1995]
R. WISNER – HUNT V T & N
Uniformity, Diversity and Provincial
Extraterritoriality: Hunt v. T&N plc
Robert Wisner*
The Supreme Court of Canada’s decision in
Hunt v. T&Nplc represents a milestone for both pri-
vate international law and federalism. The decision
confirms that the principles governing recognition
and enforcement of foreign judgments, enunciated
by the Court in De Savoye v. Morguard Investments
Ltd., are constitutional imperatives that are binding
on the provinces. In Hunt, the Supreme Court has
also rewritten the rules on the extraterritorial effects
of provincial legislation. These effects will now be
assessed according to principles of comity, order and
fairness instead of by means of an inquiry into
whether the pith and substance of a statute relates to
matters outside the province. The author argues that
the principle of comity is too indeterminate to pro-
vide a sound basis for constitutional review of pro-
vincial legislation, and that the principle reflects an
excessively centralizing view of the Canadian eco-
nomic union. A “minimal impairment” test, largely
implicit in the earlier case law, would strike a better
balance between the need for uniformity and the
benefits of diversity.
rtgissant
la
reconnaissance
L’arrt Hunt c. T&Nplc de Ia Cour supreme du
Canada constitue une borne pour le droit internatio-
nal privd et le f&ldralisme. Cet arrt d~montre que
les principes
et
l’ex6cution des jugements dtrangers, 6noncds par ]a
Cour dans l’arrt De Savoye c. Morguard Invest-
ments Ltd., sont des normes constitutionnelles que
les provinces doivent respecter. De plus, l’arret nous
prsente une nouvelle approche A l’examen de ]a
constitutionnalit6 d’une loi provinciale ayant des ef-
fets dans une autre province. Ces effets seront dord-
navant considdrds selon des normes de courtoisie,
d’ordre et d’6quit6. Si une loi ne les respecte pas, il
ne sera plus ndcessaire d’examiner si elle est in-
constitutionnelle parce que son caract~re vitable se
rapporte ii une mati~re ne faisant pas partie des com-
pttences de la province. Selon l’auteur, cette appro-
che est trop vague et reprsente une vision trop cen-
tralisatrice de Ia Constitution. Une analyse de ]a
risprudence anttrieure, aurait dtabli un meilleur
6quilibre entre le besoin d’uniformit6 et les bentfices
de la diversit6.
“M.A., LL.B. Student-at-law, McMillan Binch, Toronto, Ont. The helpful advice of Professor Rob-
ert Howse and the financial support of the J.S.D. Tory Foundation are gratefully acknowledged. The
opinions expressed herein are solely those of the author.
McGill Law Journal 1995
Revue de droit de McGill
To be cited as: (1995) 40 McGill L.J. 759
Mode de rf6rence: (1995) 40 R.D. McGill 759
MCGILL LAW JOURNAL/REVUE DE DROITDE MCGILL
[Vol. 40
Synopsis
Introduction
L Hunt v. T&Nplc: An Overview
A. The Facts
B. Jurisdiction and Constitutional Challenges
C. A New Approach to Provincial Extraterritoriality
H. Order, Fairness and the Economic Union
A. The Tragedy of Comity
B. The Economic Union Re-examined
C. Reconciling Uniformity with Diversity: The Minimal Impainnent Test
III. The Legal Basis for Minimal Impairment
A. The Traditional Interpretation of Territorial Limits
B. Minimal Imnpairnent, Federalism and International Law
C. An Application to Hunt v. T&N plc
Conclusion
1995]
Introduction
R. WISNER – HUNT V T & N
A central task of Canadian constitutional law is to balance respect for diversity
with the need to vindicate common values and capture the benefits of mutual coop-
eration.’ Beginning with the case of De Savoye v. Morguard Investments Ltd.,2 the
Supreme Court of Canada has recognized that private international law shares these
ambitions. The case of Hunt v. T&Nplc, in which the Court has rewritten the rules
on the extraterritorial effects of provincial legislation, represents a further transfor-
mation of Canadian conflict of laws rules.
Morguard has been the subject of extensive academic commentary 4 and has been
described as “by a wide margin, the most important decision on the conflict of laws
ever rendered by the Supreme Court of Canada.”‘ As will be discussed in Part I, Hunt
reveals that this attention is fully deserved and that Morguard’s impact cannot be
overestimated. Morguard established that provincial courts should give “full faith and
credit” to the judgments of sister provinces’ courts, provided that the latter’s initial
jurisdiction was properly exercised. Hunt confirms this rule as a principle of
constitutional law which is binding on provincial legislatures, and not merely an
interpretation of private international law.
6
Technically, the holding in Morguard applied only to the rules for recognition and
enforcement of foreign judgments. However, many commentators realized that Justice
La Forest’s obiter dictum dealing with the proper limits of adjudicative jurisdiction,
was equally important. In Hunt, La Forest J., again writing for a unanimous Court,
revealed that Morguard also had a third dimension. This dimension involves a new
approach to the territorial limitations on provincial powers as set out in section 92 of
the Constitution Act, 1867.7 The effects of provincial statutes on extraprovincial
litigation will now be reviewed according to principles of comity, order and fairness.
Prior to Morguard and Hunt, the traditional approach to territorial limits, as illustrated
by Churchill Falls (Labrador) Corp. v. Newfoundland, was to determine whether the
‘See e.g. C. Taylor, “Shared and Divergent Values” in R.L. Watts & D.M. Brown, eds., Options for
a New Canada (Toronto: University of Toronto Press, 1991) 53.
2 [1990] 3 S.C.R. 1077,76 D.L.R. (4th) 256 [hereinafter Morguard cited to S.C.R.].
[1993] 4 S.C.R. 289, 109 D.L.R. (4th) 16 [hereinafter Hunt cited to S.C.R.].
See “Symposium: Recognition of Extraprovincial and- Foreign Judgments: The Implications of
Moitguard Investments Ltd. v. De Savoye” (1993) 22 Can. Bus. LJ. 1 [hereinafter “Symposium”]; J.
Blom, Case Comment (1991) 70 Can. Bar Rev. 733; P. Finkle & S. Coakeley, “Morguard Investments
Limited: Reforming Federalism from the Top” (1991) 14 Dalhousie LJ. 340; V. Black & J. Swan,
“New Rules for the Enforcement of Foreign Judgements: Morguard Investments LtL v. De Savoye”
(1991) 12 Advocates’ Q. 489; H.P Glenn, “Foreign Judgements, the Common Law and the Constitu-
tion: De Savoye v. Morguard Investments Ltd’ (1992) 37 McGill LJ. 537
J. Ziegel, “Introduction” in “Symposium”, ibid, 2.
6 V. Black, “The Other Side of Morguard: New Limits on Judicial Jurisdiction” in “Symposium”,
supra note 4, 5 at 6.
