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Judgmental Judges

Thu, 03/23/2017 - 10:00am
By: Alice Woolley PDF Version: Judgmental Judges Case Commented On: Abdulaali v Salih, 2017 ONSC 1609 (CanLII) Introduction Judges exercise considerable power, and discharge a crucial public function. They identify, interpret and even create the rules that govern us. They decide … Continue reading →

Order In the Skyways: A Comment on the Regulation of Drones

Wed, 03/22/2017 - 10:00am
By: Lisa Silver PDF Version: Order In the Skyways: A Comment on the Regulation of Drones Case Commented On: R v Shah, 2017 ABQB 144 (CanLII) The increasing popularity of drones is attracting the attention of the regulatory process as municipalities, … Continue reading →

Alberta Law Reform Institute Recommends Reform to Trustee Act with Clear, Simple, and Comprehensible Legislation

Mon, 03/20/2017 - 10:00am
By: Robyn Mitchell PDF Version: Alberta Law Reform Institute Recommends Reform to Trustee Act with Clear, Simple, and Comprehensible Legislation Matter Commented On: Alberta Law Reform Institute, Final Report No. 109, A New Trustee Act for Alberta The Alberta Law Reform … Continue reading →

The Harsh Consequences of Ignoring the Dower Act

Tue, 03/14/2017 - 10:41am
By: Jonnette Watson Hamilton PDF Version: The Harsh Consequences of Ignoring the Dower Act Case Commented On: Joncas v Joncas, 2017 ABCA 50 (CanLII) If you are a married Albertan with a piece of real property registered in your name alone, … Continue reading →

Municipal Government Board Rules on Development Impacts to the G8 Legacy Wildlife Underpass in the Bow Valley

Thu, 03/09/2017 - 10:00am
By: Shaun Fluker PDF Version: Municipal Government Board Rules on Development Impacts to the G8 Legacy Wildlife Underpass in the Bow Valley Case Commented On: Town of Canmore v M.D. of Bighorn No. 8, 2017 ABMGB 10 Say again? The Municipal … Continue reading →

The Alberta Utilities Commission Rules on Its Jurisdiction to Assess Crown Aboriginal Consultation

Tue, 03/07/2017 - 10:00am
By: Kirk N. Lambrecht Q.C. PDF Version: The Alberta Utilities Commission Rules on Its Jurisdiction to Assess Crown Aboriginal Consultation Decisions Commented On: AUC Ruling on jurisdiction to determine Questions stated in Notices of Questions of Constitutional Law, October 7, 2016, … Continue reading →

Legal Innovation, Access to Justice, and the University of Calgary’s Family Law Incubator

Mon, 03/06/2017 - 10:00am
By: Kyle Gardiner PDF Version: Legal Innovation, Access to Justice, and the University of Calgary’s Family Law Incubator Matter Commented on: The University of Calgary’s Family Law Incubator Family law litigants are increasingly experiencing difficulty with access to justice that compounds … Continue reading →

Reasons, Respect and Reconciliation

Fri, 03/03/2017 - 10:00am
By: Nigel Bankes PDF Version: Reasons, Respect and Reconciliation Case Commented On: Kainaiwa/Blood Tribe v Alberta (Energy), 2017 ABQB 107 (CanLII) Reconciliation between Canada’s settler society and First Nations and other indigenous communities certainly requires mutual respect but it should also … Continue reading →

An Update on The Right to Trial Within a Reasonable Time

Thu, 03/02/2017 - 10:00am
By: Drew Yewchuk PDF Version: An Update on The Right to Trial Within a Reasonable Time Cases Commented On: R v Lam, 2016 ABQB 489 (CanLII); R v Regan, 2016 ABQB 561 (CanLII); R v Lavoie, 2017 ABQB 66 (CanLII) It … Continue reading →

Supreme Court of Canada Protects Freedom of Expression of Individuals During Election Campaigns

Wed, 03/01/2017 - 10:00am
By: Linda McKay-Panos PDF Version: Supreme Court of Canada Protects Freedom of Expression of Individuals During Election Campaigns Case Commented On: BC Freedom of Information and Privacy Association v British Columbia (Attorney General) 2017 SCC 6 (CanLII) In this case, which … Continue reading →

Criminal Negligence and the Reasonable Parent

Tue, 02/28/2017 - 10:00am
By: Erin Sheley PDF Version: Criminal Negligence and the Reasonable Parent Case Commented on: R v Lovett, 2017 ABQB 46 (CanLII) In R v Lovett the Alberta Court of Queen’s Bench added a new entry to the rapidly developing jurisprudence on … Continue reading →

Seeking Leave to Appeal a Statutory Tribunal Decision: What Principles Apply?

Fri, 02/24/2017 - 10:00am
By: Shaun Fluker and Drew Yewchuk PDF Version: Seeking Leave to Appeal a Statutory Tribunal Decision: What Principles Apply? Case Commented On: Bokenfohr v Pembina Pipeline Corporation, 2017 ABCA 40 (CanLII) Statutory provisions which provide for an appeal from a statutory … Continue reading →

The Sixties Scoop & the Duty to Consult: A New Frontier in Aboriginal Litigation?

Thu, 02/23/2017 - 10:00am
Case Commented On: Brown v Canada (Attorney General), 2017 ONSC 251 (CanLII) PDF Version: The Sixties Scoop & the Duty to Consult: A New Frontier in Aboriginal Litigation? By: Elysa Hogg and Alex Darling *Note on terminology: “Indian” is used to … Continue reading →

Independent Operations, Holdings and Common Ownership: A Letter Decision of the Alberta Energy Regulator

Tue, 02/21/2017 - 10:00am
By: Nigel Bankes and Heather Lilles PDF Version: Independent Operations, Holdings and Common Ownership: A Letter Decision of the Alberta Energy Regulator Decision Commented On: AER, Request for Regulatory Appeal by Westbrick Energy Ltd., Regulatory Appeal No. 1852713, 25 May 2016 … Continue reading →

Mennillo v Intramodal inc.: The Supreme Court of Canada Revisits the Oppression Remedy

Fri, 02/17/2017 - 3:23pm
By: Jassmine Girgis PDF Version: Mennillo v Intramodal inc.: The Supreme Court of Canada Revisits the Oppression Remedy Case Commented On: Mennillo v Intramodal inc., 2016 SCC 51 (CanLII) Mennillo v Intramodal inc. is the first oppression remedy case since BCE … Continue reading →

Residential Tenancy Agreements, Options to Purchase, In Terrorem Clauses, and Relief from Forfeiture

Thu, 02/16/2017 - 10:00am

By: Jonnette Watson Hamilton 

PDF Version: Residential Tenancy Agreements, Options to Purchase, In Terrorem Clauses, and Relief from Forfeiture

Case Commented On: Dreamworks Ventures Ltd v Dye, 2017 ABPC 20 (CanLII)

This residential tenancy case, arising in the context of a rent-to-own arrangement, is light on the law. The dispute was primarily about the tenants’ responsibility for cleaning and painting after they left the house and this decision assesses the damages. Nevertheless, the case raised one interesting legal point. Judge Allan H. Lefever mentioned an in terrorem clause in connection with the Option to Purchase that had been granted to the tenants in return for a non-refundable $5,000 deposit that was part of the rent-to-own arrangements. While he mentions the clause, he did not discuss it because it was not relevant to the dispute. The in terrorem clause tried to scare the tenants to stop them from filing a caveat to protect their interest under the Option to Purchase. Can this in terrorem clause possibly be valid? This, it seems, is a difficult question to answer.

The lawsuit was started by Dreamworks Ventures Ltd. According to their website, Dreamworks Ventures Ltd is in the “Residential Property Matchmakers” business; it is an online third-party service that links home buyers with home sellers through a rent-to-own program: “Our home buyers consist of people who cannot purchase a home through conventional methods, for various reasons. Our home sellers are people who are having a hard time selling their house, or people who want to make money in selling their house” (at Who We Are). In this case, Mandy and Kevin Dye were home buyers (although Kevin Dye was not named in the law suit, presumably because he filed for bankruptcy in 2015). We are not told who the home sellers were.

Five documents, all dated July 19, 2013 and all made between Mandy and Kevin Dye and Dreamworks, set out the legal relationships between the two parties. The details of these documents that are set out in the judgment are sketchy because of the focus of the decision.

