Article Volume 24:4

The UNCTAD Code of Conduct on the Transfer of Technology

Table of Contents

The UNCTAD Code of Conduct on the

Transfer of Technology

Ton J. M. Zuijdwijk*

I. Introduction

Canada, like the other OECD countries,’ has been an active
participant in the negotiations held within UNCTAD (United Na-
tions Conference on Trade and Development) on the Code of Con-
duct on the Transfer of Technology.2 This project is of potentially
great legal and economic significance and has been taken seriously
by the business community whose largely negative reaction is
evident in a recent study of corporate reaction to the proposed
Code 3 Such concern is justified since the UNCTAD Code could
become an effective international regulatory instrument covering
all international
transactions which deal with the transfer of
patented and non-patented technology.

This article will discuss the concept of the Code of Conduct
on the Transfer of Technology, its origins and the present nego-
tiations, the contents of the Code in its various drafts, and whe-
ther the Code can become an attractive package for technology
exporting as well as technology importing countries. It will then

* Of the Faculty of Law, McGill University and of the Ontario Bar. The
author is grateful to his former colleagues in the UNCTAD Secretariat,
particularly Professor Gabriel Wilner, for many discussions on the Code. The
views expressed in this article, however, are personal and are the sole
responsibility of the author. This article was completed in January, 1979.

2 See generally Pease Jeffries, Regulation of Transfer of Technology –

‘The Organization of Economic Co-operation and Development consists
of the following members: Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Federal Republic of Germany, Greece, Iceland, Ireland,
Italy, Japan, Luxembourg, The Netherlands, New Zealand, Norway, Portugal,
Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States.
An
Evaluation of the UNCTAD Code of Conduct (1977) 18 Harv. Int’l L.J. 309 and
Roffe, International Code of Conduct on Transfer of Technology (1977) 11
J. World Trade L. 186; see also International Technology Transfer (1977) 71
Proc. Am. Soc’y Int’l L. 224 (particularly the statement by Wilner, 228-30),
and the discussion on U.S. Foreign Policy and Emerging Legal and Policy
Issues of Technology Transfer (1976) 70 Proc. Am. Soc’y Int’l L. 1 (particularly
Wilner’s statement, 6-8).

3Business International S.A., Transfer of Technology –

A Survey of Cor-

porate Reaction to a Proposed Code (1978).

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THE UNCTAD CODE OF CONDUCT

examine the legal nature of the future Code and finally the ques-
tion whether the Code holds particular benefits for Canada in view
of Canada’s peculiar economic position.

II. The Code of Conduct as a concept

The Code was drafted as a response to a variety of complaints
expressed by developing countries with respect to transfer of
technology transactions. Their dissatisfaction stems from the fact
that often, in transfer of technology contracts, restrictive clauses
which are detrimental to developing countries are inserted. Exam-
ples of these are export prohibitions and grant-back provisions,
whereby the rights in any improvements in the technology deve-
loped by the licensee are to be passed on to the technology sup-
plier, often free of charge. In addition, the technology acquired
by a developing country is frequently not suitable to its needs;
often such technology and the form in which it is obtained are not
conducive to the development of local technological capabilities.4
The idea of drafting an international instrument to eliminate
those clauses in transfer of technology contracts which are harm-
ful to the economic development of developing countries is the
origin and core of the Code. The rest is auxiliary or supplementary
to this basic idea. For example, the Code suggests positive action
which could take the form of implied contractual terms in transfer
of technology contracts. 5 In response to the other complaints by
is often
developing countries (that the technology
neither suitable to their needs nor conducive to their technological
development), governments would promise to co-operate in a va-
riety of ways, such as by exchanging information as to which tech-

transferred

4 See the Programme of Action on the Establishment of a New International
Economic Order, G.A. Res. 3202, S-VI U.N. GAOR, Supp. (No. 1) 5, U.N. Doc.
A/9559 (1974), and the UNCTAD Secretariat Report, An International Code of
Conduct on Transfer of Technology, U.N. Doc. TD/B/C.6/AC.1/2/Supp.
1/Rev.1 (1975), 5-9.

5 In the draft version of the Code prepared by the Group of 77 (see infra,
note 22), the chapter entitled “Guarantees” sets out a series of olauses which
would be implied by law in transfer of technology transactions. See the
Report of the Intergovernmental Group of Experts on an International Code
of Conduct on Transfer of Technology on its sixth session, Pt II, U.N. Doc.
(1978). See also ‘the note by the UNCTAD Secretariat,
TD/AC.1/18/Add.1
Guarantees and responsibilities of source and recipient enterprises, U.N. Doc.
TD/AC.1/14 (1978), in particular, ch.IT (“The meaning of ‘guarantee’ “) and
ch.III (“The nature of the provisions on ‘guarantees”‘).

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nologies are available or by training technical personnel. These
are the basic elements of the Code which may be found in its
different drafts.

It should be noted at the outset that the Code has been drafted
on the assumption that transfer of technology to developing coun-
tries is desirable and that the transfer process will increase the
prosperity of developing countries. The codal exercise has
im-
plicitly abandoned, at least with respect to technology, the idea of
self-reliance or even collective self-reliance for developing coun-
tries. They want the transfer of technology to continue, and even
to increase. The main issue dealt with by the Code is on what
terms the transfer will take place. It has been argued by the
Western countries that if the terms of the transfer are too strict,
the price for technology will go up and, as a result, the flow of
technology from developed to developing countries will slow down
or even come to a standstill.0

III. The origin of the Code and the present negotiations

In the fall of 1977, the General Assembly decided “to convene
a United Nations conference to negotiate and to take all decisions
necessary for the adoption of an international code of conduct on
the transfer of technology”. 7 The Assembly also decided that this
Conference, which was to be the latest stage in the drafting of the
Code, would meet under the auspices of the United Nations Con-
ference on Trade and Development (UNCTAD). 8

The idea of international regulation of transfer of technology
was expressed as early as the first session of UNCTAD in Geneva
in 1964. At that session, the Conference recommended that “[c]om-
petent international bodies
should explore possibilities for
adaptation of legislation concerning the transfer of industrial tech-
nology to developing countries, including the possibility of con-
cluding appropriate international agreements in this field”.’ The
idea was raised again in 1972 at UNCTAD III in Santiago, Chile

0 See, e.g., Report of the Intergovernmental Group of Experts on a Code of

Conduct on Transfer of Technology, U.N. Doc. TD/B/C.6/1 (1975), para. 43.

adopted without vote.

7 G.A. Res. 32/188, U.N. GAOR, Supp. (No. 45) 117, U.N. Doc. A/32/45 (1977),
8 For a discussion of UNCTAD as an institution, see Koul, The Legal Frame

work of UNCTAD in World Trade (1977), Pt I.

9 Proceedings of the United Nations Conference on Trade and Development,

A.IV.26 Annexes 57, U.N. Doc. E/CONFA6/141, vol.I.

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THE UNCTAD CODE OF CONDUCT

when the Conference requested a joint study by the UNCTAD and
WIPO Secretariats of “possible bases for new international le-
gislation regulating the transfer of technology from developed to
developing countries of patented and non-patented technology”.'”
The idea became more pronounced when, in 1973, the Trade and
Development Board of UNCTAD requested the Intergovernmental
Group on Transfer of Technology (the predecessor of the UNCTAD
Transfer of Technology Committee) “to study the possibility and
feasibility of an international code of conduct in the field of trans-
fer of technology”.”- The UNCTAD Secretariat was asked by the
Board to prepare the necessary background papers. The result
was a study entitled The Possibility and Feasibility of an Inter-
national Code of Conduct on Transfer of Technology. 2 This is still
an excellent discussion of the philosophical and legal foundations
of the whole process of drafting a Code. of Conduct.

In the summer of 1974, the concept of a Code was boosted by
the General Assembly in its important Programme of Action on
the Establishment of a New International Economic Order in which
the Assembly specifically decided that “[a]ll efforts should be
made: [t]o formulate an international code of conduct for the trans-
fer of technology corresponding to needs ;and conditions prevalent
in developing countries.’Y” Shortly thereafter, the UNCTAD Inter-
the
governmental Group on Transfer of Technology requested
Secretary-General of UNCTAD to convene an Intergovernmental
Group of Experts to prepare a draft outline to serve as a basis
for the preparation of a universally applicable code of conduct. 4
This Group met twice during 1975: from May 5 to 1615 and from
November 24 to December 31′

The Group followed standard UNCTAD practice by conducting
negotiations and debates as a dialogue between three “regional”
groups: a Western group (or “Group B”) consisting of the OECD
countries; “Group D”, now consisting of Bulgaria, Czechoslovakia,

10 UNCTAD Res. 39 (III), I Annexes 108, U.N. Doc. TD/180 (1972).
“Trade and Development Board Res. 104 (XIII), 13 U.N. TDBOR, Supp.
(No. 1) 2, U.N. Doc. TD/B/476 (1973).
12U.N. Doc. TD/B/AC.11/22 (1977).
13 Supra, note 4, S-VI U.N. GAOR, Supp. (No. 1) 8.
‘ 4 Res. 3 (III), 14 U.N. TDBOR, Annexes, Agenda item 8, I Annexes 2, U.N.

Dor TD/B/20 (1974).

1’ U.N. Doc. TD/B/C.6/1 (1975). This report contains a discussion between
in the

the regional groups concerning many fundamental issues involved
drafting of the Code.

1’U.N. Doc. TD/B/C.6/14 (1976).

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the Groups hold caucus meetings

the German Democratic Republic, Hungary, Mongolia, Poland and
the U.S.S.R.; and the “Group of 77”, consisting of the developing
countries, including Cuba and Romania (although
its number
at present exceeds 77 states). Like political parties in national
Parliaments,
to work out
their positions and present
them as a common front to the
other Groups.17 China has not joined the Group of 77 but acts as
a fourth force in the negotiations, generally providing strong sup-
port for the developing countries. The process of negotiating in
groups is peculiar to UNCTAD; in ordinary United Nations organs
such as the General Assembly, states speak for themselves and
are not represented by a Group spokesman.18

At the sessions in 1975, the Group of 77 and Group B formally
presented draft outlines for a Code. Following a general discus-
sion, all the Groups agreed on a list of chapter headings for the
future Code.

Progress on the Code continued during UNCTAD IV in Nairobi
in 1976. In resolution 89 (IV) the Conference decided “to establish
within UNCTAD an intergovernmental group of experts, open to
participation of all member countries, in order to elaborate [a draft
code of conduct for the transfer of technology].”‘ 9 UNCTAD IV
did not decide on the hotly -disputed issue of whether the Code
should be drafted as a treaty by which States could enter into
legally binding obligations, or whether it should comprise a set of
non-legally binding guidelines. The Group of Experts was given a
mandate to formulate provisions ranging from mandatory (“shall”)
to optional (“should” or “may”) without prejudice to the final
decision regarding the legal character of the Code (which was left
to the U.N. Conference on the Code) .2

0

V At the session in May 1975, several members of the Group of 77 and
Group B stated their national positions in the debate. See the strong support
for the Code expressed by the representative of Spain as summarized in paras.
25 and 26 of U.N. Doc. TD/B/C.6/1 (1975).

‘1 There are obvious disadvantages to the negotiating process in groups;
e.g., it tends to prevent the formation of coalitions across group lines even
where developed and developing countries have a common interest on cer-
tain issues. For a discussion of this process of negotiating, see Evans,
UNCTAD: Should Group B remain Group B? (1978) 12 J. World Trade L. 241.
19 Reproduced in the Report of the United Nations Conference on Trade

and Development on its Fourth Session, U.N. Doc. TD/217 (1976).

20 The major issue concerning the Code is its legal nature. From the very
beginning, the Group of 77 has argued that only a Code in treaty form, where-
by States that are parties undertake obligations to enact appropriate legisla-

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The Group of Experts established by UNCTAD IV held six ses-
sions2 l from 1976 to 1978. Group B and the Group of 77 revised
their previous drafts while Group D submitted its own new draft.2
The experts tried to arrive at a common text by seeking language
acceptable to all three groups. Where this was not possible, each
Group retained its position by placing its own text between brackets
in the composite draft.23

Although the Group of Experts had made substantial progress,
the work on the composite draft had not advanced far enough for
the United Nations Conference to finalize the ,Code during a four-
week period in October and November, 1978. The work proceeded
more slowly than the General Assembly had anticipated, which
was not surprising in view of the many outstanding issues and
the working method followed by the Conference and its Commit-
tees. Although the rules of procedure provided for decision-making
by voting,24 the Conference negotiated through regional groups
and only acted by consensus –
a wise approach since it is hoped
that this will result in the widest possible support for the Code,
in whatever form it may finally be adopted.

At the end of the first session of the Conference, a resolution
was adopted requesting “the Secretary-General of UNCTAD to take
the necessary measures for convening a resumed session of the
Conference in the first quarter of 1979”.25 In the same resolution,

(1976)

(1977)

tion to make the Code effective in their domestic spheres, would be adequate.
The Western Group has taken the position that a Code in treaty form would
be premature, and all that is feasible at this stage would be a set of guide-
lines addressed to both governments and enterprises encouraging them to
refrain from certain practices and to undertake other (positive) action.
Group D has not clearly committed itself.

21U.N. Doc. TD/AC.1/4

(1977)
(July 25-Aug. 2); U.N. Doc.
(Mar. 28-Apr. 5); U.N. Doc. TD/AC.1/9
(Feb. 13-
TD/AC.1/11 (1977)
24); U.N. Doc. TD/CODE TOT/I, U.N. Doc. TD/CODE TOT/I/Add. 1 (1978)
(June 26-July 27).

(Oct. 31-Nov. 11); U.N. Doc. TD/AC.1/15 (1978)

(Nov. 8-19); U.N. Doe. TD/AC.1/7

2 The official drafts of the Group of 77, Group B, and Group D (at the
end of the sixth session of the Group of Experts) may be found respectively
in Annexes I, II, and III of U.N. Doc. TD/CODE TOT/1/Add.1 (1978).

23 The composite draft at the end of the sixth session (submitted to the
Conference as the Draft International Code of Conduct on Transfer of
Technology) is reproduced in U.N. Doc. TD/CODE TOT/1
(1978). For the
text of the Draft as it stood at the end of the first session, see U.N. Doc.
TD/CODE TOT/9 (1978).

24See Rules of Procedure of the Conference, U.N. Doc. TD/CODE TOT/6

(1978), ch. VI, rules 32-42.

25 U.N. Doc. TD/CODE TOT/10 (1978), 9; the request is contained in para. 1.

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the Conference cautiously recommended “that the decision re-
garding any further session of the Conference will be taken at
the resumed session in the light of the progress made at that
session”- 6 The General Assembly authorized a resumed session
as well as a subsequent session if requestedY7

-IV. The Draft International Code of Conduct

and the three regional drafts

In this part the main features of the Code will be discussed.
Since the negotiations concerning the Code are essentially a bar-
gaining process between Group B and the Group of 77, their posi-
tions will be contrasted with one another while the position of
Group D will only occasionally be examined.

The Code, as it has been conceived by all three Groups, is trans-
actional, in that it will apply to all international transfer of tech-
nology transactions. The question of what constitutes an inter-
national transfer of technology transaction is highly controver-
sial.28 The Group of 77 and Group D take the position that trans-
actions within the same country may be of an international char-
acter if one of the parties is a company controlled by a foreign
corporation. The official position of Group B, however, is that
such a transaction is purely domestic and the Code will only apply
to situations in which technology crosses national boundaries. This
position would so limit the scope of the Code that its effect would
probably be negligible. A company could, to a large extent, avoid the
effect of the Code by establishing a subsidiary in the country

26Ibid., para. 3.
27 G.A. Res. 33/157, U.N. Doc. A/RES/33/157 (1978).
28See the Draft International Code of Conduct on Transfer of Technology,
(1978), chapter on definitions and scope of

U.N. Doc. TD/CODE TOT/9
application. Group B’s position is set forth in brackets in para. A(i):

“An ‘international transfer of technology’ occurs when technology of a
proprietary or non-proprietary nature and/or rights related thereto is trans-
ferred across national boundaries from a supplying party to an acquiring
party.”
The position of Group D and the Group of 77 is stated in para. D:

“The Code shall apply to such international transfer of technology trans-
actions, which are entered into between parties which do not reside or are
not established in the same country, and shall also apply to transfer of tech-
nology transactions, between parties which are residents of or established
in the same country if at least one party is a branch, subsidiary, affiliate or
is otherwise controlled by a foreign entity or when it acts as an intermediary
in the transfer of foreign owned technology.”

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where it wants to sell technology. While the Group B draft does
encompass transactions between parent companies in one country
and subsidiaries in another, it will be difficult to enforce the Code
with regard to such a transaction since the parties are not at arm’s
length. Therefore it is crucial that transactions between subsidiaries
and locally owned companies also be covered. Thus, although the
Code is transactional in nature and not specifically drafted to apply
to transnational corporations, they might be the ones most serious-
ly affected.2 9

All three Groups agree that the term “transfer of technology
transaction” covers much more than a patent licensing agreement
since it includes the sale of both patented .and non-patented tech-
nology. Although complete agreement has not been reached on
precisely what transactions are to be considered transfer of tech-
nology transactions, all agree that “arrangements covering the
provision of know-how and technical expertise in the form of
feasibility studies, plans, diagrams, models, instructions, guides,
formulae, supply of services, specifications and/or involving tech-
nical advisory and managerial personnel, and personnel training
as well as equipment for training” are included.0 The Groups also
agree that a straight sal

‘of gobds is not covered by the Code.31

The Code is conceived as universal, applying to all international
transfer of technology transactions, even where the two parties
are both situated in either developed or developing countries.
None of the draft versions envisages the Code as applying only to
transactions between developed and developing nations.

The core of the Code is the chapter on restrictive practices,

and of the twenty practices listed, most have not been agreed to

2 This Code should not be confused with the Code of Conduct for Trans-
national Corporations being drafted by an Intergovernmental Working Group
of the Commission on Transnational Corporations. The progress of the work
on this Code has been much slower than on the Code on the Transfer of
Technology. For a general discussion, see Coonrod, The United Nations Code
of Conduct for Transnational Corporations (1977) 18 Harv. Int’l L.J. 273 and
Asante, United Nations: International Regulation of Transnational Corpora-
tions (1979) 13 J. World Trade L. 55.