(U.K.), 30 & 31 Vict., c. 3.
[1984] 1 S.C.R. 297, 8 D.L.R. (4th) I [hereinafter Churchill Falls cited to S.C.R.].
MCGILL LAW JOURNAL! REVUE DE DRO1TDE McGILL
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pith and substance of a statute related to matters outside the province.
The case law dealing with the territorial limits on provincial powers has been
criticized as inherently inconsistent and unpredictable. 9 Commentators who share this
view are likely to welcome the extension of the principle of comity to certain forms of
provincial legislation with extraterritorial effects. In Part II, it will be argued that such a
reaction would be misguided. The principle of comity is too broad and indeterminate to
provide a sound basis for constitutional review of provincial legislation. Careful
consideration of the values of economic union to which La Forest J. appealed in Hunt
suggests that a minimal impairment test would provide a better method of addressing
problems of provincial extraterritoriality.
The nature of the proposed minimal impairment test will be examined in Part III.
Support for this test can be found most notably in the Churchill Falls decision as well
as in other recent Supreme Court cases dealing with federalism and international trade
law. It is argued that use of the minimal impairment test in Hunt would have led to a
similar result, but would have provided clearer guidance for future cases. By relying on
its decision in Morguard, the Supreme Court in Hunt needlessly overextended the role
of comity and cast doubt upon the relevance of Churchill Falls.
I. Hunt v. T&Npl: An Overview
A. The Facts
The issue in Hunt arose out of an action brought by the appellant and a number of
other plaintiffs, all residents of British Columbia, against certain Quebec companies
involved in the manufacturing and distribution of asbestos products. The plaintiffs,
who developed cancer as a result of the inhalation of asbestos fibres, alleged that the
defendants negligently manufactured the products, failed in their duty to warn and
conspired to hide from the public the dangers of asbestos.’0
After having successfully resisted a challenge to the jurisdiction of the British
Columbia Supreme Court, the appellant served a notice of examination for discovery
on the Quebec respondents.” This demand was resisted on the grounds that it would
have violated the provisions of the Quebec Business Concerns Records Act,” a
“blocking statute” which prohibited the removal from the province of business
documents requested for purposes of litigation. The Quebec courts had made several
9 Black, supra note 6 at 17-18.
“0 Hunt, supra note 3 at 297. The nature of asbestos production and distribution is such that most
cases of asbestos-related litigation will involve geographically complex facts. Indeed, the Supreme
Court of Canada’s previous pronouncement on conflict of laws also arose out of an asbestos product
liability claim (Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), [1993] 1
S.C.R. 897, 102 D.L.R. (4th) 96 [hereinafterAmchemn cited to S.C.R.]).
“Hunt, ibid. at 298.
2 R.S.Q. c. D-12 [hereinafter Act].
1995]
R. WISNER – HU V T & N
orders requiring the respondents to comply with the statute. 3 The respondents claimed
that these orders provided a lawful excuse for not complying with the demand for
discovery pursuant to the British Columbia Rules of Court. The appellant countered
this claim by arguing that the Act was either ultra vires the National Assembly of
in another
Quebec or was constitutionally
province.’4
inapplicable to judicial proceedings
There is a certain irony to the extraterritorial impact of the Quebec Act on the
British Columbia litigation. The Act was originally intended as a defence to the
extraterritorial reach of American antitrust legislation’5 which has frequently been
applied to alleged foreign cartels, including those of Canadian origin.” Even though
the consequences of this aggressive unilateralism continue to concern policy makers,’ 7
one cannot but suspect that the purpose of the Act has shifted to the protection of
Quebec manufacturers from product liability claims. This supposition stems from the
fact that federal measures now address the original extraterritoriality problem more
effectively than do provincial blocking statutes.” The federal legislation is not
mentioned in the Supreme Court’s judgment, but it may nonetheless have influenced
the final result.
B. Jurisdiction and Constitutional Challenges
Before considering the constitutionality of the Quebec statute, the Supreme Court
had to dispose of the argument that British Columbia courts did not have jurisdictionto
make such a determination and, consequently, that this latter issue was not open for
consideration on appeal. Both British Columbia courts had ruled that they did not have
jurisdiction.’ 9 This ruling was partly due to practical concerns relating to the manner in
which the Attorney General of Quebec could be notified and to his ability to present
evidence.20 However, it was also based upon more principled reasons such as the
interpretation of the doctrine of comity. The British Columbia Supreme Court held that
comity prevented it from ordering the circumvention of Quebec law, and the Court of
Appeal found that Morguard supported this determination. 2′ Although the Court of
Appeal declared that comity did not extend to enactments designed to intrude into the
legislative field of other provinces, it held that the Quebec Act was intra vires the
the Act’s
province’s power. Applying Churchill Falls, the court ruled
that
1″ Hunt, supra note 3 at 298.
‘4 Ibid. at 296.
,” Ibid. at 304.
‘6 See e.g. hz Re Uranium Antitrust Litigation, 473 R Supp. 382 (N.D. Ill. 1979) and 480 F Supp.
1138 (N.D. 111. 1980).
” See Investment Canada, Extraterritoriality in the 1990s (Working Paper No. 15) by G. Tereposky
(Ottawa: Investment Research and Policy Division of Investment Canada, June 1993).
Foreign Extraterritorial Measures Act, R.S.C. 1985, c. F-29.
,9Hunt, supra note 3 at 299-302.
‘ Ibid.
21 Ibid.
MCGILL LAW JOURNAL/REVUE DE DROIT DE MCGILL
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extraterritorial effect was merely incidental.22
Justice La Forest presented two responses to these concerns. First, he noted that
under common law conflict rules, the determination of the content of foreign law is a
question of fact. There was thus no reason to exclude the issue of constitutional validity
from such fact finding. 2 Given that the Act had never been challenged in Quebec, the
British Columbia courts were free to conclude that the legislation was ultra vires the
National Assembly.
This first response to the defendants’ jurisdictional challenge
is somewhat
problematic. At the very least, the doctrine of comity would seem to require a
presumption of validity of foreign law that could only be rebutted by substantial
evidence to the contrary. Furthermore, if an incorrect finding of constitutional
invalidity were made as a finding of fact by the British Columbia Supreme Court, it
would presumably not be a ground for appeal. This could give rise to a scenario where,
following a declaration of the Act’s validity by Quebec courts, the Quebec defendant
would be obliged to violate either the law of Quebec or that of British Columbia, and
the Supreme Court would be unable to harmonize the law by overturning the British
Columbia court’s verdict.