The first document was a Lease for a house in Medicine Hat, showing Dreamworks as the landlord and Mandy and Kevin Dye as the tenants. The monthly rent was $1650. This Lease would have been a residential tenancy agreement regulated by the Residential Tenancies Act, SA 2004, c R-17.1.

The second document was an Option to Purchase the house between August 1, 2013 and July 31, 2015 for the sum of $285,000. This Option to Purchase, granted to the Dyes, stated that it amended the lease by providing that, if the option was exercised, $400 of each monthly “lease” payment would be credited toward the purchase price of the house.

The third document acknowledged that Mandy and Kevin Dye had paid a deposit of $5,000 on July 19, 2013. It also stated that the $5,000 deposit and the $400 per month credit from the lease payment were “non-refundable”.

The fourth document was entitled “The Purchase Process” and the fifth document was a “Move In/Move Out Inspection Checklist”, which was incorporated by reference into the Lease.

What we see in the Lease and the Option to Purchase appears to be, for the most part, a rather standard residential rent-to-own arrangement in terms of its structure, payment amounts, etc. See, for example, “Rent-To-Own Homes: How the Process Works”, Investopedia (16 September, 2016); Mark Weisleder, “Rent-to-own works, but beware the pitfalls”, The Star (30 July 2013); Gordon Powers, “Is Rent to Own Housing Ever a Good Idea?Money Wise (8 December 2014).

However, this rent-to-own arrangement had at least one non-standard feature: the in terrorem clause. It was a provision in one of the documents that stated that, if a caveat was filed at the Land Titles Office to protect the interest of Mandy and Kevin Dye under the Option to Purchase, then both the Lease and the Option to Purchase were automatically terminated and any monies paid towards the Option to Purchase ? the $5,000 deposit and the $400 per month credit ? would be forfeited to Dreamworks (at para 7).

We do not know whether the in terrorem clause had any impact on the Dyes. They do not appear to have filed a caveat. But neither did they exercise their option to buy the house. They paid their monthly rent of $1,650 from August 1, 2013 until June 30, 2015. Then they served a Notice of Termination on Dreamworks, effective July 31, 2015, and vacated the property.

In terrorem” is Latin for “into/about fear”. It is a legal threat, usually given to force someone to act or refrain from acting without the need to resort to a lawsuit or criminal prosecution to compel them to act or not act. This type of clause is used, for example, in wills when a provision is inserted that forfeits the gifts made to any beneficiaries who contest the will and lose. They are often upheld by the courts in that context: see Gerry W Beyer, Rob G Dickinson, and Kenneth L Wake, “The Fine Art of Intimidating Disgruntled Beneficiaries with In Terrorem Clauses” (1998) 51 SMU Law Review 225 (including a brief review of the history of these clauses over the past 2,000 years).

It is true that it appears to be common in residential rent-to-own arrangements to provide in the Option to Purchase that the tenant will forfeit the right to buy the property and forfeit any deposit if they fail to make a rent or option payment: see Jemima Codrington, “Caveat emptor, warn rent-to-own landlords”, Canada Real Estate Wealth (12 February 2013). And if a tenant fails to pay rent, they can also be evicted under the Residential Tenancies Act. But the in terrorem clause in the Dyes’ arrangement is very different. It purports to automatically terminate both their Lease and their Option to Purchase the house, and to forfeit their option money to Dreamworks, if they file a caveat in the Land Titles Office.

Under section 130 of the Land Titles Act, RSA 2000, c L-4, a person claiming an interest in land may file a caveat with the Land Title Office. Having done so, anyone coming along later who claims to have an interest in the same land is subject to the caveator’s claim (section 135, Land Titles Act. The purpose of and reason for filing a caveat is to give notice to the world of what is claimed by the caveator: Ruptash and Lumsden v Zawick, 1956 CanLII 67 (SCC), [1956] SCR 347 at 355. Had the Dyes seen a lawyer about their rent-to-own arrangement, one of that lawyer’s first pieces of advice probably would have been to file a caveat to protect themselves from Dreamworks or the owners selling the house to someone else before the Option to Purchase expired on July 31, 2015.

It was settled law in Canada from 1959 to 1996 that an option to purchase land for a named consideration is an equitable interest in land: see Frobisher Ltd v Canadian Pipelines and Petroleums Ltd, 1959 CanLII 47, [1960] SCR 126 at 171-72. As the Supreme Court of Canada put it in Canadian Long Island Petroleums Ltd et al v Irving Industries Ltd, 1974 CanLII 190, [1975] 2 SCR 715 at 731: “An option to purchase land is specifically enforceable. This gives the option-holder an equitable interest in the land; this interest is contingent upon his election to exercise the option.” And further, in the same case at 731: “[T]he essence of an option to purchase is that forthwith upon the granting of the option, the optionee, upon the occurrence of certain events, solely within his control can compel a conveyance of the property to him.” If the Dyes’ Option to Purchase was an interest in land, it could have supported a caveat: section 130 of the Land Titles Act.

However, in 1996 the Supreme Court of Canada precipitously changed the law of specific performance in the context of an agreement for the sale and purchase of real property by saying specific performance would no longer “be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available”: Semelhago v Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 SCR 415 at paras 20-22. As a result, the question arises whether an option to purchase is still specifically enforceable and therefore an equitable interest in land capable of supporting a caveat in Alberta?

It has been more than twenty years since Semelhago changed the law, and ten years since 1244034 Alberta Ltd v Walton International Group Inc, 2007 ABCA 372 (CanLII) made it clear what kind of impact this change had on the ability to caveat agreements for the sale and purchase of lands. However, as far as I can tell, there is no Alberta case specifically considering the application of Semelhago and Walton to options to purchase, but one case has come close.

That case ? Mylonas Enterprises Ltd v Foundation Place Inc, 2013 ABQB 385 (CanLII) ? involved an option to purchase as well as a vendor’s right to repurchase. Rights of repurchase are not options to purchase because they depend on the occurrence of a future event ? usually performance or non-performance by the purchaser ? that is not solely within the control of the vendor, which means they are properly characterized as rights of first refusal: Wetaskiwin Stock Car Club v Draeger, 2016 ABQB 144 (CanLII), at para 10. And a right of first refusal is deemed to be an equitable interest in land by section 63(1)(a) of the Law of Property Act, RSA 2000, c L-7. Justice Keith Yamauchi in Mylonas (at para 22) asserted that no one could challenge the proposition that options to purchase real property create interests in land given the Canadian Long Island description of their nature. But because Canadian Long Island pre-dated Semelhago, Justice Yamauchi went on to consider the changes in the law made by the latter decision. He distinguished Semelhago because it dealt with an agreement for purchase and sale and he was dealing with “a right of repurchase which, once the vendor complies with its obligations, will be an option to purchase” and that allowed him to conclude the right to repurchase “created an interest in the Lands …” (at para 47).

It therefore appears that the question of whether the Dyes’ Option to Purchase would support a caveat is unsettled. There is at least a suggestion in Mylonas that an option to purchase is still an interest in land, as it was prior to Semelhago. This seemingly illogical conclusion is perhaps driven by what the dissenting judgment of Justice Slatter in Walton (at paras 37-28) called the “inconsistency” of the statutory deeming of the “lesser” right of first refusal to be an interest in land. See also the reservations expressed in Draeger at paras 16-18.

If the Dyes had registered a caveat to protect their option to purchase (assuming for the moment that it is an interest in land), it would have protected them, for example, against Dreamworks or the owners selling the house to a third party after agreeing to sell it to the Dyes for $285,000 if the Dyes wanted to buy it during their two-year window of opportunity. Without a caveat registered against the title, Dreamworks or the owners could have sold the house out from under the Dyes. Dreamworks did not sell the property out from under the Dyes and neither did the owners. But, because the Dyes did not file a caveat, Dreamworks could have.

Is there any remedy against such a heavy-handed in terrorem clause? If a person breaches a clause in a contract, they can ask a court to provide them with relief from forfeiture. In this case, if the Dyes had filed a caveat to protect their interest under the Option to Purchase, they would have breached their contract and that contract provided that the Dyes’ would then forfeit their tenancy, their Option to Purchase, and their $5,000 deposit and $400 per month credits.

