s. 192, the Court of Appeal arrived at a conclusion that could not have been sustained under either provision, read on its own terms.

Mind you, that's not nearly as harsh as one recent comment by a (B.C.) corporate lawyer, who described the Quebec Court of Appeal decision as "poorly reasoned, spectacularly wrong in its conclusions and generally reflect[ing] a lack of understanding of both corporate law principles and commercial realities", adding that "parties to sophisticated business agreements will be far better served by agreeing to adjudicate their disputes in Ontario, where the courts generally have much greater commercial sophistication." Ouch.

The ubiquitous Karlheinz Schreiber has lost his latest round of legal whack-a-mole. This morning, the Supreme Court of Canada rejected his application for leave to appeal the most recent court decision allowing his extradition to Germany.

Germany initially requested Mr. Schreiber's extradition on August 27, 1999. Since then, he has sought leave to appeal to the Supreme Court of Canada no fewer than five times, and obtained it once (not counting his earlier trip to the SCC in 1998, challenging Canadian assistance to a Swiss investigation). He managed to delay the first court decision on the merits of his extradition until 2004, through an array of preliminary motions, as well as a concurrent lawsuit against Germany itself. After losing at the Ontario Superior Court, he continued appealing for another three years, while also seeking judicial review of the Minister of Justice's surrender order. He then sought judicial review of the decision of the new Minister not to rescind the decision of the previous Minister. Having at this point struck out at the Ontario Court of Appeal three times, he launched another judicial review application in Federal Court. Finally, he brought yet another judicial review application in Ontario to, in the Court's words, "reconsider the surrender decision made by a previous Minister of Justice and confirmed by another Minister of Justice." (This, by the way, is the decision for which leave to appeal was just denied.)

And, of course, even with his latest loss, Mr. Schreiber has guaranteed that he will be around for at least several more months, since the current Minister announced back in March that he would not be extradited until he has participated in the public inquiry on his business dealings with Brian Mulroney.

For sheer persistence, this must win some kind of record. I have to admit, I'd love to eavesdrop on the conversation when our government tries to explain to Germany why we can't seem to extradite this fellow already.

The Globe and Mail's article yesterday on the Alberta Court of Appeal decision in Yugraneft Corp. v. Rexx Management Corp. left me wondering. In Yugraneft, the Court held that an application to register and enforce a foreign arbitral award under the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (a.k.a. the New York Convention) is subject to the ordinary limitation period of two years.

The decision has indeed been the source of much concern among Canadian arbitration practitioners; even the decision by the Court of Queen's Bench in 2007 created quite a stir. My own sense from speaking to colleagues is that most, if not all, of the arbitration bar agrees that the decision is terrible policy.

But saying a decision is terrible policy is not the same as saying that it is bad law. The tone of the article suggests that errant courts have led our law astray, and it is now up to the Supreme Court to set things right, assuming it grants leave. But why should it be the job of the courts to ameliorate perceived defects in the law? The Alberta legislature established a common limitation period in its Limitations Act, without expressly excepting enforcement of foreign arbitral awards or most foreign judgments. While a longer period for enforcing foreign awards is in my view a good idea – and indeed the Alberta Law Reform Institute has recently recommended that the limitation period for enforcing all foreign judgments and awards be extended to ten years – is this not, ultimately, a legislative choice?

Arguably, the Alberta Act was insufficiently clear on this point, and in the absence of legislative guidance, there was room for the court to read the law more flexibly. Yet consider Ontario's Limitations Act, which also imposes a largely uniform two year limitation period for bringing an action. Not only does Ontario's Limitations Act lack any express exception for foreign arbitral awards, it specifically provides that enforcement of domestic arbitral awards under the Ontario Arbitration Act is not subject to any limitation period at all. In view of the (apparent) deliberate omission of any exception for foreign awards, what should a court make of the Ontario Act?

If this decision does, as the Globe says, harm Canada's image as an arbitration-friendly jurisdiction, then I think we should be turning our energies to lobbying for legislative change. The deficiencies in Canada's implementation of the New York Convention aren't limited to just one province, and nothing the Supreme Court can say is likely to change that.