30 Supra, note 28, para. C(ii). The text of this paragraph makes it clear
that the Group of 77 wants “transfer of technology transactions” defined
broadly while Groups B and D want an exhaustive and narrowly defined list
of categories.

31 Ibid., para. B.
32 Even the title of the chapter is in dispute: the Group of 77 calls it
‘”The regulation of practices and arrangements involving the transfer of tech-
nology”; Group B, “Restrictive business practices”; and Group D, “Exclusion

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in full.P One major outstanding issue is the insertion in this chapter
of a general rule of reason applicable to all practices. Alternatively,
each practice could be considered on an individual basis in order
to decide whether to prohibit it per se or to prohibit only its un-
reasonable use.3

Another important chapter is alternatively designated “Guaran-
tees” (Group of 77), “Responsibilities of Source and Recipient En-
terprises” (Group B), or “Obligations of the Parties to Technology
Transfer Transactions” (Group D). In the original conception of
the Group of 77 this chapter was to be a statement of mandatory
contractual terms3 5 and therefore in the nature of consumer pro-

of political discrimination and restrictive business practices”. The different
titles reflect their different philosophies regarding the Code. The Group of
77 sees the Code as an instrument to prohibit those practices that are harm-
ful to economic development; Group B considers the Code as an instrument
to create competition among business enterprises; and for Group D, the Code
is an instrument to eliminate political considerations from international trade.
– There is an agreed text on some practices, e.g., with respect to “exclusive
dealing” and “exclusive sales or representation agreements” (supra, note 28,
chapter on practices, s. B, paras. 3 and 8 respectively). The texts read as
follows:

“Exclusive dealing

Restrictions on the freedom of the acquiring party to enter into
sales, representation or manufacturing agreements relating to similar or
.competing technologies or products or to obtain competing technology, when
such restrictions are not needed for ensuring the achievement of degitimate
interests, particularly including securing the confidentiality of the technology
transferred or best effort distribution or promotional obligations.”

“Exclusive sales or representation agreements

Requiring the acquiring party to grant exclusive sales or representa-
tion rights to the supplying party or ,any person designated by the supplying
party, except as to sub-contracting or manufacturing arrangements wherein
the parties have agreed that all or part of the production under the tech-
nology transfer arrangement will be distributed by the supplying party or
any person designated by him.”
The significance of agreement on
the text of the individual practices
depends on the text of the heading (chapeau) under which they will appear.
Over the text of the chapeau, great controversy exists. See the text containing
many brackets, ibid., s. A.

3 This controversy shows up not only in the drafting of the chapeau, ibid.,
where the Groups are far from an agreed text, but also in the texts of
certain individual practices, where in an otherwise uniform text the term
“unreasonably” has been placed between brackets by Group .B, e.g., ibid.,
s. B, para. 4 (restrictions on research), para. 5 (restrictions on use of per-
sonnel), and para. 7 (restrictions on adaptations).

s5 See the Group of 77 draft as it stood at the end of the fifth session of
the Intergovernmental Group of Experts, II Annexes (ch. V) 13, U.N. Doc.
TD/AC.1/15 (1978). The latest draft of the Group of 77, supra, note 22, I

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tection legislation. The underlying philosophy of the Group of 77
is that not all contractual rights and obligations of parties to a
transaction should be determined by negotiation; certain obliga-
tions should be imposed on the seller who is usually the stronger
party economically. The latest draft of the Group of 77 still con-
tains mandatory rules. For example, “the price charged or other
consideration made for the technology transferred shall be fair
and equitable and shall be no less favourable than the considera-
tion usually charged by the supplying party or other technology
suppliers for similar technologies under similar circumstances”?6
However, the heading under which a series of implied contractual
terms appears is worded in such a way as to eliminate much of
their compulsory nature:

The technology transfer agreement shall contain acceptable contractual
obligations, including those relating to payments and shall be subject to
the following norms taking into account the specific circumstances of
the individual case[.]3 7
Since Group B’s draft generally rests on the thesis that freedom
of contract is sacrosanct except when it restricts competition, its
version of this chapter is less stringent than that of the Group of
77. Group B’s philosophy is well stated in the last paragraph of its
chapter: “Once a particular technology transfer agreement has
been signed by the parties, such agreement shall govern their
rights and obligations in accordance with applicable law”.38 This
provision is the only one in this chapter that Group B drafted
in mandatory language. The provision dealing with contractual
terms has been set out in such a way that it hardly imposes any
obligations on the parties, even in a legally binding Code:

The technology transfer agreement should contain mutually acceptable
contractual obligations, including those relating to payments, and where
in accordance with fair and reasonable commercial practice, should
normally provide for the following items taking into account the specific
circumstances of the individual case[.]39

Annexes (ch.V) 13, also contains obligations for parties during the negotiating
phase. All Groups have accepted the basic distinction between obligations
during the negotiating phase and the contractual phase. See supra, note 28,
i7.

36 Supra, note 22, I Annexes (ch. V) 16, para. 5(iii).
37Ibid., 15, para. 4 [emphasis added]. Thus the clauses listed under this
chapeau, e.g., “access by the acquiring party for a specific period or during
the lifetime of the agreement to improvements related to the technology
transferred under the agreement” have lost much of their meaning.

3 8 Supra, note 22, II Annexes (ch. IV) 10, para. 4.3 [emphasis added].
39 Ibid., 9, para. 4.2 [emphasis added].

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These two chapters (practices and guarantees/responsibilities),
if incorporated in a Code that takes the form of a treaty, would
require national legislation by each state party to outlaw certain
practices and impose other positive obligations on parties to an
international transfer of technology transaction. As guidelines, these
chapters would encourage private parties to abstain from those
practices disapproved of in the chapter on practices and to actively
observe in their negotiations and contracts those provisions set forth
in the guarantees/responsibilities chapter. Moreover, governments
would presumably be admonished to unilaterally enact legislation
to give effect to these guidelines.

The chapter on the applicable law and the settlement of disputes
only received its first reading at the sixth session of the Group of
Experts in June and July of 1978. Because of the lack of time, the
complexity of the subject matter, and the discrepancy between the
official positions of the Group of 77 and Group B, no compromise
text could be drafted. As a result the delegates at the first session
of the United Nations Conference were presented with five drafts
of the chapter: the original three submitted by each of the Groups
)as well as informal new ones by Group B and the Group of 77.40
Here, again, a composite text could not be produced and the only
development which occurred was that the Group of 77 proposed
yet another text for this chapter.41

The basic question dealt with in these drafts is the degree of
freedom parties should have to insert choice of law and choice of
forum clauses in international transfer of technology contracts. As
might be expected, Group B’s version espouses the principle that
both parties should be free “to choose the law governing the validity,
performance and interpretation of the agreement, provided that the
State whose law is chosen either has a substantial relationship to
the parties or to the transaction or there is other reasonable basis
for the parties’ choice”.4 2 In the absence of an express choice of
law, Group B’s draft states that:

the subitantive law governing the validity, performance and interpretation
of the agreement should be that of the State which has the most significant

40 The informal new drafts of the Group of 77 and Group B, together with
ch. VIII of the Group D draft were reproduced as- App. B to the text of the
Draft International Code of Conduct on Transfer of Technology submitted
to the first session of the Conference in U.N. Doc. TD/CODE TOT/i (1978).
41 Reproduced in App. G to the Draft International Code of Conduct on
42Supra, note 22, II Annexes (ch. VII) 17, para. 7.1.

Transfer of Technology, supra, note 28.

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THE UNCTAD CODE OF CONDUCT

Place of performance;

relationship to the transaction and the parties, taking into account the
following contacts:
i)
ii) Location of subject matter of contract;
iii) Place of contracting;
iv) Domicile, residence, nationality, place of incorporation and place

of business [of the] parties;

v) Place of negotiation. 43
The Group of 77 has taken the simple but far-reaching position
that transfer of technology contracts shall be governed by the law
of the technology acquiring country.4

As to choice of forum clauses, the Group of 77 draft claims exclusi-
ve jurisdiction over disputes for the courts of the technology acquir-
ing state.45 The Group D draft, only introduced in June 1978, deals
with choice of -law and arbitration clauses but not with choice of fo-
rum clauses. The reason for this omission is probably the fact that
Eastern European countries rely on arbitration to settle disputes
arising from international transactions. 0 The draft of Group B sta-
tes that the parties should be free to choose the forum “unless
there is no reasonable basis for the selection and the choice places
an onerous burden on one of the parties”. 7 In accordance with its
general philosophy, Gf6up B endorses the freedom of the parties
to go to arbitration, provided this is not prohibited by the law
chosen to govern the transaction. 8 In the Group of 77 draft, recourse
to arbitration by the parties is not excluded but depends upon the
permissiveness of the applicable law; that is, for this group, the
law of the technology importing country.

43 Ibid., 17, para. 7.2. The language has apparently been taken from the

Restatement (Second) of Conflict of Laws 188(2)

(1971).

4 Supra, note 22, I Annexes (ch. VIII) 23, para. 8.1.
45 Ibid., 23, para. 8.2.
46 Supra, note 22, III Annexes (ch. VIII) 18 (on applicable law and settle-

ment of disputes). See in particular para. 83:

“Since arbitration is one of the most suitable methods of settling possible
disputes, the parties may include arbitration clauses in technology transfer
agreements or may conclude arbitration arrangements providing for the
settlement of disputes by arbitration, exoluding the jurisdiction of the or-
dinary courts.

Disputes may be considered both in standing arbitration commissions
and in commissions especially created for dealing with a specific dispute
in the countries of the parties or in another country; and the awards of the
arbitration commissions shall be final and binding on both parties.”

47 Supra, note 22, II Annexes (ch. VIII) 17, para. 7.3.
48 Ibid., 17, para. 7.4.

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Considering the differences between the Group of 77 and Group
B on the questions of choice of law and choice of forum, it is un-
likely that a simple compromise solution will be found, particularly
in view of the serious political overtones these questions have for
many developing countries. However, this is not to say that a middle
ground would be impossible to reach. In the UNCTAD Secretariat
paper on Applicable Law and Settlement of Disputes49 several com-
promise solutions are mentioned. The paper discusses the possi-
bility of outlawing all choice of law clauses, thereby leaving the
determination of the applicable law to the court or tribunal seized
of the dispute.50 As to the choice of forum, a provision could be
considered which allows parties to choose their forum for the
settlement of disputes without allowing them to oust the juris-
diction of the courts of the technology importing state. Such a
provision exists -in the Andean Foreign Investment Code:”‘

No instrument pertaining to investment or to the transfer of technology
may contain a clause removing disputes or conflicts from the national
jurisdiction and competence of the recipient country, or permitting sub-
rogation by States of the rights and actions of their national investors5 2
These two solutions applied in conjunction would allow parties
to choose one or more fora in addition to the courts of the tech-
nology importing country. All these courts would have jurisdiction
and once an action was brought before a particular court, it would
decide on the applicable law. This solution might satisfy both the
developing countries (because their courts would not be deprived
of jurisdiction) and the Western Group which might be pleased that
the Group of 77 would at least have accepted the jurisdiction of
courts other than those of the technology importing country.

The new text for this chapter, submitted by the Group of 77 at
the first session of the Conference, presents .an interesting reformu-
lation of its position. Although the Group of 77 did not move away
from the substance of its earlier position, this reformulation might
open the way to a future compromise with Group BP The new draft
distinguishes between matters of public policy and private interest

(1978).

Supp.1/Add.1 (1975).

cludes Bolivia, Colombia, Ecuador, Venezuela, and Peru.

49 U.N. Doc. TD/AC.1/13
50 Ibid., paras. 12-13.
51 Prepared by the Commission of the Andean Group which presently in-
52 Art. 51 of decision no. 24, reproduced in U.N. Doc. TD/B/C.6/AC.1/2/
53Supra, note 28, App. G (Proposal on applicable law and settlement of
disputes submitted by Algeria on behalf of States members of the Group
of 77).

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THE UNCTAD CODE OF CONDUCT

in transfer of technology contracts.. The applicable law for matters
relating to public policy and sovereignty will be the law of the acquir-
ing party; any contractual clause to the contrary would be void.5 4

For matters of private interest, the law that has a “direct, effec-

tive and permanent relationship” with the transaction will apply.5
Within both the constraints of public policy and the requirement of
a real and substantial relationship, parties will be free to choose
the applicable law.50 However, the application of the law chosen
will be limited by substantive provisions of the Code itself. To the
extent that new mandatory rules are proclaimed with respect to
the contents of international transfer of technology contracts in
the chapters on practices and guarantees/responsibilities, the Code
will operate as a uniform law for states which are parties to a Code
in treaty form and, to that extent, will make choice of law clauses
unnecessary. 57 Furthermore, the law of the acquiring state would
determine which matters concern public policy or sovereignty. 8
Choice of forum clauses would be allowed in the new Group of
77 draft unless the acquiring country has express rules to the con-
trary. 9 However, the forum chosen must have a “direct, effective
and permanent relationship” with the contract and parties could not
exclude the concurrent jurisdiction of the forum of the acquiring
state.60 Furthermore, the courts of the acquiring state would still
have jurisdiction over “disputes arising from the conditions or the
effects of the contract which concern public policy (ordre public)
or sovereignty”, as well as over conflicts of characterization.0 1 The

64Ibid.,

41, paras. A.1 and A2. Para. A.2 reads as follows: “Any contractual
clause which would be in violation of the public policy (ordre public)’and
sovereignty of the acquiring State, particularly in matters concerning its
governmental prerogatives or its legislative, regulatory or administrative
powers, shall be null and void.”

55 Ibid., para. A.3.
56 Ibid., para. AA: “The choice of the applicable law by the parties, the

judge or the arbitrators shall be made in conformity with the above rule.”

57 Ibid., para. A.6: “The principles and rules set forth in this Code shall
be applicable. The law chosen by the parties, the judge or the arbitrator
shall be interpreted and applied in conformity with the Code.”

5i8 Ibid., para. A.5: “The law of the acquiring party shall apply to questions
of characterization. In particular, it alone shall be applicable for the deter-
mination of matters that may not be submitted to arbitration or which
concern public policy or sovereignty.”

5 9 Ibid., para. B.2.
60 Ibid., para. B.2: “Any clause which explicitly or implicitly excludes the
jurisdiction of the courts and other tribunals of the technology acquiring
country shall be null and void.”

01 Ibid., para. B.1.

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result will be to limit the scope for choosing a forum outside the
acquiring state and even where another forum is chosen, the courts
of the acquiring state will have concurrent jurisdiction.

The new text allows arbitration clauses in principle unless the
acquiring state expressly prohibits them0 2 However, it sets out
mandatory rules to which the arbitration would be subject.
In-
teresting features include the establishment of a procedure to have
arbitral awards reviewed by an international panel,4 and the
obligation for states parties to the Code to enforce arbitral awards
and judicial decisions “rendered within the framework of this
Code”. 5

The recent reformulation of the position of the Group of 77
appears to present openings for compromise between Group B and
the Group of 77. Nevertheless, the positions of the two Groups with

62Ibid., para. B.2.
63Ibid., 42, paras. B.3 and B.4. The rules provide that each party “shall
designate its arbitrator(s) when the dispute has arisen”. They will designate
a President of the arbitration tribunal who must be of a different nationality
than the parties and their arbitrators. The Group of 77 draft provides for
a list of arbitrators “established within the framework of this Code” from
which arbitrators can be designated if a party refuses to appoint an arbitrator,
or from which the President ‘of the arbitration tribunal can be designated if
the arbitrators cannot agree on the appointment of a President. The ndw
draft expressly provides that the “seat of arbitration shall be the technology
acquiring country” as well as that the arbitration will take place in accordan-
ce with the UNCITRAL Arbitration Rules “for all matters not provided for
in the Code”. The use of these arbitration rules was recommended “in the
settlement of disputes arising in the context of international commercial
relations” in G.A. Res. 31/98, U.N. GAOR, Supp. (No. 39) 182, U.N. Doc. A/31/39
(1976).

6 Ibid. The review procedure is only to deal with errors of law.” The
procedure is only set out in skeleton form in para. B.6 and would clearly
need further elaboration if this idea were acceptable to the other Groups:
“The arbitral award shall, at the request of one of the parties, be the subject
of an examination of its legality and, if necessary, shall be annulled. Such an
examination will be made by a panel of three persons whose decisions shall
be taken by a majority vote and who shall be selected from the list of
arbitrators set up within the framework of this Code.

This examination shall under no circumstances be on the merits of the

dispute.”

65 Ibid. This obligation is limited because it is subject to the public policy
of the forum. Para. B.5: “The States parties to this Code agree to enforce,
without proceeding to an examination of their merits, the arbitration awards
and judicial -decisions rendered within the framework of this Code, subject
to the public policy (ordre public) of the forum and duly ratified inter-
national conventions on the recognition and enforcement of arbitral awards
and judicial decisions.”

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respect to choice of law and choice of forum clauses are still very
far apart. Rather than try to bridge the gap, the Groups might agree
to a compromise text endorsing arbitration clauses as a way out of
an impasse.

The other chapters of the Code, as treated by all the drafts, are
clearly supplementary. The chapter on definitions and scope of ap-
plication is very important because it determines which trans-
actions will be affected by the core chapters. The preamble and the
chapter on objectives and principles, although important for the
interpretation of the Code, are not crucial in the sense that they do
not state specific obligations for states or private parties. In the
chapter on special treatment,”6
the measures that developed coun-
tries pledge to take in favour of developing countries, either through
direct government action or through the encouragement of national
enterprises, are general and vaguely worded. In another chapter,
the need for “appropriate international collaboration” is recogniz-
ed. A potentially interesting feature of this chapter is that it may in
the future provide for an international body which would monitor
the implementation of the Code.6

For purposes of bargaining, the chapter on national regulation
may be of great importance. The interesting aspect of this chapter
is that the Group of 77 and Group 13 each use it to try to accomplish
objectives which are diametrically opposed. The Group of 77 wants
to legitimize the screening at the national level of international
transfer of technology contracts”” in order to protect the national
interest by preventing restrictive clauses in such contracts or to make
sure that the price is reasonable and not an undue burden on a
country’s economy. A sensitive area touched upon in the Group of
77’s draft is the power of a state to require renegotiation of transfer
of technology contracts through national regulation 9 In Group B’s
opinion, this may amount to expropriation of acquired rights and

6 This chapter is the only one for which the first session of the United

Nations Conference produced an agreed text without brackets.