Section 10 of the Judicature Act, RSA 2000, c J-2, provides for relief from forfeiture in the following terms:

  1. Subject to appeal as in other cases, the Court has power to relieve against all penalties and forfeitures and, in granting relief, to impose any terms as to costs, expenses, damages, compensation and all other matters that the Court sees fit. (emphasis added)

In equity, the term “forfeiture” has a limited definition. Snell’s Equity, 30th ed at 599, speaks of “forfeiture for breach of covenant or condition where the primary object of the bargain is to secure a stated result and the provision for forfeiture is added as security for the production of that result.” In the Dyes’ case, what result does the provision for forfeiture secure? The primary object of all of the documents appears to be the sale of the house to the Dyes for $285,000 within two years. How does providing for forfeiture if a caveat is filed to protect their right to buy the house secure that object? Arguably, it does the opposite. There is no argument to be made that the forfeiture was anything other than a penalty.

Note that the court “has the power” and may impose any terms “it sees fit.” A court’s power to grant relief from forfeiture is discretionary: Saskatchewan River Bungalows Ltd v Maritime Life Assurance Co1994 CanLII 100 (SCC), [1994] 2 SCR 490 at 504. Following Saskatchewan River Bungalows, courts consider, first, whether there is a forfeiture and then three factors in deciding whether or not to exercise their discretion to provide relief from forfeiture: Bowlen v Digger Excavating (1983) Ltd., 2001 ABCA 214 (CanLII) at para 31; Saskatchewan River Bungalows at Part IV.B.

In the Dyes’ case, there would be no question that the in terrorem clause provided for a forfeiture, because more than money was to be forfeited. Then a court would consider:

1) Was the conduct of the plaintiff reasonable in the circumstances?
The Dyes have the legal right under section 130 of the Land Titles Act to file a caveat to protect their interest in land (assuming that an option to purchase is still an interest in land post-Semelhago). Exercising a legal right to protect the interest in land granted by the contract with Dreamworks is reasonable conduct. It prevents fraud.

2) Was the object of the right of forfeiture essentially to secure the payment of money?
In the Dyes’ situation, the purpose of Dreamworks’ right of forfeiture is to terminate the Option to Purchase, leaving them free to sell the house again, and to terminate the tenancy, leaving them free to rent or sell the house, as well as to secure the payment of money.

3) Was there a substantial disparity between the value of the property forfeited and the damage caused the seller by the breach?
The Dyes would have been forfeiting their right to buy the house for $285,000, their right to live in the house as tenants, and their $5,000 deposit and $400 per month credits. What possible damage would they have caused by filing a caveat (assuming for the moment that an option to purchase is an interest in land)?

Although not relevant to the Dyes’ case because they did not file a caveat, there is also an interesting question about whether the courts’ general power to relieve from forfeiture under section 10 of the Judicature Act applies to residential tenancy agreements under the Residential Tenancies Act. The question arises because the power to relieve from forfeiture does not apply to penalties or forfeitures that are imposed by statute: R v Canadian Northern Railway, 1923 CanLII 444 (UK JCPC), [1923] 3 DLR 719 (PC); Tamglass American Inc. v Richter, Allen & Taylor, Inc., 2005 ABCA 341 (CanLII) at para 22.

The British Columbia Court of Appeal has determined that relief from forfeiture is not available to residential tenants in that province. See Ganitano v Metro Vancouver Housing Corporation, 2014 BCCA 10 (CanLII) and see the comment on this decision by Scott Symthe: “What a Relief! BC Court of Appeal decides that equitable relief from forfeiture not available to residential tenants.” See also Sereda v Ni, 2014 BCCA 248 (CanLII) at para 64.

In Ganitano, the BC Court of Appeal held that “the [BC Residential Tenancy Act] provides a comprehensive scheme for dealing with matters relating to the non-payment or late-payment of rent in residential tenancy situations” (at para 40) and “[i]n a residential tenancy, the tenant’s obligation to pay rent is not merely a matter of contract, but an obligation imposed by statute” (at para 41). The BC Court of Appeal specifically notes that “s. 26(3) precludes a landlord from resorting to the common-law remedy of distress to assist in obtaining arrears of rent” (at para 41). The BC Act has also abolished the common-law right of a landlord to treat a tenancy as forfeited when a tenant fails to pay rent; instead the landlord must follow procedures set out in the statute in order to have the tenancy terminated. Thus, the BC Court of Appeal concluded: “Such a termination is a statutory forfeiture (i.e., a taking back of the remainder of the term of the tenancy) and is beyond the reach of [relief from forfeiture]” (at para 44).

The question of whether section 10 of the Judicature Act applies to residential tenants appears to be an open one in Alberta. The result in BC would not necessarily apply here. Alberta’s Residential Tenancies Act is not “a comprehensive scheme”. In Alberta, unlike BC, it is taken for granted (and procedurally provided for in section 104 of the Civil Enforcement Act, RSA 2000, c C-15) that landlords still have the common-law remedy of distress for rent available to them for non-payment of rent. The BC Court of Appeal’s reasons for finding relief from forfeiture was unavailable to residential tenants therefore does not apply in Alberta.

On the other hand, the only way to terminate a residential tenancy in Albert is provided for in the Residential Tenancies Act. A residential tenancy cannot be terminated because a tenant files a caveat to protect an Option to Purchase. That is not one of the reasons prescribed in the statute and its regulations for terminating a tenancy: see sections 6, 26, 27, 29-36.

So … to return to the question and answer at the beginning of this post: Can this in terrorem clause that requires the forfeiture of the remaining term under the residential tenancy agreement, the opportunity to buy the rented property for $285,000, and the deposit and the monthly credits if a caveat to protect the option to purchase is filed, possibly be valid? It seems that is a very difficult question to answer. Is an option to purchase an interest in land that will support a caveat? That would affect whether filing a caveat would be seen as reasonable conduct and whether it might cause damage to the seller, both points to consider in an application for relief from forfeiture. Is relief from forfeiture available to residential tenants in Alberta? Can a residential tenancy be forfeited “automatically”, as demanded by the in terrorem clause, instead of through the prescribed procedures in the Residential Tenancies Act, in light of section 3 of that statute?

Are there any more of these “no caveating” in terrorem clauses out there in other rent-to-own arrangements? If so, perhaps we might one day have some answers to these questions.

(With thanks to my colleague, Nigel Bankes, for his comments on earlier drafts of this post. All errors are, of course, my sole responsibility.)

This post may be cited as: Jonnette Watson Hamilton “Residential Tenancy Agreements, Options to Purchase, In Terrorem Clauses, and Relief from Forfeiture” (16 February, 2017), online: ABlawg, http://ablawg.ca/wp-content/uploads/2017/02/Blog_JWH_Dreamworks_Dye.pdf

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The Relationship Between Declarations Under the Optional Clause of the Statute of the International Court of Justice and Part XV of the Law of the Sea Convention

Mon, 02/13/2017 - 10:00am

By: Nigel Bankes

PDF Version: The Relationship Between Declarations Under the Optional Clause of the Statute of the International Court of Justice and Part XV of the Law of the Sea Convention

Case Commented On: Maritime Delimitation in the Indian Ocean (Somalia v Kenya), Preliminary Objections, Judgment, 2 February 2017

Somalia instituted proceedings against Kenya in the International Court of Justice (ICJ or the Court) in August 2014 concerning a dispute in relation to “the establishment of the single maritime boundary between Somalia and Kenya in the Indian Ocean delimiting the territorial sea, exclusive economic zone . . . and continental shelf, including the continental shelf beyond 200 nautical miles” (Somalia’s Application). In so doing Somalia relied upon Optional Declarations made by both states pursuant to Article 36(2) of the Statute of the Court. Kenya raised a preliminary objection as to the jurisdiction of the Court and also argued that the Court should treat Somalia’s application as inadmissible. On 2 February 2017, the Court released its judgment in respect of these preliminary objections.

This post explains the basis of Kenya’s arguments in respect of the jurisdiction of the Court and the admissibility of Somalia’s claim. It reviews the Court’s Judgment and dissenting opinions and declarations and offers some concluding remarks focussing on the relationship between declarations under the optional clause of the Statute of the International Court of Justice and Part XV of the Law of the Sea Convention (LOSC).