The CRTC has just released its decision in the complaint brought by the Canadian Association of Internet Providers against Bell regarding Internet "throttling" or "traffic shaping". It rejected CAIP's request, which turned on the specific wording of Bell's wholsale service agreement. However, it has also announced that it will launch a proceeding to examine Internet traffic shaping as a question of policy, to determine whether new rules should be imposed.

The news release is here; the decision on the CAIP complaint is here. The public notice regarding the new proceeding does not yet appear to have been posted, but presumably will be within the hour.

Yesterday's widely-reported story that the Obama administration-in-waiting is already drawing up plans to close the facility at close the facility at Guantánamo Bay and try the remaining suspects in the U.S. has generated a lot of buzz. In fact, the Obama team appears to be trying to temper expectations, as last night saw further stories emphasizing that no decisions have yet been made.

One should probably be skeptical about such reports in any event, given the incentive for anonymous "advisors" to the incoming administration to try to steer the agenda. But no reasonable person, in my view, should be surprised by Obama's reluctance to "close Guantánamo with the stroke of a pen", as the ACLU yesterday urged. As my friend Benjamin Wittes has comprehensively documented in his recent book, Law and the Long War, the current population of Guantánamo is composed in significant part – though by no means exclusively – of some exceedingly dangerous individuals, who have openly and repeatedly indicated their desire to commit mass murder given the opportunity. What's the problem? For one, much of the evidence against them does not fit the standards required for ordinary criminal trials under existing U.S. law. Does one simply let them go free?

Others, while not dangerous, pose unique problems. For example, the U.S. admits the 17 Chinese Uighurs still held at Guantánamo are not enemy combatants, but does not want to release them into the U.S., cannot return them to China because of the risk of torture, and no other country (including Canada) will accept them as refugees.

Modern terrorism, simply put, poses significant challenges to our existing legal framework. What changes might we have to make to meet those challenges – from minor tweaks, to creating an parallel justice system for terrorism cases? In the U.S., this is fast becoming a matter of major discussion (see, for example, the excellent debate in Opinio Juris.) In Canada, at least to my knowledge, we have so far not really considered these matters much, aside from security certificates in the immigration context (cf. the Charkaoui case). Perhaps we should start.

In view of our election just past, and the one next week of our neighbours to the south, I thought it opportune to raise the topic of election laws, and more specifically, absentee voting.

Several weeks ago, I received in the mail an absentee ballot from the Board of Elections in Lorain County, Ohio. I dutifully filled it out, put it in an envelope, and mailed it in: voilà, my franchise duly exercised. No one asked how long I'd been in Canada (sixteen years), or if I intended to return to the U. S. (unlikely, at this point). As a U.S. citizen living abroad, I am entitled to vote in U.S. federal elections, in the place where I last resided. It's as simple as that.

By contrast, many Canadians living abroad have no such right. If you are away for more than five years, with a few exceptions (such as diplomatic or military personnel), there is simply no mechanism under the Canada Elections Act for casting a ballot. This limitation was criticized as "arbitrary" by the House of Commons committee that studied the issue in 2006. Nonetheless, the government chose to reject, at least for now, the committee's recommendation to remove it, stating that the issue required more study.

I admit I was astounded when I first learned of this restriction: in light of Sauvé v. Canada, wouldn't this be an obvious violation of s. 3 of the Charter? Yet, it might be argued that the issue is less clear-cut than it seems. Canada, unlike the U.S., does not generally levy taxes on its non-resident citizens. If so, then what responsibility of citizenship might justify a parliamentary democracy, based on the principle (at least in theory) that the members represent their constituents, permitting voting by people who do not and may not ever live in the constituency in which they vote?

I myself tend to come down on the side of expanding the vote rather than restricting it. I think the right to vote as such is an incident of citizenship, and the issue of what riding someone votes in should be kept separate from whether that person is permitted to vote at all. If there are countervailing concerns raised by permitting Canadians living abroad to vote as electors in the last Canadian riding they lived in, alternative solutions exist: e.g. the Italian approach of having members of parliament specifically representing expatriates. However, I'm interested in hearing other ideas.

