LITIGATION OR ARBITRATION?

THE PROSPECTS FOR ADJUDICATING INTERNATIONAL HUMAN

RIGHTS CLAIMS IN CANADA

Antonin I. PRIBETIC∗

ABSTRACT

Forum selection and arbitration clauses are a mainstay of international commercial agreements.
Contracting parties often negotiate and insert a clause specifying either the chosen forum for
adjudicating any disputes arising from the contractual relationship, or agreeing to arbitrate the
dispute.

This paper will briefly explore the implications of promoting a social contract model for
advancing and adjudicating international human rights claims in Canada from the perspective of
the differing judicial approaches to the enforceability of forum selection and arbitration clauses.

Keywords: access to justice, arbitration, arbitration clause, conflict of laws, forum non
conveniens, forum selection clause, international litigation, international human rights,
jurisdiction, jus cogens, litigation, state immunity, torture, universal jurisdiction

∗ B.A. (Hons.) LL.B. LL.M. MCIArb. Blog: www.thetrialwarrior.com Email: pribetic@gmail.com. An earlier draft
of this article was presented at the Annual Meeting of the World Institute for Research and Publication – Law
conference held on June 4 - 6, 2010.
 2
Introduction

Forum selection and arbitration clauses are a mainstay of international commercial agreements.
Contracting parties often negotiate and insert a clause specifying either the chosen forum for
adjudicating any disputes arising from the contractual relationship, or agreeing to arbitrate the
dispute.

Yet, not all disputes are characterized as contractual in nature; sometimes one party alleges fraud
or tortious conduct against the other party. Party autonomy, certainty, predictability and lower
transaction costs are oft-cited public policy goals in the enforcement of ex ante forum selection
or arbitration clauses. In GreCon Dimter Inc. v. J.R. Normand Inc. et al.,1 LeBel, J. at 269 notes:

“The recognition of the autonomy of the parties…is also related to the trend toward
international harmonization of the rules of conflict of laws and of jurisdiction. That
harmonization is being achieved by means, inter alia, of international agreements sponsored
by international organizations such as the Hague Conference on Private International Law
and the United Nations Commission on International Trade Law ("UNCITRAL").
…
[where legislatures] recognize the primacy of the autonomy of the parties in situations
involving conflicts of jurisdiction. Moreover, this legislative choice, by providing for the use
of arbitration clauses and choice of forum clauses, fosters foreseeability and certainty in
international legal transactions.”

However, forum selection clauses are not interpreted and enforced within a jurisprudential
vacuum---they are subject to the juridical process of characterization.

As Janet Walker notes:

“[t]he distinction between substance and procedure, or right and remedy, is an important
subject of characterization...The characterization of a particular rule, whether foreign or
domestic, as substantive or procedural, cannot be done in the abstract because substance and
procedure are not clear-cut or unalterable categories.”2

This paper will briefly explore the implications of promoting a social contract model for
advancing and adjudicating international human rights claims in Canada from the perspective of
the differing judicial approaches to the enforceability of forum selection and arbitration clauses,

1 GreCon Dimter Inc. v. J.R. Normand Inc. et al., 2005 SCC 46, (2005) 255 D.L.R. (4th) 257, (2005) 336 N.R. 347,
(2005) J.E. 2005-1369 (S.C.C.) [cited to D.L.R.].
2 J.G. Castel and Janet Walker, CANADIAN CONFLICT OF LAWS, 6th Ed., Looseleaf-Release 10, Dec. 2007
(Markham: LexisNexis Canada Inc. 2005, Vol. 1, Chap. 3 “Characterization and the Incidental Question” and
Chapter 6 “Substance and Procedure”, §6.2, p. 6-2).
 3
on the one hand, and divergent jurisprudential views on assuming or declining jurisdiction, on
the other.

Forum Selection Clauses

The issues of the enforceability of a forum selection clause and characterization are at the
forefront in the recent Court of Appeal for Ontario decision in Matrix Integrated Solutions
Limited v. Radiant Hospitality Systems Ltd. 3

In Matrix v. Radiant, the plaintiff/appellant, Matrix Integrated Solutions Limited [“Matrix”] was
an Ontario restaurant equipment seller and installer. The defendant/respondent, Radiant
Hospitality Systems Ltd. [“Radiant”] was a Texas limited partnership that sold restaurant
equipment in Canada and the United States. The parties executed a Non-Exclusive Reseller
Agreement [the “Reseller Agreement”] under which the Ontario plaintiff was authorized to resell
the Texas defendants in Ontario. The Reseller Agreement contained the following forum
selection clause:

"This Agreement shall be governed by and construed in all respects in accordance with the
laws of the State of Texas, U.S.A. In any civil action by either party relating to this
Agreement, the prevailing party shall recover from and be reimbursed by the other party for
all costs, reasonable attorneys' fees and related expenses. [Matrix] hereby consents and
submits to the exclusive jurisdiction and venue over any action, suit or other legal
proceeding that may arise out of, or in connection with this Agreement , by any state or
federal court located in Tarrant County in the State of Texas, U.S.A. Reseller shall bring any
action, suit or other legal proceeding to enforce, directly or indirectly, this Agreement or any
right based upon it only in Tarrant County in the State of Texas, U.S.A. The parties agree
that the United Nations Convention for the International Sale of Goods shall not apply to this
Agreement."

Matrix commenced an action against Radiant and two of its former employees, Frank Naccarato
and Gus Markou, alleging conspiracy and for knowingly assisting Matrix’s former employees in
breaching their fiduciary duties to leave Matrix in order to form Radeon Technologies Ltd. At
the same time, Radiant terminated the Reseller Agreement and entered an agreement with
Radeon, all of which Matrix alleged was beyond the ambit of the forum selection clause as not
“arising out of, or in connection with” their agreement. Radiant successfully brought a motion

3 Matrix Integrated Solutions Limited v. Radiant Hospitality Systems Ltd, 2009 ONCA 593 (CanLII) ["Matrix
v.Radiant"].
 4
for as stay of action against it based on the forum selection clause. Matrix appealed. The Court of
Appeal of Ontario allowed the appeal.

