Jurisdictional immunity

Domestic law

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 State Immunity Act (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 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 Estate, paragraphs 85 to 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 concerning service of process on agencies are more flexible than they are concerning states (see ‘Service of process’). 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 ‘Final relief’).

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 based on 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 (see 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, including by:

  • submitting to the jurisdiction of the court through a written agreement (or otherwise) before or after proceedings commence;
  • initiating court proceedings; and
  • intervening in or taking a step in court proceedings (other than to claim 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 (see 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, paragraphs 31 and 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 ([1992] 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.

Concerning 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 for a plaintiff to avail him or herself of the exception (see 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 (see Schreiber v Canada (Attorney General), 2002 SCC 62, paragraph 42). Finally, a plaintiff must also have suffered interference with his or her 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 (see 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 concerning the state’s support of terrorism on or after 1 January 1985, or its terrorist activities. As of May 2020, 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, which provides, among other things, 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 like 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 was addressed by the Supreme Court of Canada in the case of Nevsun Resources Ltd v Araya et al, 2020 SCC 5. A majority of the Court found that the doctrine is not a part of Canadian common law and that the principles underpinning the doctrine are entirely subsumed within Canadian jurisprudence on conflict of laws and judicial restraint. The majority concluded that there was no legal obstacle to the continuation of the action for damages against a Canadian mining company, Nevsun Resources Ltd, filed by Eritrean plaintiffs alleging torture and other harms even if a judicial determination on the merits might involve passing judgment on the conduct of the state of Eritrea.

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 ‘Domestic law’ 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.

Standing

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 ‘State waiver of immunity or consent’), 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. The applicable criteria will be determined by federal or provincial statute, or common law rules on the recognition and enforcement of judgments. 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, as implemented at the respective provincial and federal levels, 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 ‘State waiver of immunity or consent’) (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 ‘Standing’). 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 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. However, it has been held that where a foreign state elects to waive its protection against attachment and execution under section 12 of the SIA (see ‘Domestic law’), it foregoes its right under section 11 of the SIA to be protected from injunctive relief that is ordered in the context of attachment or execution proceedings (see Canadian Planning and Design Consultants Inc v Libya, 2015 ONCA 661, paragraph 74). In that case, interim relief against the foreign state was granted through the continuation of a stay order that permitted the garnishment of an embassy bank account pending the determination of waiver issues on an appeal.

Final 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 final relief available against a foreign state in Canada is damages or a declaratory judgment. Specific performance and the recovery of land or other property are only available where the state consents in writing, as with injunctive relief (see ‘Interim or injunctive relief’). 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 (see Kuwait Airways, paragraph 36 and Tracy v Iran (Information and Security), 2017 ONCA 549, paragraphs 135 and 136).

Service of process

Identify the court or other entity that must be served with process before any proceeding against a state (or its organs and instrumentalities) 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 (see 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.

Law stated date

Correct on

Give the date on which the information above is accurate.

8 May 2020.