Tomorrow morning, the Supreme Court of Canada will, finally, release its judgment in Saulnier v. Royal Bank of Canada. The case concerns whether a government-issued licence – in this case, a fishing licence – can be treated as a form of intangible "property" for purposes of the Personal Property Security Act and the Bankruptcy and Insolvency Act.

This case has the potential to be quite significant. The traditional common law position, represented by cases such as National Trust v. Bouckhuyt (1987), 61 O.R. (2d) 640 (C.A.), was that a discretionary licence issued by a government body grants a mere revocable privilege and not a property right. Consequently, such licences were incapable of supporting PPSA security interests.

The problem with this position is that in the real world, no one treats licences that way. Licences are in practice enormously valuable assets, and are frequently bought and sold or used as security, notwithstanding their indeterminate status or restrictions on their transferability. Indeed, the Ontario Court of Appeal seems to have soon repented of its view, suggesting in CIBC v. Hallahan (1990), 39 O.A.C. 24 that the issue should be reconsidered – but that until such time as the Supreme Court saw fit to do so, it would be bound by its own decision in Bouckhuyt.

Nonetheless, Ontario and other courts, over time, evolved a more pragmatic approach, allowing a licence to constitute property capable of supporting a security interest if the licensor’s discretion is constrained such that the licensee has a reasonable expectation that the licence will continue, and the licence has commercial value. Thirteen years after Bouckhuyt, Jacob Ziegel and David Denomme, in their commentary on the PPSA, observed that this “indicate[s] a willingness by the courts to isolate Bouckhuyt by a process of attrition.”

This has not, unfortunately, permitted any great deal of certainty for those who are asked to opine on the issue. It is notable that while the Nova Scotia Court of Appeal, in Saulnier, upheld the decision of the trial judge, it disagreed with the reasoning. The Superior Court focused on the commercial reality, which assigned substantial value to fishing licences. The Court of Appeal, by contrast, held that licences themselves were not property of the licensee, as the regulations stated that a licence “is the property of the Crown.” The “commercial reality” of the licences’ value was thus irrelevant. However, the licensee nonetheless had rights in respect of the fishing licence: the beneficial interest in the earnings from the use of the licence, and, more importantly, the “rights to apply for, and resist and arbitrary denial of, a renewal or reissuance of [the] licence”. These rights were property for purposes of the PPSA, and had value.

And so, we now wait for the final (one hopes) word on the matter. Stay tuned.

Update: The full text of the decision is available here. The appeal was dismissed, but for reasons that differ in several significant respects from both the trial judge and the Court of Appeal. The debate may yet continue…

Somewhat buried in all the news today of Liberal infighting, market meltdowns, and U.S. electioneering was a CRTC notice announcing the beginning of hearings on broadcasting and New Media. This hearing follows up on its earlier consultations this year setting the terms of reference for the hearings, and more generally on the CRTC's New Media Project Initiative, begun in 2007.

No one, surely, could accuse the CRTC of acting precipitously on this issue: even with respect to yesterday's announcement, a CRTC spokesman (quoted in today's Globe and Mail) emphasized that the proceeding is about "understand[ing] the Internet", not regulating it.

Nonetheless, the CRTC has made no secret of its concern to ensure the availability of high-quality Canadian content in Internet broadcasting. Michael Geist has a recent column on the possibility of a new levy on Canadian ISPs that might be used to help subsidize such content. Given the acrimony on display between content creators and distributors in the recent hearings on the broadcasting regulatory framework and the Canadian Television Fund, it seems a safe bet that such proposals will generate a lot of sparks.

The recent decision of the Ontario Superior Court in De Wolf v. Bell ExpressVu has been hailed, at least by the plaintiff, as a win for the consumer. Myself, I admit to some doubts: the reasoning of the decision suggests that any victory is Pyrrhic at best.

For those who haven't read the decision, the plaintiff challenged Bell ExpressVu's practice of charging an "administration fee" of $25 on delinquent accounts, on the basis of the Criminal Code prohibition of "interest" exceeding 60%. Bell argued – and, in fact, the court agreed – that the fee was a fair estimate of Bell's collection costs. However, the crucial factual element for the analysis was that Bell charged the $25 fee after 60 days, but only disconnected service after 75 days. Consequently, for fifteen days the customer continued to enjoy Bell's service while delaying payment: in effect, Bell was "advancing credit" within the meaning of section 347 of the Criminal Code.

