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Concept of sovereign immunity
What is the general approach to the concept of sovereign immunity in your state?
Canada takes a restrictive approach to state immunity. That is, legislation provides for certain exceptions to the principle of state immunity consistent with the trend in industrial democracies restricting the scope of state immunity.
What is the legal basis for the doctrine of sovereign immunity in your state?
In Canada, state immunity from civil proceedings is governed by the State Immunity Act, RSC c S-18 (SIA). Section 3 of the SIA sets out the basic principle that foreign states are immune from the jurisdiction of any Canadian court except as provided in the SIA. The Supreme Court of Canada has described the SIA as a complete code as it relates to state immunity from civil proceedings in Canada such that it ousts the common law and international law as a potential source of exceptions to the immunity otherwise provided for in the SIA (Kazemi Estate v Islamic Republic of Iran, 2014 SCC 62, paras 54 and 58). The common law and international law remain, however, valid interpretative guides for provisions of the SIA, where relevant and appropriate.
State immunity from criminal proceedings continues to be governed by common law and is outside the scope of the SIA. Section 18 of the SIA confirms, in this regard, that the Act does not apply to criminal proceedings or proceedings of that nature.
This chapter does not address immunity of Canadian federal or provincial governments, which is governed by separate federal and provincial laws addressing Crown immunity.
Is your state a party to any multilateral treaties on sovereign immunity? Has the state made any reservations or declarations regarding the treaties?
Canada is not party to any multilateral treaty on sovereign immunity.
Describe domestic law governing the scope of jurisdictional immunity.
Jurisdictional immunity covers the state itself and its organs and agencies, and extends to all activities unless specifically excepted in the SIA. Foreign states are defined in section 2 of the SIA as including:
- any sovereign or other head of the foreign state or of any political subdivision of the foreign state while acting as such in a public capacity;
- any government of the foreign state or of any political subdivision of the foreign state, including any of its departments, and any agency of the foreign state; and
- any political subdivision of the foreign state.
The immunity of a foreign state extends to its functionaries or public officials acting in that capacity (see Kazemi, paras 85-90).
An ‘agency’ of a foreign state is defined in section 2 of the SIA as ‘any legal entity that is an organ of the foreign state but that is separate from the foreign state’. The scope of jurisdictional immunity for agencies of a foreign state is substantively the same as for the state itself. However, the rules with respect to service of process on agencies are more flexible than they are with respect to states (see question 14). Additionally, the scope of relief available against a state agency, where it is not immune, is broader than that available against a foreign state (see question 12).
An ‘organ’ of a foreign state is not defined in the SIA per se, but as ‘agency’ is defined as an organ of the state that is separate from the state, it can be inferred that an organ is part of the state itself. ‘Organ’ has been defined through case law as an entity identified with the state, controlled by the state and that performs state functions. Whether an entity can be considered an organ of the state to attract the scope of immunity to which a state is entitled is determined on the basis of a test referred to as ‘the alter ego test’. The test, developed through case law, involves the application of various factors, principally the amount of state control over the entity in question and its status under its governing legal regime (see Defense Contract Management Agency - Americas (Canada) v Public Service Alliance of Canada, 2013 ONSC 2005; and Collavino Incorporated v Yemen (Tihama Development Authority), 2007 ABQB 212).
Jurisdictional immunity extends to all activities and proceedings involving a foreign state save those that are specifically excepted in the SIA. The Supreme Court of Canada has confirmed that this immunity extends to civil suits involving peremptory norm violations, such as alleged acts of torture (see Kazemi Estate, paragraph 104).
The Supreme Court of Canada has also clarified that jurisdictional immunity for foreign states applies to applications for recognition and enforcement of foreign judgments. Thus, an application for recognition and enforcement of a foreign judgment against a foreign state in Canada may only proceed if one of the exceptions to jurisdictional immunity is established (Kuwait Airways Corp v Iraq, 2010 SCC 40, paragraph 19).
State waiver of immunity or consent
How can the state, or its various organs and instrumentalities, waive immunity or consent to the exercise of jurisdiction?
Section 4 of the SIA provides that a state can waive immunity in one of three ways:
- by submitting to the jurisdiction of the court through a written agreement (or otherwise) before or after proceedings commence;
- by initiating court proceedings; and
- by intervening in or taking a step in court proceedings (other than for the purpose of claiming immunity).
Case law has further developed the contours of waivers of immunity; any waiver must be clear, explicit, unequivocal, unconditional, and certain, and it must be given by someone with the authority to give such waiver on behalf of the foreign state (United States of America v Zakhary, 2015 FC 335, paragraph 27).
