Québec (AG) v Canadian Wireless Telecommunications Association is a significant case because it marks the first time that a provincial court of appeal has considered whether exclusive federal jurisdiction over telecommunications, radiocommunication, and broadcasting extends to internet service providers (ISPs). The Québec Court of Appeal confirms a statement that is perhaps obvious, but also long overdue: federal telecoms jurisdiction does indeed cover ISPs, and provincial site-blocking orders may run afoul of that exclusive jurisdiction. The provincial law here was struck down as an impermissible attempt to regulate ISPs in their role as telecommunications service providers.
This bulletin summarizers the Court of Appeal’s decision and the implications that it has for ISPs, their customers, and provincial regulation of internet activity.
Many types of gambling activity are illegal in Canada, including most online gambling. Legal sites are offered by provincial Crown corporations that specialize in lotteries and gambling. In Québec, that Crown corporation is Loto-Québec, the provincial gambling and lottery monopoly, which operates espacejeux.com. Predictably, however, the internet is full of illegal gambling websites hosted both in Canada and abroad.
In an attempt to curb access to illegal gambling websites, Québec passed an amendment to its Consumer Protection Act. This amendment authorized Loto-Québec to draw up a list of illegal gaming sites and provide that list to internet service providers (ISPs) operating in Québec. The ISPs were then required by law to block access to these sites so that their subscribers were no longer able to access those sites through the ISP. The law would catch both home internet connections and roaming internet offered by cell phone companies.
While the Québec government emphasized the consumer protection purpose of the law, there was substantial evidence that one of its main concerns was reducing illegal gambling to increase revenues at Loto-Québec.
Pith and Substance of the Act
When a law is challenged on federalism grounds, the Court looks at the “pith and substance” of the law. This refers to the dominant objective and characteristics of the law, and seeks to focus on the main purpose and effects of the law, rather than secondary purposes and effects.
The trial judge found that the amendments to the Consumer Protection Act were not, in pith and substance, really about consumer protection. Rather, they were an attempt to generate more revenue for Loto-Québec by blocking access to illegal gambling sites. As such, the amendments were in pith and substance telecommunications law or perhaps criminal law.
On appeal, the Government of Quebec argued that the pith and substance of paragraph 260.35 was consumer protection, and thus the laws could be validly enacted under provincial powers over property and civil rights. The Court of Appeal disagreed, pointing out that government reports and legislative debate over the amendments were focused on raising revenue, more than problem gambling. And while the rest of the Consumer Protection Act is administered by the Consumer Protection Office, the amendments alone had a different regulator, namely Loto-Québec. This suggested that the true dominant purpose of the law had little to do with consumer protection. Additionally, the Court of Appeal found that the amendments had significant legal and practical effects on telecommunications service providers. Legally, the amendments established a blanket requirement to block access to certain sites merely upon receiving notice from Loto-Québec. Practically, this site-blocking would require ISPs and cell phone providers to block access not only in Québec, but also in neighbouring provinces as well, since their networks overlapped provincial boundaries.
Having found that the law was in pith and substance a site blocking order allowing Loto-Québec to order ISPs to block access to certain websites, the Court considered whether such a law fell within provincial or federal jurisdiction. No existing appellate precedent provided any guidance on this principle, but the Court of Appeal applied existing broadcasting and telecommunications cases by analogy. Updating the law of telegraph, telephone, and cable networks, the Court of Appeal found that the “reception and transmission of internet signals” (whether wired or wireless) fell within federal jurisdiction:
Exclusive federal jurisdiction over telecommunications, which has been developed, extended and confirmed over the years by the Privy Council and the Supreme Court in cases involving the transmission of radio signals, visual images, Hertzian waves or other signals, by means of different types of facilities and equipment, must logically also extend to the transmission, reception and retransmission of internet signals.
What have other courts had to say?
This is not the first time that site-blocking orders have been considered by courts or administrative agencies. In 2016, the Canadian Radio-television and Telecommunications Commission (CRTC) had a chance to review the legality of the same law. In doing so, the CRTC found that the provincial provision created a tension with the federal Telecommunications Act. Specifically, section 36 of the Telecommunications Act prohibits Canadian carriers from blocking access to specific websites on the internet unless the carriers first receive the Commission’s approval to do so. However, the Commission did not go so far as to say that the Québec provision was unconstitutional. While the Commission determined that the fact that the legality of this question had been raised before the Superior Court of Québec did not automatically prohibit the Commission from pronouncing itself as to the constitutionality of the impugned provision, the Commission determined that the constitutional issues raised by the provision surpassed its expertise and deferred to the courts to make a final decision.
While the CRTC decision considered tension between federal and provincial site-blocking orders, the Federal Court of Appeal recently considered similar tension between two federal laws, namely the Telecommunications Act and the federal Copyright Act. In Teksavvy Solutions Inc v Bell Media Inc, the Federal Court of Appeal ruled that Canadian carriers can block access to specific internet websites without prior CRTC approval if the site-blocking order is issued as a remedy for copyright infringement. While the Teksavvy case does not raise the same constitutional issues relating to the division of powers problems faced by the CRTC and Quebec Court of Appeal, there is still a tension between the two federal laws, since the Telecommunications Act would seem to expressly prohibit what the Copyright Act (implicitly) allows.. The Federal Court of Appeal resolved the tension in favour of the Copyright Act and the general equitable jurisdiction of the Federal Court of Appeal, finding that compliance with a court-ordered site blocking injunction did not require the ISP to violate section 36 of the Telecommunications Act. Only time will tell whether other sources of federal site-blocking orders will emerge beyond the Copyright Act itself. If so, this would tend to undermine the CRTC’s gate-keeping role under section 36 of the Telecommunications Act.
Conclusion and Impact
Returning to the constitutional issues, the Québec Court of Appeal concluded its decision by stating that the purpose and effect of paragraph 260.35 is to regulate ISPs, and that ISPs are under the exclusive jurisdiction of the federal Parliament. Thus, they struck down the challenged provincial law. This is a significant finding because it confirms that internet service providers are regulated solely by Parliament in the same manner as telephone service providers, radio broadcasters, and television broadcasting and distribution undertakings – at least when they are engaged in purely telecommunications activities.
However, the Court of Appeal was quick to underline that their decision did not mean that provinces may never regulate activity occurring online, or that “the internet” was now a matter of exclusive federal jurisdiction. The Court pointed out that valid provincial legislation can affect internet transactions via provincial jurisdiction over contracts or civil rights like defamation. The Court of Appeal suggested that one of the main defects of the challenged law was that it targeted telecommunications intermediaries solely in their role as intermediaries, rather than targeting specific contractual or business practices by the operators of the illegal websites. Thus the law attempted to regulate ISPs as ISPs, which is a matter of exclusive federal jurisdiction. The potential for provinces to find other methods of regulating “the internet” remains very much open, just as the provinces do regulate a host of internet transactions.