Writing for the unanimous Court of Appeal, Sharpe, J.A. (Laskin and LaForme, JJ.A.
concurring), held that the motions judge had erred in characterizing Matrix’s claims as being
contractual in nature and subject to the forum selection clause. Justice Sharpe points out that:

[10] The motion judge did not have the benefit of this court’s decision in Precious Metal
Capital Corp. v. Smith 2008 ONCA 577 (CanLII), (2008), 92 O.R. (3d) 701 (“Precious
Metal”). Precious Metal dealt with the application of forum selection clauses in a series of
agreements to claims for breach of fiduciary duty similar to those advanced in the present
case. Writing for the court, Doherty J.A. held that in order to determine whether the claims
for breach of fiduciary duty fell within the reach of the forum selection clauses, an important
first step was to characterize the nature of the claims as they were in the statement of claim.
Doherty J.A., at paras 10-11, agreed with the conclusion of the motion judge that the claims
“in pith and substance” centred on a fiduciary relationship and the allegation that two of the
defendants “deliberately orchestrated events” to put the plaintiff at a disadvantage and to
misappropriate to themselves a commercial opportunity. As the case was “not contractual in
substance” but rather about “an allegedly abusive course of conduct by fiduciaries”, the
forum selection clauses in those agreements did not apply.”

Relying on Doherty, J.A.’s contextual approach in Precious Metal,4 Sharpe, J.A. further observes
that:

[11] Applying a similar analysis to this case, the claims for breach of fiduciary duty and
conspiracy advanced in the amended statement of claim cannot fairly be described as
“contractual in substance”. As in Precious Metal, they are “in pith and substance” centred on
a fiduciary relationship and the allegation that Radiant conspired with and knowingly
assisted Naccarato and Markou to breach their fiduciary obligations. The RA is merely part
of the factual background that explains the existence and nature of the relationship that
existed between Matrix and Radiant prior to the alleged wrongs that form the basis of this
action. In my view, the claims for conspiracy and knowing assistance do not arise out of or
in connection with the provisions of the RA. The elements of the causes of action asserted do
not depend upon the RA, and the RA can be removed from the picture without undermining
those claims.

[12] I respectfully disagree with the motion judge’s conclusion that Matrix relied upon the
RA in advancing this claim. The motion judge focused on the ambiguous reference to a
“breach of a duty of good faith” in paras. 37-38 of the amended statement of claim:

37. Each and all of the defendants have violated the duty of good faith owing to Matrix as a
result of the circumstances set out above.

4 Precious Metal Capital Corp. v. Smith 2008 ONCA 577 (CanLII), (2008), 92 O.R. (3d) 701 (“Precious Metal”).
See, Antonin I. Pribetic, “Staking Claims Against Foreign Defendants in Canada: Choice of Law and Jurisdiction
Issues Arising from the in Personam Exception to the Mocambique Rule for Foreign Immovables “(2009) 35 Adv.
Q. 230 at 253-263.
 5
38. In particular, Naccarato and Markou owed a duty of good faith in the performance of all
obligations arising from their employment with Matrix.

The Court of Appeal distinguished a line of authority construing arbitration clauses, which held
that words such as “relating to”, “respecting”, “in connection with” or “concerning” are
expansive terms, and reflect an intention of the parties to embrace claims beyond those that may
be brought “under” the contract or that are founded “upon” the contract.5 Citing with approval
the Court of Appeal’s earlier decisions in Dalimpex Ltd. v. Janicki,6and the Alberta Court of
Appeal decision in Kaverit Steel and Crane Ltd. v. Kone Corp.7, Sharpe, J.A. confirmed that the
proper test in deciding whether to apply a contractual provision which employs the words
“disputes arising out of or in connection with” the parties’ contract is “if either claimant or
defendant relies on the existence of a contractual obligation as a necessary element to create the
claim, or to defeat it.”

In the learned Justice’s view, the claims for breach of fiduciary duties and conspiracy could not
fairly be described as contractual in substance as Matrix’s claims were centred on a fiduciary
relationship. The Reseller Agreement was merely part of the factual background, whereas the
claims for conspiracy and knowingly assisting breach of fiduciary duties did not arise out of or in
connection with provisions of that agreement. As such, Matrix’s claims were sustainable in lieu
of any reference to the Reseller Agreement. Similarly, any putative defences arising from
provisions in the agreement had no direct bearing on the claims of conspiracy or knowingly
assisting breach of fiduciary duties.

Arbitration Clauses

The decision in Matrix v. Radiant hints at a pro-arbitration bias by the Ontario Court of Appeal.
In an earlier decision this year in Dancap Productions Inc., v. Key Brand Entertainment, Inc.,
2009 ONCA 135,8 Justice Sharpe reaffirmed the Canadian judiciary’s “deferential approach” to
the principle of competence/competence for arbitral jurisdiction.

5 See, Mantini v. Smith Lyons LLP 2003 CanLII 20875 (ON C.A.), (2003), 64 O.R. (3d) 505, at para. 19 (C.A.);
Woolcock v. Bushert 2004 CanLII 35081 (ON C.A.), (2004), 246 D.L.R. (4th) 139 (“Woolcock”), at para. 22 (Ont.
C.A.).
6 Dalimpex Ltd. v. Janicki, 2003 CanLII 34234 (ON C.A.), (2003), 64 O.R. (3d) 737 at ¶¶ 41-43.
7 Kaverit Steel and Crane Ltd. v. Kone Corp. 1992 CanLII 2827 (AB C.A.), (1992), 87 D.L.R. (4th) 129 (“Kaverit
Steel”), at p. 135, leave to appeal to S.C.C. refused, [1992] 2 S.C.R. vii.
8 Dancap Productions Inc., v. Key Brand Entertainment, Inc., 2009 ONCA 135 (Ont. C.A.) per Sharpe, Armstrong
and Watt JJ.A. [“Dancap”].
 6

The issue on appeal was whether the motion judge erred in refusing to grant a stay on account of
arbitration and forum selection clauses in one of the contracts entered into by the respondents
“Dancap” and the appellants “Key Brand”. Dancap and Key Brand executed a preliminary Term
Sheet outlining the general terms of a participation agreement related to Key Brand’s acquisition
of theatrical assets, including two Toronto theatres. Dancap was to gain an equity position in Key
Brand and membership on its board, which included the right to manage the theatres pursuant to
separate management agreements yet to be concluded. The parties also entered into an
Additional Rights Agreement (“ARA”) which, inter alia, set out the parties’ agreement to
negotiate in good faith towards the conclusion of the management agreements. Following Key
Brand’s acquisition of the assets, but prior to the finalization of the management agreements,
Key Brand sold the Toronto theatres to the respondent Mirvish Enterprises Limited (“Mirvish”).
Dancap immediately threatened proceedings. However, Key Brand won the “race to the
courthouse”; a month before Dancap sued in Ontario, Key Branch had already commenced an
action in the United States District Court in California for an order compelling Dancap to submit
their dispute to arbitration.