Justice La Forest’s second response is more persuasive and indicates that such an
unpleasant scenario need not arise. He observed that, in determining the validity of the
Act, the British Columbia courts would be addressing an issue of Canadian
constitutional law, which could hardly be considered local foreign law. He remarked
that “[a]ll judges within the Canadian judicial structure must be taken to be competent
to interpret their own Constitution. 24 Given that constitutional challenges frequently
arise in the course of “normal” litigation, Morguard’s principles of order and fairness
obviate the requirement that plaintiffs pursue their action in the defendant’s province. ”
Despite the potentially far-reaching impact of constitutional rulings, La Forest J.
concluded that the test for assuming jurisdiction in constitutional challenges was the
same as in any other case with geographically complex facts. Given that the British
Columbia courts had correctly dismissed an earlier challenge to their jurisdiction, they
should not have reversed that decision simply because a constitutional issue had
arisen. 2 La Forest J. dismissed without much discussion the question whether the
British Columbia courts, having validly established their jurisdiction, should have
exercised their discretion under the doctrine of forum non conveniens and declined
jurisdiction. 27 This conclusion is not surprising in light of the Supreme Court’s holding
in Amnchem that “the existence of a more appropriate forum must be clearly established
22 Ibid.
2′ Ibid at 309.
4 Ibid. at 314.
2-‘Ibid. at 313.
6 Ibid. at 316.
2
27 Ibid.
19951
to displace the forum selected by the plaintiff.”2′
R. WISNER – HuNT v T & N
La Forest J. made one final point regarding the defendants’ jurisdictional
challenge. In obiter dictum, he noted that even if the British Columbia courts did not
have jurisdiction to address the constitutional issue, the Supreme Court of Canada did
have such jurisdiction. This power stemmed from precedents which held that the Court
may take judicial notice of any provincial law, and that it can exercise a “unifying
jurisdiction” over the provincial courts.29
C. A New Approach to Provincial Extraterritoriality
Hunt would still be a noteworthy decision even if it had only established that
provincial courts have jurisdiction to consider constitutional challenges
the
legislation of sister provinces. However, the most innovative aspect of Hunt concerns
the substantive constitutional issue itself rather than the jurisdictional one. The standard
of review for provincial extraterritoriality in Hunt is completely different from that
adopted in earlier cases.
to
The significance of Hunt can only be understood in light of the pre-Morguard
approach to provincial extraterritoriality. As La Forest J. explained,
issues about the extent to which a province may give extraterritorial effect to
legislation … have traditionally been considered in the context of the limitation
in every head of provincial power to legislation “in the province”
For example, in the present case, the Attorney General of Quebec sought to justify the
Business Concerns Records Act under the provincial property and civil rights power in
section 92(13) of the Constitution Act, 1867. However, the words “in the Province’
limit the scope of this section. In assessing the impact of this limitation, the traditional
approach entails determining the legislation’s “pith and substance”.- This test was
discussed by McIntyre J. in Churchill Falls:
Where the pith and substance of the provincial enactment is in relation to mat-
ters which fall within the field of provincial legislative competence, incidental
or consequential effects on extra-provincial rights will not render the enactment
ultra vires. Where, however, the pith and substance of the provincial enactment
is the derogation from or elimination of extra-provincial rights then, even if it is
cloaked in the proper constitutional form, it will be ultra vires. A colourable
attempt to preserve the appearance of constitutionality in order to conceal an
unconstitutional objective will not save the legislation. ‘
28 Amchemn, supra note 10 at 921.
‘ Hunt, supra note 3 at 317-19.
“Ibid. at 319.
3′ Churchill Falls, supra note 8 at 332.
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This quotation demonstrates that the traditional approach was concerned primarily with
the scope and content of the legislation in question, and not with the principle of
2
comity.’
It is important to emphasize, however, that Hunt does not overrule the traditional
test for the constitutionality of extraterritorial provincial legislation. La Forest J. did not
need to consider the “pith and substance” test since he found the impugned Act
constitutionally inapplicable on the grounds that it offended the principles enunciated
in Morguard.” The relevance of the traditional test is’ therefore limited to cases in
which these principles do not apply.
The remainder of La Forest J.’s judgment was devoted to fleshing out the scope of
the principles of Morguard and to applying them to the facts in Hunt. Morguard
involved an action for the recovery of the deficiency between the value of the land and
the amount owing on a mortgage that fell into default. The mortgage charged Alberta
land and was constituted between two Alberta residents. The debtor had moved to
British Columbia before the commencement of the action and had not attomed to
Alberta’s jurisdiction. This led to a default judgment against him.”‘ In holding that the
judgment should be recognized and enforced in British Columbia, the Supreme Court
of Canada explicitly rejected the restrictive traditional British common law rules”‘ and
replaced them with a requirement that
the courts in one province should give full faith and credit, to use the language
of the U.S. Constitution, to the judgments given by a court in another province
or a territory, so long as that court has properly, or appropriately, exercised ju-
risdiction in that action.’
The Court then went on to define the test for proper exercise of jurisdiction in terms of
a “real and substantial connection” as interpreted by Dickson J. in Moran v. Pyle
National (Canada) Ltd. 7
Justice La Forest’s critique of the traditional rules proceeded along two lines. First,
he pointed to changes in the world economy that made it increasingly necessary “to
facilitate the flow of wealth, skills and people across state lines in a fair and orderly
manner.”38 Second, adopting a theme from Aetna Financial Services Ltd. v.
Feigelbnan,”9 he argued that conflict rules needed to be adapted to the context of
Canadian federalism. 4
.,2 Application of the “pith and substance” test will be discussed more fully in Part III, below.
“Hunt, supra note 3 at 331.
Morguard, supra note 2 at 1083.
See Emanuel v. Symon, [1908] 1 K.B. 302,77 W. K.B. 180 (C.A.).
“Morguard, supra note 2 at 1102.
“(1974), [1975] 1 S.C.R. 393,43 D.L.R. (3d) 239 [hereinafter Moran cited to S.C.R.].
“Morguard, supra note 2 at 1096.
‘9 [1985] 1 S.C.R. 2, 15 D.L.R. (4th) 161.
40 Morguard, supra note 2 at 1099.
1995]
R. WISNER – HUNT V T & N
Morguard, however, was not argued on constitutional grounds and La Forest J.
considered it sufficient to base the requirement of “full, faith and credit” on principles
of comity.4’ Some commentators viewed this as an indication that the case merely
reinterpreted the common law and therefore did not bind the provinces. For example,
Woods argued that since Quebec’s conflict rules were not consistent with the holding in
Mo guard, it was unlikely that the Court could have intended Morguard to bind the
province.4 ‘ He based this view on the absence of any reference to sections 92(13) and
92(14) of the Constitution Act, 1867 in the decision. 3
It is now clear that this interpretation of Morguard’s constitutional dimensions is
mistaken: “[Tihe constitutional considerations raised [in Morguard] are just that. They
are constitutional imperatives, and as such apply to provincial legislatures as well as to
the courts.””4 Woods’ misperception, however, is understandable. After all, the words
“full faith and credit” appear in the United States’ Constitution, not in Canada’s.