An arbitration agreement has been held to be a submission to the jurisdiction of Canadian courts for purposes of recognition of an eventual award (see Collavino, paragraph 139).
In which types of transactions or proceedings do states not enjoy immunity from suit (even without the state’s consent or waiver)? How does the law of your country assess whether a transaction falls into one of these categories?
Section 3 of the SIA has been held to establish a presumption of immunity from the jurisdiction of Canadian courts in civil proceedings against foreign states that can only be overcome if a plaintiff establishes the application of one of the exceptions in the SIA. States do not enjoy immunity from the jurisdiction of Canadian courts in the following areas, which are specifically excepted in sections 5 to 8 of the SIA:
- commercial activities;
- activities causing death, personal or bodily injury, or property loss or damage if they occur in Canada;
- support of terrorism by a listed state;
- certain maritime-related actions;
- certain shipping-related actions; and
- interests or rights in property in Canada that arise by way of succession, gifts or bona vacantia.
The restrictions on immunity relating to maritime and shipping claims apply only in the context of commercial activities.
Commercial activities are defined in the SIA as ‘any particular transaction, act or conduct or any regular course of conduct that by reason of its nature is of a commercial character’. The Supreme Court of Canada has rejected a bright-line rule between sovereign acts and private or commercial acts for purposes of the commercial activity exception. Whether a state activity may be characterised as commercial for purposes of limiting the scope of a foreign state’s immunity must be determined through a contextual approach (see Kuwait Airways, paras 31-32).
Canadian courts have been regularly called upon to consider the scope of the commercial activities exception in the context of employment-related claims. The leading case in such claims remains the 1992 Supreme Court of Canada judgment in Re Canada Labour Code ( 2 SCR. 50). That case arose when the Public Service Alliance of Canada, a labour union, sought to have the Canada Labour Relations Board certify it to represent civilian employees at the United States naval base in Argentia, Newfoundland. The proposed bargaining unit would be composed of maintenance employees at the base. The Court adopted a contextual approach that considered both the nature and purpose of the state activity. The Court ultimately held that the commercial activity exception did not apply. Courts have applied the test in Re Canada Labour Code since 1992 with mixed results, illustrating the fact-intensive nature of the inquiry.
The commercial exception was held to apply by the Supreme Court in Kuwait Airways. Kuwait Airways sought to have a costs judgment of the English High Court of Justice against Iraq recognised in Canada. The conduct of Iraq in the management of the defence of the Iraqi Airways Company in English litigation, and the retention and use of aircraft belonging to Kuwait Airways Corporation by the Iraqi Airways Company that gave rise to the English litigation, were considered to fall within the commercial exception.
With regard to the exception from immunity for actions relating to death or bodily injury in section 6(a) of the SIA, the Supreme Court of Canada has confirmed that both the wrongful act and the injury or death must have occurred in Canada in order for a plaintiff to avail him or herself of the exception (Kazemi Estate, paragraph 73). The injury must also be physical in nature; mental distress and emotional upset are only relevant if they are connected to a physical injury (Schreiber v Canada (Attorney General), 2002 SCC 62, paragraph 42). Finally, a plaintiff must also have suffered interference with his or her own physical integrity for the exception to apply. A claim cannot, for example, be brought against a state under the section 6(a) exception to immunity by a plaintiff who sustained only moral injury arising from interference with the physical integrity of another person (Kazemi Estate, paragraph 77).
Certain states identified as supporting terrorism and listed under the SIA (listed states) are also deprived of any immunity from the jurisdiction of a Canadian court in proceedings against the state in relation to the state’s support of terrorism on or after 1 January 1985, or its terrorist activities. As of June 2018, only two states are so listed under the SIA: Iran and Syria. This exception to immunity under the SIA was enacted following passage by the Canadian Parliament of the Justice for Victims of Terrorism Act, SC 2012, c 1 (JVTA), which provides, among others, a private cause of action for claims against supporters of terrorism, where the loss or damage in or outside Canada is suffered as a result of a foreign state’s activities in the nature of acts punishable under the terrorism offences listed in the Canadian Criminal Code.
If one of the exceptions to sovereign immunity set out above applies, is there any related principle that could prevent a court having jurisdiction over the state?
The principle of non-justiciability can be invoked by a foreign state in the same way that a private litigant may invoke the principle, to prevent a court from having subject-matter jurisdiction over a dispute. The principle cannot be invoked by a state to assert, indirectly, jurisdictional immunity that is meant to be removed by the exceptions set out in the SIA.