The legal analysis is interesting, but what especially strikes me about this decision is its potentially perverse ramifications for consumers. The application of section 347 to late fees and similar charges has been defended on consumer protection grounds, notwithstanding that the section was intended as a tool to fight criminal loan-sharking. Yet what might be the practical result in this case? One simple way for Bell to comply with the effect of the decision would be to change its policy so that service is disconnected after 60 days, since any additional grace period alters the legal characterization of its fee from cost recovery to usury. (No good deed goes unpunished, it would appear.)

In my view, section 347 is a terribly blunt instrument to use for this type of situation, even if one accepts that such late fees are a policy problem worth addressing. Is there a better approach? Could one add additional carve-outs for consumer contracts regulated by provincial law, similar to the one recently added for payday lenders? Could one add a defence, along the lines argued by Bell, that "interest" should exclude any fee that represents a reasonable estimate of the costs incurred by one party where the other party breaches its payment obligations, even where the first party continues to provide the goods or services under the contract? Should the section simply be repealed entirely as creating more problems than it solves?

We've had a number of posts (for example, from Gavin and Jordan) lately on the future of the traditional law firm model.

This week's issue of The Economist has a thought-provoking article on recent changes to U.K. law permitting law firms to become publicly traded corporations. Australia appears to have been the first jurisdiction to permit this; Slater & Gordon went public in May of last year.

What are people's views on this? Is it good? Bad? Inevitable?

Is there anyone else out there who is tearing their hair out over Ontario's antediluvian system of providing access to court records?

In the Federal Courts, the Supreme Court of Canada, and (to some extent) the Manitoba courts, one can obtain free, web-based access to case and docket entry information. In British Columbia and Quebec one can also obtain such information via the web, though it is not free.

Meanwhile, in Ontario, we are making do with pencil and paper. No, I'm not joking. For actions commenced after April 25, 2008, so I'm told, searches – by party name only – must be requested in person at the court registry office, and performed by the Registrar, who then dictates results to be written down by the person requesting the search.

I realize modernizing court administration probably isn't a major political priority – say, like maintaining film censorship, or banning pit bulls. Still, I would really like someone to explain why, when other jurisdictions in Canada manage to have 21st century court record access, we are stuck in the 19th.

First, many thanks to Simon F. and the rest of the Slaw team for asking me to join. I've been an enthusiastic reader and occasional commenter on Slaw for the last couple of years, and I am looking forward to the opportunity to contribute more regularly to our exchanges of ideas.

As a topic for discussion, I'd like to propose the following hypothetical scenario. Let's suppose that tomorrow you are presented with a legal problem requiring a bit of digging. You go to the library, and find, much to your surprise, that every fourth book is filled with empty pages. You turn to the printed reporters, or QuickLaw and eCarswell, and similarly find every fourth case or so missing. Even when reading federal and (some) provincial legislation, half the words are blank.

Of course, this scenario is not really that hypothetical at all. It's the experience of unilingual anglophone lawyers faced with Canadian legal writing, cases, and legislation in French.

My question is this: should we be willing to accept that most anglophone lawyers lack minimum competency in both languages? Can we fulfill our responsibility to advise on the law if we can't understand what much of it says? Why isn't having a basic reading knowledge of French considered part of an English legal education?

Many lawyers might argue that an inability to speak French is largely a theoretical lacuna in their skill set, having little or no effect on their day to day practices. Moreover, the growth of national firms means that English-only lawyers who are more likely to be working on files where understanding French is critical will also more likely have access to French speaking colleagues.

Even if often the language gap has limited effect, or can be easily bridged, I nonetheless ask why the gap need exist in the first place. My own prejudices on this subject have been formed by my having obtained my law degree and begun practising in Montreal. In six years there, I don't think I met a single lawyer who was not bilingual at least to some degree.

Should we expect more from English speaking lawyers in the rest of Canada? Not perfect bilingualism, not even necessarily the ability to serve clients in French, but just the simple ability to read a case, book, or article in French and understand what it says? Having not learned French until I was in law school, I don't think it's much to ask, but I would be interested in hearing other views.