The recent decision of the Court of Queen’s Bench of Alberta (the Court) in Alberta Skydivers Ltd v. Darby, 2017 ABQB 273 (Alberta Skydivers) provides a succinct but useful analysis of the exceptions to state immunity available under the State Immunity Act, RSC 1985, c S-18 (SIA) and, in particular, demonstrates how both the commercial exception and waiver provisions of the SIA are to be applied.
The plaintiff, Alberta Skydivers Ltd., provided skydiving training services to members of the Ministry of Defence of the United Kingdom (UKMOD). The plaintiff alleged that it was made to believe that UKMOD would renew its skydiving training contract with it, and that it had spent money to upgrade its facilities in anticipation of such a renewal. The plaintiff argued that UKMOD breached its fiduciary duties and duties of good faith by failing to renew its skydiving training contract with the plaintiff.
UKMOD sought a declaration that it was immune from the jurisdiction of the Court under the SIA.
The plaintiff also named individual British soldiers as defendants to the action. However, the decision concerned only the availability of state immunity to UKMOD and not to the individual defendants.
The starting point for the decision was that UKMOD was immune from the jurisdiction of the Alberta courts under section 3 of the SIA, except as otherwise set out in therein. The issue was, therefore, whether there was any such exception or waiver of state immunity that applied.
To this end, the Court considered: (1) the commercial exception available under section 5 of the SIA; (2) whether there were any exceptions besides those in the SIA; and (3) whether UKMOD waived the state immunity conferred by section 3 of the SIA.
Section 5 of the SIA sets out the commercial exception: a foreign state is not immune from the jurisdiction of a court in any proceedings that relate to any commercial activity of the foreign state.
The Court applied the two-part test set out by the Supreme Court of Canada in Re Canada Labour Code (often referred to as P.S.A.C. v. United States Defence Department)1 to find that the commercial exception did not apply in this case. The first step of this test requires consideration of the nature of the activity in question in an overall context. The second step requires consideration of the relationship between the legal proceeding in issue and the activity.
The Court held that while there was a commercial nature to the impugned skydiving training for the plaintiff due to the plaintiff’s profit motive in selling skydiving training services, it was important to consider the state’s perspective toward the skydiving training. In this case, the state’s concern in training its soldiers was not commercial in nature. The state did not market skydiving activities to the soldiers, nor did it act like a tour operator in organizing skydiving activities for the soldiers. Skydiving was part of UKMOD’s training program for its soldiers.
The Court held that the second step of the PSAC test was also problematical for the plaintiff. The legal proceedings did not concern a breach of contract, and the allegations concerned UKMOD’s failure to enter into a new contract to the plaintiff. In other words, the allegations concerned a state’s freedom to determine its future course of action. On the basis that sovereignty and freedom were fundamental to state immunity, the Court held that UKMOD was protected in this case. The Court also relied on the Supreme Court of Canada’s reasons in Kazemi Estate v. Islamic Republic of Iran2 to emphasize the importance of the comity and reciprocity rationales that underlie state immunity.
The Court affirmed the proposition in the Kazemi case that there are no other exceptions to state immunity except as set out in the SIA. In other words, the SIA provides an exhaustive regime of exceptions to state immunity.
The plaintiff argued that UKMOD, by filing a previous claim in Canada against it, waived its state immunity in the present instance. The Court disagreed.
Any waiver needed to be express. The previous claim dealt with a different subject matter, being personal injury and not contract, and thus could not constitute express waiver in this case. Further, the significance of the difference in subject matter was bolstered by the fact that section 6 of the SIA operated as a bar against state immunity for acts of death and personal injury occurring in Canada. The Court interpreted this to mean that state immunity in relation to personal injury claims depended on different considerations from those in the present case.
While Alberta Skydivers is a short decision, it addresses various principles underlying the law of state immunity. First, it demonstrates how the PSAC case is to be applied to determine the availability of the commercial exception in relation to state military activity. Second, it affirms that the SIA is a complete legislative regime in relation to exceptions to state immunity. Third, it clarifies what does (and does not) constitute a waiver of state immunity.
Alberta Skydivers also demonstrates how first principles continue to support judicial reasoning in private international law. The themes of sovereignty, comity and reciprocity bolstered the Court’s conclusion that UKMOD was protected by state immunity.