Kenya’s arguments

Kenya’s declaration read as follows:

…the Republic of Kenya . . . accepts, in conformity with paragraph 2 of Article 36 of the Statute of the International Court of Justice until such time as notice may be given to terminate such acceptance, as compulsory ipso facto and without special Agreement, and on the basis and condition of reciprocity, the jurisdiction over all disputes arising after 12th December, 1963, with regard to situations or facts subsequent to that date, other than:

1.Disputes in regard to which the parties to the dispute have agreed or shall agree to have recourse to some other method or methods of settlement. (emphasis added, and hereafter “the Kenyan reservation”)

Kenya’s objection to jurisdiction had two branches. The first branch was to the effect that Kenya and Somalia had agreed “to have recourse to some other method or methods of settlement” with respect to the dispute between them and that therefore the matter was covered by the Kenyan reservation. Kenya based this argument on the terms of an agreement between the parties entitled “Memorandum of Understanding between the Government of the Republic of Kenya and the Transitional Federal Government of the Somali Republic to grant to each other No-Objection in respect of submissions on the Outer Limits of the Continental Shelf beyond 200 Nautical Miles to the Commission on the Limits of the Continental Shelf” (the MOU) (reproduced in its entirety at para. 37 of the 2 February 2017 Judgment).

The second branch of Kenya’s objection to jurisdiction (assuming it could not rely on the terms of the MOU) was that in ratifying LOSC neither Kenya nor Somalia had made a declaration concerning the choice of means of compulsory dispute resolution under section 2 of Part XV and therefore both parties must be taken to have elected to refer any dispute that could not be settled by negotiation or other means to arbitration under Annex VII of LOSC (pursuant to Article 287(3) of LOSC) and this too fell within the terms of Kenya’s reservation. In Kenya’s view, Article 282 of LOSC does not trump this reasoning because in this case the Kenyan reservation was broader than that of the Somalia reservation and the two declarations therefore did not constitute “an agreement, under Article 282, to submit a dispute concerning the interpretation or application of the Convention to this Court.”

Kenya’s objections to admissibility were also two-fold. First, Kenya objected that the MOU precluded resolution of delimitation questions until the Commission on the Limits of the Continental Shelf (Commission or CLCS) had concluded its process. Second, Kenya objected that Somalia’s application should be treated as inadmissible because Somalia had breached the terms of the MOU by raising objections to the Commission’s consideration of Kenya’s submission.

The objection to jurisdiction based on the Memorandum of Understanding

Kenya had to demonstrate two things in order to successfully argue its objection to jurisdiction based on the language of the MOU. First it had to show that the MOU was an agreement within the meaning of the Kenyan reservation, and second that it was an agreement as to a method of settling the dispute.

While titled a MOU, this seven paragraph agreement was couched in legal terms, dealt with legal issues and in its final operative paragraph indicated that it would enter into force upon signature. The MOU was executed by the Minister for Foreign Affairs of the Government of Kenya and the Minister for National Planning and International Cooperation of the Transitional Federal Government of Somalia and contained a declaration to the effect that both signatories were “duly authorized by their respective governments”.

The Court took the view (Somalia actually considered it (at para. 41) unnecessary to determine “the status of the MOU under international law”) that the MOU could only affect its jurisdiction if the MOU was a treaty in force between the Parties. The Court had little difficulty concluding that the MOU was a treaty. As the Court observed it was (at para. 42) “a written document, in which Somalia and Kenya record their agreement on certain points governed by international law” and the “inclusion of a provision addressing the entry into force of the MOU is indicative of the instrument’s binding character”. The MOU was executed by Ministers who, in accordance with Article 7 of the Vienna Convention on the Law of Treaties (VCLT), are assumed to be capable of binding their states “by virtue of their functions and without having to produce full powers” (at para. 43). Neither State is a party to the VCLT but the Court was of the view that this provision codified customary law. In any event, the evidence showed (at para. 43) that the Prime Minister of the Somali Transitional government had signed a document affording the Minister full powers. Finally, the MOU expressed on its face that it was to enter into force upon signature, and (at para. 45) “Under customary international law as codified in Article 12, paragraph 1 (a), of the Vienna Convention, a State’s consent to be bound is expressed by signature where the treaty so provides.” Neither could Somalia escape the binding effect of the MOU by relying on the provisions of “the Transitional Federal Charter of the Somali Republic, applicable between 2004 and 2012, which ‘made the President’s authority to sign binding international agreements conditional upon subsequent ratification by Parliament’, and that such ratification did not take place” (at para. 39). Article 46 of the VCLT generally precludes reliance on the provisions of domestic law and in this case there was no reason to suppose that Kenya was aware of, or should have been aware of, any constitutional impediment to the exercise of full powers by the Minister.

However, the conclusion that the agreement was a binding agreement was not enough to exclude the jurisdiction of the Court under the terms of Kenya’s reservation. It was also necessary for Kenya to show that the MOU constituted an agreement to settle the dispute by an alternative method. That required the interpretation of the MOU and in particular its paragraph 6 which provided as follows:

The delimitation of maritime boundaries in the areas under dispute, including the delimitation of the continental shelf beyond 200 nautical miles, shall be agreed between the two coastal States on the basis of international law after the Commission has concluded its examination of the separate submissions made by each of the two coastal States and made its recommendations to two coastal States concerning the establishment of the outer limits of the continental shelf beyond 200 nautical miles.

The Court observed (at paras 63 – 64) that interpretation should be in accordance with the terms of Articles 31 and 32 of the VCLT which reflect customary international law (at para. 63) and these terms require attention to ordinary meaning, context and object and purpose and “together with the context” any relevant rules of international law, as well as, and where appropriate, the travaux.

In this case, the context required that attention be given not only to the entire MOU, but also Article 76(8) of LOSC which contemplates that a party to LOSC can only establish final and binding outer limits (the exercise of delineation) to its continental shelf following submissions to the Commission and on the basis of the recommendation of the CLCS. Referencing the Court’s own judgment in Question of the Delimitation of the Continental Shelf between Nicaragua and Colombia beyond 200 nautical miles from the Nicaraguan Coast (Nicaragua v. Colombia), Preliminary Objections, Judgment of 17 March 2016, paras 107-108, the Court here again emphasised (at para. 67) that delineation is different from delimitation: “The two tasks are distinct and the delimitation of the continental shelf ‘can be undertaken independently of a recommendation from the CLCS’.” (pinpoint references from Nicaragua v. Colombia omitted).

The purpose of a treaty may be evidenced, inter alia by its title and in this case (at para. 70), “The MOU’s title suggests that its purpose is to allow Somalia and Kenya each to make a submission on the outer limits of the continental shelf to the CLCS without objection from the other, so that the Commission could consider those submissions and make its recommendations, in accordance with Annex I to the CLCS’s Rules of Procedure.” The title, reinforced by the first five paragraphs of the MOU, was thus designed to allow the CLCS to consider submissions in relation to the delineation of the shelf notwithstanding the existence of a dispute as to delimitation. These provisions of the MOU thus preserved (at para. 75) “the distinction between the ultimate delimitation of the maritime boundary and the CLCS process leading to delineation.”

That said, and having maintained that distinction, the real issue was whether any of these provisions supported Kenya’s contention that the MOU and its paragraph 6 represented an agreement as to the “method for settling the dispute relating to the delimitation of the Parties’ maritime boundary” (at para. 77). The Court saw nothing in that contention in relation to the first five paragraphs (at paras 70 – 87).

The Court reviewed paragraph 6 of the MOU. In light of Article 31(3)(c) of the VCLT, and in light of the fact that both Kenya and Somalia are parties to LOSC, the provisions of Article 83 of LOSC on the delimitation of the continental shelf are relevant to the interpretation of paragraph 6 of the MOU especially given (at para. 90) the “similarity in language between Article 83, paragraph 1, of UNCLOS and the sixth paragraph of the MOU.” Perhaps the Court’s crucial conclusion on this point was that (at para. 91) “the reference to delimitation being undertaken by agreement on the basis of international law, which is common to the two provisions, is not prescriptive of the method of dispute settlement to be followed and does not, as indeed Kenya appeared to accept during the oral proceedings, preclude recourse to dispute settlement procedures in case agreement could not be reached.” While paragraph 6 of the MOU goes beyond Article 83 (at para. 92) insofar as it suggests that delimitation as to the extended shelf should be agreed after the Commission had concluded its examination and made its recommendations, that did not, in the view of the Court (at para. 95), preclude “the Parties from reaching an agreement on their maritime boundary, or either of them from resorting to dispute settlement procedures regarding their maritime boundary dispute, before receipt of the CLCS’s recommendations.” The wording in paragraph 6 “shall be agreed” did not mean that the Parties were obliged to reach an agreement. It actually meant (at ibid.) “that the Parties are under an obligation to engage in negotiations in good faith with a view to reaching an agreement.” But negotiations were not the only means of reaching an agreement, especially in light of the commitments of both parties under Part XV of LOSC and under their Optional Clause declarations. Absent express language, the Court did not consider that the Parties could “be taken to have excluded recourse to such procedures until after receipt of the CLCS’s recommendations” (at ibid.). In sum (at para. 98), paragraph 6 “neither binds the Parties to wait for the outcome of the CLCS process before attempting to reach agreement on their maritime boundary, nor does it impose an obligation on the Parties to settle their maritime boundary dispute through a particular method of settlement.” The Court confirmed this interpretation by reference to the travaux which reinforced the proposition that the MOU was concluded for the limited purpose of facilitating consideration of the Parties’ submission by the Commission. Had paragraph 6 been intended to have the far-reaching consequences suggested by Kenya it would in all likelihood (at paras 102 & 103) have been the subject of additional discussions between the parties.