The ARA contained an “entire agreement” clause providing that it “supersedes all prior
agreements, negotiations and understandings concerning the subject matter hereof” and that it
“shall supplement each of the Management Agreements and the Shareholders Agreement of even
date”. The entire agreement clause further provided that “if there is a conflict between this
Agreement and… the Management Agreements, this Agreement shall control and provide
[Dancap] with the additional rights granted… under this Agreement.”9 The ARA and
Shareholders Agreement both contained an arbitration clause requiring that “[a]ny dispute,
controversy or claim arising out of or relating to” the agreement (except for equitable claims) be
submitted to arbitration “in accordance with the JAMS International Arbitration Rules. The
tribunal will consist of a sole arbitrator.” The ARA and Shareholders Agreement also contained a
forum selection clause providing for the exclusive jurisdiction of the state or United States
District courts in California. However, the Term Sheet was silent on both arbitration and forum
selection. Key Branch then moved for a stay of the Ontario action based upon art. 8(1) of the
UNCITRAL Model Law on International Arbitration as incorporated in Ontario by the

9 Id, at ¶ 13.
 7
International Commercial Arbitration Act.10 The motion judge dismissed Key Brand’s motion.
Morawetz, J. ruled that Dancap’s claims arose solely under the Term Sheet and not under the
ARA and that the arbitration and forum selection clauses did not apply.

The Court of Appeal allowed the appeal and stayed the Ontario action, pending the resolution of
the arbitration on the “core issue of whether Key Brand has the right to terminate any
management rights to the theatres that Dancap may have obtained under either the Term Sheet or
11
the ARA upon the sale of the theatres.” Writing for the unanimous Court, Sharpe, J.A., held
that:

“[32] It is now well-established in Ontario that the court should refuse to grant a stay under
art. 8(1) of the Model Law where it is “arguable” that the dispute falls within the terms of an
arbitration agreement. [Dalimpex Ltd. v. Janicki (2003), 64 O.R. (3d) 737 ( C.A. ), at para.
21, Charron J.A. and Hinkson J.A. in Gulf Canada Resources Ltd. v. Arochem International
Ltd. (1992), 66 B.C.L.R. (2d) 113 (B.C.C.A.) internal quotation omitted] . . .

[33] As Charron J.A. explained in Dalimpex, at para. 22, “a deferential approach” allowing
the arbitrator to decide whether the dispute is arbitrable, absent a clear case to the contrary,
‘is consistent both with the wording of the legislation and the intention of the parties to
review their disputes to arbitration.’”

Justice Sharpe also relied upon the recent Supreme Court of Canada decision in Dell Computer
Corp. v. Union des consommateurs,12 which endorsed the “competence-competence” principle,
calling for deference to arbitrators to resolve challenges to their jurisdiction.13 The parties
consented to the admission of fresh evidence relating to a recent order issued by the District
Court in California, which required the parties to submit to arbitration. The Court of Appeal’s
deferential approach was not limited to arbitrability. Sharpe, J.A. had no difficulty in extending
judicial comity to the U.S. court, without any form of reciprocity requirement, stating:

“[36] It may well be that in the United States , courts do not follow the deferential approach
to arbitrability set out in Dalimpex and Dell. (I note, however, that in the statement of
defence Dancap has filed in the arbitration, Dancap maintains that Key Brand’s claims are
not arbitrable and reserves the right to argue the point before the arbitrator as well as before
the Ninth Circuit Court of Appeals.)

[37] Whatever the law may be in the United States, I am persuaded that the motion judge
erred in ruling on the scope of the arbitration clause rather than leaving the issue to the

10 R.S.O. 1990, c. I-9.

11 Dancap, supra note 8, at ¶ 43.
12 Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34 (S.C.C.) ["Dell"].
13 Dancap, at ¶34, citing Deschamps, J., in Dell [2007] 2 S.C.R. 801 (S.C.C.) at ¶ 84).
 8
arbitrator. While the issue of whether the dispute between the parties is covered by the ARA
is by no means free from doubt, for the reasons that follow, I conclude that it is at least
arguable that the ARA arbitration clause governs the core issue raised in the action. That
issue was properly identified by the District Court judge as being whether Key Brand has the
right to terminate any management rights to the theatres that Dancap may have obtained
under either the Term Sheet or the ARA upon the sale of the theatres to Mirvish.”

Is Arbitration A Viable Alternative?

In Dell, the Supreme Court of Canada observed that:

“[l]egislative policy…now accepts arbitration as a valid form of dispute resolution and,

moreover, seeks to promote its use.” 14

In Beals v. Saldanha 15on the issue of public policy as a defence to the enforcement of a foreign
judgment, Justice Major for the majority held:

“The third and final defence is that of public policy. This defence prevents the enforcement
of a foreign judgment which is contrary to the Canadian concept of justice. The public policy
defence turns on whether the foreign law is contrary to our view of basic morality.”
(Emphasis added).

Both normative statements reflect a Rawlsian view of contractualism: that morality (and,
therefore, public policy) is based on social contract or agreement.16 Each statement identifies the
continuing jurisprudential debate over the nature and scope of a court’s jurisdiction ratione
materiae and the judicial role in reviewing private contractual disputes submitted to consensual
arbitration. It also highlights the tension between promoting the primacy of party autonomy and
contractual freedom, on the one hand, and defining the limits to judicial intervention of matters
involving the “public order” or public interest, on the other. Essentially, it addresses the issue of
the privatization of justice and whether a social contract model is appropriate in disputes
affecting the public interest.

14 Dell, supra note 12, at ¶ 143, per Bastarache and LeBel JJ.
15 Beals v. Saldanha [2003] 3 S.C.R. 416, (2003) 234 D.L.R. (4th) 1 (S.C.C.) [“Beals”].
16 See, John Rawls, A THEORY OF JUSTICE (Cambridge, MA: Harvard University Press, 1971). Cf. T.M.
Scanlon, “Contractualism and Utilitarianism”, in A. Sen and B. Williams (eds.), UTILITARIANISM AND
BEYOND (Cambridge: Cambridge University Press, 1982), pp. 103-28, and T.M. Scanlon, What We Owe to Each
Other (Cambridge, MA: Harvard University Press, 1998) and Amartya Sen, THE IDEA OF JUSTICE (Cambridge,
MA: Harvard University Press & London: Allen Lane,2009).
 9
The Yin of Litigation and the Yen of Arbitration

In their dissenting reasons, Bastarache and Lebel JJ. (Fish J. concurring) in Dell refer to the
Court’s earlier decision in Desputeaux v. Éditions Chouette (1987) inc.,17 which addressed
whether questions relating to ownership of copyright fell outside arbitral jurisdiction. In effect, a
matter may be excluded from the field covered by arbitration because it is by nature a “matter of
public order.”18

Between litigation and arbitration, legislative policy actively supports arbitration as a viable form
of alternative dispute resolution and promotes its use. Domestically, the Arbitration Act, 1991
19
and internationally, the New York Convention20 and the UNCITRAL Model are prime examples
of legislative policy, which reflects a pro-arbitration bias premised on the primacy of contractual
freedom, party autonomy, and largely, a presumption of equality of bargaining power and
informed consent.