Furthermore, Morguard dealt more explicitly with private international law than with
constitutional law. Yet, the Supreme Court was not content to give the Constitution
Acts a narrow, literal interpretation. Instead, it read the Constitution as a whole and
found that a “full faith and credit” clause followed inevitably from the following four
considerations: (1) a common citizenship; (2) the interprovincial mobility rights in
section 6 of the Canadian Charter of Rights and Freedoms;45 (3) the various provisions
of the Constitution Act, 1867 creating a common market, namely section 121
(removing barriers to interprovincial trade), section 91(2) (federal power over trade
the national concern branch of the Peace, Order and Good
and commerce),
Government clause,4″ and the combined effect of sections 91(29) and 92(10)
(interprovincial works and undertakings); and (4) the essentially unitary structure of
the judicial system.47
These constitutional considerations give the federal government the power to
legislate with respect to recognition and enforcement of judgments without removing
all such power from the provinces.4′ Rather, these considerations require that the
exercise of provincial power be consistent with “the minimum standards of order and
fairness addressed in Morguard.”49 Thus, provincial rules permitting service exjuris are
Ibid at 1100-101.
12J.A. Woods, “Recognition and Enforcement of Judgments between Provinces: The Constitutional
Dimensions of Morguard Investments Ltd.” in “Symposium”, supra note 4, 104 at 116.
41 Ibid. at 120.
‘ Hunt, supra note 3 at 324.
45 Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c.
11. Inter-provincial mobility rights were considered in Black v. Law Society of Alberta, [1989] 1
S.C.R. 591,58 D.L.R. (4th) 317.
” R. v. Crown Zellerbach Canada Ltd., [1988] 1 S.C.R. 401, [1988] 3 W.W.R. 385 [hereinafter
Crown Zellerbach].
47 Hunt, supra note 3 at 322; Morguard, supra note 2 at 1099.
4
1 Hunt, ibid. at 324.
49 Ibid.
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presumably still valid, provided that they are only applied in cases which have a “real
and substantial connection” to the forum.
While these clarifications of the constitutional dimensions of Morguard are
helpful, their relationship to the basic issue in Hunt, the validity of the impugned
Quebec Act, is not obvious. On its face, the Act says nothing about recognition and
enforcement of judgments, nor does it deal with the jurisdiction of Quebec courts.
However, the Act does have the effect of impeding litigation in sister provinces. This is
its only connection to the issue of recognition and enforcement, but, according to
Justice La Forest, it is a connection sufficient to render the Act constitutionally
inapplicable to proceedings outside of the province of Quebec. He characterizes the Act
as denying effect to orders in other provinces by means of a “preemptive strike” which
makes compliance impossible. 0 The disruption of litigation in other provinces is both
the Act’s “essential effect” and its “barely shielded intent”.5’ Consequently, the Act is a
violation of comity that offends the basic structure of the Canadian federation. 2
This interpretation of Morguard is strikingly broad. It begins with a requirement of
comity that is merely implicit in the Constitution, and extends the requirement from the
issue of recognition and enforcement of judgments to apply to any provincial
legislative measure with an extraterritorial impact on litigation. Hunt does not seem to
restrict the application of Morguard’s principles to statutes that impede discovery or
other rules of procedure. Nor does the judgment require that a statute completely
obstruct foreign litigation for it to be declared invalid. As the trial judge had noted,
discovery, while significant, is “considerably less vital to civil actions than the ability to
compel evidence at trial.”53
The Supreme Court has therefore created a leading role for Morguard’s principles
in cases of provincial legislation with extraterritorial effects. The broader “in the
province” limitation as interpreted in Churchill Falls, will still be relevant in many
cases. When the impugned statute can be characterized as impeding extraprovincial
litigation, however, this test will be unnecessary since a violation of comity
requirements will be more readily discovered. Whether or not this expanded role for
Morguard is appropriate remains to be determined.
II. Order, Fairness and the Economic Union
The central task of both constitutional and private international law is, as Justice La
Forest observed, to find “a workable balance between diversity and uniformity.”‘ 4 In
seeking to strike this balance, the Supreme Court relied on the doctrine of comity.
Unfortunately, as will be discussed below, this reliance has become excessiv6. Comity
0 Ibid. at 327.
“, Ibid. at 330.
52 Ibid. at 327.
51 Ibid. at 300.
” Ibid. at 296.
1995]
R. WISNER – HUNT V T & N
is too vague and indeterminate a concept to evaluate the validity of provincial
legislation which impacts upon litigation in other provinces. The idea of comity must
be related to the fundamental values of the Canadian economic union. It will also be
argued that the Court’s vision of the economic union is excessively centralizing.
Finally, an alternative method of balancing uniformity with diversity will be examined.
A. The Tragedy of Comity
In Hunt, La Forest J., adopting a theme from Morguard, castigated traditional
common law conflict rules as
rooted in an outmoded conception of the world that emphasized sovereignty
and independence, often at the cost of unfairness. Greater comity is required in
our modem era when international transactions involve a constant flow of
products, wealth and people across the globe.5
This vision of the transformation of the world economy is consistent with fashionable
media claims of globalization, but is at odds with historical reality. International trade
accounted for a greater share of the United Kingdom’s gross national product in 1908
(the year Emanuel v. Syrnon was decided) than it did in 1980.56 In quantitative terms,
the indisputable changes in communications and transportation technology have been
less instrumental in increasing flows of goods, capital and labour than were the
invention of the steamship and the telegraph, as well as the settlement of the Canadian
prairies.
The fact that the transformation of the global economy since the nineteenth century
has not been as dramatic as the Supreme Court suggests means only that greater comity
is not a necessity. It does not mean that greater comity is not desirable. Comity would
still be desirable if it could provide guidance to courts grappling with the problems of
when to choose foreign law, to recognize and enforce foreign judgments or to
invalidate laws with extraterritorial effects.
In Morguard, La Forest J. adopted the following formulation of the idea of comity,
articulated by the United States Supreme Court in Hilton v. Guyot:
‘Comity’ in the legal sense, is neither a matter of absolute obligation, on the
one hand, nor of mere courtesy and good will, upon the other. But it is the rec-
ognition which one nation allows within its territory to the legislative, execu-
tive or judicial acts of another nation, having regard both to international duty
and convenience, and to the rights of its own citizens or of other persons who
are under the protection of its laws.5
Ms bitt at 321-22.