0G See supra, note 28, 23, para. C of the chapter on international collabora-
tion and the informal proposals by the Group of 77 and Group B on inter-
national implementation machinery in App. F, 39.
8E.g., as in Mexico, in art. 7 of the Law on the Registration of Contracts
and Agreements Regarding the Transfer of Technology: Act Concerning Re-
gistration of the Transfer of Technology and the Use and Working of Patents,
Trade Names and Trade-Marks, 28 Dec. 1972, D.O., reproduced in U.N. Doc.
TD/B/C.6/AC.1/2 Supp.1/Add.1 (1975).

09 See the Group of 77 draft, supra, note 22, I Annexes 6, para. 3.1 and the

Draft International Code of Conduct, supra, note 28, 9, para. 3.1.

578

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it would therefore be in order for the Group of 77 to recognize the
right to compensation under international law. The Group of 77 has
managed to obtain tentative agreement from the other Groups to
a long list of subjects which may be regulated by national legisla-
tion, including “loss of ownership and/or control of domestic acquir-
ing enterprises” and “the determination of the legal effect of trans-
actions which are not in conformity with national laws, regulations
and administrative decisions on the transfer of technology”.70 To
the extent that these and other subjects of domestic legislation are
mentioned in the Code, the developing countries will have the sa-
tisfaction of knowing that the validity of such legislation could
hardly be contested under international law.7oa

Group B, as a quid pro quo, has asked that certain criteria be
observed by states when they legislate. The rules of international
law in respect of nationalization are changing in favour of the de-
veloping countries,7’ but Group B still sees international law as an
instrument to preserve the status quo, while the Group of 77 is
reluctant to accept any limitations imposed by customary inter-
national law on the legislative power of the state. Group B also
wants to include in this chapter respect for industrial property
rights7 2 as well as procedural requirements such as the provision
that “laws and regulations should ‘be clearly defined and publicly
and readily available”.13

The chapter as now formulated is a peculiar one. Even as part of
a treaty Code, it would not require states to enact any particular
language. 4
legislation because it is couched in non-mandatory
Similarly the criteria to be observed when states legislate or
regulate are stated in non-mandatory language (“… in exercising
this right States should act on the basis that .. .”)Y” While the Group

7oSupra, note 28, 11, para. 3.3(j) and (m) of the chapter on national re-

gulation of transfer of technology transactions.

7oa However, states have the right under customary international law to enact
the types of legislation set forth in the Draft International Code of Conduct,
ibid., 10, para. 3.3.

71 See Carreau, Juillard & Flory, Droit International Economique (1978),

423-79.

of transfer of technology transactions.

national Code of Conduct, ibid., 10, para. 32C.

72 Supra, note 28, 9, para. 3.2.A(v) of the chapter on national regulation
73 This was accepted by the other Groups and inserted in the Draft Inter-
74 “In exercising their right to adopt laws, regulations and rules, and
policies with respect to transfer of technology transactions, States may…”,
ibid., 9, para. 3.1.

76Ibid., para. 3.2.

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THE UNCTAD CODE OF CONDUCT

of 77 is hardly interested in drafting a list of subjects with respect to
which states must legislate, Group B could have taken the oppor-
tunity to use mandatory language to describe the criteria, thereby
establishing effective limits to the legislative power of states. (For
example, ” …
in exercising their power to legislate or regulate with
respect to transfer of technology transactions, States shall observe
the following criteria …
“). This was not done by Group B because
it has operated on the basis of a voluntary Code, consisting of guide-
lines rather than binding rules.

V. The Code as a potentially attractive package for both technology

importing and technology exporting countries

Countries are likely to look at the drafting of the Code from an
expedient national point of view, inevitably asking: “what is in it
for us?”; “how much are we giving up?”; and “how much are we
getting back?”. These questions will be examined from the point of
view of a technology exporting country and are of particular im-
portance since, at UNCTAD, the developing countries have generally
been the ones to demand the concessions. The advantages provided
by the Code to technology importing countries are readily apparent
since the project was undertaken in response to their complaints.
The chapter on practices would effectively place limits on freedom
to contract while the chapter on guarantees (in the Group of 77
version) would imply certain terms in transfer of technology con-
tracts.

For the technology exporting countries there are potential bene-
fits as well. The exercise of drafting the Code has provided tech-
nology exporters with a rare opportunity to influence the legisla-
tion of developing countries. It is hoped that representatives of all
three groups will eventually agree on a list of practices to be elimi-
nated. Such an agreement may, if not in law, at least in practice,
determine the upper limit to which nations could legislate with
regard to transfer of technology. While it is unlikely that anyone
might object to a particular country prohibiting all the practices
listed, there might be opposition to the prohibition of more practi-
ces than those agreed upon –
even though states do have the power
to do so under both international law and the Code’s chapter on
national regulation. Usage could render the list of practices limita-
tive. This idea could be reinforced if a model law were drafted
which would include only those practices.

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Other features of the Code beneficial to technology exporting
countries could be the recognition by developing nations of arbitra-
tion as a means of settling disputes as well as various criteria to be
observed in the legislative, judicial, and administrative processes
of all countries. For instance, Group B has successfully insisted on
the following text in the chapter on national regulation:

Measures indicated in paragraph 3.1 including decisions of competent
administrative bodies, should be applied equitably, in accordance with
(fundamental fairness and) established procedures of law (and without
discrimination). Laws and regulations should be clearly defined and
publicly and readily available. To the extent appropriate, relevant infor-
mation regarding decisions of competent administrative bodies should
be disseminated6

The technology exporting nations should also insist that once a
transfer of technology contract has been approved by the national
authorities of the importing country, such a contract would be res-
pected and would not be subject to renegotiation, at least for
a fixed term. These are significant benefits to be gained by the tech-
nology exporting countries; whether they will offset the benefits
gained by the developing countries remains to be seen.

VI. The legal nature of the Code

The issue of the legal nature of the Code is clearly related to the
anticipated outcome of the negotiations. It
is unfortunate that
from the outset Group B has taken the position that the Code should
be no more than a -set of guidelines. 77 In its view, governments
would be encouraged to adopt appropriate legislation to bring their
national laws into conformity with the Code. Furthermore, enterpri-
ses engaged in international transfer of technology transactions
would be encouraged to abstain from those practices that are disap-
proved of by the Code and to actively undertake those obligations set
out in the chapter on guarantees/responsibilities. The problem with
this approach is that it envisages the Code as no more than a state-
ment of good intentions of states and a list of moral principles for
enterprises. This would hardly be effective since companies would
have no incentive to engage in the expense of following the provi-

6 6Ibid., 10, para. 3.2.C. The brackets in the text indicate those parts that
have not been accepted by the Group of 77. The position of Group D has
not been indicated.

T For a discussion of non-legally binding agreements between states, see
Schachter, The Twilight Existence of Nonbinding International Agreements
(1977) 71 Am.J.Int’l L. 296. The position of Group B as to the legal nature
of the Code is stated in its draft version, supra, note 22, II Annexes 18.

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sions as long as others did not feel bound to do so. Business enter-
prises cannot and should not be expected to police themselves. The
only way to make the Code effective would be to enact its man-
datory provisions into national legislation. This is exactly what
would happen if the Code were adopted in treaty form. The
states parties would specifically undertake to adopt, in accordance
with their respective constitutions, the measures necessary to ensure
a common practice in regulatory treaties of a
its application –
commercial nature. 8

Technology exporting countries generally expect the results to
be disadvantageous to them and thus want an instrument that re-
quires a minimal amount of obligation. It has been written that
even guidelines may have some legal effect and become part of
customary international law.79 However, it is difficult to imagine a
norm of customary international law which would require states to
actively prohibit their enterprises from inserting certain restrictive
clauses in international transfer of technology contracts.

It is clear, after an examination of the various chapters of the
Code, that only the chapters on practices, guarantees/responsibili-
ties, and on applicable law and dispute settlement would require
domestic legislation by the states that are parties to a treaty Code;
the other chapters either contan undertakings to make best efforts
to reach certain goals (chapters on special treatment for developing
countries and international collaboration) or are couched in non-
mandatory language (preamble and chapters on objectives and prin-
ciples and national regulation)’. In other words, the first three are
the only chapters for which it matters whether they are included in
a binding or non-binding Code; these are the only chapters that may
have a direct effect on individual transfer of technology transac-
tions, but in order to have such effect they must be enacted in
national legislation. This is unlikely to happen if the Code is con-
sidered merely a set of guidelines.

It is regrettable that the debate on the Code’s legal nature has
thus far been conducted on the assumption that the Code will either
be a set of guidelines or a treaty. There is no reason why it could

’18 See, e.g., art. 25 of the Paris Convention for the Protection of Industrial
Property, reproduced in W.I.P.O. Doc. 201 (E) (1974), and art. 47 of the Con-
vention on a Code of Conduct for Liner Conferences, reproduced in I Annexes
4, U.N. Doc. TD/CODE/13/Add.1 (1975).

79 See Davidow & Chiles, The United States and the Issue of the Binding or
Voluntary Nature of International Codes of Conduct Regarding Restrictive
Business Practices (1978) 72 Am.J.Int’l L. 247, 255.

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not be proclaimed as a series of guidelines and, at the same time or
later, with additional final clauses which would make it into a trea-
ty, be opened for signature, ratification and accession.s0 This would
satisfy both the Western states that want a Code in the form of
guidelines, and those states that want a treaty Code. The Western
countries could hardly object to this dual approach since each
state could choose whether or not to adhere to the treaty Code.

VII. The Code from a Canadian perspective

Canada has participated in the drafting of the Code as a member
of Group B. Nevertheless the question must be raised as to where
Canada’s interest lies in this exercise. It is in a special position in
the Western world; although politically a loyal member of the
western group, Canada’s economic position in some respects re-
sembles that of a developing country. Although Canada is very
advanced technologically, its industries are to an inordinate extent
foreign owned8l and it is a net importer of technology. 2

Canada imports foreign technology in a variety of forms: through
direct foreign investment, most commonly the establishment of Ca-
nadian subsidiaries; through an arm’s length transfer of techno-
logy contract, for example, a patent licensing agreement; or through
the direct importation of a finished product.8 The Gray Report, issu-
ed by the Canadian Government in 1971,84 contained specific policy
alternatives regarding the best possible terms for importing techno-
logy into Canada. It pointed out that a review authority, consider-
ing proposed foreign investments, could bargain for the location
of research, development, and innovative activities in Canada.”, This

80 The author of this idea is Wilner; this possible scenario was laid down

by him in an unpublished paper of June 1977.

81The report published by the Government of Canada in 1971, entitled
Foreign Direct Investment in Canada (hereinafter referred to as the Gray
Report) states at page 5 that about one third of the total business activity
in Canada is undertaken by foreign controlled enterprises.

82Ibid., ch. VIII (“The Technological Impact of Direct Foreign Invest-
ment”); see also the Working Paper on Patent Law Revision, issued by the
Department of Consumer and Corporate Affairs, June 1976, 8 (Pt I.B.3.7:
“Canada’s Position in International Developments”).
83 Supra, note 81, 115. It should be noted that the establishment of a subsi-
diary in Canada may be followed by non-arm’s length contracts for the trans-
fer of technology between the foreign parent company and the Canadian
subsidiary.

84Supra, note 81.
85 Ibid., 133.

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power was created by the Foreign Investment Review Act of 1973.86
It was also suggested that the review authority could be authorized
“to bargain for the importation of foreign technology through arm’s
length licensing agreements or joint ventures, rather than direct
investment, when this seemed to be the cheapest or most efficient
way for Canada to obtain foreign technology”.8 7 Furthermore, the
Gray Report proposed that “for both the parent-subsidiary and arn’s
length relationships, the review authority might be given the power
to look at the terms of royalty agreements, management fees, R &
D charges, etc. to determine whether or not they were fair and
reasonable”.8 8 Although the last two policy options were not enacted
into law, it is interesting that they were mentioned; this shows that
policy considerations similar to those in developing countries apply
in Canada.

Other national legislative schemes which could regulate the con-
tents of international transfer of technology agreements are the
Combines Investigation Act 8 and, for patent licensing agreements
only, the Patent ActY0 The present Combines Investigation Act re-
cognizes that patents and trademarks may be abused in order to
unduly restrain competition. Under section 29, upon an application
by the Attorney-General, the Federal Court can make a variety of
orders, inter alia “declaring void, in whole or in part, any agree-
ment, arrangement or licence relating to such use [of the patent
or trademark] “P

Under the present Act, it is possible, at least in principle, to take
action against certain “vertical” restrictive practices which are also
covered in whole or in part by the Draft International Code of Con-
duct: exclusive dealing, market restriction, ‘tied selling and price
maintenance. As to exclusive dealing, market restriction and tied

86 S.C. 1973-74, c.46, particularly s.2(2) (c), where it is stated that one of the
factors to be taken into account in determining whether the acquisition of
control of a Canadian business enterprise or the establishment of a new
business in Canada is or is likely to be of significant benefit to Canada is
“the effect of the acquisition or establishment on productivity, industrial
efficiency, technological development, product innovation and product variety
in Canada”. The Act in ss. 9 and 11(3) provides for written undertakings to
the Canadian Government relating to the proposed investment.

s87 Supra, note 81, 133.
88 Ibid., 134.
89R.S.C. 1970, c.C-23 as am. by R.S.C. 1970, c.10 (1st Supp.), s.34; R.S.C.

1970, c.10 (2d Supp.), s.65; S.C. 1974-75-76, c.76; S.C. 1976-77, c.28, s.9.
20 R.S.C. 1970, c.P-4 as am. by R.S.C. 1970, c.10 (2d Supp.) s.65.
91 Combines Investigation Act, R.S.C. 1970, c.C-23, s.29(e), as am.

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selling (classified as reviewable practices under Part IV.1), 9 the
Restrictive Practices Commission could, provided all other require-
ments were met, make orders addressed to the supplier prohibiting
such practices. 3 Price maintenance is an indictable offence and may
be followed by a criminal prosecution.’4 However, all these practices
are allowed as between affiliated companies. 95 Even if the Canadian
buyer of technology .and the foreign seller were dealing at arm’s
length, the provisions in the Act would be ineffective because they
would require an order addressed to a company outside of Canada
or a criminal prosecution of persons outside of Canada. Extra-
territorial application of the Act is very unlikelyf 6

The proposed Competition Act would go further. In Proposals
Second Stage97 the pro-
For A Competition Policy For Canada –
blem of import and export restrictions between affiliated compa-
nies is discussed; for example, the foreign parent may prohibit the
Canadian subsidiary from exporting any of its products manufactur-
ed in Canada. The proposals include the creation of a new tribunal
(the Competition Board) which could order a company carrying
on business in Canada to withdraw from such an arrangement if it
found that the restriction was designed to protect the price -level
in a Canadian market from import competition or a foreign market
from Canadian competition.””

The question of Canada’s national technological capability and
the effect thereon of restrictive clauses in patent licensing agree-
ments has been discussed in the framework of the revision of the
Canadian Patent Act. The Working Paper on Patent Law Revision 9
deals with restrictions on the exploitation of patent rights by Ca-

92 S.C. 1974-75-76, c.76, s.31.4.
93Ibid., s.31.4(2) and (3).
94 Ibid., s.38(8).
95Ibid., s.31.4(4) (exclusive dealing, market restriction, and tied selling);

s.38(2) and (8) (price maintenance).

9See Henry, “International Aspects of Competition Policy” in Macdonald,
Morris & Johnston (eds.), Canadian Perspectives on International Law and
Organization (1974), 756, 773.

97Published by the Department of Consumer and Corporate Affairs

in

March 1977.

98Ibid., 60-61; see also ibid., 182, where s.31.61 of the proposed Competition
Act is reproduced. For the most recent version see An Act to Amend the
Combines Investigation Act (1977), Bill C-13, 3d Sess., (1st reading), 30th
Leg. (Can.).

99Published by the Department of Consumer and Corporate Affairs

in

June 1976.

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nadian subsidiaries imposed by foreign parent companies.100 Export
limitations occur frequently, and grant-back clauses (by virtue of
which the licensee undertakes to grant back to the foreign licensor
the rights -in any improvements made in the licensed technology in
Canada) are not uncommon.'”” With respect to the foreign parent-
Canadian subsidiary relationship, it was stated bluntly:

Canadian subsidiaries of MNE’s are potential captives of their foreign
parents, insofar as the international exploitation of inventions and inno-
vative technology is concerned.102
Concerned with provisions in patent licensing agreements which
unreasonably extend the monopoly grant of a patent, the Senior
Deputy Director of the Bureau of Competition Policy in the Depart-
ment of Consumer and Corporate Affairs proposed a non-exhaustive
list of restrictive clauses for possible prohibition.103 This list was
reproduced in the Working Paper and includes such clauses as
“charging royalties on patents [after] they expire”, “the require-
ment that the licensee accept and pay for additional patents (to
discourage a challenge to the validity of doubtful patents)” and
other “tying arrangements such as the obligation to purchase capital
goods or raw materials from a designated source or to make per-
manent use of staff designated by the supplier of the technology”. 104
The Working Paper went on to state that:

[c]onsideration of whether provisions of these types should be expressly
prohibited under the combines law requires an individual cost-benefit
analysis of their impact on the competitive market mechanism, on the
one hand, and their effect on the patent system as an incentive instrument,
on the other hand.105
Two restrictions in patent licensing agreements were outlawed
in the new draft: subject to certain exceptions, future rights in in-

100 Ibid., 79.
101 Ibid., 79-80. No figures were cited with regard to companies dealing at

arm’s length. See ibid., 91 (penultimate para.).

102 Ibid., 81. This is not the place to discuss the question whether Canada’s
continued adherence to the Paris Convention for the Protection of Industrial
Property is in Canada’s best interest. It should be noted that the UNCTAD
Code of Conduct on the Transfer of Technology, in all its versions, recog-
nizes the existence of the international patent system and by no means
advocates its abolition. The Working Paper (90-91), having found that 95%
of the patents granted in Canada are granted on the basis of inventions made
by foreigners, seriously questioned whether Canada should indeed continue
to participate in the scheme of the Paris Convention.

103 This proposal was made by Mr Roy Davidson in a 1974 lecture before

the Law Society of Upper Canada.

