While Canada’s legal system may appear quite similar to that of many western democracies, there are many unique aspects to it, including the presence of two civil law codes: the French Code Napoléon-based system in the province of Québec and the English precedent-based common law system throughout the rest of the country.

Levels of Government

Canada is a federal bilingual (English and French) country operating under a parliamentary system of government. Legislative authority and the ability to make laws are divided between various levels of government, including the Parliament of Canada and the legislatures of Canada’s ten provinces and three territories.

While the federal government is responsible for the territories, it has provided for elected councils with law-making powers similar to those of the provinces. In addition, unique arrangements have been developed for aboriginal peoples in various regions of the country. For example, Indian bands exercise a range of governmental powers over reserve lands under the Indian Act.

Canada’s Constitution

The Constitution of Canada is the supreme law of the country. It sets out the basic principles of a democratic government and defines the three branches of government: executive, legislative and judicial. The Constitution also divides law-making power and responsibility between the federal and provincial levels of government.

The federal government is responsible for areas such as: foreign affairs and international trade, defence, the monetary system, criminal law, patents, bankruptcy/insolvency and certain “national” sectors, such as financial services and telecommunications. The provinces are responsible for education, health care, municipal affairs, securities regulation and national resources along with other specified areas.

Charter of Rights and Freedoms

Canada’s Charter of Rights and Freedoms (Charter), under which several important legal arguments have been waged since 1982, is also contained in the Constitution. Unlike the United States’ Bill of Rights, the Charter has only limited application to the regulation of economic rights.

Two Civil Law Codes

Another unique aspect of Canada’s legal system is the presence of two civil codes. The criminal law system that governs the whole country and the civil law system that governs most jurisdictions in Canada is based on the English precedent-based system of common law. The civil law system in the Province of Québec only is based on the French Code Napoléon. Foreign companies and investors interested in doing business in Canada nationally should ensure that their Canadian legal advisors are well versed in both civil systems.

An Independent Judiciary

Canada’s judiciary is completely independent from other branches of government. All government action is subject to judicial scrutiny.

Canadian Courts

Commercial court proceedings are usually heard in the federal courts or in the superior courts of the provinces (which are presided over by federally appointed judges). In Toronto, a formal and well-respected “Commercial List” court hears most commercial matters in Ontario; informally, certain judges in other provinces are often assigned to hear commercial matters. Canada generally has a “loser pays” civil litigation system, meaning that the losing side of any court battle can usually expect to pay some portion of the successful party’s legal costs.

Alternative Dispute Resolution (ADR)

Alternative Dispute Resolution (ADR) comprises various techniques for resolving disputes outside of the court that are less formal, less costly and generally faster than court proceedings. ADR includes both mediation (an independent third party facilitates the parties’ resolution of their dispute) and arbitration (an independent third party decides on how the dispute will be resolved). The province of Ontario has had a mandatory mediation program in place in Toronto and Ottawa for most civil non-family case-managed actions in Toronto and Ottawa since July 2001. Canadian courts will generally recognize and enforce arbitration decisions made in other jurisdictions.

Canadian Class Actions

Most provinces in Canada – including the most populous, Ontario and Québec – have statutes governing class proceedings. Even in the other Canadian jurisdictions, actions can usually be brought on behalf of large numbers of people as “representative” actions.

Canada’s approach to class actions is relatively welcoming. The number of class proceedings being brought in Canada has grown substantially in the last 10 years, with the plaintiff’s bar becoming larger and more experienced. It is now not uncommon to have similar actions commenced in many provinces at the same time and in a coordinated way, and for Canadian proceedings to be brought that mirror proceedings brought in other countries.