Reference re Newfoundland Continental Shelf (1984), 5 DLR (4th) 385, [1984] 1 SCR 86

Supreme Court of Canada

Reference re Newfoundland Continental Shelf, [1984] 1 S.C.R. 86

Date: 1984-03-08

IN THE MATTER of Section 55 of the Supreme Court Act, R.S.C. 1970, chapter S-19, as amended

AND IN THE MATTER of a Reference by the Governor in Council concerning property in and legislative jurisdiction over the seabed and subsoil of the continental shelf offshore Newfoundland and set out in Order-in-Council P.C. 1982-1509 dated the 19th day of May, 1982

File No.: 17096.

1983: February 22, 23, 24; 1984: March 8.

Present: Laskin C.J.[1], Ritchie, Dickson, Beetz, Estey, Mclntyre and Chouinard JJ.

REFERENCE BY THE GOVERNOR IN COUNCIL

Constitutional law—International law—Continental shelf off Newfoundland—Natural resources—Whether Canada or Newfoundland has the right to explore and exploit natural resources of continental shelf—Newfoundland Act, 1949 (U.K.), c. 22, Terms of Union (Schedule), Terms 2, 3, 7, 35, 37—Statute of Westminster, 1931 (U.K.), c. 4, ss. 1, 3, 10, 11—Geneva Convention, 1958, art. 2—Statute of the International Court of Justice, art. 38(1)—Constitution Act, 1867, ss. 109 , 132 .

Constitutional law—Distribution of legislative powers—Legislative jurisdiction over the natural resources of continental shelf off Newfoundland—Federal jurisdiction—Peace, order and good government power—Constitution Act, 1867, ss. 91 , 92 , 92(5) , 92(13) , 92A(1) .

The Governor General in Council, in accordance with s. 55 of the Supreme Court Act, referred to this Court the following constitutional question:

In respect of the mineral and other natural resources of the seabed and subsoil of the continental shelf, in the area offshore Newfoundland…has Canada or Newfoundland:

(1) the right to explore and exploit the said mineral and other natural resources, and

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(2) legislative jurisdiction to make laws in relation to the exploration and exploitation of the said mineral and other natural resources?

The Attorney General of Canada submitted that the answers to both parts of the question should be in favour of Canada. The Attorney General of Newfoundland, whose position was supported by the other provinces—except Quebec, Ontario and Saskatchewan who were not represented on this reference—submitted that both parts of the question should be answered in favour of Newfoundland.

Held: Both parts of the question should be answered in favour of Canada.

There is no basis upon which the Province of Newfoundland could claim the right to explore and exploit or claim legislative jurisdiction over the resources of the continental shelf:

(1) The continental shelf rights claimed by the parties are the rights granted by international law for a coastal State to explore and exploit its continental shelf. These rights are not in pith and substance proprietary: they are an extraterritorial manifestation of external sovereignty. During the relevant period prior to its entry into Confederation in 1949, Newfoundland did not have the requisite external sovereignty to acquire continental shelf rights. As a matter of Imperial constitutional law any continental shelf rights available at international law before 1949 would have been acquired by the Crown in right of the United Kingdom, not the Crown in right of Newfoundland.

Even if Newfoundland had acquired continental shelf rights prior to its entry into Confederation these rights would have passed to Canada by virtue of the Terms of Union. Term 37, which perpetuates the province’s proprietary rights in natural resources “belonging to Newfoundland at the date of Union”, would not suffice to pass any existing continental shelf right to the province.

In any event, Newfoundland could not, upon entry into Confederation, have held rights to explore and exploit in the continental shelf because at that time international law conferred no such rights. These rights, which were not indisputably recognized before the Geneva Convention of 1958, do not have a retroactive effect capable of assisting Newfoundland.

(2) Newfoundland’s legislative competence, like that of all the other provinces, is confined to legislation operating within the province. The continental shelf,

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being outside the boundaries of Newfoundland, does not fall within any of the enumerated heads of s. 92 . Legislative jurisdiction falls therefore to Canada under the peace, order, and good government power in its residual capacity.