However, the Dell case also demonstrates the inherent problems in adopting a strict
contractualist approach to arbitration. Granted, the majority in Dell did address the issue of
contracts of adhesion, noting the “introduction of arts. 1435 to 1437 C.C.Q. — which lay down
special rules on the validity of certain clauses typically found in contracts of adhesion or
consumer contracts — into the law of contractual obligations.”21 However, the majority seems to
have elevated the primacy of contractual choice, irrespective of whether the contract is
asymmetrical or fails to protect “the weakest and most vulnerable contracting parties,”
suggesting that some “abuse” is tolerable, while other forms of “abuse” are not.22

Equally important is the majority’s stated procedural preference of arbitration over class actions.
Specifically, the public policy choice of form over substance: “class action is a procedure, and its

17 Desputeaux v. Éditions Chouette (1987) inc., [2003] 1 S.C.R. 178, 2003 SCC 17 (SCC) per LeBel J. (Gonthier,
Iacobucci, Bastarache, Binnie, Arbour, and Deschamps JJ. concurring)
18 Id., at ¶ 52 per LeBel, J.
19 Arbitration Act, 1991, S.O. 1991, C.17 (as am.)
20 The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, concluded at
New York, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 38, [the “New York Convention”].
21 Dell, supra note 12, at ¶ 81.
22 See, Dell at ¶ 90 where the majority distinguishes between different types of clauses (external, illegible,
incomprehensible, and abusive) aimed at different types of abuse.
 10
purpose is not to create a new right.” So much for access to justice in cases involving click-wrap
internet agreements.

In Dell, the majority held that Bill 48 had no retroactive effect.23 Nevertheless, the Quebec
legislature’s response in the form of as blocking legislation24 restores the balance in protecting
consumers and is a welcome, albeit overdue, development. 25

Whither International Human Rights?

Whether international human rights norms are (or ought to be) incorporated into legislative
policy favouring arbitration is more problematic. At the outset, state immunity is an exception to
foreign judgment recognition and enforcement and the traditional Canadian judicial approach has
favoured restrictive immunity, rather than adopting universal jurisdiction or the jus cogens
doctrine.

Justice Goudge, in Bouzari v. Republic of Iran 26 notes:

…[W]here Canada's obligations arise as a matter of customary international law…customary

rules of international law are directly incorporated into Canadian domestic law unless
explicitly ousted by contrary legislation. So far as possible, domestic legislation should be
interpreted consistently with those obligations. This is even more so where the obligation is a
peremptory norm of customary international law, or jus cogens. (citation omitted)

Canada’s Federal State Immunity Act,27 provides that a foreign state cannot be subject to the
jurisdiction of Canadian courts except in specific circumstances: where the damage occurred as
part of the commercial activity of the state (section 5), or where the foreign state is responsible
for death or personal injury that occurred in Canada or damage of loss of property that occurred
in Canada (section 6). These exceptions reflect existing peremptory norms of international law

23 Dell, supra at 12, at ¶¶ 112-120)

24 An Act to amend the Consumer Protection Act and the Act respecting the collection of certain debts, 2nd Sess.,
37th Leg., (now S.Q. 2006, c. 56), assented to on December 14, 2006)
25 See also, Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A §6(2).
26 Bouzari v. Republic of Iran (2004) 71 O.R. (3d) 675 at 690, (2004) 243 D.L.R. (4th) 406, (2004) 122 C.R.R. (2d)
26, (2004) 132 A.C.W.S. (3d) 275 (Ont. C.A.) [Cited to O.R.] (“Bouzari v. Iran”).
27 State Immunity Act, 1985 R.S.C., S.18 (as am.).
 11
and customary international law, which through “adoptionist” theory, were integrated into the
law of Canada.28

In cases involving exclusively tort-based claims for personal injury damages arising from state-
sponsored torture or human rights abuses, Canadian courts have resisted assuming jurisdiction.
In Bouzari, supra, the trial court dismissed Mr. Bouzari's claim, finding that the State Immunity
Act was constitutional and that there was no international law exception to state immunity for
torture. The Ontario Court of Appeal rejected Mr. Bouzari's appeal, agreeing with the lower
court that there was no exception to state immunity for torture. The Court of Appeal also
declined jurisdiction on the grounds that Ontario was not the proper forum to hear Mr. Bouzari's
claim, concluding that “Canada’s treaty obligation pursuant to Article 14 of the Convention
Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment,29 did not
extend to providing the right to civil remedy against a foreign state for torture committed
abroad,” a view disputed by some commentators. 30

The commercial context, which prompted the torture, was insufficient to bring the lawsuit within
the section 5 “commercial activity” exception to the restrictive immunity availing under section
3 of the State Immunity Act. Admittedly, Mr. Bouzari may not have been the ideal plaintiff to
establish a precedent for an international human rights claim given that he was not a Canadian
resident at the time of the alleged torture at the hands of the Iranian secret police. However, from
a procedural standpoint, Bouzari v. Iran was incorrectly decided for two reasons. First, the Court
31
of Appeal failed to consider Rule 17.2(h) of the Rules of Civil Procedure , which confers a
jurisdictional basis for service ex juris allowing the court to apply the “real and substantial
connection” test without expressly establishing jurisdiction simpliciter vis-à-vis assumed
jurisdiction. Rule 17.2(h) reads:

28 See, R. v. Hape, 2007 SCC 26 (SCC) at para.36 per LeBel, J. quoting with approval Trendtex Trading Corp. v.
Central Bank of Nigeria [1977] 1 Q.B. 529 (C.A.) at 554 (per Denning L.J.). Cf. Sosa v. Alvarez-Machain, 542 U.S.
692 (2004) (USSC) and the draft United Nations (U.N.) Convention on Jurisdictional Immunities of States and Their
Property, Resolution A/RES/59/38 adopted by the United Nations General Assembly, Fifty-ninth session (December
2, 2004)).
29 Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, 10 December
1984, 1465 U.N.T.S. 85, Can. T.S. 1987 No. 36 (in force in Canada as at June 26, 1987).
30 For e.g., see, F. Larocque, “Bouzari v. Iran: Testing the Limits of State Immunity in Canadian Courts” (2003) 41
Can. Y Int’l L. 341.
31 Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
 12
“Damage Sustained in Ontario”