The objection to jurisdiction based on Part XV of the Law of the Sea Convention

Kenya’s second argument was that even if the MOU did not constitute an agreement “to have recourse to some other method or methods of settlement” within the meaning of the Kenyan reservation then Part XV of LOSC surely constituted such an agreement pursuant to which the Parties, by default of any other election, had committed to resolve any dispute by means of Annex VII arbitration.

The short answer to this argument from the perspective of the Court is that Annex VII arbitration is referenced in section 2 of Part XV and section 2 only becomes relevant “where no settlement has been reached by recourse to section 1” and section 1 contains, inter alia, Article 282 which preserves the compulsory jurisdiction of the ICJ arising from complementary optional declarations. The Court put the point this way (at para. 126):

Article 282 makes no express reference to an agreement to the Court’s jurisdiction resulting from optional clause declarations. It provides, however, that an agreement to submit a dispute to a specified procedure that applies in lieu of the procedures provided for in Section 2 of Part XV may not only be contained in a “general, regional or bilateral agreement” but may also be reached “otherwise”. The ordinary meaning of Article 282 is broad enough to encompass an agreement to the jurisdiction of this Court that is expressed in optional clause declarations.

The Court went on to note that this interpretation was confirmed (at paras 127 – 128) by the travaux which made it clear that the “or otherwise” language was intended to embrace declarations under Article 36(2) of the Statute. Thus, in the event of broadly framed complementary declarations under the Optional Clause, it must follow that it is the ICJ that has jurisdiction in relation to a dispute as to the interpretation or application of LOSC and not a Part XV, section 2 tribunal, unless, as the final words of Article 282 state, “the parties to the dispute agree otherwise”. A specific reservation in an Optional Clause declaration as to a class of disputes (e.g., disputes relating to maritime delimitation) would lead to a different result and thus confer jurisdiction to the extent of the reservation on a Part XV section 2 tribunal (provided that neither party had made a similar reservation under Article 298(1)(a) of LOSC). The same reasoning did not follow with respect to Kenya’s reservation on “[d]isputes in regard to which the parties to the dispute have agreed or shall agree to have recourse to some other method or methods of settlement.”

The Court seems to give two reasons to support this last conclusion. The first is the “ordinary meaning” of the “or otherwise language” referenced above. The second, draws on the travaux but also on the Court’s understanding with respect to the practice of states in relation to optional clause declarations. The Court noted that reservations of the type filed by Kenya were very common at the time of the adoption of LOSC and remain common (at para. 129). In effect, given the express references in the travaux to the optional clause declarations, the Court simply could not believe (at para. 129) that the parties to LOSC did not intend to preserve the existing jurisdiction of the Court under Article 36(2) of its Statute (for the contrary view see the Dissenting Opinion of Judge Robinson discussed below). In effect, therefore, the Court gave short shrift to Kenya’s arguments (at para. 120) based on both lex specialis and lex posterior to the effect that the agreement under LOSC to use a section 2 tribunal (i.e. in this case, and by default, an Annex VII tribunal), trumped jurisdiction under the Optional Clause. The Court concluded as follows (at para. 130):

Article 282 should therefore be interpreted so that an agreement to the Court’s jurisdiction through optional clause declarations falls within the scope of that Article and applies “in lieu” of procedures provided for in Section 2 of Part XV, even when such declarations contain a reservation to the same effect as that of Kenya. The contrary interpretation would mean that, by ratifying a treaty which gives priority to agreed procedures resulting from optional clause declarations (pursuant to Article 282 of UNCLOS), States would have achieved precisely the opposite outcome, giving priority instead to the procedures contained in Section 2 of Part XV. Consequently, under Article 282, the optional clause declarations of the Parties constitute an agreement, reached “otherwise”, to settle in this Court disputes concerning interpretation or application of UNCLOS, and the procedure before this Court shall thus apply “in lieu” of procedures provided for in Section 2 of Part XV.

Kenya’s objections as to admissibility

Kenya’s first argument with respect to admissibility was based upon an interpretation of the MOU which precluded resolution of delimitation questions until the Commission had concluded its process. The Court had already rejected that interpretation of the MOU and accordingly (at para. 138) this objection as to admissibility necessarily failed.

Kenya’s second argument was that Somalia’s application should be treated as inadmissible because Somalia had breached the terms of the MOU by raising objections to the Commission’s consideration of Kenya’s submission (even though it subsequently withdrew those objections). While Kenya relied at least in part on the clean hands doctrine (at para. 139) the Court preferred to dismiss the objection on narrower grounds (at para. 143):

The Court observes that the fact that an applicant may have breached a treaty at issue in the case does not per se affect the admissibility of its application. Moreover, the Court notes that Somalia is neither relying on the MOU as an instrument conferring jurisdiction on the Court nor as a source of substantive law governing the merits of this case. (at para. 142)

Declarations and Dissenting Opinions

Judges Gaja and Crawford filed a Joint Declaration in which they took issue with the manner in which the majority concluded that the MOU did not trigger the application of Kenya’s reservation. In their view the majority paid too much attention to the legal status of the MOU and too little attention to the proposition that paragraph 6 was not an agreement to a “method or methods of settlement” (emphasis added). However it does appear that Judges Gaja and Crawford did consider that paragraph 6 would have precluded (at para. 7) either party from unilaterally triggering binding dispute resolution before the CLCS had made its recommendations had the Parties not agreed by their conduct to modify paragraph 6 by mutually engaging in negotiations to try and resolve the delimitation issues. Judge Guillaume is critical of this particular conclusion in his Dissenting Opinion.

Vice-President Yusuf’s Declaration seemingly questions the manner in which the Court used the travaux to the MOU to assist it in its deliberations. Clearly Vice-President Yosuf finds this quite anomalous (and Judge Bennouna makes the same point in his Dissenting Opinion) given that the text of the MOU was not drafted by either or both parties but by the Norwegian Ambassador Longva as part of Norway’s assistance to African countries in meeting the deadlines imposed by LOSC and the CLCS on the filing of claims.

The most trenchant of the Dissenting Opinions is that filed by Judge Robinson. While Judge Robinson dissented from all aspects of the majority’s judgment he focuses his attention on the relationship between Kenya’s reservation and dispute settlement under Part XV of LOSC. While Judge Robinson accepts that the “or otherwise” language of Article 282 clearly contemplates reciprocal declarations under the Optional Clause, he contends that not every form of declaration can qualify. The majority of the Court accepts that qualification in some cases (see comments above with respect to a declaration that contains a reservation as to matters related to delimitation) but Judge Robinson argues that the majority was too quick to conclude that a declaration of the type made by Kenya fits within Article 282. In his view the only declarations that might qualify under Article 282 should be (at para. 26) declarations “without reservations”. Finally he notes (at para. 34) that one of the consequences of the majority’s broad understanding of the “or otherwise” language is to privilege the position of the ICJ which he suggests is incompatible with the intentions of the LOSC drafters who “did not wish to give any particular prominence to the ICJ”.

By contrast Judge Bennouna focused his attention on paragraph 6 of the MOU. In his view the plain meaning of this provision was clear (and he criticizes the way in which the majority applies the VCLT rules on interpretation by jumping too quickly to context) and it provided a procedure for the settlement of the dispute between the parties by negotiations and agreement once the CLCS has made its recommendation. Judge Ad Hoc Guillaume in his Dissenting Opinion (in French only) makes similar points especially with reference to the manner in which the majority applied Article 31 of the VCLT.

Neither Judge Bennouna nor Judge Ad Hoc Guillaume dissent from the views of the majority in relation to Part XV of LOSC (Article 282).