56 R Krugman, Exchange Rate Instability (Cambridge, Mass.: Massachusetts Institute of Technol-
ogy, 1989) at 7. Kmgman, ibid. at 10, also cites statistics on relative price movements, international
labour flows and international capital flows which indicate that, in some respects, “it is unambiguous
that today’s markets are less well integrated than those of Edwardian times.”
” 159 U.S. 113 at 163-64,40 L. Ed. 95 (1895), as quoted in Morguard, supra note 2 at 1096.
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Before adopting this formulation, however, it may have been wise for La Forest J. to
have considered the following dictum of Justice Cardozo: “The misleading word
‘comity’ has been responsible for much of the trouble. It has been fertile in suggesting
‘ As this passage indicates, the
a discretion unregulated by general principles.
meaning of comity is highly contested in American jurisprudence, and will probably be
equally problematic in Canada.
One of the problems that the reliance on comity may have created in the United
States is an excessively pro-defendant position. According to Weinberg, “[t]o the
extent that an interested forum strives for comity and reciprocity in choice of law, it
abnegates responsibility for providing justice.”‘ 9 As the decisions of the lower courts in
both Anchem and Hunt indicate, this danger is not confined to problems of choice of
law.
In Amchem, the trial judge found that, while comity would ordinarily have
required him to defer to the Texas court’s decision to assume jurisdiction, that court’s
failure to apply the doctrine of forum non conveniens itself constituted a breach of
comity and thus deprived the Texas court of any entitlement to deference. The trial
judge therefore issued an anti-suit injunction preventing the plaintiffs from suing in
Texas. 6 The Supreme Court held that this interpretation of comity was too narrow and
that deference was due to foreign courts except in cases of serious injustice.6’ Having
been reversed in Amchem, the same trial judge in Hunt followed the Court’s advice and
gave comity a broad interpretation, holding that comity required deference to the law
of another province.12 This time his decision was reversed for the reasons discussed
above in Part I.
The decisions of the Supreme Court in Amchem and Hunt should reduce the risk of
the pro-defendant biases to which Weinberg alludes. However, the judicial histories of
these cases indicate that the lengthy discussion of comity in Morguard has not
provided lower courts with any guidance as to the appropriate degree of deference to
foreign law. La Forest J. himself seems to have recognized this in Hunt, where he
wrote that “the ideas of ‘comity’ are not ends in themselves, but are grounded in
notions of order and fairness to participants in litigation with connections to multiple
jurisdictions.”” These notions of order and fairness relate in turn to the Supreme
Court’s vision of the Canadian economic union.
– Loucks v. Standard Oil Co., 120 N.E. 198 at 201-202 (N.Y. Ct. App. 1918) as quoted in L. Wein-
berg, “Against Comity” (1991) 80 Georgetown L.J. 53.
59 Weinberg, ibid at 75.
60Aichenz, supra note 10 at 910.
“Ibid. at 914-15.
62 Hunt, supra note 3 at 300.
61 Ibid. at 325.
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B. The Economic Union Re-examined
The Supreme Court’s judgment in Morguard recognized that the task of ensuring a
fair and orderly flow of wealth and people across the country was a constitutional
imperative. In order to understand the nature of this imperative, we must consider its
economic and political rationales. These rationales, it is argued, provide a more solid
basis for constitutional review of the territorial limits on provincial powers than does
the vague idea of comity.
The economic benefits of a common market have been extensively scrutinized in
Canada and need only be briefly discussed here. 4 The free movement of goods across
the country allows each unit of the federation to specialize in the production of those
goods for which it possesses a comparative advantage. Free mobility of labour and
capital permits each of these factors to be put to its most productive use. A less
frequently mentioned benefit of economic union is its insurance function. The negative
impact of a change in external circumstances on one region tends to be offset by a
related expansion in another. For example, the hardship to Ontario workers created by
a rise in the price of oil is alleviated by the possibility of moving to a new job in
Alberta.
The economic union can also be justified in political terms by appealing to notions
of equal citizenship and equality of opportunity.” These concerns include gains in
economic efficiency which increase individual opportunity, but they also call for a
stronger federal role in promoting equity and social justice.66 A political theory of
economic union recognizes the need to complement “negative integration”, which
involves the elimination of barriers to the mobility of goods and factors of production,
with “positive integration”, which entails the adoption of uniform social and regulatory
policies.
67
The relationship between these values of economic union and the conflict of laws
was summarized by La Forest J. in the following passage from Hunt:
It is inconceivable that in devising a scheme of union comprising a common
market stretching from sea to sea, the Fathers of Confederation would have
contemplated a situation where citizens would be effectively deprived of access
to the ordinary courts in their jurisdiction in respect of transactions flowing
from the existence of that common market. The resultant higher transactional
costs for interprovincial transactions constitute an infringement on the unity
The literature is surveyed in R. Howse, Economic Union, Social Justice and Constitutional Re-
forn Towards a High But Level Playing Field (North York, Ont.: York University Centre for Public
Law and Policy, 1992).
Ibid. at 15.
Ibid. The importance of a federal role in the promotion of equity is also emphasized by R. Boad-
way, “Constitutional Design in a Federation: An Economist’s Perspective” in R.L. Watts & D.M.
Brown, eds., Optionsfor a New Canada (Toronto: University of Toronto Press, 1991) 237.
‘ Howse, ibid. at 25-29.
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and efficiency of the Canadian marketplace … , as well as unfairness to the citi-
zen.
La Forest J. was therefore calling for both negative and positive economic integration.
In terms of negative integration, he drew on the argument of Finkle and Labrecque that
barriers to the transferability of rights within a unified market can be considered
transaction costs. In terms of positive integration, the recognition that causes of action
arise from the existence of the common market can be traced back to Moran. In that
judgment, Dickson J. justified the forum’s right to exercise jurisdiction over the
defendant on the grounds that a manufacturer who places defective goods in the
interprovincial flow of commerce ought to assume the burden of defending his or her
products wherever they cause harm.0
These economic and political values of economic integration are beyond dispute. If
taken to their logical conclusion, however, they suggest that Canada should be a
unitary state. La Forest J.’s analysis appears to ignore the possibility that other
economic and political values could justify a federal state. This led him to an overly
broad view of the Constitution’s implicit “full faith and credit” clause.
An interpretation of the Constitution consistent with the virtues of federalism
would have recognized the economic and political benefits of decentralization. In
economic terms, decentralization permits governments to match the provision of local
public goods with local preferences.7’ Competition between provinces could also lead
to the introduction of innovative social and regulatory policies which would then be
adopted nationwide.72 In political terms, decentralization provides local minorities with
greater opportunities to preserve their distinctive cultural or linguistic identities.
