There was an interesting decision from the Supreme Court this past week. It dealt with a woman who worked for the Moroccan government in their embassy. When she was relieved of her duties she sued for wrongful dismissal. In the Quebec Superior Court she was successful but she lost in the Quebec Court of Appeal.
The Supreme Court last week rejected her application for leave to appeal. While the decision of the Supreme Court basically says nothing, it is interesting to look at the Quebec Court of Appeal’s decision. This is because the entire case revolves around whether the lady was able to sue in the first place. The Quebec Court of Appeal found that she was not able to do so because of a federal law called the State Immunity Act. Put simply, the Act says that foreign countries cannot be sued in Canada unless they are carrying on a “commercial activity” in Canada.
For the Quebec Court of Appeal, the lady’s activities for the Moroccan embassy and its Montreal consulate were not “commercial activities”. As stated by the Court at paragraph 79 (with my far from perfect translation):
In summary, it is difficult to see how the bonds of employment between the government of Morocco and one of its [civil] servants working at its Canadian embassy or at its Montreal consulate can take on a “commercial” character. Its employment relationship with Ms. El Ansari is clearly an internally regulated problem and should remain as such. Despite all of the sympathy that one could have for the situation of the employee and the treatment that she claims to have suffered, the Canadian courts must abstain from intervening, because to do otherwise would infringe upon the sovereignty of the Moroccan government
Now, if you are supplying materials to a foreign government, you have nothing to be worried about since that will clearly be a “commercial activity” and you will be entitled to sue. But what happens if, for example, you are dealing with a foreign company and things do not work out for whatever reason. Suppose that the country has something like our Export Development Canada and they post on a web site that other companies in the country shouldn’t do business with you because your company is no good and this causes damage to your company. Or, suppose that you have agreed to provide services to a foreign country’s government but you have agreed to work as an independent contractor and even set up a company for this sole purpose for various tax or other reasons. Is there a difference between this latter situation and that of the plaintiff in the case before the Quebec courts and the Supreme Court? Possibly not. Meanwhile, if your business is defamed by the foreign government or its subsidiary – can you sue? Again, possibly not.
If you are dealing with foreign countries, you should give a quick look at the terms of the State Immunity Act. It’s better to know about it now, than to have the legislation come back and bite you in the behind later on – like it did for the plaintiff in this one case.
Something to think about.