Doing Business in Canada – Part 1(*1) – The Canadian Legal System
Canada is a federal state with a
constitution. Canada has an elected parliamentary system of government. In
addition to the federal government it has ten provincial governments, three
territorial governments. At the federal level Canadians elect the prime minister
and at the provincial levels, the premier. The Constitution Act, 1867 sets out the powers assigned to the federal
government and the powers assigned to the provincial and territorial
governments. English common law is applied in nine provinces and three
territories. French civil law is applied in the province of Quebec.
Federal jurisdiction was designed to
encompass decisions that affect all Canadians across the vast country – matters
of national significance. The federal government has powers that include
national defence, foreign affairs, employment insurance, banking, federal
taxes, the post office, federal taxes, fisheries, shipping, railways,
telephone, pipelines, indigenous lands and rights and criminal law. Provincial
and territorial jurisdiction includes direct taxes, hospitals, prisons,
education, marriage, property and civil rights. Agriculture and immigration is
shared. Certain aspects of provincial powers are delegated to municipal
governments, which enact their own bylaws. Legislative jurisdiction is subject
to limits provided by the Canadian
Charter of Rights and Freedoms, which forms part of the Consitution Act, 1982.
Depending on the business, it may be subject
to either federal or provincial regulation. For example, an airline may be
subject to federal law, such as the federal labour code, for matters dealing
with labour and employment but be also subject to provincial laws dealing with
real property.
The division of powers is further complicated
by the “opting” out by provinces from federal programs. For example, Quebec
administers its own provincial pension plan. It operates separately from the
Canada Pension Plan.
In addition, unique arrangements have been
developed for Aboriginal peoples in different regions of Canada. Aboriginal
groups may have a range of rights and powers over certain lands under the Indian Act and pursuant to historic and treaty rights.
The
federal and provincial and territorial governments are all responsible for the
judicial system in Canada. (*2) Canada’s judiciary is completely independent
from other branches of government and all government action is subject to
judicial scrutiny. Canadian judges are appointed for life. Canadian judges are
fair and well-respected.
Only
the federal government can appoint and pay judges of the superior, or
upper-level, courts in the provinces. Parliament can also establish a general
court of appeal and other courts. It has created the Supreme Court of Canada, the Federal Court and the Federal Court of Appeal, as well as
the Tax Court.
Parliament
also has exclusive authority over the procedure in courts that try criminal
cases. Federal authority for criminal law and procedure ensures fair and
consistent treatment of criminal behaviour across the country.
The
provinces administer justice in their jurisdictions. This includes organizing
and maintaining the civil and criminal provincial courts and civil procedure in
those courts.
The
graphic below is an outline of Canada’s Court System (*3).
The Supreme
Court of Canada is Canada’s final court of appeal. Its nine judges represent the four major regions of the country. Three of them must be from
Quebec to adequately represent the civil law system.
The Federal Court specializes in areas such
as intellectual property, maritime law, immigration law, federal-provincial
disputes and civil cases related to terrorism.
The Provincial and Territorial level courts
are roughly the same across Canada. Each province has three levels: lower
courts, superior courts and appeal courts. Nunavut is the exception. It has a
single-level trial court.
Administrative boards and tribunals deal with
certain types of disputes over the interpretation and application of laws and
regulations. Examples are human rights, entitlement to employment insurance or
disability benefits and refugee claims. Decisions of administrative tribunals
may be reviewed by a court to ensure fairness and proper legal process.
Canadian courts may look to foreign judicial
decisions for guidance, and both the federal and provincial legislatures
frequently adopt foreign legislative models: for example, the Personal
Property Security Act in force in Ontario is essentially the same as
Article 9 of the U.S. Uniform Commercial Code.
Arbitration clauses in agreements are
generally enforced by courts and arbitration is extensively used. Canadian
courts will generally recognize arbitration decisions, including foreign
awards.
Canada also hosts a number of mediations with
many former judges and senior lawyers available to mediate complex commercial
disputes.
Canada provides an attractive climate for
foreign businesses. It has stable political and economic systems. It has
abundant natural and human resources.
Endnotes
(*1) This article is part 1 of 17 parts
dedicated to a review of doing business in Canada. Subsequent articles will
include: Foreign Investment, Business Structures, Securities
Regulation, Canadian Immigration, Employment Laws, Directors and Officers,
International Trade, Competition, Sale of Goods, Intellectual Property,
Privacy, Real Property, Environmental Laws, Taxation, Insolvency, Litigation
and ADR.
(*3)
Ibid
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