104 Supra, note 99, 158-59.
105 Ibid., 159.

McGILL LAW JOURNAL

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ventions of unknown value could not be assigned and the right
of a licensee to challenge the validity of the patent could not be
excluded.”” The rationale of the first prohibition is to protect Ca-
nadian industry from the consequences of consenting in advance
to control by the foreign licensor over the improvement of inven-
tions made in Canada by the Canadian licensee.10 The second pro-
hibition was inserted to protect a licensee against competition from
third parties who would be free to challenge the validity of the
patent. If successful, they would be in a stronger position than the
licensee who would have to continue paying royalties to the licen-
sor.

108

All of the above reports have expressed concern regarding Ca-
nada’s dependence upon foreign technological innovations and the
harm done to Canada’s own technological capabilities by irestric-
tive clauses in transfer of technology agreements. It would thus
appear that Canada’s interest does not necessarily coincide with
that of the technology exporting countries. Therefore, while remain-
ing a Western country strongly committed to such values as security
of investment, respect for contractual rights, and fair play in the
screening of transfer of technology contracts by a national authority,
Canada is in a better position than many other Western nations to
understand the problems faced by developing countries.

VIII. Conclusion

The drafting of the UNCTAD Code of Conduct is not as radical
an exercise as it has been considered by some countries. After all,
the Code does recognize the existence of the international patent
system and leaves open the possibility that technology exporters
will raise their prices for technology in response to an effective
Code. It is essentially international consumer protection legisla-
tion which tries to achieve a fairer balance of rights and obligations
between buyers and sellers of technology. Adjusting this balance

3

0 6 Proposed Patent Law, a companion document to the Working Paper
on Patent Law Revision, supra, note 99, ss.80(4) and 88. S.80(4) is not an
absolute prohibition. Exceptions are: the right of an employer to own the
rights in an employee’s invention (s.86(2)); the right of a licensor to negotiate
for a non-exclusive licence of improvements developed by the licensee (s.87(l)
and (2)); and the right of parties to carry out research jointw and to
allocate future rights as may arise between them (s.87(3)).

107 Supra, note 99, 160.
10s Ibid.

19781

THE UNCTAD CODE OF CONDUCT

may have significant financial consequences for the technology ex-
porting countries and their enterprises, which explains the initial
reluctance of many Western countries to participate in the drafting
of the Code and Group B’s present position that it should be a
mere set of guidelines without legal force. As demonstrated earlier,””
a properly balanced Code would provide potential benefits to tech-
nology exporting countries such as the opportunity to effectively
influence the legislation of technology importing countries, the
ability to ensure that technology importing countries act fairly both
in enacting new legislation and in applying their existing laws, the
inviolability of an international transfer of technology contract once
it has been approved by the technology importing country, and the
agreement by technology importing countries to dispute settlement
through commercial arbitration.

It has been pointed out that a non-legally binding Code (in the
form of guidelines) would be unlikely to achieve its objectives; a
Code in treaty form to which states can adhere at will is therefore
more desirable. However, it is important that the drafters of the
Code realize that the two forms are not mutually exclusive.

Canada is dependent on foreign technology. In the context of
the Gray Report as well as the revision of the Patent Act and the
Combines Investigation Act, concern has been expressed about
restrictive clauses in both arm’s length and non-arm’s length trans-
fer of technology contracts and their impact on Canada’s technolo-
gical capability. Canada’s interest may therefore coincide to a
certain extent with that of the developing countries. However, as a
technologically advanced member of the Western Group, it will at
the same time fully appreciate the position of the technology ex-
porting Western countries. This situation places Canada in a unique
position to mediate between nations of both types.

109 See supra, pp. 579-80.

The Professions Tribunal and the Control of Ethical

Conduct among Professionals

Pierre Issalys*

The Professional Code, passed in 1973 by the National Assembly,1
effected a complete reorganization in the regulation of professions.
The resulting administrative structure, of which the Professions
Tribunal is a part, was designed to ensure that professional practice
would remain in conformity with one paramount objective: protec-
tion of the public. The background and main features of this new
regulatory scheme will be set forth in Part I of this article. The
organization and procedure of the disciplinary system will appear
in Part II. Part III will be devoted to an analysis of the peculiar
features of legal rules governing discipline among members of the
professions and the relationship of these rules with other branches
of the legal system.

I. REGULATORY REFORM IN THE PROFESSIONAL FIELD

A. The regulation of professions before 1973

In order -to perceive the thrust of the reform embodied in the
Professional Code of 1973, one must first look back to the state of
the law in the field of professional organization during the 1960’s –
a time of intense social change in Quebec.2 The most salient feature

* Professeur adjoint, Facult6 de droit, Universit6 Laval, Qu6bec. This article
is an updated version of a paper presented at the Colloquium on Anglo-
Canadian and Quebec Administrative Law, held jointly by the Laboratoire
de recherche sur la justice administrative (Universitd Laval, Qudbec) and the
Institute of Judicial Administration (University of Birmingham, England) in
May and September 1978.
1 S.Q. 1973, c. 43, as am.
2 The situation as of 1969 in the health and welfare professions is exhaustive-
ly and very critically surveyed in Sheppard, “L’organisation et ]a r6glementa-
tion des professions de la santd et du bien-6tre au Qu6bec” in Government of
Quebec, Report of the Commission of Inquiry on Health and Social Welfare
(1970), App. 12.

A somewhat more sanguine view is taken in Ouellette, “Les corporations
professionnelles” in Barbe (ed.), Droit administratif canadien et qudbdcois
(1969), 181-222; and Lemieux, Nature et pouvoirs des corporations profession-
nelles au Qudbec (1967-68) 9 C. de D. 37. The major features and trends in

19783

THE PROFESSIONS TRIBUNAL

of that period was the accelerated growth of the public sector in the
areas of education, social services, public utilities and economic
development. It became necessary for the State to employ an in-
creasing number of professionals who, as a -result, experienced chan-
ges in their status and the tasks that they performed. These develop-
ments rendered obsolete the existing system of professional organi-
zation.

Prior to 1973, each profession had been governed by its own
statute. The three oldest and most prestigious professions in Quebec
society (legal, notarial and medical) were the first to be granted
such recognition by the Legislature.’ A second group of professions
emerged between Confederation and the First World War and were
accorded similar legislative treatment when they had attained a
level of social status almost equivalent to that of the “established”
professions Members of a third group of occupations that came
into existence more recently as a result of the increased specializa-
tion of knowledge likewise sought incorporation by an Act of the
Legislature, 5 thereby hoping to obtain the status, privileges, and
prestige enjoyed by people practising the older professions. In-
evitably, the statutes that were eventually passed reflected a com-
promise between the ambitions of the new professionals, the in-
clinations of the government in power, and the sullen opposition

pre-1970 legislation are summarized in Report of the Commission of Inquiry
on Health and Social Welfare (1970), Part V (hereinafter cited as Castonguay-
Nepveu Report), t. 1.

3 An Act for the organization of the Notarial Profession in that part of this
Province called Lower Canada, Provincial Statutes of Canada 1847, 10-11 Vict.,
c. 21; An Act to incorporate the Members of the Medical Profession in Lower
Canada, and to regulate the Study and Practice of Physic and Surgery there-
in, Provincial Statutes of Canada 1847, 10-11 Vict., c. 26; An Act to incorporate
the Bar of Lower-Canada, Provincial Statutes of Canada 1849, 12 Vict., c. 46.
4 Dental surgeons (S.Q. 1869, c. 69), pharmacists (S.Q. 1870, c. 52), surveyors
(S.Q. 1882, c. 16), architects (S.Q. 1890, c. 59), engineers (S.Q. 1898, c. 32),
veterinarians (S.Q. 1902, c. 27) .and optometrists (S.Q. 1906, c. 89).

5 Nurses (S.Q. 1920, c. 141 and S.Q. 1946, c. 88), chartered accountants (S.Q.
1920, c. 118), forest engineers (S.Q. 1921, c. 143), dispensing opticians (S.Q.
1940, c. 61), industrial accountants (S.Q. 1941, c. 95), agronomists (S.Q. 1942, c.
61), dental technicians (S.Q. 1944, c. 43), certified general accountants (S.Q.
1946, c. 89), dieticians (S.Q. 1955-56, c. 156), social workers (S.Q. 1959-60, c.
178), radiology technicians (S.Q. 1960-61, c. 87), psychologists (S.Q. 1962, c. 88),
industrial relations counsellors (S.Q. 1963, c. 99), vocational guidance coun-
sellors (S.Q. 1963, c. 100), chemists (S.Q. 1963, c. 53), town planners (S.Q. 1963,
c. 101), speech therapists and audiologists (S.Q. 1964, c. 58), chartered ad-
ministrators (S.Q. 1966-67, c. 128), chartered appraisers (S.Q. 1969, c. 104).

McGILL LAW JOURNAL

[Vol. 24

raised by members of the established professions.6 As these three
factors varied considerably from one case .to the next, the statutory
product was predictably very different.

All statutes conformed to the principle that the regulation of
ethical conduct should be exercised primarily by the professional
groups themselves. However, the statutory arrangements for the
implementation of that principle varied significantly. These incon-
sistencies were reflected in all three components of the regulatory
process: legislative, administrative, and adjudicative.

For instance, while all professional groups recognized at least
implicitly the need for ethical standards,” only a few attempted to
embody guidelines of professional ethics in legislation. 8 The usual
practice was to delegate the authority to regulate discipline and
ethical conduct to the governing body of the corporation. These
regulations varied widely in form, style, and detail9 and were often
– but not always –
subject to approval by the Lieutenant Governor
in Council.10 Nor were these regulations always exhaustive; some
statutes granted to the adjudicating authority the power to punish
all conduct considered to be “derogatory to the dignity of the pro-
fession”, whether or not such conduct breached the provisions of
the Act or the regulations.”

6 A number of occupations (e.g., nursing assistants, occupational therapists,
medical technologists) failed to obtain recognition in the form of a special
enactment, and were organized as non-profit associations incorporated by
letters patent under Part III of the Companies Act, R.S.Q. 1964, c. 271. Since
the beginning of this century, most professional organizations began as interest
groups of this kind and moved after some time to the higher status of a
professional corporation exercising regulatory powers under a special statute.
7Provision for the regulation of discipline illustrates this recognition: see,
e.g., Act respecting the Corporation of Psychologists of the Province of
Quebec, S.Q. 1962, c. 88, s. 7; Act to incorporate The Corporation of Urbanists
of Quebec, S.Q. 1963 (1st Sess.), c. 101, s. 7.

8 E.g., Pharmacy Act, R.S.Q. 1964, c. 255, s. 45; Dental Act, R.S.Q. 1964, c. 253,

s. 122.

compiled in Sheppard, supra, note 2.

9 See, e.g., the statutes regulating the health and welfare professions as
‘ 0 E.g., approval was required by the following acts: Bar Act, S.Q. 1966-67,
c. 77; Medical Act, R.S.Q. 1964, c. 249; Pharmacy Act, R.S.Q. 1964, c. 255.
Approval was not required by the psychologists’ and town planners’ statutes,
supra, note 7.

11 Bar Act, S.Q. 1966-67, c. 77, s. 105; Medical Act, R.S.Q. 1964, c. 249, s. 66(2);
Pharmacy Act, R.S.Q. 1964, c. 255, s. 48. Ouellette, supra, note 2, shows that
breaches of professional ethics may be committed at common law even
where the particular conduct is not prohibited by any enactment. Quebec
cases on the point, however, are scarce, relatively old, and conflicting: see
Tremblay v. Bernier (1891) 17 Q.L.R. 185 (C.S.) and O’Farrell v. Brassard
(1877) 1 L.N. 32, 3 Q.L.R. 33 (Que. Q.B.).

19781

THE PROFESSIONS TRIBUNAL

The pre-1973 statutes also failed to follow a uniform approach
with respect to the administrative functions of inspection, investiga-
tion, and enforcement. Procedures for monitoring professional con-
duct, filing and investigating complaints; and initiating procedures
against violators differed greatly.12

With regard to the adjudicative process, the same unsystematic
approach prevailed. Although all of the processes were internal in
nature (that is, with no outside participation), procedural safe-
guards varied widely. 13 All statutes listed the sanctions that could
be imposed on violators, but the range of available penalties was
not uniform.’ 4 Most statutes provided for a two-tier adjudicative
system in which the lower tier consisted of a disciplinary committee
chosen by the governing body of the corporation from members of
the profession and the upper tier consisted of the governing body
itself.15 However, the composition and relationship of these two
bodies varied significantly. Some statutes did not exclude members
of the governing body from serving on the lower tier disciplinary
committee, with the result that such members would occasionally
hear appeals from their own decisions.

In addition, subsequent recourse to a judicial body outside of
the professions was not always available. Only a few statutes allow-
ed for an appeal to the courts; 6 many, on the other hand, contained

12For instance, the decision on the validity of a complaint could be taken
by the president of the corporation (Pharmacy Act, R.S.Q. 1964, c. 255, s. 47),
the executive committee of the corporation (Medical Act, R.S.Q. 1964, c. 249,
s. 61), an official of the corporation responsible for the monitoring of pro-
fessional conduct (Bar Act, S.Q. 1966-67, c. 77, s. 23), a screening committee
(Regulation of the Corporation of Psychologists, Q.S.R. 1972, 9-661, s. 52), or
the disciplinary body itself (Regulation of the College of Optometrists and
Opticians, Q.S.R. 1972, 9-277, ss. 114 et seq.).

13 Ouellette, supra, note 2, 212-13.
14 All statutes provided for reprimands and temporary or permanent disbar-
ment from the profession. Many also allowed for the imposition of fines.
Some authorized suspension of permits or certificates issued by the cor-
poration, disfranchisement as a voting member, ineligibility for office in the
corporation, or disqualification from such office.

15 Disciplinary bodies under the Medical Act and the Pharmacy Act con-
formed to that basic model, with minor variations between them. Note-
worthy among other schemes were the Bar Act, which provided for two
large panels of members (one for each level) from which a quorum would
be selected for each case, and the psychologists’ Disciplinary Board, elected
by the annual general meeting of members.

16Dispensing Opticians Act, R.S.Q. 1964, c. 258, s. 28; Veterinary Surgeons
Act, R.S.Q. 1964, c. 259, s. 59; Pharmacy Act, R.S.Q. 1964, c. 255, s. 58; and
Optometry Act, R.S.Q. 1964. c. 257, s. 47, all provided for an appeal to the
Provincial Court as the second or third level of adjudication.

McGILL LAW JOURNAL

[Vol. 24

some form of privative clause.1 7 When confronted with such clauses,
however, the courts often relied on the doctrine of jurisdiction to
censure disciplinary actions by professional corporations. Judicial
review could therefore be invoked against the exercise of rule-
making powers,’
and
adjudication by disciplinary bodies. 20

investigations by officers of corporations,’

Thus as far as the regulation of ethical conduct was concerned,
the situation seemed unsatisfactory in several respects: the values
and principles involved remained uncertain, the rules were difficult
to collect, the notion of unprofessional conduct appeared open-
ended, the disciplinary process generally took place entirely within
the profession, and procedural safeguards were often -left to the
discretion of inexperienced adjudicators. In addition, the lack of
outside control resulted in a wholesale delegation of regulatory
powers –
to people
who were only nominally accountable to the legislature or the gov-
ernment. Therefore, while on the one hand the system could be
suspected of exposing members of the professions to the tyranny
of their peers and perhaps to unfair sanctioning, it could equally
be viewed as a whitewashing operation for the profession. 2′

some of which were rather extraordinary –

B. The reform of 1973

1. The Castonguay-Nepveu Report

The idea of formulating a Professional Code was formally pro-
posed in 1970 in the Report of the Commission of Inquiry on Health
and Social Welfare.2 2 The Commission, appointed in 1966, had ini-
tially been concerned with -the professions involved in the provision
of health and social services. Due to increased specialization, to
recent changes in status following the expansion of the public

17 See Lemieux, supra, note 2, 59-62.
18 X. v. La Salle [1964] R.P. 266 (C.S.); Paratte v. Collge des optomdtristes

[1967] B.R. 645; Bdchard v. Roy [1974] C.S. 13, aff’d [1975] C.A. 509.

19 Gosselin v. Bar of Montreal (No. 1) (1912) 2 D.L.R. 19 (Que. K.B.); Maillet
v. Bureau des gouverneurs du College des chirurgiens-dentistes (1919). 28
B.R. 539; B. v. Chambre des notaires [1954] C.S. 476.

2 0 Cahoon v. Conseil de la Corporation des ingdnieurs [1972] R.P. 209
(C.A.); Comitg d’appel du Bureau provincial de mddecins v. Chavrefils [1974]
C.A. 123. See also Chavrefils v. Conseil de discipline du College des mddecins
[1976] C.S. 1468, aff’d [1978] C.A. 94.

21 See Desch~nes, Les professionnels dans le Qudbec contemporain (1967)

27 R. du B. 69, for an attempt to dispel the latter criticism.

22 Part V, supra, note 2.

1978]

THE PROFESSIONS TRIBUNAL

sector, and to the gradual erosion of the monopoly formerly en-
joyed by physicians, these professions were in an acute state of
crisis. In the course of its study, however, the Commission became
convinced that since other professions faced problems that were
similar in nature, the matter should be approached globally. Thus
the Commission recommended the adoption of a single Professional
Code which would supersede the existing special statutes and
include the following elements:

(1)

representation of the public and the government on the

governing bodies of professional corporations;

(2) public discussion of regulations drafted ‘by professional
corporations prior to their adoption by the Lieutenant Governor in
Council;

(3)

continuance of the corporations’ responsibility for pro-

fessional ethics;

(4)

inclusion in the Professional Code of some broad ethical
standards, to be completed by regulations drafted within each pro-
fession;
(5)

the creation, within each profession, of a disciplinary tri-
bunal composed of mexpbers of the profession and presided over by
a lawyer appointed by the Cief Judge of the Provincial Court;

(6)

the creation, within :each profession, of a disciplinary ap-
peal tribunal, composed of members of the profession and presided
over by a judge appointed by the Chief Judge of the Provincial
Court;

(7) a right of appeal from the final decisions of -a disciplinary

appeal tribunal to the Superior Court;

(8)

incorporation in the Professional Code of a single uniform
list of disciplinary sanctions, including probationary periods and
the obligation to repay the victim of unprofessional conduct;

(9)

discretion on the part of the disciplinary tribunals to im-

pose on violators any of the sanctions on that list;

(10)

incorporation in .the Professional Code of standard rules

of procedure for all disciplinary tribunals, including:

a) a requirement that the complaint be written and specific;
b) the right to counsel for parties and witnesses;
c) a presumption of innocence in favour of the accused;
d) the right to summon witnesses and to examine and cross-

examine them under oath;

e) a requirement that evidence be recorded;

McGILL LAW JOURNAL

[Vol. 24

f) protection against self-incrimination;
g) a requirement that hearings be held in private unless the

tribunal decides otherwise in the public interest;

h) a requirement that decisions be given in writing, be brought
to the attention of the parties and-interested persons, and
be published in a collection of reported cases;

i) a provision that appeals be heard on the basis of the file,
saving the power of the -appeal tribunal or the court to hear
additional evidence in certain cases.’