The act of state doctrine will be addressed by the Supreme Court of Canada in the case of Nevsun Resources Ltd v Araya et al, likely to be heard in 2019.
Proceedings against a state enterprise
To what extent do proceedings against a state enterprise or similar entity affect the immunity enjoyed by the state? Is there precedent for piercing the corporate veil to subject the state itself to those proceedings?
Proceedings against a state enterprise or similar entity could, in certain circumstances, affect the immunity of a state (see question 4 on the distinction between an agency of a foreign state and an organ of the state), where one of the exceptions to immunity is also established. The test applied in the state immunity context is different from the criteria traditionally applied to pierce the corporate veil. That said, there is a precedent for subjecting the state itself to civil proceedings where the state enterprise or similar entity is found to be an organ of the state.
What is the nexus the plaintiff needs to have standing to bring a claim against a state?
The nexus that the plaintiff needs to have is determined by certain exemptions to immunity set out in the SIA (see question 6), and by applicable provincial law regarding personal jurisdiction when the matter is before a superior court of a province, or the applicable law when the matter is before the Federal Court. The general principle is that there needs to be a real and substantial connection of the jurisdiction with the litigants or subject matter in dispute. Canadian courts will generally consider when applying the real and substantial connection test whether:
- the defendant is domiciled or resident in the jurisdiction;
- the defendant carries on business in the jurisdiction;
- the tort was committed in the jurisdiction; or
- a contract connected with the dispute was made in the jurisdiction or had to be performed there.
However, if the proceeding is the recognition of a foreign judgment against a foreign state, the requirement of a real and substantial connection applies between the foreign court and the litigants or subject matter in dispute. There need not be such a connection with the enforcing court. If the proceeding is the recognition of a foreign arbitral award, the criteria set out in the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards apply.
Nexus of forum court
What is the nexus the forum court requires to exercise jurisdiction over a state if the property or conduct that forms the subject of the claim is outside the forum state’s territory?
The required nexus is determined by certain exceptions to immunity set out in the SIA (see question 6) (eg, for the exception regarding activities causing damage to property or bodily injury, the property must be in Canada and the bodily harm must have occurred in Canada). The required nexus is also determined by applicable law relating to circumstances in which the forum court can take jurisdiction over civil matters. The general principle is that there must be a real and substantial connection between the jurisdiction and the litigants or with the subject matter in dispute (see question 9). Both the requirements of the SIA and the applicable law on personal jurisdiction have to be satisfied for the forum court to exercise jurisdiction.
Interim or injunctive relief
When a state is subject to proceedings before a court or arbitral tribunal in your jurisdiction, what interim or injunctive relief is available?
Injunctive or interim relief against a foreign state is not available in Canada unless the state consents in writing to the relief. Where a foreign state does consent, any relief granted cannot exceed the scope of the consent. Section 11(2) of the SIA clarifies that submitting to the jurisdiction of a court in Canada does not constitute consent for purposes of consenting to be bound by injunctive relief.
When a state is subject to proceedings before a court or arbitral tribunal in your jurisdiction, what type of final relief is available?
The only final relief available against a foreign state in Canada is damages. Specific performance and the recovery of land or other property are only available where the state consents in writing, as with injunctive or interim relief (see question 11). This is not, however, the case in respect of state agencies or listed states (ie, those identified as supporting terrorism).
Although not specified in the SIA, Canadian courts have also found that where a court properly has jurisdiction over a state, such as where an exception to immunity applies, the state is not immune from an adverse costs award (Kuwait Airways, paragraph 36; Tracy v Iran (Information and Security), 2017 ONCA 549, paras 135-136).
Service of process
Identify the court or other entity that must be served with process before any proceeding against a state may be issued.
There is no prerequisite service on a court or other entity that is applicable before issuance of a proceeding and service of that proceeding on the state.
How is process served on a state?
Service of originating process on a state may be done in one of several ways. Where the state has agreed to accept service in a certain way, service may be made on the state in that way. If the state is a party to an international treaty on service of process, service may be effected in accordance with the terms of the treaty. Finally, pursuant to section 9(1)(c) and 9(2) of the SIA, service on a foreign state may be effected by delivering a copy of the document to the Deputy Minister of Foreign Affairs or a person designated by him or her for the purpose of then transmitting the document to the foreign state. It has been held that sections 9(1) and 9(2) of the SIA, regarding service on a state, are mandatory and exhaustive (Sistem Mühendislik İnşaat Sanayi Ve Ticaret Anomic Sirketi v Kyrgyz Republic, 2015 ONCA 447, paragraph 49).