The literature on conflict of laws is generally oblivious to these potential benefits
of diversity.73 Whereas the field of corporate law has witnessed an extensive debate
about the merits of state competition for corporate charters, 74 law review articles and
law reports dealing with conflict cases continue to be full of disparaging comments
about “forum shopping”.7″ These objections bring to mind Lord Denning’s reply: “You
may call this ‘forum shopping’ if you please, but the forum is England, it is a good
place to shop in, both for the quality of the goods and the speed of service.”76 This
6Hunt,
supra note 3 at 330.
“P Finkle & C. Labrecque, “Low-Cost Legal Remedies and Market Efficiency: Looking Beyond
Morguard” (1993) 22 Can. Bus. L.J 58 at 60.
7′ Moran, supra note 37 at 409.
7’Boadway, supra note 66 at 245-46.
‘ See generally A. Breton & A. Scott, The Economic Constitution of Federal States (Toronto: Uni-
versity of Toronto Press, 1978).
‘ An exception is B. Hay, “Conflicts of Law and State Competition in the Product Liability Sys-
tem” (1992) 80 Georgetown L. 617.
ket” (1991) 36 McGill L.J. 130.
‘ See R. Daniels, “Should Provinces Compete? The Case for a Competitive Corporate Law Mar-
75See e.g. Prefontaine v. Frizzle (1990), 71 O.R. (2d) 385 at 395,65 D.L.R. (4th) 275 (C.A.).
76 Owners of the Motor Vessel “Atlantic Star” v. Owner of the Motor Vessel “Bona Spes”, [1973]
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comment, despite
competition may eventually lead to a better quality of justice.
its blatant national chauvinism,
indicates
that jurisdictional
Indeed, the recent evolution of the doctrine of forum non conveniens suggests that
courts are beginning to distinguish between good and bad “forum shopping”. For
example, Lord Goff, in Spiliada Maritime Corp v. Cansulex Ltd.,J recognized that
while some aspects of litigation (such as longer limitation periods) benefit one party at
the expense of the other, other aspects (such as the location of witnesses and solicitors)
do not share this purely distributive character.78 According to Black, Spiliada implies
that forum non conveniens “could become a doctrine which requires an explicit
minimization of litigation costs.” 79 By refusing to condemn plaintiffs who seek out an
advantageous forum which has a real and substantial connection to the case,80 Sopinka
J.’s judgment in Ainchem appears to confirm Black’s hypothesis.
Rather than appealing exclusively to the values of economic union, the Supreme
Court in Hunt should also have considered the virtues of decentralization. Had it done
so, it might have found a way to maximize simultaneously the benefits of uniformity
and of diversity. One solution to this problem will be considered below.
C. Reconciling Unifornity with Diversity: The Minimal Impairment Test
Once we recognize that there are benefits to decentralization as well as to
economic union, there is a danger that courts will try to balance these benefits on a case
by case basis. Such “interest balancing” is well outside the courts’
institutional
competence, as was recognized by McKinlay J.A. in Quebec v. Ontario Securities
Commission. The case involved an appeal of an order issued against a Quebec crown
corporation, La Soci6t6 Nationale de l’Amiante (S.N.A.), by the Ontario Securities
Commission for violation of the Ontario Securities Act.” The Court rejected the
appellant’s argument that it should balance the interest of the Ontario government in
regulating its capital markets with Quebec’s interest in using the S.N.A. to implement
its asbestos industry policies. McKinlay J.A. could see “no objective way of choosing
which governmental interest is more compelling.” ’83 Although the case involved a
conflict between two provincial regulatory policies, the same problem exists when
provincial policy conflicts with the national interest in securing a common market.
A more principled approach to the extraterritorial effects of provincial legislation is
clearly required. Such an approach can be found by reconsidering the theory of
Q.B. 364 at 381-82, [1972] 3 All E.R. 705 (C.A.), rev’d (1973), [1974] A.C. 436, [1973] 2 All E.R.
175 (H.L.).
7, (1986), [1987] A.C. 460, [1986] 3 W.L.R. 972 (H.L.) [hereinafter Spiliada cited to W.L.R.].
7 1biL at 991.
Black, supra note 6 at 25.
Anichem, supra note 10 at 920.
,(1992), 10 O.R. (3d) 579,58 O.A.C. 277 (C.A.) [hereinafter Quebec v. O.S.C. cited to O.R.].
R.S.O. 1990, c. S.5.
‘3 Quebec v. O.S.C., supra note 81 at 590.
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comparative advantage that is one of the main justifications of the economic union. For
quite some time now, international trade theorists have been modelling the effects of
trade barriers in the presence of market failures.84 A market failure in the domestic
economy provides an efficiency rationale for activist state measures. However,
economic models invariably lead to the conclusion that, while trade barriers may
improve public welfare over free trade, the more appropriate policy intervention is to
directly target the source of the market failure.8 For example, if a country is suffering
from high unemployment, labour market policy is a better tool for dealing with the
problem than is trade policy.
The international trade literature therefore provides a policy rationale for a
“minimal impairment” test for barriers to economic mobility, similar to the Oakes test
in Charter litigation.86 Under such a test, a court would first determine whether a
provincial policy was aimed at a valid objective. If so, the court would go on to
consider whether the poicy was the least drastic means of pursuing that objective
given its impact on the economic union. In terms of the above example, if provincial
trade barriers were found to be a genuine response to unemployment, the court would
examine why the province did not adopt an alternative policy, such as an employment
subsidy, that would have less of an effect on interprovincial trade.
A minimal impairment test would also be consistent with the political values of
federalism. It would give provincial governments the latitude to pursue valid
objectives, while at the same time respecting the interests of the rest of the country. If
one values provincial autonomy, the analogy to the Oakes test, with its process of
reconciling
individual autonomy and government purposes for Charter rights
violations, is particularly appropriate.
The idea of minimal impairment is more attractive than is the concept of comity
that La Forest J. relied on so extensively in Hunt. Perhaps because the objective of the
Quebec blocking statute was colourable (i.e. a deliberate attempt, couched in neutral
language, to protect domestic manufacturers from liability), the Court never indicated
whether a statute that impedes litigation in other provinces might be justifiable in other
circumstances. If a case should one day arise in which an impugned statute with similar
effects had the valid objective of protecting individual privacy, would such a statute
also be considered a violation of comity? Or would a court uphold the legislation and
merely order the defendants to attempt in good faith to make information available,
permitting an adverse inference to be drawn if they fail to do so?”7 This uncertainty
following Hunt is particularly unfortunate because, as will be shown below, the legal
Classic articles include W. M. Corden, “Tariffs, Subsidies and the Terms of Trade” (1957) 24
Economica 235; J. Bhagwati & V.K. Ramaswarni, “Domestic Distortions, Tariffs and the Theory of
Optimum Subsidy” (1963) 71 J. Pol. Econ. 44.