The Castonguay-Nepveu Report clearly emphasized the need for
uniformity in the area of professional discipline as well as in other
areas of professional organization. At the same time, it recognized
that to be meaningful and reasonably specific, rules of ethical
conduct must be drafted by the members of each profession for
themselves. The proposals also reflected other values such as open-
ness, insofar as self-regulation by the profession would allow for
public comment. For example, non-members would sit on the
governing and disciplinary bodies of the corporations, disciplinary
proceedings could occasionally be conducted in open court, and
decisions of disciplinary tribunals would be reported. Fairness was
safeguarded by the establishment of a three-tiered adjudicative
structure under the direction of lawyers and judges and the intro-
duction of basic procedural -standards which would govern all dis-
ciplinary proceedings. Impartiality in the adjudicative process was
reinforced by the introduction of non-member chairmen at lower
levels and independent judicial authority as a last resort.

The proposals set forth in the Castonguay-Nepveu Report were
included in a bill introduced before the National Assembly in 1971,24
where a lengthy and lively debate ensued before the Assembly’s
Health and Welfare Committee. Although the professions voiced
their misgivings about the proposed regulatory scheme, the pro-
visions in the bill concerning professional discipline were not the
subject of much controversy. In the following year, when the govern-
ment introduced a new bill which considerably strengthened the
position of the Professions Board as a policy-making body and
overall policing agency, the provisions concerning discipline were
left unaltered.2 5

23Ibid., 43 and 50-62.
24 (1971) Bill 250, 2d Sess., 29th Leg. (Que.).
2 (1972) Bill 250, 3d Sess., 29th Leg. (Que.). The main changes concerned
the role, composition and powers of the Professions Board, the regulation of

19783

THE PROFESSIONS TRIBUNAL

Two of the major proposals made in the Castonguay-Nepveu
Report have been incorporated into the new regulatory structure.
First, professional organization and regulation were meant to ensure
the protection of the public rather than the interests of the cor-
poration. In the past, there had been a tendency to further the
interests of a particular profession under the guise of protecting
the public when in fact the public interest might have benefited
from a curtailment of some of that profession’s privileges. 0 Under
the new scheme, professional corporations would act as agents for
the community, entrusted with a delegation of public authority
which could only be exercised to further the common goody Second,
the new system was to include a code, of general application to all
professions, to be supplemented by special statutes or letters patent
specifying the objects and powers of a corporation within the code’s
framework, 28 and a set of regulations for each profession to be
approved by the Lieutenant Governor in Council.

2. The new regulatory structure

To appreciate the role of the Professions Tribunal, one must
examine its position in the complex administrative structure set
up by the Professional Code.-9

a) Professional corporations

Although the Professional Code distinguishes between profes-
sions where practice is -subordinate to membership in the corpora-
tion (“exclusive professions”) and those where practice is free
but the bearing of the professional title is reserved to members

advertising by professionals, the approval of schedules of fees, temporary
practice by foreign professionals, the appointment of non-members to the
governing bodies of corporations, the corporations’ responsibility for con-
tinuing education, the setting of membership dues, the corporations’ duty
to set up an indemnity fund, the power of certain corporations to authorize
non-members to perform professional acts, the membership and powers of
professional inspection committees, and the use of injunctions to restrain
continuing violations of professional legislation.

20 See, e.g., Collage des m~decins v. Lesage (1933) 71 C.S. 338.
27 Castonguay-Nepveu Report, supra, note 2, 39-41.
28Companion bills to the Professional Code amended the existing special
into existence by
statutes governing seventeen professions, and legislated
special statute professional corporations for denturologists (S.Q. 1973, c. 50),
hearing-aid acousticians (S.Q. 1973, c. 54), podiatrists (S.Q. 1973, c. 55) and
chiropractors (S.Q. 1973, c. 56).

29 The administrative structure reflects the very real constraints imposed
on the autonomy of the professions. See Dussault & Borgeat, La rdforme des
professions au Quebec (1974) 17 Can. Pub. Admin. 407, 422-39.

McGILL LAW JOURNAL

[Vol. 24

of the corporation (“professions with reserved titles”),” in both
types the corporation is given a standard form of organization. Pro-
fessional corporations are administered by a Bureau which in-
cludes a president and several directors whose number varies
according to the size of the corporation.3 1 While the president and
most of the directors are elected by the members, 2 between two and
four directors (one or two of whom must not belong to any cor-
poration) are appointed by the Professions Board upon consultation
with the Interprofessional Council and socio-economic organiza-
tions3 3 Directors are elected to the Bureau on a regional basis
and must be practising in the region they represent 4 The Bureau
acts either by resolutions -5 or regulations, which must receive ad-
vance circulation among members, advance publication in the
Official Gazette, and approval by the Lieutenant Governor in Coun-
cil36 In corporations consisting of more than five hundred members,
the Bureau delegates responsibility for all day-to-day business
other than the drafting of regulations to an administrative com-
mittee which it elects annually from among its members. The pre-
sident and one of the appointed directors must sit on this com-
mittee.3 7

The Professional Code also provides for the establishment, within
each profession, of an inspection committee made up of three
members appointed by the Bureau 38 This committee’s task is to
supervise the technical quality of the members’ practice through
investigations, the inspection of -records, the administration of
tests of competence, and the assignment of members to refresher
training courses 9 The committee may also refer disciplinary cases
either directly to the syndic of the corporation 0 or indirectly,

30 This distinction, already present albeit in a confused and unsystematic
way in pre-1973 legislation, was somewhat underplayed by the Castonguay.
Nepveu Report, supra, note 2, 25-26.

3 tProfessional Code, S.Q. 1973, c. 43, ss. 60-61.
32 Ibid., ss. 62-63, 65-66, 68-73, 75-76.
3Ibid., s. 77.
34Ibid., ss. 64, 67 and 74.
3s Ibid., s. 84.
36 Ibid., ss. 85-93. The exercise of regulation-making powers under ss. 85-91

is mandatory.

37 Ibid., ss. 94-95.
38 Ibid., s. 107.
39Ibid., ss. 110-111. See also ss. 88 and 12(g) and (h).
40 Though not expressly provided for in the Professional Code, this seems
to be an accepted practice in cases of gross incompetence: see Office des
professions du Qu6bec, Quatriame rapport d’activitds 1976/77, 36.

19783

THE PROFESSIONS TRIBUNAL

through a recommendation to the Bureau.4′ Within the disciplinary
structure, it is further mandatory for each profession to establish
both a committee on discipline and the office of syndic.42
b) The Quebec Interprofessional Council

The Council was instituted in 1965 as a voluntary organization
where professional groups could meet to exchange views, collaborate
to resolve common problems, and settle difficulties between them.43
The existence of the Council (to which all professions now belong)
is maintained by the Professional Code.44 The Council has become
an integral part of the regulatory struoture. 45 It may make recom-
mendations to the corporations on matters of common interest,
advise the Professions Board and the Lieutenant Governor in Coun-
cil on the creation of new professional corporations, and suggest
the appointment of a majority of the Board’s members.” It must
also be consulted before certain types of regulations are made by
the Lieutenant Governor in CounciL4 In short, the Council provides
a channel of communications which promotes cooperation between
the professions and government in the process of -regulation.
c) The Professions Board (Office des professions)

The Board is -the keystone of the new administrative structure.
It represents a major departure from the proposals contained in the
Castonguay-Nepveu Report which had suggested that the regula-
tion of professions be entrusted to the Department of Financial
Institutions, Companies, and Cooperatives (expert in similar forms
of regulation) .4 The National Assembly thought it preferable to
set up an autonomous administrative agency, representative
in
character and specialized in its field.

The five members of the Board are appointed by the Lieutenant
Governor in Council, three of whom (including the chairman or the
vice-chairman) must be chosen from a list of five names submitted
by the Interprofessional Council.49 All five must be members of a

41 Professional Code, ss. 110 and 125.
42Ibid., ss. 114-119. Both of these organs are part of the disciplinary

structure and will be described in Part II, infra.

43 See Desch~nes, supra, note 21.
44 Professional Code, ss. 17-22.
45 Significantly, the Council reports annually to the Minister responsible

for the application of the Professional Code: ibid., s. 22.

40 Ibid., ss. 19 and 4.
47 Ibid., s. 177.
48 Castonguay-Nepveu Report, supra, note 2, 67-69.
40Professional Code, s. 4.

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professional corporation.50 The staff of the Board are also appointed
by the Lieutenant Governor in Council, on the Board’s recommenda-
tion 51 In view of this composition, it is still possible, to a certain
extent, to consider the Board as an instrument of professional self-
management, rather than just another government agency. Indeed,
in some respects, its functions overlap with those of the Interprofes-
sional Council. For instance, the Board must “endeavour to bring
the corporations to. work together to find solutions for common
problems”. 2

An examination of .the Board’s duties, however, reveals that
its primary purpose is to protect the public interest rather than
the professions. Its basic task is plainly and succinctly stated in the
first paragraph of section 12 of -the Professional Code: “The function
of the Board shall be to see that each corporation ensures the pro-
tection of the public”. The Professional Code then specifies various
activities which follow from this function, such as making -sugges-
tions to the government concerning the establishment, amalgamation,
or dissolution of professional corporations,.6 as well as changes in
the Professional Code or in the special statutes governing profes-
sions. The Board is also invited to suggest improvements in pro-
fessional training to the professions and the universities.

The Board’s responsibilities regarding the rule-making powers
of professional corporations are crucial to the success of the regu-
latory scheme described in the Professional Code. First, the Board
is given a mandate to make recommendations concerning the regu-
lations adopted by professional corporations and may thus sug-
gest regulatory changes to any corporation.’
In addition, the Lieu-
tenant Governor in Council will rely on the Board’s expertise and
advice in approving such regulations.5 Second, if a corporation

50 Ibid., s. 6.
51 Ibid., s. 5. A recent amendment has brought the staff of the Board under
the general rules governing employment in the public service: L.Q. 1978,
c. 18, s. 22.

52 Ibid., s. 12, para. 2.
53 S. 25 lists the factors which the Board must take into account to assess
the desirability of creating a professional corporation. For Board policy on
the subject, see Office des professions du Qudbec, L’dvolution du profes-
sionnalisme au Qudbec (1976). To implement the Board’s suggestions requires
legislative action in the case of exclusive professions (see s. 26); as for pro-
fessions with reserved titles, implementation would require either an amend-
ment of s. 36 and Schedule I or the issuance, amendment or revocation of
letters patent (see ss. 27 and 35).

-4 Professional Code, s. 12, para. 2, in fine.
55Ibid., s. 93.

19781

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fails to adopt the regulations made mandatory by sections 85 and 91
of the Professional Code,56 the Board may act in its stead, and
implement, inter alia, a code of ethics to govern the members of
that corporation. In this respect, the Board’s “suggestions” for
changes are really imperative, since it can, in effect, overrule a
corporation’s objections. 7 Regulations adopted by the Board under
section 12 must, however, be approved by the Lieutenant Governor
in Council.5″ Third, the Board has the power to adopt, after
involved and other bodies, a
consultation with the profession
tariff of fees for the services rendered by the members of -that
corporation. Such tariffs are subject to one month’s advance pub-
lication, which allows for comments from the general public.59

In addition to overseeing the regulations made by professional
corporations, the Board must investigate and report on the financial
administration of any corporation which shows a deficit or is
financially incapable of meeting its statutory obligations. In this
event, the corporation may be placed under the control of the
Board, or a -subsidy may be granted.60

Such an accumulation of power and influence clearly circum-
scribes the autonomy formerly enjoyed by professional corporations.
It illustrates that the meaning of “tempered self-management”, the
keynote phrase of the Castonguay-Nepveu Report,”‘ has shifted to
a point where the emphasis is on “tempered” as much as on “self-
management”.

d) The Cabinet and the Minister

The Lieutenant Governor in Council at least nominally plays a
prominent role in the scheme. He approves regulations made by
professional corporations, the Professions Board, and the Profes-
sions Tribunal 62 and, in addition, makes regulations on his own
initiative.P Furthermore, he wields a power of great practical signi-
ficance in that he appoints Board members and staff, as well as the
chairmen of committees on discipline.6

5G Ibid., s. 12, subparas. 3(a) to (p).
57Ibid., s. 12, subparas. 3(q) and (r).
58 Ibid., s. 13.
59Ibid., s. 12, subpara. 3(u) and s. 13.
60 Ibid., s. 12, subparas. 3(s) and (t), and ss. 14 and 267.
61 Supra, note 2, 10.
62 Professional Code, s. 172a (as am. by S.Q. 1974, c. 65, s. 29) and ss. 93 and 13.
03 Ibid., ss. 177-178.
64 Ibid., ss. 4 and 115; as to the latter, see infra, pp. 603-604.

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In contrast, the role of the Minister responsible for the applica-
tion of the Professional Code is rather limited. He is granted no
power to issue policy directives to the Board. As is generally the case
where an autonomous administrative agency has been set up out-
side departmental structures, the Minister is more or less confined
to the role of parliamentary spokesman for the Board.

e) The Professions Tribunal

The Tribunal’s single function is to act as a judicial body with
primary regard to disciplinary matters. Due to its very specialized
role, its links with the other elements of the regulatory structure
are rather limited. In relation to the other disciplinary authorities
and, in certain cases, to the Bureau of a corporation, it stands exclu-
sively as a court of appeal; it has no involvement in the appointment
or training of members of those bodies or in the regulation of their
activity. With respect to professional corporations, the Tribunal’s
judicial position requires complete independence. The Board’s only
involvement is its responsibility to publish the Tribunal’s deci-
sions. ” The Lieutenant Governor in Council may intervene solely to
approve the Tribunal’s rules of practice and procedure.7

II. THE DISCIPLINARY PROCESS

The three disciplinary authorities set up by the Professional
Code –
-the syndic, the committee on discipline, and the Professions
Tribunal – will now be examined in detail, with reference to their
powers, procedure, and the appointment of their members. In ad-
dition, specific problems such as the amenability of these authori-
ties to judicial review will be discussed.

A. The syndic

The Professional Code requires the Bureau of every corporation
to appoint a syndic -from among the members of the corporation.
While no particular selection procedure is prescribed, a recent
amendment provides that officers of the corporation, including
the syndic, can only be dismissed by -a two-thirds majority of
Bureau members.68 Interestingly, the major provisions concerning
this position appear in the subdivision entitled “Constitution of

65Ibid., ss. l(i) and 191.

06Ibid., ss. 12, para. 3(v) and 173.
60 Ibid., s. 172a.
68 Ibid., s. 83a (as am. by S.Q. 1977, c. 66, s. 7) and s. 119.

19781

THE PROFESSIONS TRIBUNAL

committees on discipline”. 9 This would seem to indicate that the
syndic functions as an auxiliary to the committee and the placement
is therefore somewhat misleading. In fact, the syndic protects the
public interest in committee proceedings by acting as investigator
and prosecutor for the corporation, inquiring into alleged or sus-
pected professional misconduct. Although special statutes consti-
tuting corporations may empower the syndic to open an inquiry on
his own initiative,70 generally an investigation is triggered by any
“information to the effect that a professional is guilty of an offence”
against the Professional Code, against the act constituting the cor-
poration to which’he belongs, or against its -regulations, including
the corporation’s code of ethics ‘ The information may come from
a variety of sources, including members of the public, fellow mem-
bers of the corporation,72 the Bureau,73 a special committee of in-
quiry set up by the Bureau,74 the professional inspection committee,
or one of its investigators.

It should be noted that in some corporations, the professional
inspection committee appoints the syndic one of -its investigators.75
The investigator-syndic then serves both statutory committees. In-
vestigations which begin for the purpose of inspection may be con-
verted into disciplinary investigations if. the investigator-syndic
deems it proper. This hardly seems compatible with the principle
of separating the control of professional competence and the sanc-
tion of unprofessional behaviour – one of the briginal aims pursued
by the draftsmen of the Professional Code.75

When conducting an inquiry, the syndic and his assistants or
regional correspondents may exercise broad powers: they may re-
quire the production of any relevant information or document and
examine and make copies of any records kept by a professional.77
Obstructive, uncooperative, or misleading behaviour by a profes-

69 Ibid., ss. 119-121.
70 Bar Act, S.Q. 1966-67, c. 77, s. 90b, as am. by S.Q. 1973, c. 44, s. 36.
71Professional Code, ss. 120 and 114.
72 The codes of ethics of the various corporations make it an offence for a
member not to refer to the syndic a case of unprofessional behaviour that
comes to his knowledge. See, e.g., the code of ethics of the Bar: By-law res-
pecting the Code of Ethics, O.C. 1425-77, Reg. 77-250 (1977) Qu6bec Official
Gazette 3311, s. 4.02.01(p).

73 Professional Code, s. 55.
74 Ibid., s. 84(c).
75 Ibid., s. 110.
7 0Dussault & Borgeat, supra, note 29, 417-18.
77 Professional Code, ss. 120 and 186.

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sional in the course of an inquiry is an offence punishable by a
fine78 At the close of the inquiry, the syndic has the discretion to
decide whether the facts warrant the laying of a complaint before
the committee on discipline. However, should he choose not to lodge
a complaint, he must provide the informant with reasons for his
decision. In many of the pre-1973 statutes, the syndic’s deternina-
tion of the seriousness of the facts ‘disclosed by the inquiry was
final. This is no longer the case since the Bureau may now order
the syndic to -lay a complaint,7 9 and any other person, including an
individual informant, may lodge a complaint when the syndic
declines to do so. This latter provision is a useful safety mechanism
in cases where the informant believes that the corporation, through
its syndic, is trying to protect an alleged violator.” The institution
of a complaint by the syndic is mandatory in situations in which he
is informed that a member of the corporation has ‘been found guilty
of an indictable offence (triable only by indictment) by a final
decision of a Canadian court.8’ This procedure raises the broader
question of the relationship between criminal law and professional
discipline, to be dealt with in Part III.