Comment

This decision offers an important clarification as to the choice of judicial forum with respect to disputes as to the interpretation or application of LOSC where the parties to the dispute also have extant Optional Clause declarations under Article 36(2) of the Statute. The decision stands for the proposition that where the dispute, properly characterized, falls within the terms of relevant Optional Clause declarations, the matter must be litigated before the ICJ under the Optional Clause jurisdiction and not before a Part XV, section 2, tribunal. Article 282 trumps the choice of forum under Article 287 of LOSC and this is the case even where the declaration in question includes a reservation in the form of the Kenyan reservation which reserves out disputes that the parties have agreed to resolve by some other mode of settlement. In effect the Court has concluded that the selection of a preferred tribunal under Part XV, section 2 by election or by default is not a relevant agreement. It is not relevant because the structure of Part XV accords priority to section 1 and its emphasis on the freedom of parties to choose their preferred means of dispute settlement.

The same logic must apply to the jurisdiction of the Court arising under a regional dispute settlement agreement such as the Pact of Bogotá. Such an agreement, if applicable to disputes in relation to the interpretation or application of LOSC, and if qualifying under Article 282, must equally serve to preclude the choice of a dispute resolution mechanism under Part XV, section 2.

The choice is a jurisdictional choice and not a choice of convenience or preference. This is because, as the Court emphasises (at paras 128 & 130) the procedure before the ICJ under the terms of the Optional Clause declarations applies “in lieu” of the procedures provided by Part XV (see Articles 282 and 286). A tribunal empanelled under section 2 of Part XV can have no jurisdiction (and see the Court’s rather odd comment at para. 132 as to the consequences were the Court to decline jurisdiction) “unless the parties to the dispute otherwise agree”. Accordingly, parties who might have thought (on the basis of either lex specialis or in at least some cases lex posterior) that their choice of tribunal under LOSC Part VX, section 2 (either expressly or by default) should prevail over the general acceptance of the Court’s jurisdiction through their Optional Clause declarations (or similar), will need to confirm that they are both of the same mind (i.e., they will need a further agreement as referenced in the closing words of Article 282).

This post originally appeared on JCLOS, The blog of the K.G. Jebsen Centre for the Law of the Sea

 This post may be cited as: Nigel Bankes “The Relationship Between Declarations Under the Optional Clause of the Statute of the International Court of Justice and Part XV of the Law of the Sea Convention” (13 February, 2017), online: ABlawg, http://ablawg.ca/wp-content/uploads/2017/02/Blog_NB_ICJ_Somalia_Kenya.pdf

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Canadian Mining Operators Abroad – Corruption as a ‘Real Risk’ Factor in Forum Non Conveniens Applications

Thu, 02/09/2017 - 10:00am

By: Rudiger Tscherning

PDF Version: Canadian Mining Operators Abroad – Corruption as a ‘Real Risk’ Factor in Forum Non Conveniens Applications

Case Comment On: Garcia v Tahoe Resources Inc., 2017 BCCA 39 (CanLII)

In Garcia v Tahoe Resources Inc., 2017 BCCA 39 (CanLII) the Court of Appeal of British Columbia reversed an order which had granted Tahoe Resources Inc. (Tahoe) a stay of proceedings on grounds of forum non conveniens. The claim brought against Tahoe concerned the shooting of local protesters by security guards at Tahoe’s Guatemalan mining operation. The Court of Appeal held that the possibility of corruption in the Guatemalan legal system raised a real risk that the claimants would not obtain a fair trial, and therefore concluded that British Columbia was the “more appropriate forum”.

The decision raises a number of important issues, particularly for the Canadian energy and natural resources sector. The decision has the potential to undermine the attractiveness of Canadian jurisdictions as preferred venues for the registration of mining companies that engage in international activities. Tahoe’s registered office is in Vancouver which gave rise to jurisdiction simpliciter. The decision is also noteworthy from a private international law perspective. Firstly, the effect of the judgment is that serious doubt has been cast over the reliability of the legal system of an entire country, thereby raising issues of comity upon which the functioning of private international law depends. Secondly, the case marks the acceptance of the English test of ‘real risk’ of judicial unfairness as a factor in Canadian forum non conveniens analysis. Lastly, the BCCA focused on the close alignment between international resources companies and their host state governments and considered that the context of extensive local opposition to a mining project was a factor that pointed to British Columbia as the more appropriate forum.

Background

The Canadian claim in Tahoe involves a civil claim for damages (including punitive damages) for battery and negligence arising from the fatal shooting of Mr. Garcia and injuries to six other members of the local community (referred to collectively as “Garcia”) by a private security officer employed at a mine wholly owned by a Guatemalan subsidiary of Tahoe. Criminal proceedings had commenced against the security manager in Guatemala and, as permitted by the laws of Guatemala, a derivative civil claim was joined to that proceeding. But no charges had been brought against Tahoe or its Guatemalan subsidiary.

In the British Columbia Supreme Court proceedings, Tahoe was successful in its forum non conveniens application on the basis that Guatemala was the ‘clearly more appropriate’ forum (per Club Resorts Ltd. v Van Breda, 2012 SCC 17 (CanLII)). The BCSC noted that all the facts (i.e., that the claimants resided in Guatemala, the alleged injuries and losses occurred in Guatemala, the evidence was in Guatemala and in Spanish, and Tahoe’s subsidiary is a wholly-owned Guatemalan company) pointed towards Guatemala.

On appeal, the BCCA disagreed. Holding that British Columbia, not Guatemala, is a clearly more appropriate forum to dispose fairly and efficiently of the appellants’ claim, it dismissed Tahoe’s application, allowing the civil claim to proceed.

Extensive evidence had been adduced with respect to alleged judicial corruption, lack of independence of judges and the overall risk that Garcia would not receive a fair trial in Guatemala. Justice Garson of the BCCA undertook a detailed discussion of the shortcomings of the Guatemalan legal system, which included a consideration of new evidence. At the time the dispute was before the BCSC, the criminal proceedings were ongoing in Guatemala. This was considered by the BCSC as “a significant, if not pivotal, point” (at para 61) in the court’s decision that the Guatemalan forum would effectively resolve the civil claim.

New evidence before the BCCA, however, indicated that the manager had absconded to Peru and there was uncertainty over his likely extradition to Guatemala. This change in circumstances, effectively, was held by Justice Garson to mean that the original “adequate extant proceeding” had fallen away, casting doubt over whether the criminal proceeding would move forward in a timely manner, if at all (at para 68). This was considered relevant new evidence by the BCCA in its conclusion that Guatemala was no longer the more appropriate forum to adjudicate the dispute (at paras 70-71).

Deficiencies in Guatemalan civil procedure also meant that Garcia would be unlikely to obtain a fair trial. According to the BCCA, the lower court had not given “adequate consideration to the difficulties that the appellants [would] face in bringing a stand-alone civil suit against Tahoe in Guatemala” (at para 79). This would require a complex and time-consuming process of discovery to obtain corporate documentation from Tahoe in British Columbia, including a petition of a Guatemalan judge. In light of the new evidence on the Guatemalan criminal proceedings, Justice Garson concluded that closer scrutiny should be given to the difficulties of pursuing a civil suit in Guatemala. The BCCA was mindful of placing too much emphasis on “procedural variances between Canada and other jurisdictions” (at para 80, per Van Breda), but the court was also acutely aware of the evidence regarding civil discovery in Guatemala. This would “point away” from finding that Guatemala was the more appropriate forum for pursuing a claim against a British Columbia corporate defendant (at para 80).

Furthermore, under Guatemalan law, Garcia had one year to commence a civil suit against Tahoe, and this period had long expired. The BCCA concluded that by bringing their claim in British Columbia, Garcia sought “legitimate juridical advantages” (at para 94) in avoiding this limitation period. Failure to sue Tahoe in Guatemala within the limitation period should not “militate against attaching any weight to this advantage factor” (at para 94). In the court’s view, this was a serious issue which suggested that Garcia may not be able to pursue a civil claim against Tahoe in Guatemala at all.

Legal Test for Risk of Unfairness in the Foreign Judicial System

Before the BCCA, the case concerned whether the Guatemalan legal system was suitable to hear Garcia’s claim, owing to allegations of corruption, intimidation and serious procedural deficiencies, which would limit the quest for legal redress. The case turned on whether the test for determining the risk of unfairness in a foreign legal system, as one of the factors for the court’s forum non conveniens analysis, should be “whether the foreign legal system is capable of providing justice” (as stated by the BCSC, at para 34) or whether “there is a real risk of an unfair process in the foreign court” (as stated by the BCCA, at para 115).