” For a survey, see J. Bhagwati, “The Generalized Theory of Distortions and Welfare” in J. Bhag-
wati etal., eds., Trade, Balance of Payments and Growth (Amsterdam: North Holland, 1971).
R. v. Oakes, [1986] 1 S.C.R. 103, 26 D.L.R. (4th) 200 [hereinafter Oakes].
” This has been the solution adopted by American courts when foreign bank secrecy laws impede
discovery (see eg. the cases cited in Weinberg, supra note 58 at note 43, p. 62).
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basis for a minimal impairment test of the extraterritorial impact of provincial
legislation had already been established.
I. The Legal Basis for Minimal Impairment
A. The Traditional Interpretation of Territorial Linits
Prior to the Supreme Court’s decision in Churchill Falls, the case law interpreting
the words “in the Province” in section 92 of the Constitution Act, 1867 was a morass of
contradictions.8 Two predominant approaches, however, had emerged. The first was
based on a line of cases dating back to the Privy Council’s decision in Royal Bank of
Canada v. R.89 The second approach was based on another Privy Council decision,
Ladore v. Bennett.90
At issue in Royal Bank was the validity of an Alberta statute that required the Bank
to transfer funds held in Montreal to the Alberta Treasury. These funds had been raised
from bondholders outside of the province for the construction of a railway, a project for
which the province was the guarantor. The railway company having defaulted on its
interest payments, the rights to these funds had revested in the bondholders. The Privy
Council held that since these rights were held outside the province, the statute was
ultra vires.9′ As Sullivan notes, “[t]he result of this approach is to seal the provinces
closed at their borders, at least so far as provincial legislation is concerned.”9′
The Royal Bank approach was followed as recently as 1976 in Interprovincial
Cooperatives Ltd v. Manitoba,93 a case which vividly illustrates the approach’s
inadequacies. This case arose as a result of damage caused to Manitoba fishermen by
pollution originating
in Saskatchewan and Ontario. Manitoba passed a law
compensating the fishermen and taking assignment of any cause of action. The law
also provided that legislation in force in other provinces which permitted discharge of
pollutants would not constitute a defence to such an action. When Manitoba sued, the
defendants moved to strike out any references to the legislation.
The Supreme Court found the statute ultra vires the province. Pigeon J., writing for
the majority, claimed that “[w]hile it can be said that the legislation is aimed at damage
caused in Manitoba, it is not directed against acts done in the Province.” This view is
clearly inconsistent with the basic thrust of Moran,9 which had been decided just a
R.E. Sullivan, “Interpreting the Territorial Limitations on the Provinces” (1985) 7 Sup. CL L. Rev.
511 at 537.
[1913] A.C. 283, 9 D.L.R. 337 (P.C.) [hereinafter Royal Bank].
9 [1939] 3 D.LR. 1, [1939] 2 W.W.R. 566 (P.C.) [hereinafter Ladore].
” Churchill Falls, supra note 8 at 328-29.
92 Sullivan, supra note 88 at 538.
9′ (1975), [1976] 1 S.C.R. 477, 53 D.L.R. (3d) 321 [hereinafter Ipco cited to S.C.R.].
9′ Ibid. at 507.
9′ This point is made in the dissenting judgment of Laskin CJ.C., ibicL at 500-501.
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year earlier. In that case, the Supreme Court held that the commission of a tortious act
outside provincial territory did not deprive a court of jurisdiction when the damage
occurred in the province. However, the fact that the Manitoba court in Ipco had
jurisdiction did not, in Pigeon J.’s view, give the Manitoba court unlimited authority.”
Had the Court adopted a minimal impairment test in this case, it would have
reached the opposite conclusion. The ultimate objective of the statute, as even Pigeon
J. recognized, was the protection of property in Manitoba. 7 Although the statute was
directed at actions outside of the province, its impact met the minimal impairment
requirement. The legislation only sought to remove impediments to a basic common
law tort action that may have been created by other provinces. It did not in any other
manner affect the civil rights of the defendants.
The restrictive approach to provincial territorial limitations, as exemplified by
Royal Bank and Ipco, was ultimately rejected by the Supreme Court in Churchill Falls.
In that case, the Court chose instead to follow the authority of Ladore,9’ which
involved a challenge to provincial legislation which amalgamated two municipalities
and reduced the rates of interest paid to non-resident bondholders. Although the facts
were very similar to those of Royal Bank, the Privy Council upheld this legislation on
the grounds that the effect on non-residents was “a necessary incident” to the exercise
of a valid provincial power.99
The Supreme Court extracted the “pith and substance” analysis of Churchill Falls,
mentioned above in Part I, from Ladore. This time, however, the analysis was
applied in such a way as to render provincial legislation invalid. The Court found that
Newfoundland’s expropriation of the assets of a corporation situated within its borders
was a colourable attempt to interfere with a power contract that gave Hydro-Quebec a
favourable price on Labrador electricity.’0 ‘
The Ladore approach to territorial limits has been criticized on the grounds that
characterization of the “pith and substance” of provincial legislation “in the best of
circumstances is a highly subjective art; often it is merely arbitrary. ‘ ‘ However, this
criticism can be levied against almost all decisions interpreting provincial powers in
section 92 of the Constitution Act, 1867. The standard method of interpreting the
division of powers presumes that legislation, the pith and substance of which relates to
a head of power in section 92, is valid even if it has ancillary effects on a federal matter
within section 91.03
‘ Ibid. at 516.
Ibid. at 507.
“‘ Churchill Falls, supra note 8 at 332.
“Ibid. at 331.
‘0’ See text accompanying note 32, above.
… Churchill Falls, supra note 8 at 333.
” Sullivan, supra note 88 at 540.
See Starr v. Houlden, [1990] 1 S.C.R. 1366,68 D.L.R. (4th) 641.
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Moreover, unlike Royal Bank, Ladore involved more than just a determination of
the object of the impugned statute. As Edinger explains,
[a] province may legislate without infringing the territorial limitation provided
only two conditions are met: first, that the legislation is in relation to some
provincial object; and second, that the expanded application is necessary for
the attainment of the object and that there is some nexus with the province.0 4
In effect, this test is equivalent to the minimal impairment test suggested above.
Churchill Falls therefore has already provided the legal basis for the most suitable test
on policy grounds.
B. Minimal Impairnen4 Federalism and International Law
Churchill Falls and other cases interpreting the words “in the Province” address
the problem of the appropriate method for dividing powers amongst provinces. It may
be helpful to compare these cases with recent decisions addressing the related problem
of the appropriate division of powers between the provinces and the federal
government. These cases reveal that the minimal impairment test of Ladore is
consistent with the approach adopted for other aspects of federalism.