17.02 (h) in respect of damage sustained in Ontario arising from a tort, breach of contract,
breach of fiduciary duty or breach of confidence, wherever committed; (emphasis added)

Second, Goudge, J.A. in Bouzari v. Iran also conveniently side-stepped the application of “real
and substantial connection” test altogether, which included amongst its eight factors, a
consideration of “unfairness to the plaintiff in not assuming jurisdiction. 32

33
In contrast, in Crown Resources Corp. S.A. v. National Iranian Drilling Co., the assignees in
bankruptcy of a Canadian corporation commenced actions in Ontario relating to a contractual
dispute for oil drilling and related services with a state-owned Iranian company. The actions
arose from three contracts, executed in 1990, 1996, and 1998. The 1990 contract contained a
clause specifying the Republic of Iran as the choice of forum and Iranian law as the choice of
law. In contrast, the forum selection clause in the 1996 contract specified Ontario as the chosen
forum and Ontario law as the governing law. The 1998 contract was silent on either choice of
forum or choice of law. The plaintiffs were initially successful in resisting a motion for stay of
proceedings on various grounds, including jurisdiction simpliciter, forum non conveniens and the
state immunity exception. The motions judge concluded that state immunity did not apply
because of the commercial nature of the dispute. Moreover, Ontario was the appropriate forum
for the case to be heard, despite the fact that much of the dispute concerned activities in Iran,
given that the plaintiff would not be able to obtain a fair trial in Iran. While the lower court’s
decision was varied on appeal on the issue of the enforceability of the forum selection clauses,
the lower court ruling on the commercial activity exception to state immunity was not. 34

A priori, it appears difficult to reconcile these two decisions given the underlying commercial
activities. However, under the State Immunity Act, a state committing human rights abuses or
torture within its territory is immune to a lawsuit brought in a Canadian court, while a state or
affiliated agency violating a commercial agreement with a Canadian company is not.
However, assume arguendo that Mr. Bouzari entered into a contract with the Islamic Republic of

32 Bouzari v. Iran, supra note 26 at ¶¶ 31 and 38; Muscutt v. Courcelles (2002) 60 O.R. (3d) 20, (2002) 213 D.L.R.
(4th) 577 (Ont. C.A.).
33 Crown Resources Corp. S.A. v. National Iranian Drilling Co., (2005) 142 A.C.W.S. (3d) 421 (Ont. S.C.J.) per
Greer, J.
34 Crown Resources Corp. S.A. v. National Iranian Drilling Co.,[2006] O.J. No. 3345 (Ont. C.A.) per Labrosse,
Laskin and Armstrong JJ.A. Application for leave refused with costs on March 8, 2007 (31684) (S.C.C.)
 13
Iran, which contained an arbitration clause or arbitration agreement (specifying Ontario law as
the applicable law). The commercial activity exception in section 5 of the State Immunity Act
would trump any state immunity defence, particularly if the defendant state provided an express
waiver and voluntarily consented to private arbitration of any disputes arising under the
agreement, whether contractual, tortious or restitutionary in nature. Article 7 of the International
Commercial Arbitration Act reads as follows:

Article 7. Definition and form of arbitration agreement

(1)“Arbitration agreement” is an agreement by the parties to submit to arbitration all or

certain disputes which have arisen or which may arise between them in respect of a defined
legal relationship, whether contractual or not. An arbitration agreement may be in the form
of an arbitration clause in a contract or in the form of a separate agreement.

Any public policy defence would, therefore, be assessed in terms of “international public policy”
or “ordre public international” rather than Canadian domestic public policy.35

With the possible exceptions of Articles 34(b) and 36(b) of the International Commercial
Arbitration Act, both of which refer to “the subject-matter of the dispute is not capable of
settlement by arbitration under the law of this State” or “the recognition or enforcement of the
award would be contrary to the public policy of this State”, a Canadian court would have no real
difficulty in enforcing such an international commercial arbitration award, particularly where an
arbitrator’s decision was neither previously annulled nor successfully challenged during
enforcement proceedings. Of course, the foregoing approach is inapplicable in a non-commercial
context. I would argue, however, that the “justice exception” jurisdictional argument raised by
Professor Trevor Farrow in his article “Globalization, International Human Rights, and Civil
Procedure” 36in the context of recognition of foreign judgments, would apply, mutatis mutandis,
to recognition of a foreign arbitral awards against a defendant Multinational Corporation, or a
defendant State, for that matter.

It is important to point out, however, that the Court of Appeal for Ontario has recently
reformulated the “real and substantial connection” test for assumed jurisdiction in Van

35 See van den Berg, "Distinction Domestic-International Public Policy", (1996) XXI Yearbook at p. 502 and Dieter
Krombach v André Bamberski, Case C-7/98, [2000] ECR I-0000, paragraph 19 (ECJ), where it was held that the
infringement must constitute a manifest breach of a rule of law regarded as essential in the legal order of the State in
which enforcement is sought or of a right recognized as being fundamental within that legal order.
36 (2003), 41(3) Alta. L. Rev. 671 at 702.
 14
37
Breda v. Village Resorts Limited. Perhaps the most promising change is the explicit
recognition of a “forum of necessity” exception:

[100] The post-Muscutt emergence of the forum of necessity doctrine has a direct bearing
on this issue. The forum of necessity doctrine recognizes that there will be exceptional cases
where, despite the absence of a real and substantial connection, the need to ensure access to
justice will justify the assumption of jurisdiction. The forum of necessity doctrine does not
redefine real and substantial connection to embrace “forum of last resort” cases; it operates
as an exception to the real and substantial connection test. Where there is no other forum in
which the plaintiff can reasonably seek relief, there is a residual discretion to assume
jurisdiction. In my view, the overriding concern for access to justice that motivates the
assumption of jurisdiction despite inadequate connection with the forum should be

37 Van Breda v. Village Resorts Limited, 2010 ONCA 84 (Ont. C.A), leave to appeal granted, Club Resorts Ltd. v.
Van Breda, [2010] S.C.C.A. No. 174) (S.C.C. Jul 08, 2010) [hereinafter “Van Breda”] At ¶109, Sharpe, J.A.
clarifies and reformulates the Muscutt test (the “Van Breda” test) as follows:

• First, the court should determine whether the claim falls under rule 17.02 (excepting subrules (h) and (o)) to
determine whether a real and substantial connection with Ontario is presumed to exist. The presence or
absence of a presumption will frame the second stage of the analysis. If one of the connections identified
in rule 17.02 (excepting subrules (h) and (o)) is made out, the defendant bears the burden of showing that a
real and substantial connection does not exist. If one of those connections is not made out, the burden falls
on the plaintiff to demonstrate that, in the particular circumstances of the case, the real and substantial
connection test is met.
• At the second stage, the core of the analysis rests upon the connection between Ontario and the plaintiff’s
claim and the defendant, respectively.
• The remaining considerations should not be treated as independent factors having more or less equal weight
when determining whether there is a real and substantial connection but as general legal principles that bear
upon the analysis.
• Consideration of the fairness of assuming or refusing jurisdiction is a necessary tool in assessing the
strengths of the connections between the forum and the plaintiff’s claim and the defendant. However,
fairness is not a free-standing factor capable of trumping weak connections, subject only to the forum of
necessity exception.
• Consideration of jurisdiction simpliciter and the real and substantial connection test should not anticipate,
incorporate or replicate consideration of the matters that pertain to forum non conveniens test.
• The involvement of other parties to the suit is only relevant in cases where that is asserted as a possible
connecting factor and in relation to avoiding a multiplicity of proceedings under forum non conveniens.
• The willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional
basis is as an overarching principle that disciplines the exercise of jurisdiction against extra-provincial
defendants. This principle provides perspective and is intended to prevent a judicial tendency to overreach
to assume jurisdiction when the plaintiff is an Ontario resident. If the court would not be prepared to
recognize and enforce an extra-provincial judgment against an Ontario defendant rendered on the same
jurisdictional basis, it should not assume jurisdiction against the extra-provincial defendant.
• Whether the case is interprovincial or international in nature, and comity and the standards of jurisdiction,
recognition and enforcement prevailing elsewhere are relevant considerations, not as independent factors
having more or less equal weight with the others, but as general principles of private international law that
bear upon the interpretation and application of the real and substantial connection test.
• The factors to be considered for jurisdiction simpliciter are different and distinct from those to be
considered for forum non conveniens. The forum non conveniens factors have no bearing on real and
substantial connection and, therefore, should only be considered after it has been determined that there is a
real and substantial connection and that jurisdiction simpliciter has been established.
• Where there is no other forum in which the plaintiff can reasonably seek relief, there is a residual discretion
to assume jurisdiction.
 15
accommodated by explicit recognition of the forum of necessity exception rather than by
distorting the real and substantial connection test.38

In contrast, the Quebec court decision in Bil'In (Village Council) c. Green Park International
39
Inc., [“Bil’In”] reflects a traditional restrictive approach to imposing corporate civil liability
for international human rights claims, including war crimes. In Bil’In, the municipal council and
the estate of the deceased owner of land in a small village located on the West Bank sued a
Montreal corporation and its director for their involvement in the development of dense
residential housing in the area. The plaintiffs alleged that by transferring part of its civilian
population to territory it occupies in the West Bank, Israel is violating international law as well
as Canadian and Québec laws and that by constructing and selling condominiums exclusively to
Israeli civilians, the Defendants are assisting Israel in the perpetration of war crimes.40

The plaintiffs claimed that the defendants' actions constituted breaches of the Fourth Geneva
41 42
Convention and the Rome Statute of the International Criminal Court, as well as Canada's
43
Geneva Conventions Act and Crimes Against Humanity and War Crimes Act.44 The plaintiffs
also sought declaratory relief in the form of a permanent mandatory injunction against the
corporation, enjoining it from participating in the construction, sale, and marketing of settlement
housing in the area, and punitive damages under the Quebec Charter of Human Rights.45 By
preliminary motions, the defendants sought dismissal of the action or a stay based upon forum
non conveniens46 and for recognition of judgments rendered in Israel.

At first instance, Superior Court judge Louis-Paul Cullen exercised his discretion to decline
jurisdiction on the grounds of forum non conveniens. Somewhat promising what Cullen, J.S.C.’s

38 Id. at ¶100.
39 Bil'In (Village Council) c. Green Park International Inc., 2009 QCCS 4151 (CanLII), aff’d Yassin c. Green Park
International Inc., 2010 QCCA 1455 (CanLII).
40 The plaintiffs framed their action in tort, rely upon Article 1457 of the Civil Code of Quebec, R.S.Q., c. C-25,
which sets out the basic principle of extra-contractual civil liability under Quebec civil law:
“1457. Every person has a duty to abide by the rules of conduct which lie upon him, according to the
circumstances, usage or law, so as not to cause injury to another.”
41
50 R.T.N.U. 75.
42
Articles 8(2)(b)(viii) and 25 (3)(c) of the Rome Statute of the International Criminal Court, dated July 17, 1998.
43 R.S.C. 1985 c. G-3.
44 S.C. 2000 c. 24.
45
R.S.Q. c. C-12.
46 An "Exception to Dismiss Action and, de Bene Esse, to Recognize Judgments (Art. 165 (1), 785, 165 (3) and 165
(4) C.C.P.)" (hereinafter, the "Exception to Dismiss"), and (b) an "Application to decline jurisdiction – forum non
conveniens (Art. 3135 C.C.Q.)" (hereinafter, the "Declinatory Exception") Bil’In, at para. 15.
 16
rejection of the defendants’ state immunity, lack of standing and res judicata defences, 47 and the
availability of a tort-based remedy:

