Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Canada’s Minister of Foreign Affairs Has Broad Export Controls Discretion Says Federal Court

Posted in Export Controls & Economic Sanctions, Legal Developments

Canadian parliamentOn January 24, 2017, the Federal Court of Canada issued its judicial review decision in Daniel Turp v. The Minister of Foreign Affairs, T-462-16.  The Federal Court dismissed an application for judicial review of the decision of the Minister of Foreign Affairs to approve an export permit in respect of the export of General Dynamics light armoured military vehicles to Saudi Arabia.  Daniel Turp, a law professor, argued that the issuance of the export permits did not meet the legal requirements of the Export and Import Permits Act.  The Federal Court held that the Minister of Foreign Affairs has broad discretion to assess the factors contained in Canada’s export controls legislation (the Export and Import Permits Act), the Export Controls List and government policy.  The Federal Court reviewed the facts and determined that the Minister of Foreign Affairs considered the economic impact of the proposed export, Canada’s national and international security interests, Saudi Arabia’s human rights record and the conflict in Yemen before granting the export permits,  and, thereby respecting the values underlying the Conventions.

This decision is important because the Federal Court granted an activist standing and upheld the Minster’s exercise of discretion to issue export permits.  The word “activist” is not being used in a pejorative manner.  There is more scrutiny by the media and by human rights organisations in the social responsibility of businesses and this is not a bad thing.  What is important by the Federal Court’s decision is that once an export permit application is approved, the Federal Court will not pass moral judgement and substitute views for that of the Minister and bureaucrats with export controls experience.  The Federal Court was cautious to allow concerns to be heard and considered whether those concerns were valid in the context of Canada’s export controls laws and the limitations of judicial reviews as a dispute settlement/review mechanism.

The Federal Court considered three issues:

  1. What is the applicable standard of review?
  2. Does the applicant have the necessary public interest standing?
  3. Did the Minister commit a reviewable error in issuing the permits to export LAVs to Saudi Arabia?

Standard of Review

The Federal Court determined that the appropriate standard of review in respect of a decision by the Minister of Foreign Affairs to issue an export permit is reasonableness.  The Federal Court explained:

“In Dunsmuir v New Brunswick, 2008 SCC 9 at paragraph 51 [Dunsmuir], the Supreme Court of Canada stated that “questions of fact, discretion and policy as well as questions where the legal issues cannot be easily separated from the factual issues generally attract a standard of reasonableness”. This Court will only intervene if the Minister’s decision is not justified, transparent or intelligible, or if it does not fall within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.”

Public Interest Standing

The Federal Court determined that Professor Turp had public interest standing.  The Federal Court restated the following test for granting public interest standing:

  1. whether there is a serious justiciable issue raised;
  2. whether the plaintiff has a real stake or a genuine interest in it; and
  3. whether, in all the circumstances, the proposed suit is a reasonable and effective way to bring the issue before the courts.

Most importantly, in granting public interest standing in the context of the issuance of export permits for light armoured military goods, the Court stated:

“I am of the view that the question of the issuance of export permits for controlled goods is sufficiently important from the public’s perspective to meet the first criterion. As for the second criterion, the applicant is a professor of constitutional and international law for whom the principles of the rule of law, respect for fundamental rights and international humanitarian law are of particular concern. Among other things, through several interventions before the courts, he has shown himself to be an engaged citizen with a genuine interest in issues involving fundamental rights around the world. I also find that this judicial review is a reasonable and effective way to bring the issue before the Court. Aside from the administrative avenues that have already been exhausted, there exists no other way to bring such a challenge before the Court. No other party has a higher interest than the applicant when it comes to challenging the approval of export permits by the Minister, with the possible exception of a Canadian living in Saudi Arabia or Yemen.”

This sets the stage for more judicial review applications of export permit decisions by activists in the future.

Canada’s Export Controls Regime

The Federal Court reviewed Canada’s export controls regime and made the following points:

  • Sections 3 and 5 of the EIPA clearly indicate that the Governor in Council may establish a list of goods, the export of which it is necessary to control on account of Canada’s national interests;
  • Section 7 of the EIPA sets the authority of the Minister to issue export permits for such controlled goods – and that authority is a broad discretion;
  • Subsection 7(1.01) of the EIPA identifies the factors to be taken into account in deciding whether to issue such permits;
  • The EIPA is supplemented by one main administrative tool, the “Export Controls Handbook”;
  • The Handbook describes as follows the factors to consider before issuing an export permit:
    • With respect to military goods and technology, Canadian export control policy has, for many years, been restrictive. Under present policy guidelines set out by Cabinet in 1986, Canada closely controls the export of military items to: • countries which pose a threat to Canada and its allies; • countries involved in or under imminent threat of hostilities; • countries under United Nations Security Council sanctions; • countries whose governments have a persistent record of serious violations of the human rights of their citizens, unless it can be demonstrated that there is no reasonable risk that the goods might be used against the civilian population.
  • These factors guide the Minister; and
  • The Minister has broad discretion to decide how to assess the factors and how much weight to give to each, as long as he exercises his power in accordance with the object and in the spirit of the EIPA;
  • Neither the EIPA nor the Handbook contains any export prohibitions; and
  • It is open to Parliament to adopt targetted measures under the Special Economic Measures Act, SC 1992, c 17, following a decision, resolution or recommendation of an international organization of states or association of states of which Canada is a member, or where the Minister is of the opinion that a grave breach of international peace and security by a foreign state has occurred that has resulted or is likely to result in a serious international crisis.

Whether the Minister Made A Reviewable Error

The Federal Court held that the Minister did not commit a reviewable error and that “the Minister remains free to issue an export permit if he concludes that it is in Canada’s interest to do so, considering the relevant factors.”  The Federal Court found as a matter of fact that Saudia Arabia is not subject to prohibitions under the EIPA and UN Resolutions. The Federal Court also found as a matter of fact that the factors set out in the Export Controls Handbook were explicitly considered during the consultations leading up to the decision by the Minister.  The Federal Court further found that the Global Affairs memo addressed human rights concerns.

Importantly for Canadian businesses, the Federal Court stated:

“It is for the Minister, whose expertise in such matters has been recognized by the courts to assess whether there is a reasonable risk that the goods might be used against the civilian population.”

The Federal Court further stated that the Export Controls Handbook is not binding on the Minister and the Minister should not fetter the exercise of his discretion by treating these informal Guidelines as if they were mandatory requirement. The Court quoted Agraira v Canada (Public Safety and Emergency Preparedness), where the Supreme Court ruled as follows:

“The Guidelines did not constitute a fixed and rigid code. Rather, they contained a set of factors, which appeared to be relevant and reasonable, for the evaluation of applications for ministerial relief. The Minister did not have to apply them formulaically, but they guided the exercise of his discretion and assisted in framing a fair administrative process for such applications. As a result, the Guidelines can be of assistance to the Court in understanding the Minister’s implied interpretation of the “national interest”.”

The Federal Court also considered Professor Turp’s arguments with respect to the Geneva Convention and did not find a reviewable error.

Conclusion

This is an important export controls decision.  The issues discussed in this case are being discussed in Canada and other developed countries.  The discussion about controlling exports is important.  Discussion about the role Canadian companies play in the world is important. These discussions have historically been carried on by a limited number of people.  Now, the discussions are taking place in a larger community.  Canadian businesses must be aware that things are changing and be more vigilant in their export controls compliance.  It is possible that their transactions may be put under a microscope of public opinion and judicial review.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.  For more information about Canada’s export controls laws, please review the information on the LexSage website.