Service of process on a state agency differs from service of process on the state itself. Service can be made on a state agency in accordance with any applicable rules of court, in any manner agreed by the agency, or in accordance with any treaty that may be applicable to the agency. To the extent service cannot be made on a state agency by any of the prescribed means in the SIA, a court has the power to direct how service is to be made.
Judgment in absence of state participation
Under what conditions will a judgment be made against a state that does not participate in proceedings?
Default judgment can be entered against a state or state agency where the state or state agency fails to take, within the time stipulated in the applicable rules of court, the initial step required of a defendant or respondent, and 60 days have expired from service of the originating document. A certified copy of the default judgment must be served on the state or state agency, following which the state or state agency may, within 60 days of having been served, apply to have the judgment set aside or revoked.
Describe domestic law governing the scope of enforcement immunity.
In general, the property of a foreign state in Canada is immune from attachment and execution and, in the case of an in rem action, from arrest, detention, seizure and forfeiture, save in the following circumstances:
- the state has waived its immunity from attachment, execution, arrest, detention, seizure or forfeiture, unless the state has withdrawn its waiver according to any applicable terms of such withdrawal;
- the property is used or intended to be used for a commercial activity, or is used or intended to be used by a listed state to support or engage in terrorism;
- the execution relates to a judgment establishing rights in property that has been acquired by succession or gift or in immovable property located in Canada; or
- the state is a listed state and the attachment or execution relates to a judgment rendered in an action brought against it for its support of terrorism or its own terrorists activity and to property other than property that has cultural or historical value.
Conversely, the property of an agency of a foreign state is not immune from attachment and execution. It is not immune either, in the case of an in rem action, from arrest, detention, seizure and forfeiture, for the purpose of satisfying a judgment of a court in any proceedings in respect of which the agency is not immune from the jurisdiction of the court. The sole exception to this is where the property in question is used or is intended to be used in connection with a military activity of the foreign state, and is military in nature or under the control of a military authority or defence agency.
Application of civil procedure codes
When enforcing against a state, would debt collection statutes and the enforcement sections of civil procedure codes or similar codes also apply?
Yes, to the extent execution immunity is not applicable.
Consent for further enforcement proceedings
Does a prior submission to the jurisdiction of a court or tribunal constitute consent for any further enforcement proceedings against the property of the state?
No, the SIA makes a distinction between jurisdictional immunity and execution immunity. See question 16 for situations constituting exceptions to execution immunity.
Property or assets subject to enforcement or execution
Describe the property or assets that would typically be subject to enforcement or execution.
Property that would typically be subject to execution would be property used or intended to be used for commercial activity, as the term is defined in the SIA.
Assets covered by enforcement immunity
Describe the assets that would normally be covered by enforcement immunity and give examples of any restrictive or broader interpretations adopted by the courts.
Under the Foreign Missions and International Organizations Act, SC 1991, C 41 (FMIOA), which implements various provisions of the Vienna Convention on Diplomatic Relations, foreign embassies and consulates, as well as their furnishings and other property on the premises, and the means of transport of the embassy or consulate, are immune from search, requisition, attachment or execution. This immunity extends to the private residences of foreign diplomats.
The Canadian Minister of Foreign Affairs may issue a certificate under section 11 of the FMIOA confirming which property in Canada enjoys diplomatic immunity.
Explain whether the property or bank accounts of a central bank or other monetary authority would be covered by enforcement immunity even when such property is in use or is intended for use for commercial purposes.
Foreign central banks and monetary authorities enjoy immunity from attachment and execution in respect of property held for the bank’s own account that is not used or intended for a commercial activity. Immunity does not apply, however, where the bank, authority or its parent foreign government has explicitly waived the immunity, unless such waiver has been withdrawn in accordance with any applicable term relating to the withdrawal of the waiver.
Test for enforcement
Explain whether domestic jurisprudence has developed any further test that must be satisfied before enforcement against a state is permitted.
There is no further test to be satisfied for the enforcement phase since the requirement of a real and substantial connection would have already been satisfied and the state property in question would need to fall within one of the exceptions set out in the SIA, such as the commercial activity exception.
Service of arbitration award or judgment
How is a state served with process or otherwise notified before an arbitration award or judgment against it (or its organs and instrumentalities) may be enforced?
Section 10 of the SIA provides that where a judgment has been issued by default (whether it is a judgment on the merits, or a judgment recognising an award or foreign judgment), a certified copy of the judgment must be served before any enforcement step is taken. The state has 60 days to apply to have the default judgment set aside or revoked. Where the state appeared in the proceedings (whether it is a proceeding to determine liability or to recognise an award or foreign judgment) and lost on the merits, and the creditor wants to proceed with enforcement, the rules of service or notification are determined under the applicable legislation or rules of court governing the proceedings.