“[176] In theory, a person would therefore commit a civil fault pursuant to art. 1457 C.C.Q.
by knowingly participating in a foreign country in the unlawful transfer by an occupying
power of a portion of its own civilian population into the territory it occupies, in violation of
an international instrument which the occupying power has ratified. Such a person would
thus be knowingly assisting the occupying power in the violation of the latter’s obligations
and would also become a party to a war crime, thereby violating an elementary norm of
prudence.
[177] The essential question, however, is whether the application of the law of Québec
with respect to extracontractual civil liability would be engaged in that context rather than
the law of the foreign country.
[178] Before a Québec court, the law of the country where the injurious act occurred, i.e.
the lex loci delicti, governs extracontractual civil liability unless the injury appeared
elsewhere (art. 3126 C.C.Q.):
3126. The obligation to make reparation for injury caused to another is governed by
the law of the country where the injurious act occurred. However, if the injury
appeared in another country, the law of the latter country is applicable if the person
who committed the injurious act should have foreseen that the damage would occur.
In any case where the person who committed the injurious act and the victim have
their domiciles or residences in the same country, the law of that country applies.
…
[204] To summarize, the Superior Court has jurisdiction over defendants domiciled in
Québec regarding a civil action based on extracontractual liability for an injury caused and
suffered in a foreign country. The law that normally applies in such case is the law of the
country where the injurious act occurred, i.e. where the injury was caused. That law must be
proven. In the absence of proof, by default, the Superior Court will apply the substantive
law of Québec.
[205] Under Québec law, a defendant will incur civil liability if he causes damages to
another by his fault. Knowingly favouring a breach of a High Contracting Party's
undertakings pursuant to an international instrument or knowingly assisting a state in the
perpetration of a war crime are both civil faults. Assuming for purposes of discussion that
the Defendants knowingly assisted Israel for the purpose of committing a war crime as
alleged, the Defendants committed a civil fault and are liable to appropriate civil remedies.
This is consistent with a restrictive interpretation of state immunity that limits its benefit to
sovereign entities and their agents.
[206] Given the grave consequences of dismissing an action without a hearing on the
merits, as a rule, an action ought not be dismissed summarily on a motion based on art.
165(4) C.C.P. unless such action is obviously not founded. In the case at bar, a generous
reading of the Action, considered as a whole, does not lead to the inescapable conclusion that
it is unfounded in law even if the facts alleged are true.[citations omitted]

47 Cullen, J.S.C. concluded that :

“ [30] Above all, the Defendants do not contend that they are truly agents of Israel. Moreover, one of
their alternative arguments is predicated on the opposite assumption. It is axiomatic that pursuant to
the SIA, immunity may only be claimed legitimately by a "foreign state" or by an "agency of a foreign
state".
[31] The Defendants are therefore not entitled to state immunity on the basis of the Plaintiffs'
unproven and alternative allegations that they are agents of Israel.”[citations omitted]
 17

Nevertheless, Cullen J.S.C. exercised his discretion under CCQ Article 3135 to decline
jurisdiction on the grounds of forum non conveniens applying the factors articulated in Spar
Aerospace v. American Mobile Satellite Corp.48 where LeBel J. cited with approval the ten
factors set out in Lexus Maritime Inc. v. Oppenheim Forfait GmbH,49 none of which is
individually determinative :

1. the parties' residence, that of witnesses and experts;

2. the location of the material evidence;
3. the place where the contract was negotiated and executed;
4. the existence of proceedings pending between the parties in another jurisdiction;
5. the location of the Defendant's assets;
6. the applicable law;
7. advantages conferred upon a Plaintiff by its choice of forum, if any;
8. the interest of justice;
9. the interest of the parties;
10. the need to have the judgment recognized in another jurisdiction.

With respect to applicable law, the trial judge weighed opposing expert opinions50 on the
whether the High Court of Justice of Israel would adjudicate alleged violation by Israel in the
occupied territories under the Fourth Geneva Convention, and concluded that the plaintiffs had
not demonstrated a violation of public order:

“[288] On the whole, the evidence shows that the HCJ has not applied Article 49(6) of
the Fourth Geneva Convention, not because of its unwillingness to adjudicate on its alleged
violation by reason of the political significance of the matter, but either because it was
unnecessary to do so or because the HCJ considered that it was not customary international
law (contrary to what professor Ben-Naftali states in her footnote) and that it had not been
incorporated into the domestic law of Israel through appropriate legislation.
[289] The fact that Canada, contrary to Israel, has approved the Fourth Geneva
Convention by statute is insufficient to conclude that the application of the law of the West
Bank would lead to a result that would be manifestly inconsistent with public order as
understood in international relations contrary to article 3081 C.C.Q.” 51

48 Spar Aerospace Ltd. v. American Mobile Satellite Corp., [2002] 4 S.C.R. 205 at 238-244.
49 Lexus Maritime Inc. v. Oppenheim Forfait GmbH, J.E. 98-1592 (C.A.).
50
The plaintiffs relied on the affidavit of Orna Ben-Naftali, a professor of international law who opined on the
Israeli judicial policy of declining to review the legality of settlements with respect to “international humanitarian
law.” The defendants countered with an affidavit by Israeli attorney Renato Jarach, who concurred that Israeli courts
would not review the legality of settlements with respect to war crimes, but on the ground, that such a judicial
determination would interference with Israeli government policy.
51 The Quebec court accorded minimal weight to the plaintiff’s in the form of a Government of Canada letter dated
December 14, 1998 by the Minister of National Revenue, purporting to describe Canada's public policy with respect
to permanent settlements in the occupied territories, cited in Magen David Adom for Israel v. Canada, [2002] F.C.J.
No. 1269 (F.C.A.). Cullen, J.S.C. also noted that:
 18
In considering the factor relating to the advantages conferred on the plaintiff by its choice of
forum, the trial judge rejected the plaintiffs’ arguments, noting:

[311] Similarly, in the present case, the Québec forum has jurisdiction over the Action
solely because the Defendants are domiciled in Québec.
[312] Mr. Badt's evidence and the letter dated January 6, 2009 from the Plaintiffs' counsel
to the Defendants' counsel clearly establish, however, that this lone and apparent connection
is merely superficial: the Corporations have no assets in Québec, are alter egos for another
corporation which itself has no assets in Québec and Defendant Laroche has no personal
involvement in the Bil'in project or any actual knowledge of same.
[313] The advantage conferred to the Plaintiffs by their choice of the Québec forum should
therefore be given very little weight, if any.

With respect to the “interests of the parties” factor, the Quebec court concludes:

[314] It is in the interest of all the parties that a court of competent jurisdiction decides the
Action impartially, promptly and efficiently on the basis of the best evidence available. In
this connection, it is relevant to note that the burden of proof in the Action lies with the
Plaintiffs.
[315] It would clearly be more practical to try the Action in Israel rather than in Québec in
light of each and every one of the connecting factors considered above, including the interest
of the parties. It is also clear that the Defendants would be seriously prejudiced if this was
not the case.