The “real risk” articulation has its origins in the English decision of AK Investment CJSC v Kyrgyz Mobil Tel Ltd, [2012] 1 WLR 1804. Garcia’s factum summarized this to mean that “the burden can be satisfied by showing that there is a real risk that justice will not be obtained…by reason of incompetence or lack of independence or corruption” (at para 115).

Application of the correct legal test is of course essential to any consideration of forum non conveniens. Justice Garson noted that there are significant differences between the English and Canadian approaches. English courts undertake a ‘two-step’ process, which first requires a defendant to establish that the proposed alternate forum is more appropriate. Second, once this burden is met, a stay will “ordinarily be granted” (at para 118) unless the plaintiff can also establish that there are other circumstances which would make the granting of a stay adverse to the interests of justice (per Spiliada Maritime Corp. v Cansulex Ltd., [1987] AC 460). As the BCCA correctly noted, one such circumstance is the ‘real risk’ that a plaintiff will not obtain justice in the proposed alternate forum (per AK Investments). The English forum non conveniens process therefore undertakes any consideration of corruption or injustice in the proposed forum “at the secondary stage with a reverse onus on the plaintiff to show that granting a stay would be adverse to the interests of justice” (at para 118).

By contrast, the Canadian forum non conveniens analysis involves “a more unified approach” (at para 119). The BCCA referred to Justice Sopinka’s analysis in Amchem Products Incorporated v British Columbia (Workers’ Compensation Board), [1993] 1 SCR 897, where the Supreme Court of Canada examined the loss of ‘juridical advantage’ and held that it should be included in the other factors that are weighted to consider the appropriate forum (at para 119). As per Amchem, the consideration of a ‘juridical advantage’ is a function of a party’s connection to the jurisdiction in question and, provided that there is a real and substantial connection with the forum, a party may avail of the advantages that that forum provides. As set out by Justice Garson in the BCCA, the Supreme Court of Canada in Van Breda affirmed the Amchem forum non conveniens analysis as “a weighing of all relevant concerns and factors” (at para 120). This manifests itself in a single-step analysis that places the overall burden on the defendant to establish that the proposed alternate forum is “in a better position to dispose fairly and efficiently of the litigation” (at para 120). According to the BCCA, Tahoe failed to establish that Guatemala would be the more suitable forum.

Drawing on the difference between the English and Canadian forum non conveniens approaches, Justice Garson noted that she would find it ‘unhelpful’ to frame the issue more narrowly as one of capability for assessing evidence of corruption and injustice. The BCCA noted that “it is more appropriate to frame the issue as whether the judge correctly defined a factor which she was required to consider in the overall forum non conveniens analysis” (at para 121). It was therefore not a question of the “capability” of the Guatemalan judicial system to provide justice, but one of considering the “likelihood” that the alternate forum would provide justice – in other words, “whether there was a real risk that justice would not be done” (at para 121).

According to the BCCA, the lower court had wrongly viewed the issue of alleged corruption and injustice as part of the secondary step in the analysis. This placed the burden on Garcia “to rebut [the lower court’s] prima facie determination that Guatemala was the more appropriate forum” (at para 123). The lower court also erred in making the inquiry about the ‘capability’ of the Guatemalan courts to provide justice (at para 123).

The Consideration of Evidence of Corruption and Injustice

As noted, the Canadian forum non conveniens analysis undertakes a search for an alternate forum that is “better equipped than Canada to dispose of the litigation fairly and efficiently” (at para 124). In light of this, Justice Garson held that it would be inadequate to ask whether the foreign jurisdiction is capable of providing justice, as this inquiry would offend basic principles of comity in private international law. On this basis, the ‘real risk’ standard as articulated in AK Investment was considered ‘helpful’ and was adopted by the BCCA. Where a plaintiff presents evidence of corruption or injustice in the defendant’s proposed alternate forum, the ‘real risk’ test asks a court to determine whether the evidence suggests “a real risk that the alternative forum will not provide justice” (at para 124).

In her review of decisions of the English courts on the ‘real risk’ test, Justice Garson noted that the evidentiary standard to establish the test “is a high bar in England” (at para 125). This is directly related to the fact that the English forum non conveniens analysis, as discussed above, entails a two-step test and the court is asked, in the first part of the test, to make a finding that the alternate forum is “prima facie more appropriate for the dispute” (at para 125). By contrast, the unified Canadian approach does not require such a high evidentiary threshold to determine a risk of unfairness. A risk of unfairness is just one factor of many to be weighed. The weight attached to the evidence is dependent on its quality, with “detailed and cogent evidence of corruption” attracting significant evidentiary weight (at para 125).

Commentary

In Tahoe, the BCCA adopted the English test of ‘real risk’ of judicial unfairness as an important factor to consider in Canadian forum non conveniens analysis. In my view, this clarifies the Canadian private international law position. Given the significant emphasis by Canadian courts (e.g., Chevron Corporation v Yaiguaje, 2015 SCC 42 (CanLII)) on the importance of comity, the ‘real risk’ approach is better suited to dealing with the issue of judicial corruption than an inquiry as to the capability of a foreign legal system.

However, the decision does raise some issues for the Canadian energy and natural resources sector. One concern is that the decision may undermine the attractiveness of Canada for the registration of mining companies that operate internationally. This is because jurisdiction to hear the case was established on grounds of jurisdiction simpliciter (arising from the corporate registration of Tahoe in Vancouver). If the decision is upheld, corporate companies may therefore reconsider their venues of registration and may potentially relocate out of Canada. Another is that the judgment has effectively cast doubt over the reliability of the legal system of an entire country, Guatemala, thereby undermining the principles of comity that are fundamental to the operation of private international law. This conclusion has the potential to be far-reaching. Does this now mean that whenever an application is brought in a Canadian court that involves a civil claim in Guatemala (with all jurisdictional requirements met), the Canadian court will never grant a forum non conveniens application? It is hard to predict this with any degree of certainty.

Lastly, some uncertainty is also raised by the BCCA’s consideration of the “context” of local opposition to the mining project (which gave rise to the alleged shootings). As noted, this was a significant factor in the court’s conclusion that British Columbia was the more appropriate forum. Moreover, the court expressed concern that Garcia would encounter difficulties in obtaining a fair trial “against a powerful international company whose mining interests…align with the political interests of the Guatemalan state” (at para 130). This contextual approach strongly suggests that resources companies should be acutely aware that Canadian courts will likely look very closely at the company’s interactions with host governments and local communities in deciding whether or not to decline jurisdiction on grounds of forum non conveniens.

This post may be cited as: Rudiger Tscherning “Canadian Mining Operators Abroad – Corruption as a ‘Real Risk’ Factor in Forum Non Conveniens Applications” (9 February, 2017), online: ABlawg, http://ablawg.ca/wp-content/uploads/2017/02/Blog_RT_Garcia_Tahoe.pdf

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Announcing a New Resource for the Letter Decisions of the Alberta Energy Regulator

Wed, 02/08/2017 - 10:00am

By: Nigel Bankes, Amy Matychuk, and David Rennie

PDF Version: Announcing a New Resource for the Letter Decisions of the Alberta Energy Regulator

Decisions Commented On: The Participatory/Procedural Decisions of the AER

Several years ago now, ABlawg published a series of posts that were critical of the failure of the Alberta Energy Regulator (AER) and its predecessor the Energy Resources Conservation Board to publish its letter decisions in a systematic way: see herehere and here. Whether in response to that criticism, or for its own good reasons, the AER began posting what it refers to as participatory/procedural decisions (presumably a sub-set of a broader category of letter decisions) in the fall of 2015. When this venture began, the decisions were simply listed with no attached descriptor whatsoever. Now the AER does provide a brief description of the matter at hand but it is still a laborious task to click and retrieve each document and assess its significance.

Having asked the AER to provide this information it accordingly seemed appropriate to try and present it in a more usable and accessible form. Hence this project. The project has three steps. Step one is to provide a digest of each decision. Given the number of these decisions (already over 170) we have not attempted to synthesise or précis these decisions, rather the exercise has been more of a cut-and-paste job hewing closely to the AER’s actual text. We have added key words which are listed below. There is no additional commentary. The result of that exercise has been collated into a PDF document which is available here and is fully searchable. Step two will be to present this information as a set of web-pages. That is a work in progress. Step three will be to write what we anticipate will become a short annual survey of these decisions, assessing trends and perhaps highlighting some of the more important decisions. That too is a work in progress. It goes without saying that while step one is complete until the end of January 2017 we also aim to populate it with new decisions from time to time.