In order to enjoy immunity from prosecution, the syndic must
act in good faith. He is protected -further by provisions purporting
to exclude judicial review, but this protection is not absolute and
must be considered in light of the doctrine of jurisdiction. 82 Since
the syndic’s powers are so broad and could conceivably be used to
harass professionals or to undermine their reputations, it is crucial
that he act in good faith. Whether sued for damages or challenged
in judicial review proceedings, this element is essential to the syn-
dic’s defence. 83

The syndic must remain independent and steadfast in the face
of the many (often conflicting) pressures which may be brought to
bear on him. The Bureau (which appoints and may pay him) has
the power to order him to lodge a complaint, and may informally
exert “political” pressures.m In certain professional corporations,
the syndic also serves both the committee on discipline and the pro-

78Ibid., ss. 112 and 182.
7o Ibid., s. 125.
80 Ibid., s. 120a (as am. by S.Q. 1975, c. 80, s. 12) and s. 125.
8 1 Lamarche v. Fiset [1976] C.A. 765.
82Professional Code, ss. 188-190.
83 Ibid., s. 187.
84 However, the syndic’s newly acquired protection against dismissal (supra,

note 68) should strengthen his independence.

19781

THE PROFESSIONS TRIBUNAL

fessional inspection committee, and in cases where an information
has been referred to him by the Professions Board, it too may exert
its influence. Finally, the syndic is liable to attract criticism and
hostility from fellow members within the profession who resent
being suspected of wrongdoing and from informants who may
suspect him of protecting a violator. Thus the office of syndic would
seem to require an individual with unassailable integrity as well as
great independence of mind.

B. The committee on discipline

In this area the Professional Code has blended tradition with
reform. It has upheld the traditional claim of the professions to
basic responsibility for the control of ethical conduct among their
members. The notion that judgments concerning the violation of
professional ethics should in principle be made by members of the
profession was fully accepted by the Castonguay-Nepveu Report
and implicitly retained in the Professional Code. Reform has taken
place by imposing uniformity and giving a more judicial flavour
to the disciplinary process.

1. Composition

Committees on discipline, which are mandatory for all corpora-
tions, must be constituted similarly. While the Bureau of the cor-
poration may select the members of the committee from among the
members of the corporation, the chairman must be a lawyer (and
therefore an outsider to all corporations other than the Bar) ap-
pointed by the Lieutenant Governor in Council after consultation
with the BarY To foster expertise and consistency,’the appointment
of the same person to chair the committees of several corporations
In -practice, multiple appointments are
has been encouraged.”
usually made to the committees of related or similar corporations;
for example, the same person chairs the committees on discipline
for general accountants, administrators, and appraisers.

Although each corporation’s special statute or -regulations govern
the number of members and the manner of selection, committees
always sit in groups of three, including the chairman. If the number
of members is sufficient and the volume or geographical distribu-
tion of complaints requires it, the committee may sit in several divi-
sions. Each division must be chaired by a lawyer, selected by the

85 Professional Code, s. 115.
86 Ibid., s. 118.

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chairman of the committee from a list prepared by the Lieutenant
Governor in Council after consultation with the Bar. 7

Committee members, including the chairman, may be recused
in the same manner as judges. 8 In this regard, it may be noted that
the reorganization of disciplinary bodies by the Professional Code
has eliminated many possibilities of bias that existed under the
pre-1973 statutes. The syndic will no longer be able to both prose-
cute and sit on the disciplinary body in the same case, nor will
the Bureau be called upon to adjudicate on appeals from a com-
mittee which includes some of its members. 89

2. Jurisdiction and powers

The jurisdiction of the committee is clearly set out in sections

114, 148 and 153 of the Professional Code:

114. A committee on discipline is constituted within each corporation.

The committee shall be seized of every complaint made against a
professional for an offence against this Code, the act constituting the
corporation of which he is a member or the regulations made under
this Code or that act.
148. The committee shall -decide to the exclusion of any court, in first
instance, whether the respondent is guilty of an offence against this
Code, the act constituting the corporation of which he is a member or
the regulations made under this Code or the said act.
153. The committee on discipline shall impose on a professional con-
victed of an offence against this Code, the act constituting the corporation
of which he is a member or the regulations made under this Code or the
said act, one or more of the following penalties:
(a) reprimand;
(b)
(c) a fine of at least two hundred dollars for each offence;
(d)

the obligation to remit to any person entitled to it a sum of money
the professional is holding for him;

temporary or permanent striking off the roll;

(e) revocation of his permit;
(f) revocation of his specialists’s certificate.
Several points may be made concerning the substance of the
committee’s jurisdiction. First, the authority of the committee to

87 Ibid., s. 133.
88 Ibid., s. 135.
89 The diverse and awkward disciplinary structure of pre-1973 corporations
gave rise to much litigation on bias in disciplinary proceedings: see O’Farrell
v. Brassard, supra, note 11; Gosselin v. Bar of Montreal, supra, note 19;
Maillet v. Bureau des gouverneurs du Collge des chirurgiens-dentistes, supra,
note 19; Ddcarie v. Collage des chirurgiens-dentistes (1928) 44 B.R. 435; Mas-
son v. College des chirurgiens-dentistes (1930) 49 B.R. 376; G. v. Barreau de
Montrial [1959] B.R. 92; Bdchard v. Roy, supra, note 18.

19783

THE PROFESSIONS TRIBUNAL

hear complaints and impose sanctions may be exercised only when
the alleged violator is a member of the corporation. This conforms
to the tradition of self-regulation, which did not allow professional
corporations to pass judgment on infringements of their privileges
by non-members. That class of proceedings continues to belong to
the jurisdiction of ordinary courtsO Second, the scope of profes-
sional misconduct is striotly limited to offences against the Profes-
sional Code, the statutes incorporating professions, and the regula-
tions made under both. Significantly, this has been repeated at
length in each of the three sections defining the committee’s juris-
diction, thus emphasizing a major change from pre-1973 legislation.
Previously, disciplinary bodies had the common-law jurisdiction to
declare and punish violations of professional ethics not covered by
any specific enactmentY1 Third, section 153 breaks with tradition
by providing a uniform list of penalties for all professions. Most of
the sanctions enumerated in that list could be found in different
combinations in pre-1973 statutes. The obligation to reimburse
money held for others, however, is a new type of indirect sanction
suggested in the Castonguay-Nepveu Report.2

To the committee’s adjudicative tasks must be added two signi-
ficant powers. It may make recommendations regarding an applica-
tion for reentry by a professional who has ‘been -struck off the roll
of the corporation pursuant to a decision of the committee, although
the final decision rests with the Bureau. The committee may also
recommend that the Bureau require a professional to serve a period
of refresher training, during which his right to practise may be
limited9 4 This essentially operates as an extension of the com-
mittee’s sanctioning power and allows it to deal more effectively
with cases where curative action seems necessary.

The jurisdiction of the committee is therefore firmly confined
to violations of the ethical rules laid down in the relevant enact-
ments. Such limited jurisdiction does not allow the committee to

OZenith Radio Corp. v. Ordre des audioprothdsistes [1976] C.S. 1758; Cor-

poration professionnelle des rnddecins v. Boily [1977] C.S. 84.

9′ Borgeat, La faute disciplinaire sous le Code des professions (1978) 38
R. du B. 3, 5-7. This crucial aspect of the Professional Code will be discussed
further in Part III, infra.

92 Supra, note 2, 58-59.
03 Professional Code, s. 157.
94Ibid., ss. 156 and 92(h). The professional inspection committee has the

same recommendatory power under s. 111.

McGILL LAW JOURNAL

[Vol. 24

consider issues -such as the constitutional validity of legislation or
the legality of regulations, which remain reserved to the courtsY5

3. Procedure

a) General character

Disciplinary procedure may be considered a hybrid.90 Depending
on the particular aspect of the case, the committee may look to
either the Criminal Code9 7 or the Code of Civil Procedure for
guidance. Although no provision in the Professional Code requires
the sole use of either type of procedure,98 specific rules may be
borrowed to reflect the nature of the action. For instance, the pro-
cedures for laying complaints and imposing penalties bear a strong
resemblance to criminal proceedings, while most of the other com-
mittee functions are analogous to civil proceedings.9 However,
disciplinary procedure must always be seen as an autonomous
field, and the direct transposition of external rules may not be
appropriate.100

The committee’s freedom to choose its own manner of pro-
ceeding where no statutory provision is applicable’
has been re-
cognized in the Professional Code. Section 139 authorizes the com-
mittee to use “all legal means to ascertain the facts”, and section
142 allows it to summon such witnesses and require the produc-
tion of such documents as it considers useful.

A third element, characteristic of adjudication, is that the proce-
dural autonomy of the committee is ultimately -limited by the require-
ments of natural justice. Both elements of natural justice have been
made explicitly applicable to the committee by sections 135 (import-

V5 For unsuccessful attempts to bring committees to exceed their jurisdiction
in this regard, see Comitd-Mgdecins-1 [1974] D.D.C.P. 49; Comiti-Mddecins-21
[1976] D.D.C.P. 335.
96 Goodman v. Bureau de discipline du Collage des pharmaciens [1971]

C.A. 841; Lemieux v. Lippens [1973] R.L. 405 (Prov. Ct).

151 (C.A.); Comiti-Psychologues-1 [1975] D.D.C.P. 59.

97 R.S.C. 1970, c. C-34 as am.
9 8 Tribunal-Avocats-3 [1975] D.D.C.P. 294.
99 Richard v. Bureau de discipline du Collage des pharmaciens [1969] R.P.
100 Comitg-Avocats-7 [1974] D.D.C.P. 12 (error in the wording of the com-
plaint not fatal); Tribunal-Midecins-1 [1975] D.D.C.P. 75 (appeal suspends
execution of a committe’s decision); Tribunal-Notaires-1 [1976] D.D.C.P. 209
(imposition of a single sanction for several offences not fatal); Tribunal-
Mddecins4 [1977] D.D.C.P. 136 (joinder of complaints); Tribunal-Avocats-l
[1977] D.D.C.P. 353 (respondent’s evidence treated as admission).

‘0 1 Lambert v. Lippens [1973] R.L. 446 (Prov. Ct).

19783

THE PROFESSIONS TRIBUNAL

ing the recusation provisions of the Code of Civil Procedure) and 140
(maintaining the right of the respondent “to present a full and
complete defence”).

b) Some specific rules

Sections 123 to 157 of the Professional Code also contain a large
number of procedural provisions which, considered as a whole,
leave no doubt as to the quasi-judicial character of the process.””2
A few of these provisions ‘deserve comment in view of their origina-
lity. Section 127 allows the plaintiff to request that the respondent
be struck from the roll immediately, pending the committee’s de-
cision on the complaint. This is considered an interim measure for
the protection of the public where the continuation or repetition
of the behaviour complained of might threaten public safety.1 3
The plaintiff has -the onus of establishing that the public may be in
serious jeopardy if the respondent is allowed to carry on his prac-
tice.0 4 Since it is an emergency measure, the decision of the commit-
tee to strike the respondent off the roll, although appealable, nor-
mally remains in force until the final decision of the committee,
unless the Professions Tribunal orders its suspension. 105

Among the provisions concerning the -taking of evidence by the
committee, the most striking are sections 143 to 145, which require
any witness before the committee, including a professional and the
respondent himself, to answer all questions under oath. Refusal to
answer may be punished by the committee as contempt of court.’06
The duty of secrecy, imposed on professionals by section 9 of the
Charter of Human Rights and Freedoms, 107 by section 85(3) of the

102 See, e.g., the provisions pertaining to the form of the complaint (s.
124), the right to counsel (s. 130), notice of the hearing (s. 134), the right of
both parties to make representations on the penalty to be imposed after a
conviction (s. 146), and the form and contents of the decision (s. 150).
103An analogy may be drawn between this measure (in relation to cor-
poration members) and the interlocutory injunction procedure of s. 185
(in relation to non-members).
104Comitd-Avocats-7 [19753 D.D.C.P. 12; “Comitd-Avocats-11 [1975] D.D.C.P.

17; Comitg-Comptables agrgds-2 [1975] D.D.C.P. 20.

105 Professional Code, ss. 157 and 162; Tribunal-Avocats-2 [1974] D.D.C.P. 73,

based on identical provisions in the Bar Act, S.Q. 1966-67, c. 77.

Act, R.S.Q. 1964, c. 11, s. 11.

10o Professional Code, s. 161, referring to the Public Inquiry Commission
107 S.Q. 1975, c. 6. Statutes or regulations passed subsequent to the Charter
may expressly set aside that provision for their purposes: see s. 52 of the
Charter and Borgeat, Le secret professionnel devant les tribunaux qugbdcois
(1976) 36 R. du B. 148.

McGILL LAW JOURNAL

[Vol. 24

Professional Code, and by the codes of ethics of the various cor-
porations, cannot be raised as an objection before the committee
as it could before a court.103 When these provisions are added to
sections 120 and 186, which give the syndic and the committee un-
restricted access to the records of a professional, it becomes obvious
that the disciplinary process overpowers the principle of confiden-
tiality. The clients of a professional must rely instead on the fact
that committee hearings are normally held in camera,109 on the
oath of discretion taken by the syndic and the members of the
committee,110 and on the duty of secrecy imposed on any person
having knowledge of the evidence at the hearing.”‘ Although wit-
nesses are protected against self-incrimination in court proceedings,
evidence given before the committee could be used against them in
other disciplinary or administrative proceedings.” 2

The uncertain relationship between disciplinary procedure and
civil or criminal procedure has given rise to a number of evidentiary
problems. For instance, what is the standard of proof required to
establish a violation of professional ethics? In some cases it has
been assumed that, in view of the penal character of the complaint,
guilt must be proved beyond a reasonable doubt.” 3 The majority of
cases, however, require no more than the usual standard of proof for
civil proceedings, that is, that the weight of evidence support the
finding of guilt.” 4

It seems clear from the scheme of the Professional Code, as
well as from a line of jurisprudence going back to the pre-1973
period, that the respondent in disciplinary proceedings must be
presumed innocent until his guilt is established by the plaintiff.””
But can the latter rely on presumptions or circumstantial evidence
to establish guilt on the part of the respondent? In one case, a com-
mittee refused to hold a professional responsible for misrepresen-
tations made by his receptionist as to his qualifications as a spe.

‘0 8 Comiti-Psychologues-1, supra, note 99; Comitg-Avocats22 [1975] D.D.C.P,

115.

109 Professional Code, s. 137.
110 Ibid., s. 121.
111Ibid., s. 145.
112 Ibid. See Grey, Ddcary & Bernier, Some Comments from a Symposium

on Quebec’s Professional Code (1976) 22 McGill L.J. 110, 113-14.

113 Comitd-Avocats-17 [1974] D.D.C.P. 40.
11″Comitd-Psychologues-1, supra, note 99; Comitd-Optomdtristes-3 [1975]

D.D.C.P. 240; Tribunal-Mgdecins-2 [1975] D.D.C.P. 77.

115 See, e.g., Ldonard v. Amyot

[1971] C.S. 349; Comitd.Psychologues1,

supra, note 99.

19783

THE PROFESSIONS TRIBUNAL

cialist; the committee held that implied liability for damages under
article 1054 of the Civil Code could not be used to establish a
contravention of section 57 of the Professional Code.”” On the other
hand, the Professions Tribunal upheld the deoision of another com-
mittee which had found a professional guilty of illegal advertising
on the basis of circumstantial evidence to the effect that he had
at least tacitly approved of such advertising, if not actually autho-
rized it, and had certainly benefited from it.. 7 Generally, in eviden-
tiary matters, the case law seems to favour a broad interpretation
of the provisions in the Professional Code giving the committee a
large measure of procedural freedom.”” In particular, the Profes-
sions Tribunal has been prepared to allow committees to consider
hearsay evidence.'”

4. The caseload

During the period between the coming into force of the Profes-
sional Code in February 1974 and the end of June 1977, committees
on discipline have heard over five hundred complaints.’20 In ap-
proximately twenty per cent of the cases, the committee dismissed
the complaint. Professionals found guilty were struck from the
roll permanently in about three per cent of the cases, and in another
twelve per cent, the respondernd was struck from the roll for
periods ranging from a few weeks :to several years. In the remaining
cases, the committee imposed one of the lesser penalties listed in
section 153.

Complaints made against members of the oldest established pro-
fessions (lawyers, notaries, and physicians) accounted for a large
proportion of the total caseload. This presumably reflects the ex-
pertise these professions have acquired over time in the control
of ethical conduct. Pharmacists, a slightly newer group, have also
experienced a great deal of disciplinary litigation; this may be due
in part to the lack of consensus wiihin the profession regarding
recent movements to suppress commercial practices. While a few

110Coniitd-Mddecins-22 [1976] D.D.C.P. 339. S. 58 considers such misrepre-

sentations derogatory to the dignity of the profession.

117Tribunal-Mgdecins-5 [1977] D.D.C.P. 161.
118 See especially ss. 139 and 142.
11Tribunal-Mddecins-7 [1976] D.D.C.P. 172.
120 Committee decisions have been reported in the series Ddcisions discipli-
naires des corporations professionnelles (D.D.C.P.), published
twice yearly
by the Professions Board in pursuance of ss. 12(v) and 173 of the Professional
Code.

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complaints concerning twelve other professions were also heard
over that period, twenty-two committees on discipline (most of them
in recently constituted corporations with reserved titles) remained
inactive throughout the period.

5. Judicial review of committee proceedings

The possibility of judicially challenging the legality of proceed-
ings before committees on discipline set up under the Professional
Code has never been in doubt even though the immunities and
privative clauses of sections 187 to 190 apply to disciplinary com-
mittees as well as to syndics. These privative clauses are indeed
more sweeping in terms than those found in the pre-1973 profes-
sional statutes, but they too may be circumvented under the doctrine
of jurisdiction.