The case of General Motors of Canada Ltd v. City National Leasing Ltd. ‘ is a
revealing example of how the minimal impairment test has been applied to the
interpretation of federal powers. In General Motors, the Supreme Court upheld the
validity of a provision of the Combines Investigations Actio, creating a civil cause of
action for violations of the Act. This clear encroachment on provincial powers over
civil rights was justified on the grounds that the provision was of limited scope and
was functionally related to the rest of the Act. As Howse has observed, this requirement
of “a close fit between the intrusion and the national purposes reflected in the
regulatory scheme as a whole’ is very similar to an Oakes-style minimal impairment
test.”
Crown Zellerbach is not as easily reconcilable with this approach to constitutional
interpretation. At issue in that case was the validity of federal legislation regulating
pollution in provincial waters. The majority of the Court upheld the statute under the
national concern branch of peace, order and good government, even though the
intrusion into provincial jurisdiction could not be interpreted as necessarily incidental
to the exercise of federal jurisdiction over pollution in extraprovincial waters. Le Dain
J., however, characterized water pollution as a single, indivisible subject matter: if one
province failed to regulate pollution, the others would be negatively affected.’O This
suggests that the encroachment on provincial jurisdiction created by the federal
’04E. Edinger, “Territorial Limitations on Provincial Powers” (1982) 14 Ottawa L. Rev. 57 at 94.
[1989] 1 S.C.R. 641, 58 D.L.R. (4th) 255 [hereinafter General Motors].
’06R.S.C. 1985, c. C-23.
107 Howse, supra note 64 at 57.
” Crown Zellerbach, supra note 46 at 432.
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legislation was less intrusive than that which would have resulted from another
province’s failure to regulate. Consequently, even though it was not necessarily
incidental, the impairment was, in a sense, minimal.
General Motors and Crown Zellerbach both indicate that the Supreme Court has
abandoned the “watertight compartments” approach to the division of powers between
the federal government and the provinces. Problems such as economic regulation or
environmental policy are too complex to be confined to a single head of power, and
will usually encompass powers in both sections 91 and 92 of the Constitution Act,
1867. Similarly, there is no reason why the “watertight compartments” approach
should be maintained with respect to the territorial division of powers between the
provinces. The Ladore interpretation of these territorial limits, as even its proponents
acknowledge, is likely to lead to some instances of overlapping legislation.’ 9 Yet, the
approach’s benefits in terms of both certainty and flexibility make this a price worth
paying. The visibility of the costs of overlapping legislation, in terms of bureaucracy
and duplication, should not obscure the equally real costs of unaddressed social and
economic problems.
Finally, it is worth noting that the minimal impairment test has found favour in
areas of international trade law that raise problems similar to those raised by
federalism. Under Article XX of the General Agreement on Tariffs and Trade
0 a country is permitted to deviate from its basic GATT obligations in order to
(GAT1,
achieve certain public policy goals. GATT panels assess
these deviations by
determining whether the policies in question meet the following three criteria: “i) fit
the scope of the Article; ii) be ‘necessary’ to (or related to) the stated objectives; and
iii) be non-discriminatory and non-protectionist. ” . These criteria ensure that countries
will pursue
the protection of the
environment, in a manner that distorts trade flows as little as possible.
their legitimate policy objectives, such as
C. An Application to Hunt v. T&N plc
Had the Supreme Court refrained from applying Morguard’s principles of comity
in Hunt, the result would probably have been the same. The impugned statute in Hunt
would still have failed to meet the demands of proportionality as required by Churchill
Falls. While this failure would have led to a declaration that the Act was wholly
unconstitutional, instead of merely constitutionally inapplicable outside the province,
this distinction would have been of no practical importance. Justice La Forest indicated
that the power to legislate with extraterritorial effects belongs to
the federal
Parliament. ” ‘ Thus, should the Act be used to impede international litigation, a
successful challenge to its constitutionality would be likely.
, 9Edinger, supra note 104 at 95.
“0 30 October 1947, 55 U.N.T.S. 188.
P. Sorsa, “GATI and the Environment” (1992) 15 The World Economy 1 at 10.
“2 Hunt, supra note 3 at 328.
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Although the British Columbia Court of Appeal found the “pith and substance” of
the Act to be within the province,” 3 La Forest J.’s judgment indicated that it was clearly
a colourable attempt to protect Quebec manufacturers from liability:
Everybody realizes that the whole point of blocking statutes is not to keep
documents in the province, but rather to prevent compliance, and so the suc-
cess of litigation outside the province that that province finds objectionable.”
Thus, a critical scrutiny of the Act’s objective would have led to a finding that it failed
to meet the first branch of the minimal impairment test. The British Columbia Court of
Appeal may have been unwilling to subject the Act to such scrutiny because of the
political consequences of a British Columbia court declaring a Quebec statute
unconstitutional.
Furthermore, even if the purpose of defending against the extraterritorial impact of
American antitrust law would have been accepted as valid, the statute was “a blunt
response” to the problem.” 5 It contained no qualifications and gave no discretion.
Moreover, federal legislation, the Foreign Extraterritorial Measures Act, was in place
to deal with the purported objective. Thus, it is likely that the Act would have failed the
minimal impairment requirement implicit in Ladore v. Bennett.
Conclusion
In a sense, Hunt was too easy a case and as a result, did not give rise to good law.
The Quebec statute had such an extreme impact on extraprovincial litigation that
almost any approach to federalism would have found it objectionable. Given that the
outcome of the case is reasonable, the problems inherent in the use of the comity
principle to assess the extraterritorial
legislation are not
immediately apparent. Unfortunately, cases will eventually arise, such as Ipco, where
provincial legislation serves a valid purpose. When they do, the problems with Hunt’s
interpretation of the scope of the Constitution’s implicit “full .faith and credit” clause
will become apparent. Will such forms of provincial legislation be characterized as
impediments to litigation outside the province? If so, will they also lead to a violation
of comity?
impact of provincial
A more traditional approach to the territorial limitations on provincial powers
would have made these questions unnecessary. On the contrary, Hunt presented an
opportunity for the Court to build on the principles established in Churchill Falls and
Ladore. The Court could have clarified the test of minimal impairment largely implicit
in the earlier cases. The constitutional status of Morguard’s principles could still have
been recognized, but their scope would have been limited to the conditions for
Ibid. at 301-302.
“4 Ibid. at 327.
.IMbiL at 328.
780
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exercising jurisdiction and recognizing and enforcing judgments of sister provinces.
By extending these principles so as to encompass any provincial legislation that
impacts upon litigation in other provinces, the Court has upset the balance between
uniformity and diversity provided by the minimal impairment test