David Rennie (JD 2017) began this work as a summer student in 2016 preparing digests of the first 85 decisions and Amy Matychuk (JD 2018), also a summer student in 2016, continued the work for the latter part of the summer and through the fall. Nigel Bankes provided direction and supervision.

We hope that readers of ABlawg and other researchers will find this tool useful and we welcome your feedback, either by way of a comment on this post or to ndbankes@ucalgary.ca

Alphabetical List of Key Words

abandonment

abandonment costs

Aboriginal Consultation Office

Aboriginal rights

administrative penalty

advance of funds

agenda

agricultural land

air quality

alternative dispute resolution

amendment application

animal habitat

appealable decision

application scope

bias

CAPL operating procedure

common ownership

confidentiality

confidentiality application

conservation

constitutional questions

consultation

consultation area

costs

cross-examination

decision definition

directly and adversely affected

disclosure

drainage

dust

earthquake

eligible person

emergency planning zone

emissions

environmental impact assessment

environmental protection order

equipment spacing

erosion

evidence

expert evidence

filing deadline

filing extension

First Nations/Métis

flaring

gas injection

gas over bitumen

gas storage

groundwater

health

hearing attendance

hearing date

hearing timing

holding

horses

industry vs. industry

information request

injection well

irreparable harm

joint ownership

joint review panel

jurisdiction

land use

landowner

LARP

late filing

licence amendment

licence extension

licence transfer

light

LNG facilities

maps

MDR report

mineral rights

mitigation

municipality

noise

non-routine application

non-routine status

notice of hearing

observation well

odours

oil sands exploration

oral submissions

participation scope

pilot project

pipeline

pipeline diameter

pollution

pool name

pooling order

pre-hearing meeting

prescribed decision

privilege

procedural direction

procedural fairness

procedural items

project timeline

property values

public record

reclamation

reclamation certificate

reconsideration request

records

recusal request

regulatory appeal

regulatory requirements

removal application

renewal application

request for stay

request to participate

reservoir integrity

reservoir pressure

resolution agreement

right to appeal

safety

schedule

scope of appeal

setbacks

settlement

site visit

sound attenuation equipment

surface rights

technical competency

traditional knowledge

traditional lands

traffic

trapping

treaty rights

trespass

undue harm

unmarked graves

venting

waste disposal

wastewater disposal

water

water quality

wetlands

wildlife

without prejudice

written submissions

This post may be cited as: Nigel Bankes, Amy Matychuk, & David Rennie “Announcing a New Resource for the Letter Decisions of the Alberta Energy Regulator” (8 February, 2017), online: ABlawg, http://ablawg.ca/wp-content/uploads/2017/02/Blog_NB_etal_AER_digest.pdf

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Alberta Agrees to Amend Human Rights Legislation to Expand Prohibitions Against Age Discrimination

Tue, 02/07/2017 - 10:00am

By: Jennifer Koshan

PDF Version: Alberta Agrees to Amend Human Rights Legislation to Expand Prohibitions Against Age Discrimination

Case Commented On: Ruth Maria Adria v Attorney General of Alberta, Court File No 1603 05013, Consent Order filed 13 January 2017

Human rights legislation exists in every province and territory in Canada, and at the federal level, but protection against discrimination varies amongst jurisdictions with respect to what grounds and areas are protected. Until recently, the Alberta Human Rights Act, RSA 2000, c A-25.5, only protected against age discrimination in the areas of publications and notices (section 3), employment practices and advertisements (sections 7 and 8), and membership in a trade union, employers’ organization or occupational association (section 9). Age was not a protected ground in relation to the provision of goods, services, accommodation or facilities customarily available to the public (section 4), or in relation to tenancies (section 5).

In January 2017, the Alberta government agreed to expand the Alberta Human Rights Act to include age as a protected ground under sections 4 and 5. This development was prompted by an application brought in March 2016 by Ruth Maria Adria under section 15 of the Charter, the constitutional equality rights guarantee, to have the omission of age declared unconstitutional and to have age read in to these sections. The Adria case is similar to Vriend v Alberta, [1998] 1 SCR 493, 1998 CanLII 816, where a section 15 challenge went all the way to the Supreme Court of Canada before a reading in remedy was granted to add sexual orientation to Alberta’s human rights legislation (see ABlawg posts on Vriend here and here). Unlike Vriend, however, the government did not fight the challenge in the Adria case. As noted in the consent order signed by Justice R.P. Belzil of the Alberta Court of Queen’s Bench, the Minister of Justice and Solicitor General of Alberta consented to the reading in remedy, which will be suspended for one year (presumably to allow parties who are covered by the new prohibition against age discrimination to amend existing policies and practices as needed). The Alberta Human Rights Commission will begin accepting complaints on the ground of age under sections 4 and 5 when the government amends the legislation or on January 6, 2018, whichever occurs first.

There is one important caveat to this significant legal development. Age is defined in the Alberta Human Rights Act to mean 18 years of age or older (section 44(1)). Therefore, service providers and landlords will still be able to deny goods, services, accommodations, facilities and tenancies to persons under the age of 18 years without facing a human rights complaint. Ms. Adria’s application was motivated by concerns about discrimination against the elderly in the areas of services and tenancies (Adria is affiliated with the Elder Advocates of Alberta Society). This is certainly a valid concern, as a previous ABlawg post on the treatment of elderly condominium residents makes clear, as do the case studies on the Elder Advocates website. However, now that it is looking at this issue, the government might consider extending the protection against age discrimination to include youth under the age of 18.

Alberta is not the only province to exclude youth from protection against discrimination based on age – for example, Ontario and Saskatchewan also define age as over 18 years old (Human Rights Code, RSO 1990, c H.19, section 10(1); Saskatchewan Human Rights Code, SS 1979, c S-24.1, section 2), and in British Columbia, age discrimination is only prohibited for those 19 years and older (see Human Rights Code, RSBC 1996, c 210, section 1). In Ontario, however, youth who are 16 or 17 years old and who have withdrawn from parental control have “a right to equal treatment with respect to occupancy of and contracting for accommodation without discrimination because the person is less than eighteen years old” (Human Rights Code, section 4). This type of provision recognizes that some youth live independently and have housing needs that should not be denied simply on the basis of their age. Youth homelessness has been recognized as a problem in Alberta (which has a youth homelessness initiative; so does the Calgary Homeless Foundation and other municipalities). Amending the Alberta Human Rights Act to protect against age discrimination without any limits, or at the very least in the context of housing for independent youth, would be one positive step forward in this context. It would also recognize that youth under 18 are employable, and should have the same right to be free from discrimination  in the employment context as those over 18 (see Alberta Human Right Review Panel, Equal in Dignity at 57).

The government’s rationale for excluding age discrimination claims from youth may be to avoid a flood of claims, given that age is a common basis for limiting entitlements in society (driving, voting, working, admission to facilities serving alcohol, etc.). Other provinces have dealt with this issue by creating specifically tailored limits on age discrimination protections in their human rights statutes. For example, the Manitoba Human Rights Code, CCSM c H175, provides in section 13(2) that “Nothing … prevents the denial or refusal of a service, accommodation, facility, good, right, licence, benefit, program or privilege to a person who has not attained the age of majority if the denial or refusal is required or authorized by a statute in force in Manitoba”, with an equivalent exception for employment discrimination in section 14(10) (see also New Brunswick’s Human Rights Act, RSNB 2011, c 171, which has similar provisions in sections 4(7), 5(5) and 6(3)). These sorts of carefully tailored provisions would be much more likely to withstand scrutiny under section 1 of the Charter, the reasonable limits clause, than the blanket exclusion of discrimination against youth that currently exists in the Alberta Human Rights Act, if it were to be constitutionally challenged.

In 1994, the Alberta Human Right Review Panel recommended that age be added to Alberta’s human rights legislation for all areas of discrimination, with no limits on age (see Equal in Dignity at 16). The Alberta government has now agreed to the first recommendation; it is time for it to implement the second.

This post may be cited as: Jennifer Koshan “Alberta Agrees to Amend Human Rights Legislation to Expand Prohibitions Against Age Discrimination” (7 February, 2017), online: ABlawg, http://ablawg.ca/wp-content/uploads/2017/02/Blog_JK_AHRA_Age.pdf

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