A long line of English and Canadian cases, reaching as far back
as the seventeenth cehtury, has treated disciplinary bodies as exer-
cising quasi-judicial functions and characterized them as “inferior
tribunals” subject to the review jurisdiction of the Superior Court.’21
Whether the advent of the Professions Tribunal, endowed with a
general appellate jurisdiction over disciplinary committees, has
affected that review jurisdiction will be examined below. It may be
noted that the Superior Court has already reviewed the proceedings
of committees on discipline on a few occasions since 1973.11

C. The Professions Tribunal

The Castonguay-Nepveu Report, attempting to reconcile the tra-
dition of professional self-regulation with the perceived need for
judicial expertise, recommended
the adoption of a three-tiered
disciplinary structure. 23 Complaints would be heard by the com-
mittee on discipline whose decisions would be reviewable by a
second-tier authority presided over by a Provincial Court judge. At
the third level, there would be an appeal to the Superior Court.
This proposal was rejected by the Government in favour of a less
elaborate two-tiered structure in which the upper level is com-
posed entirely of Provincial Court judges and is completely inde-
pendent of the corporations. This choice arose from a desire not

121 This position has been repeatedly endorsed in Quebec cases: see, e.g.,

Gosselin v. Bar of Montreal, supra, note 19.

322 Byer v. Barreau du Qudbec r1976] C.S. 1020; Abramovitch v. Comitd de

discipline de l’Ordre des pharmaciens [1976] C.A. 480.

123 Supra, note 2, Recommendations 7.1.37 to 7.1.39.

19783

THE PROFESSIONS TRIBUNAL

to impose an unpredictable burden on the already overworked
Superior Court, to benefit from the experience acquired by the
Provincial Court in the exercise of its appeal jurisdiction over the
disciplinary processes of some corporations, and to have all com-
ponents of the new regulatory structure for the professions appoint-
ed by the Quebec government.

1. Composition

At its inception in 1973, the Tribunal consisted of five judges
selected by the Chief Judge of the Provincial Court from among the
members of that Court. One of them was appointed chairman.114 To
provide more flexibility in the assignments of Tribunal members,
however, a recent amendment has created a further group of five
Provincial Court judges, again designated by the Chief Judge; these
are known as deputy jtidges (juges suppldants).125 Members of the
Tribunal are intended to become part-time specialists
in Profes-
sional Law but not to devote all their time to their duties as
Tribunal members. (All have continued to sit as judges of the Pro-
vincial Court.) The Tribunal normally sits as a bench of three judges
designated by the chairman, one of whom may be a deputy judge.’2
Although it is composed of judges, the Professions Tribunal
cannot be considered -a court of justice. It should rather be charac-
terized as an administrative tribunal, in the strictest sense of the
phrase, meaning a non-departmental public authority specializing in
adjudicative functions. The Legislature has the power to decide
what sorts of persons will participate in such bodies. If it chooses
judges, it simply expresses a concern that the members be experts
in the art of justice; it does not necessarily intend that the .particular
authority become a court. The federal Parliament rather infrequently
calls on judges to staff federal tribunals. 127 By contrast, in Quebec,
a whole series of recently-created tribunals are composed in whole
or in part of Provincial Court judges.12 Such a practice has the poli-
tical advantage of vesting in those new tribunals at least some of
the prestige and moral authority associated with judges. A second-
ary practical advantage is the creation of a whole class of judges
with in-depth experience of various sectors of public administration.

124 Professional Code, s. 158.
325Ibid., s. 159, para. 2 (added by S.Q. 1977, c. 66, s. 11).
126Ibid., s. 159; Tribunal-Avocats-1 [1974] D.D.C.P. 71.
127 E.g., unemployment insurance umpires are Federal Court judges; mem-

bers of the Pension Appeals Board are provincial Superior Court judges.

128 E.g., the Labour Tribunal, the Expropriation Tribunal, the Transport Tri-

bunal, the Rentals Commission, the Social Affairs Commission.

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2. Jurisdiction and powers

The main provision concerning the Tribunal’s jurisdiction ap-
pears in the second paragraph of section 158 of the Professional
Code: “An appeal shall lie to such tribunal from any decision of a
committee on discipline, by the plaintiff or the respondent”. The
jurisdiction is therefore purely appellate; it can only be invoked
after a disciplinary committee has made a decision. On the other
hand, it extends to any decision of a committee, incidental or other-
wise, including a decision on a request under section 127 to imme-
diately strike from the roll a professional against whom a complaint
is made. 129

The reform of 1973 has placed rights of appeal against disci-
plinary decisions in a new setting. Prior to that date, disciplinary
committees or councils were internal to the various corporations,
and any appeal to an outside authority –
if and when such an
appeal was provided for –
could only be by the respondent pro-
fessional. Since the advent of the Professional Code, however, com-
mittees on discipline have been chaired by outsiders, and anyone
can lodge a complaint; therefore, the syndic or an individual plain-
tiff would also have standing to appeal. This was expressly recog-
nized in 1974 by an amendment to section 158 of the Professional
Code.’ 30

Under section 51d, the Tribunal also has appellate jurisdiction
over certain decisions of the Bureau. These are cases in which the
Bureau refuses to enter a person on the roll, strikes him from the
roll, or limits his right to practise, because he is reported by three
physicians to .be in a mental or physical condition incompatible
with the practice of the profession, or has refused to undergo a
medical examination to determine whether he is in such a condi-
tion. In any case, the decision of the Tribunal is final.131

With regard to committee decisions, the Tribunal has the full
powers generally associated with an appellate jurisdiction: it may
confirm, vary, or quash the decision appealed from, and substitute
its own decision for it. Furthermore, the Tribunal has consistently
taken the view that its powers are no different from those of an
ordinary court of appeal. Thus, it will not disturb the committee’s
decision unless it finds a serious and manifest misapprehension of
the facts, an excess of jurisdiction, misuse of the committee’s discre-

129 Tribunal-Avocats-1, supra, note 126; Tribunal-Mddecins1, supra, note 100.
130 S.Q. 1974, c. 65, s. 26.
131 Professional Code, s. 51d (as am. by S.Q. 1977, c. 66, s. 2) and s. 170.

19783

THE PROFESSIONS TRIBUNAL

tion as to the sentence, or an inappropriate or disproportionate
penalty. 32 As have many other administrative agencies, the Tribunal
has received the broad investigative powers provided for in the
Public Inquiry Commission Act.’ 3 Among other things, this allows
the Tribunal to require witnesses to attend, and to punish them for
contempt

34

3. Procedure

The Tribunal may adopt its own rules of procedure, subject to
their approval by the Lieutenant Governor in Council. 35 In general,
however, procedure before the Tribunal is meant to follow the
Code of Civil Procedure, saving the specific provisions in the Pro-
fessional Code.’36 Thus, the Tribunal has held that the setting of
a simpler procedure by section 160 of the Professional Code ex-
cludes application of the provisions of the Code of Civil Procedure
governing appeals to the Court of Appeal.’37 On the other hand, the
general rule that time limits for appealing are inflexible has been
held to apply to the limit set in section 160, in the absence of Pro-
fessional Code provisions ‘allowing for ‘an extension. 3 s Similarly,
in the absence of provisions to the contrary, an appeal to the Tri-
bunal from an interlocutory decision was held to suspend proceed-
ings before the committee, as would have been the rule under the
Code of Civil Procedure. 39 Some provisions of both Codes are sub-
stantially identical, and the Tribunal may rely on either or both.
One example of this is section 165 of the Professional Code dealing
with the admissibility of additional evidence under exceptional cir-
cumstances and where justice may require that it be authorized 40
Some of the basic rules made -applicable to the procedure before
the committee on discipline are reiterated in respect of the Tri-

132 Tribunal-Avocats-3 [1974] D.D.C.P. 75; Tribunal-Mgdecins-2, supra, note
114; Tribunal-Mgdecins-3 [1975] D.D.C.P. 309; Tribunal-Avocats-15 [1976] DD.
C.P. 407; Tribunal-Pharmaciens-1 [1976] D.D.C.P. 223; Tribunal-Avocats-4 [1977]
D.D.C.P. 123; Tribunal-Arpenteurs- con2ntres-2 [1977] D.D.C.P. 341.

1.3- R.S.Q. 1964, c. 11.
134 Professional Code, s. 161.
135Ibid., s. 172a. See Rules of practice of the Professions Tribunal, O.C.

765-76, Reg. 76-128 (1976) Quebec Official Gazette 2121.

1.6 Ibid., s. 161.
37 Tribunal-Avocats-1 [1975] D.D.C.P. 69.
138 Tribunal-Notaires-1 [1977] D.D.C.P. 387.
1.309 Tribunal-Mgdecins-1, supra, note 100.
140 Tribunal-Mgdecins-1 [1974] D.D.C.P. 79; Tribunal-Avocats-14 [1976] D.D.

C.P. 406.

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bunal.’ One provision expressly adopted from committee proce-
dure requires witnesses, including the professional whose behaviour
is the subject of the complaint and any other professional, to answer
all questions, but grants them immunity against the use of that
evidence in judicial proceedings.1 42

The Professions Tribunal seems to have avoided the pitfall of
excessive formalism, a risk in any judicial proceeding. Its hearings
are said to be no more formal than those of the committees, and
generally tend to assume the form of an orderly discussion. The
Tribunal has also succeeded in preserving the major advantage of
administrative tribunals: speed. Cases are generally heard and
decided within three months, which is remarkable in view of the
fact that the members of the Tribunal still carry on their normal
judicial duties.

4. The caseload

Between February 1974 and mid-1977, the Tribunal handed down
one hundred decisions. About half of the cases were decided in
the last year of that period. The rate of reversal of committee deci-
sions was about seventy per cent until that final year, at which time
the nature of the caseload changed due to the fact that a large
number of appeals concerned matters of procedure and therefore
did not immediately affect the outcome of the complaint. Among
the cases where a substantive decision was at issue, the reversal
rate fell to approximately thirty per cent. Appeals from decisions
concerning
lawyers, physicians, and pharmacists accounted for
eighty-eight of those hundred cases; the rest dealt with members
of seven other corporations.

5. Judicial review and the constitutional issue

Like the other disciplinary authorities set up by the Professional
Code, the Professions Tribunal found, in sections 187 to 190, only
limited shelter from the traditional review powers of the Superior
Court. Early in its existence, one of its decisions was challenged by
a plaintiff who applied to the Superior Court for a writ of evocation.
Although he was unsuccessful, the application gave the Court an
opportunity to indicate that it would read the privative clauses in

141 E.g., the right to counsel (s. 166), the principle of in camera hearings
142 Professional Code, s. 169.

(s. 168) and the duty to give reasons (s. 171).

19781

THE PROFESSIONS TRIBUNAL

the customary way, that is, so as not to exclude review for want or
excess of jurisdiction. 43

Similar proceedings were initiated in 1977 against decisions of
the Tribunal; this time the attack was founded on section 96 of the
1 That section provides that ap-
British North America Act, 1867. T
pointments to the superior courts of the various provinces are to
be made (in effect) by the federal Cabinet. When a province confers
jurisdiction on an inferior court or tribunal (the members of which
are appointed by the provincial Cabinet), the question arises as to
whether that particular jurisdiction was included, in 1867, in the
jurisdiction of the superior courts of that province. A number of
criteria have been used, in a large body of case law, to ascertain
the answer to that question. If it is found that jurisdiction was con-
ferred upon the Superior Court in 1867, then the inferior tribunal
or court becomes unconstitutional as regards that particular juris-
diction, and is therefore liable to evocation of its proceedings. In
recent years, a number of administrative tribunals set up by the
Legislature of Quebec have had their jurisdiction challenged in
this way.

In a case decided in April 1977, the Superior Court held that the
Legislature, when it gave the Professions Tribunal jurisdiction to
hear appeals from committees on discipline, including appeals on
questions of law and jurisdiction, in fact transferred jurisdiction
which had substantially belonged to the Superior Court in 1867.145

In November of the same year, Nadeau J. of the Superior Court
supported the constitutional validity of sections 158 and following
of the Professional, Code, on the grounds that the jurisdiction con-
ferred on the Tribunal previously belonged -to other inferior tri-
bunals or courts, namely the governing bodies of professional cor-
porations, their committees, and in some cases the Provincial
Court; that the Tribunal remained subject to review by the Superior
Court; and that provinces do not impinge on section 96 when they
set up inferior appeal tribunals 4

The Supreme Court of Canada has recently ruled on a similar
application involving the Transport Tribunal. 14 The Supreme Court,

‘ 43 Briare v. Tribunal des professions [1975] C.S. 745.
14 30-31 Vict., c. 3 (U.K.).
143 Crevier v. Aubry [1977] C.S. 324 per Poitras’ J.
146 Choquette v. Comitg de discipline du Barreau C.S.M. no. 500-05-14949-779,
Nov. 15, 1977. Both this and the Crevier case (supra, note 145) have been
taken to the Court of Appeal.

147 A.-G. Quebec v. Farrah (1978) 86 D.L.R. (3d) 161; 21 N.R. 595.

McGILL LAW JOURNAL

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confirming an earlier decision of the Quebec Court of Appeal, un-
animously held that the exclusive jurisdiction given to the Transport
Tribunal to hear appeals on questions of law and jurisdiction from
decisions of the Quebec Transport Commission was ultra vires.
Chief Justice Laskin considered as fatal to -the constitutionality of
the Transport Tribunal the fact that it was not set up simply as
an appeal tribunal, with power to decide on questions of law in the
exercise of a general appellate authority over the decisions of the
Transport Commission. Rather, the Transport Tribunal was an
appeal body whose primary task was to examine questions of law.148
By contrast, it may be argued that the Professions Tribunal is
simply an appeal tribunal with that sort of general appeal juris-
diction where questions of law may or may not be involved. How-
ever, in the recent Superior Court decision of Haltrecht v. Tribunal
des professions, Mr Justice Meyer (following the Farrah case) held
that the same reasoning that applies to an appeal tribunal primarily
dealing with questions of law applies a fortiori to tribunals with the
jurisdiction to deal with questions of both law and fact, such as the
Professions Tribunal. 14 9

III. PROFESSIONAL LAW WITHIN THE LEGAL SYSTEM

The control of ethical conduct within professional organizations
has long been a central feature in the body of -legal rules pertaining
to the professions. This emphasis on disciplinary law corresponds
to a sociological fact observed by the Professions Board in its policy
document on the evolution of professional organization in Quebec:
among the different forms of activity which professional corpora-
tions undertake in order to protect the public, control of profes-
sional ethics is the most common. According to the Board’s survey,
in 1974 about one-half of the total number of professional cor-
porations had an active committee on discipline; this proportion
rose to two-thirds among exclusive professions. The degree of invol-
vement by the corporations was substantially lower for other forms
of activity aimed at the protection of the public 6 0

The preeminence of the disciplinary function in the activities of
professional corporations is likely to increase. For one thing, section
23 of the Professional Code has confirmed the tendency (already

148Ibid., 165-66. Spence, Dickson and Estey JJ. concurred.
’49 Haltrecht v. Tribunal des professions C.S.M. no. 500-024855-783, Dec. 1,
150 Office des professions du Quebec, supra, note 53, 3541.

1978 (Meyer’J.).

1978]

THE PROFESSIONS TRIBUNAL

apparent before 1973) of corporations to relinquish their role as
promoters of group interests and concentrate instead on protecting
the public by maintaining a high standard of quality -in professional
services. The Professional Code has further introduced all the,
elements required for an orderly, consistent, and systematic de-
velopment of disciplinary law: (1) mandatory rule-making by the
a
professions under centralized supervision by the Board;
uniform procedure for the introduction, investigation, and adjudi-
cation of disciplinary complaints; (3) a uniform set of disciplinary
sanctions; and (4) an overall appellate authority, capable of de-
veloping a body of case law. The experience of a few years already
points to a substantial enrichment of disciplinary law, in terms
of both quantity and quality. The changes introduced by the Pro-
fessional Code and its subsequent developments have not, however,
removed some basic difficulties in the control of ethical conduct
the perennial
among professionals. Nor have they suppressed
problem concerning the relationship between disciplinary law and
other parts of the legal system.

(2)

A. Some peculiar features of disciplinary law

1. Codes of ethics

The legal nature of ethical rules established by professional cor-
porations to guide the conduct of their members has to some extent
been clarified by the Professional Code. For one thing, these rules
are now an essential element in the legal order governing the pro-
fessions. In addition, codes of ethics are always expressed in the
familiar legal form of regulations issued by the Lieutenant Governor
in Council. Finally, section 85 of the Professional Code succinctly
outlines the purposes served by codes of professional ethics and
contains a list of minimal provisions:

The Bureau must make, by regulation, a code of ethics governing the
general and special duties of the professional towards the public, his
clients and his profession, particularly the duty to discharge his pro-
fessional obligations with integrity. Such code must contain, inter alia:
1. provisions determining which acts are derogatory to the dignity

of the profession;

if applicable,

the professions,

2. provisions defining,

trades, in-
dustries, businesses, offices or duties incompatible with the dignity or
practice of the profession;

3. provisions to preserve the secrecy of confidential information
that becomes known to the members of the corporation in the practice
of their profession;

4. provisions respecting the right of any person having recourse to
the services of a professional to take cognizance of the documents re-

McGILL LAW JOURNAL

[Vol. 24

garding him in any record made by that professional about him and to
obtain copies of those documents.

The introductory paragraph of this section distinguishes between
two levels of ethical obligations, characterized as general and special
duties of the professional, and lists the persons to whom those du-
ties are owed, namely, the public, the clients of a professional, and
the profession. The specific mention of one’s “duty to discharge his
professional obligations with integrity” is obviously an example of
a general duty. As to the minimal requirements, groups 3 and 4
seem to relate mainly to the clients’ protection, while group 2 con-
cerns both the public and the profession. Group 1 would appear
applicable to all classes of duties; its main object is to require that
codes determine exhaustively which acts are to be treated as de-
rogatory to the dignity of the profession, so that the meaning of
that phrase may be reasonably defined.

a) The inherent generality

Codes of professional ethics do not easily lend themselves to
the formulation of cut and dried rules for specific situations.
Rather than to define a solution for every conceivable difficulty in
neat legal terms, their aim is to provide moral guidance for broad
categories of situations. It should be kept in mind that codes of
professional ethics are basically ideological statements made in the
sometimes technical context of a particular professional practice.’5 ‘
For this reason, it is often impossible for the draftsmen of such a
code to be very specific. They must rely on broad general prescrip-
tions of conduct.