History of enforcement proceedings
Is there a history of enforcement proceedings against states in your jurisdiction? What part of these proceedings is based on arbitral awards?
Yes, there is a history of enforcement proceedings against states, state organs and state agencies in Canada. A significant number of these proceedings are for the recognition and enforcement of arbitral awards.
Are there any public databases through which assets held by states may be identified?
There are no databases specifically dedicated to identifying state assets in Canada. However, there are general databases such as land registries, registries for personal property liens and corporate registries.
Would a court in your state be competent to assist with or otherwise intervene to help identify assets held by states in the territory?
Canadian courts are governed by an adversarial judicial process. Courts do not proactively provide assistance to litigants or otherwise intervene to help identify assets of defendants. Plaintiffs must do this on their own and seek court assistance for the enforcement of judgments in instances where defendants do not voluntarily pay. To that end, courts can provide those forms of assistance contemplated in the given court’s rules of procedure or applicable law on remedies available to creditors. While courts may compel disclosure, such as through Norwich Pharmacal orders, immunity may still be engaged, however. For example, certain provisions of the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations have been implemented in Canada through the FMIOA and may be relevant.
Section 12.1 of the SIA provides, however, in respect of proceedings in which the exception to immunity based on a listed state’s support of terrorism applies, that the Minister of Finance or the Minister of Foreign Affairs, upon request, may assist a judgment creditor in identifying and locating assets of the foreign state that are held within Canadian jurisdiction (in the case of the Minister of Finance) and property of the foreign state that is situated in Canada (in the case of the Minister of Foreign Affairs). The Minister of Foreign Affairs is entitled to refuse to assist any request where it is believed that to assist the request would be injurious to Canada’s international relations, and either Minister may refuse to assist if it is believed that to assist the request would be injurious to Canada’s other interests.
Immunity of international organisations
Does the state’s law make specific provision for immunity of international organisations?
Yes, the FMIOA governs the privileges and immunities available to international organisations in Canada. The federal cabinet has the power to issue orders under this statute to provide for international organisations to have the privileges and immunities set out in articles 2 and 3 of the Convention on the Privileges and Immunities of the United Nations.
Domestic legal personality
Does the state consider international organisations headquartered or operating in its territory as enjoying domestic legal personality and could such organisations be subjected to proceedings before a court or arbitral tribunal?
Where so specified in an order issued by the federal cabinet, an international organisation may be deemed to have the legal capacity of a body corporate. In such cases, immunity from legal proceedings will turn on the provisions of the particular order governing the organisation’s privileges and immunities.
The Supreme Court of Canada upheld the immunity of the North Atlantic Fisheries Organization (NAFO), an international organisation established by a convention and headquartered in Canada, against an employment-related claim on the basis of language in the federally issued NAFO Immunity Order providing that NAFO is immune from proceedings ‘to such extent as may be required for the performance of its functions’ (Amaratunga v Northwest Atlantic Fisheries Organization, 2013 SCC 66).
The Court reasoned that allowing employment-related claims of senior officials of NAFO to proceed in Canadian courts would constitute undue interference with NAFO’s autonomy in performing its functions and amount to submitting NAFO’s managerial operations to the review of Canadian courts. The Court allowed a claim to proceed against NAFO, however, for payment of a separation indemnity on the basis that this would not amount to submitting NAFO’s managerial operations to the review of Canadian courts or interfere with NAFO’s performance of its functions.
Would international organisations in the state enjoy enforcement immunity? Are there any cases where debtors sought to enforce against a state by attaching or executing assets held by international organisations?
International organisations in Canada enjoy the scope of immunity set out in the particular privileges and immunities order in respect of each international organisation issued by the federal cabinet pursuant to the FMIOA. The specific terms of the privileges and immunities order of each international organisation determines whether the organisation enjoys enforcement immunity and, if so, the scope of that immunity.
Updates & Trends
Updates and trends
For the doctrine of act of state, a case to look out for is Nevsun Resources Ltd v Araya et al, which will be heard by the Supreme Court of Canada, likely in 2019. On other fronts, a trend to look out for in Canada is a larger number of proceedings for recognition and enforcement of arbitral awards against foreign states, given the increasing involvement of states in commercial activities. Another potential trend is an increasing number of proceedings against listed states (ie, foreign states listed as supporters of terrorism), since the enactment of the JVTA.