Jurisdiction (NAFTA)

• Author: International Law Group
• Pages: 10-13

Page 10

The Council of Canadians, members of the Canadian Union of Postal Workers and members of the Charter Committee on Poverty Issues filed a suit in the Ontario courts. It challenged the constitutionality of Canada's agreement in the North American Free Trade Agreement (NAFTA) to set up arbitration Tribunals to resolve claims by foreign investors that they had suffered damage due to governmental measures undertaken by Canada.

The application judge first took up the question of whether § 96 of the Constitution Act of 1867 applied to the investor-state arbitration mechanism in Chapter 11 of NAFTA. She found that it did not because Canada had not made NAFTA part of Canada's domestic law. The Act provides that: "The Governor General shall appoint the Judges of the Superior, District, and County Courts in eachPage 11 Province, except those of the Courts of Probate in Nova Scotia and New Brunswick."

While NAFTA does provide standing to foreign investors, the obligations enforced by NAFTA tribunals constitute international commitments made by that Treaty among the three NAFTA parties, Canada, Mexico and the United States. She held that § 96 of the Constitution Act did not aff ect NAFTA as an international agreement .

Assuming arguendo that the Canadian courts might someday decide that § 96 does reach the NAFTA tribunals, the judge concluded that there was still no violation. The arbitration tribunals decide only whether a NAFTA Party had breached its Treaty obligations, a type of jurisdiction that superior courts have never exercised. Since an aggrieved investor could complain about a government measure either to a domestic court or to a NAFTA tribunal, the latter did not have exclusive jurisdiction to hear disputes about contested government measures. Thus, NAFTA could not have usurped a core function of the superior courts.

Finally, the judge held that the mere establishment through NAFTA of the system of arbitration tribunals did not breach any rights guaranteed by the Charter of Rights and Freedoms. As a result, any question of a Charter violation arising from a particular tribunal decision was premature. Plaintiffs took an appeal.

The Ontario Court of Appeal, however, dismisses. The application judge correctly determined that the tribunals set up under Chapter 11 had not been incorporated into the domestic law of Canada thus removing one possible basis for applying § 96 to them.

There is a clear and well-known distinction in Canadian...