Justice Cullen reached a similar conclusion on the “interests of justice” factor:

[316] The Plaintiffs strenuously argue that they seek justice in the Québec forum.
[317] However, as it is presently framed, the Action can hardly lead to a just result:
- The Plaintiffs have failed to implead any of the numerous owners or occupants of the
buildings that they seek to have demolished, thereby depriving those persons of the right to
be heard, a fundamental tenet of natural justice.
- Despite having chosen not to implead the State of Israel, the Plaintiffs indirectly seek
the essential finding that it is committing a war crime, thereby effectively by-passing Israel's
absolute immunity to any judicial proceedings. In Canada as in England, the scope of state
immunity extends to gross violations of international human rights.
[318] Moreover, the Geneva Conventions Act and Crimes Against Humanity and War
Crimes Act both prohibit criminal prosecution without the Attorney General's authorisation.
Although the Action is civil, it is predicated on the finding that Israel is committing a war
crime in violation of public international law. While seeking the benefit of the Geneva
Conventions Act and Crimes Against Humanity and War Crimes Act, the Plaintiffs are
proceeding without having impleaded the Attorney General and without his authorisation.
[319] The HCJ has jurisdiction over the Action insofar as the Plaintiffs allege that the
Defendants are agents of the State of Israel. In the past, Mr. Yassin has acknowledged the
jurisdiction of the HCJ with respect to the Lands by bringing several motions contesting the
legality of various actions undertaken by Israel.
…

“[n]either the Security Council nor the International Court of Justice have declared, however, that
Article 49(6) of the Fourth Geneva Convention was part of customary international law or that a state
that had not incorporated this provision into its domestic law was acting in a manner that is manifestly
inconsistent with public order as understood in international relations.” [citations omitted]
 19
[328] Inappropriate "forum shopping" should thus be discouraged.
…
[335] To sum up, this is one of those exceptional situations where the Superior Court is
compelled to decline jurisdiction on the basis of forum non conveniens, as the Plaintiffs have
selected a forum having little connection with the Action in order to inappropriately gain a
juridical advantage over the Defendants and where the relevant connecting factors,
considered as a whole, clearly point to the HCJ as the logical forum and the authority in a
better position to decide.

The Quebec Court of Appeal upheld the trial judge’s decision declining jurisdiction on forum non
conveniens grounds.52 With respect to the “interest of justice” factor in Spar, the Quebec Court of
Appeal’s approach differs markedly from the Ontario Court of Appeal’s approach to “fairness” and
“forum of necessity” factors in Van Breda. The Quebec Court of Appeal observes,

“[89] Finally, regarding the interest of justice, the trial judge correctly noted that the
appellants did not implead the purchasers of the new residential units. It is difficult to
imagine how a Quebec court could order the evacuation of the owners without their having
been impleaded.
[90] The trial judge noted in passing that there is no Canadian legislative provision
relating to the civil liability of its citizens in a foreign country in such circumstances :
[323] In the United States of America, legislation expressly grants jurisdiction to American
courts over civil claims brought by aliens and based on torts committed abroad. No such
legislation exists in Canada. The Plaintiffs did not submit any precedent of a Canadian court
acknowledging that a person may be found civilly liable in Canada for having participated
abroad in a war crime as defined by international instruments, neither is the Court aware of
any such precedent.”53

Conclusion

Unless the Canadian federal State Immunity Act is amended to create a general “torture” or
“human rights abuse” exception, or Canadian federal legislation akin to the U.S. Alien Tort
54
Statute, is enacted, the only viable procedural route is to attempt to enforce a foreign arbitral
award obtained against a state based upon commercial activity and rely upon the “forum of
necessity” exception to the reformulated “real and substantial connection” test in Van Breda.
This will, of necessity, include concurrent claims framed in contract and tort, as well as claims
imposing liability against Canadian corporations “aiding and abetting” the alleged torture or
human rights violations committed in the host state’s territory and falling within the ambit of acts
committed by individuals acting in an official capacity. 55

52
Yassin c. Green Park International Inc., 2010 QCCA 1455 (CanLII), supra note 39.
53 See also, James Yap, “Corporate Civil Liability for War Crimes in Canadian Courts: Lessons from Bil’In
(Village Council) v. Green Park International Ltd., (2010), 8 J. Int'l Crim. Just. 631, 648 (2010)
54 Alien Tort Statute, 28 U.S.C. §1350 (also referred to as the Alien Tort Claims Act).
55 See, Presbyterian Church of Sudan v. Talisman Energy, Inc. No. 07-0016-cv (USCA 2d Cir. Docketed Jan.3,
2007), cf. Doe I v. Unocal Corp., 963 F. Supp. 880 (C.D. Cal 1997) which imposed liability under the ATS against
 20

Recent efforts to amend the Canadian federal State Immunity Act are reflected in the form of Bill
C-35- An Act to deter terrorism, and to amend the State Immunity Act, which did not make it past
56
First Reading due to the recent prorogation of Canadian Parliament. Bill C-35 was an Act to
deter terrorism, and to amend the State Immunity Act (the Justice for Victims of Terrorism Act or
JVTA) which was introduced in the House of Commons on June 2nd 2009 by the Minister of
Public Safety, the Honourable Peter Van Loan. The bill was to establish a cause of action that
allowing victims of terrorism to sue individuals, organizations, and terrorist entities for loss or
damage suffered because of acts committed or omissions made that otherwise would be
punishable under Part II.1 of the Criminal Code (which deals with terrorism offences).
Essentially, Bill C-35 would have allowed victims of terrorism to sue state-sponsors of terrorism
for losses or damage occurring inside or outside Canada on or after January 1, 1985. Bill C-35
held promise to expand the narrow exceptions to state immunity. The goal was to amend the
State Immunity Act to create a new---albeit admittedly equally narrow---exception, which would
serve to remove state immunity only “when the state in question has been placed on a list
established by Cabinet on the basis that there are reasonable grounds to believe that it has
supported or currently supports terrorism.” According to the official Legislative Summary:

"Bill C-35 is similar to a number of private members’ bills and senators’ public bills that
have been introduced in Parliament since 2005.(4) The primary difference between the
previous bills and Bill C-35 is that the other bills sought to include the cause of action in the
Criminal Code, whereas Bill C-35 creates a free-standing civil cause of action."

Obviously, enforcing a foreign arbitral award against a foreign state implies that there are
exigible assets in Canada which fall within the commercial activity exception or there is an
express waiver of immunity by the state or related agency (See §12 of the State Immunity Act).
Only time will tell whether the winds of political change or judicial activism will finally hold
sway and allow victims of human rights abuses and torture equal access to Canadian justice.

private corporations by imposing a standard of “knowing practical assistance or encouragement that has a substantial
effect on the perpetration of a crime.”
56 “House shut? Liberals to report for work anyway, The Toronto Star, January 6, 2010 (available online at:
http://www.thestar.com/news/canada/article/746615--house-shut-liberals-to-report-for-work-anyway)