One example of this type of provision is section 52A(24) of the
Regulation of the College of Physicians and Surgeons: “The physi-
cian must refrain from omissions, procedures or acts unsuitable
or contrary to current medical science”. 152 The validity of an earlier
version of that provision was challenged in evocation proceedings
brought under the pre-1973 legislation.153 The applicant contended
that under the pretence of regulating the conduct of physicians, an
unfettered discretion to define the elements of an offence had
been delegated to the disciplinary bodies of the corporation. The

151 Cf. Dussault & O’Neil, La ddontologie professionnelle au Qudbec (1977),

40-45, 157-161.

152 This provision was adopted under the Medical Act before 1973: see Q.S.R.
1972, 9-101. It was continued in force by s. 262 of the Professional Code, and
subsequently by successive orders-in-council, the latest extending its validity
to July 1, 1979: O.C. 3610-78 (1978) Gazette officielle du Qu6bec, Lois et r~gle-
ments 6695.

153 Bdchard v. Roy, supra, note 18.

19781

THE PROFESSIONS TRIBUNAL

Court of Appeal, affirming the judgment of the Superior Court,
held that the general wording of the section did not affect its
validity. The essentially moral character of the duties laid down in
a code of professional ethics, as well as the need to conform to the
changing conditions of professional practice, required the for-
mulation of broad principles rather than specific rules.

Interestingly, the Professions Tribunal has had the opportunity
to rule on the standard of evidence required to prove that a parti-
cular omission, procedure or act was “unsuitable or contrary to
current medical science”. It read that phrase as referring to the
common stock of knowledge of physicians. Accordingly, the plain-
tiff had to prove violation of a scientific standard acknowledged
by all in the profession. A single testimony could not achieve that
proof.154

The need for such general statements of principle had been over-
looked in section 85 of the Professional Code as it was originally
passed by the National Assembly. At that time, the introductory
paragraph merely stated the -duty of each corporation to adopt a
code of ethics. When corporations began submitting draft codes to
the Board for approval by the Lieutenant Governor in Council, it
was realized that the delegation of regulation-making authority
effected by section 85 could not support a formulation of the codes
in general terms, uncertain in their meaning, and indefinite in their
application. On the contrary, the first paragraph of the section
contemplated a specific listing of prohibited acts. 155 This obstacle
in the path of disciplinary rule-making could only be removed by
an amendment expressly providing for the enunciation of general, as
well as special, duties.

An examination of codes of ethics recently approved by the
Lieutenant Governor in Council shows that the corporations and the
Board have attempted to be as specific as possible. Provisions which
impose on professionals the general duties of objectivity, modera-
tion, dignity, integrity, availability, diligence, discretion, or a duty
to act in accordance with current piofessional or scientific stan-
dards, are usually completed by more specific provisions setting
out situations in which the particular duty applies. In some cases,
the statement of principle is immediately followed by a non-limi-
tative list of illustrations.’5

154 Tribunal-Mddecins-2, supra, note 114.
155 Borgeat, supra, note 91, 10-11.
156 See, e.g., the “integrity” provision in the code of ethics of the Bar,

supra, note 72, s. 3.02.01.

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b) Classification of duties

By the time an amendment to section 85 of the Professional
Code became necessary to allow for the adoption of general ethical
standards, the Professions Board had begun to develop a model
code of ethics. The model was to be used to provide suggestions
and guidance to corporations engaged in the drafting of their codes,
and rested on the threefold classification of professional duties
(towards the public, the client, and the profession). This classifica-
tion thus became incorporated into the enlarged version of section
85.

The influence of the Board’s model code is quite obvious when
one compares recently approved codes of ethics. All are arranged
under the following headings with only minor variations.

i) Duties to the public

The greatest variations from one code to the other occur within
this part, since it sets out each profession’s commitment to parti-
cular social values. Thus, the advocates’ code emphasizes respect for
the law and the courts, the pharmacists’ code commits members to
the furtherance of public health, the town planners’ code underlines
the protection of land as a limited natural resource, and so on.

ii) Duties to the client
1. General provisions on the formation of the professional-client

relationship

2. Integrity
3. Availability and diligence
4. Liability
5. Independence and impartiality
6. Professional secrecy
7. Accessibility of records
8. Determination and payment of fees.

iii) Duties to the profession
1. Incompatible duties and responsibilities
2. Derogatory acts (although somewhat formally categorized as
violations of the duty to preserve the profession’s reputation, they
are obviously of vital concern to the professional’s clients and to
the public)

3. Relations with the corporation and colleagues
4. Contribution to the advancement’of the profession.

The item “derogatory acts” deserves further comment. Prior to
1973, the disciplinary bodies of several major corporations could

19781

THE PROFESSIONS TRIBUNAL

decide that a particular behaviour, not covered by any enactment,
was nevertheless “derogatory to the dignity of the profession” and
therefore punishable. Section 85, on the contrary, requires that the
list of such acts be determined in the code of ethics. Disciplinary
committees must base a finding of “derogatory act” on a specific
item in that list or on sections 56 to 58 of the Professional Code,
which declares certain acts to be derogatory. However, one excep-
tion has survived the reform of 1973 and appears at section 105 of
the Bar Act:15 7

In the absence of a provision of this act or a by-law applicable to a
particular case, the committee shall decide to the exclusion of any court,
in first instance:
(a)

if the act complained of is derogatory to the honour or dignity of
the Bar or prejudicial to the discipline of its members [.1

One can only wonder at the survival of this vestige of a period that
seems to have ended for all other professions. Fortunately, such
decisions of the committee on discipline of the Bar are subject to
appeal before the Professions Tribunal.158 As regards all other pro-
fessions, the Tribunal has made it quite clear that, in the absence
of any enactment declaring a particular behaviour to be derogatory,
committees have no power to characterize it as such and thereby
create offences not contemplated in the codes of ethics or other
regulations. 5 9

The development and implementation of a uniform model of
ethical rules for the professions has required a joint effort from.
the corporations and the Board to view the problems globally, and
thereby transcend the peculiar perspective and turn of mind of each
profession. Such an effort would have been inconceivable ten years
ago. The result attests to the effectiveness of the new regulatory
structure. It also provides a completely new textual basis for the
development of disciplinary law by the Professions Tribunal and
the committees on discipline.

2. Disciplinary penalties

The purpose of disciplinary penalties has been diversely inter-
preted. Some would say that, while the primary aim of the disci-
plinary process is to protect the public, disciplinary penalties should,
to the greatest possible extent, foster rehabilitation of the profes-

151 S.Q. 1966-67, c. 77, s. 105, as am. by S.Q. 1973, c. 44, s. 54.
‘ 58 Tribunal-Avocats-3, supra, note 98; Tribunal-Avocats-9 [1976] D.D.C.P. 150.
159 Tribunal-Psychologues-1 [1976] D.D.C.P. 229; Tribunal-Optomrtristes-2

[1976] D.D.C.P. 425.

McGILL LAW JOURNAL

[Vol. 24

sional. 16 The Castonguay-Nepveu Report ‘showed some agreement
with that point of view when it suggested that probation, with or
without refresher training, be added to the list of possible penal-
ties.’6 ‘ In addition, the liberal use of reprimands (the mildest of
penalties) by disciplinary committees certainly shows faith in the
educational value of the disciplinary process. However, the Pro-
fessions Tribunal still adheres to a more conventional view of dis-
ciplinary penalties as a punishment that serves to protect the
public and maintain the reputation of the profession.112

Whatever may be their primary aims, committees on discipline
have retained their pre-1973 discretion to choose from the list of
available penalties according to what seems fair, appropriate, and
commensurate with the seriousness of the offence. Within the list,
there is no minimum or maximum penalty prescribed for any parti-
cular offence.’ 6a The committee must, however, impose some penalty
when it has made a finding of guilt. Where guilt is found on several
counts, a separate penalty should normally be imposed for each. 04
Committees have occasionally imposed a given penalty with the
intention of setting an example. To be effective as a general de-
terrent, this requires publicizing the sentence within the profession;
the minimum exemplary penalty would be revoking the respondent’s
permit or striking him from the roll temporarily. Lesser penalties
would not be reported to members of the corporation. 60 The com-
mittee’s desire to impose an exemplary penalty may be influenced
by the fact that the offence was repeated, or by the danger to the
public.’66 The committee should not, however, try to make the case
an example for society as a whole, as a criminal court might do;
the exemplary effect should be aimed at the members of the pro-
fession only.1 7 Nor should the committee feel bound to impose
an exemplary penalty because a criminal court judging the same
facts imposed an exemplary sentence. 6 Finally, the committee
ought to take into account extenuating circumstances, such as good
faith or the fact that the offensive behaviour had no direct repercus-

‘6 0 Dussault & O’Neil, supra, note 151, 264.
1-1 Supra, note 2, Recommendation 7.I.41.
162 Tribunal-Avocats-9 [1977] D.D.C.P. 345.
1463 Comitd-Arpenteurs-gdomktres-2 [1975] D.D.C.P. 2.
104 Tribunal-Notaires-1, supra, note 100; Tribunal-Mdecins4, supra, note 100.
165 Professional Code, s. 174.
166 Comitd-Inggnieurs-2 [1975] D.D.C.P. 24.
167 F. v. Comitg de discipline des mddecins, Professions Tribunal no. 02-

046 060-773, May 30, 1978.

168 Ibid. See also Tribunal-Pharmaciens-5 [1977] D.D.C.P. 165.

19781

THE PROFESSIONS TRIBUNAL

sions on actual practice. 1 9 Generally (allowance being made for the
very broad discretion conferred by section 153 as to the choice of
penalty), it seems fair to say that the disciplinary tribunals have
approached the problem of sanctions very much in the spirit of
the criminal law.

B. Relationship to other branches of law

Some of the general affinities between disciplinary law and civil
or criminal law have already been described. 170 The relationship
between those various branches of the law may also be considered
on a more specific level, that is, in situations where certain beha-
viour of a professional simultaneously or successively becomes the
subject -of process before a disciplinary
tribunal and before a
criminal or civil court or an administrative tribunal.

1. The criminal process

One example of conflict between the disciplinary process and
the criminal process may occur when, at the time disciplinary pro-
ceedings are being initiated, the behaviour complained of has al-
ready been the subject of a final judgment by a criminal court.
If a criminal court has found the respondent guilty of an indictable
offence triable by indictment only, section 152 of the Professional
Code requires the syndic to refer the decision of that court to the
committee on discipline, by means of a complaint. The -decision it-
self is conclusive proof of guilt for disciplinary purposes; the com-
mittee has no discretion to examine the facts on which the conviction
is based so as to dismiss the complaint if it considers those facts
irrelevant from the standpoint of professional ethics.’ 7′

Following this automatic finding of guilt, the committee “may”
then impose one or more of the penalties provided by section 153.
The Professions Tribunal has ruled that the committee has no dis-
cretion, however, not to impose – any penalty; it must impose a
penalty, since the word “may” is to be construed as imperative when

109 Tribuna-Mjdecins4 [1976] D.D.C.P. 160; Tribunal-Pharmaciens-1, supra,

note 132; Tribunal-Mgdecins-18 [1976] D.D.C.P. 415.

170 Supra, Part II and the first section of Part III.
171 Conmitg-Mgdecins-16 [1975] D.D.C.P. 204; Comitg-Mddecins-19 [1975] D.D.
C.P. 211; Tribunal-Mgdecins-6 [1976] D.D.C.P. 164. Committees assumed dis-
cretion to reject the complaint as irrelevant in Comitg-Mgdecins-3 [1975]
D.D.C.P. 42; Comitd-Mgdecins-8 [1976] D.D.C.P. 46; Comitg-Conseillers d’orien-
tation-1 [1976] D.D.C.P. 313.

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[Vol. 24

used to confer jurisdiction on a judicial body.” 2 The Tribunal
pointed out that section 109 of the Bar Act’ 73 is almost identical to
section 152 of the Professional Code, with the added words “may, if
it deems it proper”, which, in the Tribunal’s opinion, are necessary
to restore the usual permissive meaning of “may”. It might be
argued, however, that when “may” is used to confer on a judicial
body the power to impose a penalty, its meaning is permissive.174
If the requirements of section 152 are not met, the plaintiff will
not have the benefit of the automatic finding of guilt. He must
comply with the usual standard of evidence and establish before
the committee a violation of the Professional Code or of the pro-
fession’s statute or regulations.” 5

If the respondent in disciplinary proceedings has been acquitted
of criminal charges based on the same facts as the disciplinary
complaint, he cannot plead autrefois acquit before the committee,
since both processes are completely distinct and pursue different
ends. 176 The same principle leads to the conclusion that both pro-
cesses may be carried out simultaneously. There is no need for a
suspension of disciplinary proceedings while a case based on the
same facts is pending before a criminal court.17

7

2. The civil process

The autonomy of the disciplinary process has been emphasized
just as forcefully in relation to the civil process. The Tribunal,
relying on old case law, has refused to suspend disciplinary pro-
ceedings in cases where civil proceedings based on the same facts
are pending. Since each process has a different subject matter and
leads to different conclusions, the judgments to be delivered cannot
contradict each other.1 8 It follows that, just as cases on tort -liability
cannot assist in the interpretation of codes of ethics, a finding of
guilt by a disciplinary committee has no bearing on the determina-
tion of the respondent’s civil liability.

172 Tribunal-Mdecins.6, supra, note 171.
173 S.Q. 1966-67, c. 77.
17 See Pigeon, Rddaction et interprdtation des lois 2d ed. (1978), 31; McHugh

v. Union Bank (1913) 10 D.L.R. 562 (P.C.).

supra, note 96; Lambert v. Lippens, supra, note 101.

175 Comitd-Avocats-4 [1976] D.D.C.P. 285.
176 Dussault v. Barreau de Montrdal (1926) 64 C.S. 395; Lemieux v. Lippens,
177 Tremblay v. Bernier (1893) 21 S.C.R. 409; Comitd-Avocats-17, supra, note
113; Tribunal-Avocats-3, supra, note 98; Comitd-Conseillers d’orientation-1,
supra, note 171; Byer v. Barreau du Qudbec, supra, note 122.

17SVidal v. Bureau de Qudbec (1905) 27 C.S. 115; Tribunal-Comptables

agrdds-2 [1975] D.D.C.P. 307; Tribunal-Pharmaciens-3 [1976] D.D.C.P. 431.

1978]

THE PROFESSIONS TRIBUNAL

3. The administrative process

The involvement of the State in the provision of professional
services (such as health insurance or legal aid) and the employment
of many professionals in the public service have brought profes-
sional misconduct within the scope of administrative law. For in-
stance, a physician summarily convicted of having fraudulently
claimed remuneration from the Quebec Health Insurance Board may
become subject to disciplinary proceedings based on the same
facts. Such a conviction cannot, however, be treated as conclusive
proof of guilt under section 152 of the Professional Code, and the
plaintiff will have the burden of proving guilt before the com-
mittee.17

Similarly, purely administrative sanctions may be imposed on
a professional in addition to disciplinary penalties. For example,
where the board of directors of a health or social services establish-
ment refuses, on the basis of misconduct or negligence, to reappoint
or reinstate a physician or dentist to the medical council of the
establishment, or dismisses him from that council, such sanctions
cannot prevent disciplinary proceedings from being taken against
him on the same basis. 80

There is no doubt that professionals who belong to the public
service may be subject to disciplinary sanctions under the general
statutes governing employment in the public service.’ 8
1 At the same
time, it would seem that professionals who belong to the public ser-
vice and whose behaviour gives rise to a complaint under the
Professional Code would not be protected from the application of
the legislation on professions by the rule that the Crown is not
bound by a statute unless it is expressly mentioned. 82 Once again,
the disciplinary process appears to stand in a position of autonomy
in respect to the administrative process.

171 Tribunal-Mgdecins-4 [1975] D.D.C.P. 311.
180An Act respecting health services and social services, S.Q. 1971, c. 48,
ss. 92a and 92b, as enacted by S.Q. 1974, c. 42, s. 48; Comnitg-Mgdecins-15
[1976] D.D.C.P. 325.

181 For federal public servants, see Garant, La fonction publique canadien-
ne et qudbdcoise (1973), 303-23; for Quebec, see Loi sur la fonction publique,
(1978) Bill 50, 3d Sess., 31st Leg. (Que.), ss. 93-99 and the Regulation respecting
ethics and discipline in the civil service, O.C. 2208-74, Reg. 74-317
(1974)
Qudbec Official Gazette 3131.
182 Dussault & Pelletier, Le professionnel-fonctionnaire face aux mdcanis-
ines d’inspection professionnelle et de discipline instituds par le Code des
professions (1977) 37 R. du B. 2, 9-19.

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[Vol. 24

IV. CONCLUSION

The whole reform of professional organization undertaken in
1973 has been shaped by two opposing trends. One trend, emphasiz-
ing government responsibility and the need for public participation,
favours the introduction of public law elements into the regulatory
structure and standards of the professions. The other trend prefers
continued autonomy for professional organizations and the body of
law that applies to them.

The case for stronger public law features in the regulation of
professions rested on a number of concerns. The increasing involve-
ment of the community in what had been a purely bilateral and in-
dividual relationship between the professional and his client called
for institutional recognition through some form of participation by
the public and its representatives in the regulation of professional
activity. A new philosophy of professional organization was emerg-
ing, emphasizing the protection of the public rather than the pro-
motion of sectional interests. Finally, it became increasingly clear
that a measure of direct State involvement and the establishment
of close links between the Government and the existing organiza-
tions were the surest ways to rationalize the existing institutions in
the professional field. All these ideas were expressed in the Caston-
guay-Nepveu Report and served as inspiration for the draftsmen of
the Professional Code.

At the same time, the specific character of professional organiza-
tions, especially with respect to the control of ethical conduct among
members of the professions, was recognized as legitimate. It was
readily acknowledged that an increased subjection of professional
corporations to public law should not lead to the elimination of that
specific character. The autonomy of corporations might be reduced,
but not to the point where their disciplinary law would cease to
exist as a distinct branch of the legal system.

Ultimately, the most valuable concepts derived from the public
law character of professional organization –
a unified source of
policy, a code of standard procedures for all professions, a cen-
tralized appeal structure –
combine to reinforce the unique charac-
ter of the disciplinary law of professions. The Professional Code
has given that branch of our legal system a definite legislative frame-
work with a set of stable institutions and a capacity for orderly
growth.