Reference re Offshore Mineral Rights of British Columbia, [1967] S.C.R. 792; Reference re Mineral and other Natural Resources of the Continental Shelf (1983), 145 D.L.R. (3d) 9; North Sea Continental Shelf, Judgment, I.C.J. Reports 1969, p. 3; R. v. Keyn (1876), 2 Ex. D. 63; MacLeod v. Attorney-General for New South Wales, [1891] A.C. 455; Nadan v. The King, [1926] A.C. 482; Croft v. Dunphy, [1933] A.C. 156; St. Catherine’s Milling and Lumber Co. v. The Queen (1888), 14 App. Cas. 46; Interprovincial Co-Operatives Ltd. v. Dryden Chemicals Ltd., [1976] 1 S.C.R. 477; Attorney-General of British Columbia v. Attorney‑General of Canada (1889), 14 App. Cas. 295; Abu Dhabi Arbitration (1952), 1 International and Comparative Law Quarterly 247; New South Wales v. Commonwealth of Australia (1975), 135 C.L.R. 337, referred to.

REFERENCE by the Governor General in Council, pursuant to s. 55 of the Supreme Court Act, concerning property in and legislative jurisdiction over the seabed and subsoil of the continental shelf off Newfoundland. Both parts of the question answered in favour of Canada.

Pierre Genest, Q.C., Clyde K. Wells, Q.C., Peter W. Hogg, Q.C., and Donald Kubesh, for the Attorney General of Canada.

James J. Greene, Q.C., Colin K. Irving, Margaret Cameron, John Ashley and James Thistle, for the Attorney General of Newfoundland.

Gordon F. Henderson, Q.C., Emilio Binavince and Edward Foley, for the Attorney General of Nova Scotia.

P.A. MacNutt and Bruce Judah, for the Attorney General for New Brunswick.

Brian F. Squair, for the Attorney General of Manitoba.

E. Robert A. Edwards, for the Attorney General of British Columbia.

Ralph C. Thompson, for the Attorney General of Prince Edward Island.

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Wm. Henkel, Q.C., for the Attorney General for Alberta.

The following is the judgment delivered by

THE COURT

Introduction

The Governor in Council, in P.C. 1982-1509, dated May 19, 1982, referred the following constitutional question to the Court under s. 55 of the Supreme Court Act, R.S.C. 1970, c. S‑19:

In respect of the mineral and other natural resources of the seabed and subsoil of the continental shelf, in the area offshore Newfoundland approximately 320 kilometres (170 nautical miles) east south east of St. John’s, Newfoundland, bounded by 46° 30′ north latitude and 47° 00′ north latitude and by 48° 30′ west longitude and 49° west longitude, where resource exploration is being conducted and more particularly delimited on the map attached hereto as the Appendix to this Order, as between Canada and Newfoundland, pursuant to The Newfoundland Act, 1949 or otherwise, has Canada or Newfoundland:

(1) the right to explore and exploit the said mineral and other natural resources, and

(2) legislative jurisdiction to make laws in relation to the exploration and exploitation of the said mineral and other natural resources?

The Attorney General of Canada submits that the answers to both parts of the question should be in favour of Canada. The Attorneys General of Newfoundland, British Columbia, Nova Scotia, New Brunswick, Prince Edward Island, Manitoba and Alberta submit that the answers to both parts of the question should be in favour of Newfoundland.

The metes and bounds description in the reference designates an area of the continental shelf known as the Hibernia field, the location of which is shown on the map on the page following. It is not suggested that the legal issues are any different in respect of Hibernia than in respect of any other portion of the continental shelf off Newfoundland. The significance of the limitation to Hibernia is that it excludes consideration of the territorial sea, i.e., waters adjacent to Newfound-

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land within formerly three, now twelve, nautical miles thereof.

A few months before the federal reference was submitted to this Court, the Lieutenant Governor in Council of Newfoundland, on February 18, 1982, referred its own question to the Newfoundland Court of Appeal. The Newfoundland reference includes not only the continental shelf, but also the territorial sea. The question before the Newfoundland Court of Appeal was this:

Do the lands, mines, minerals, royalties or other rights, including the right to explore and exploit and the right to legislate, with respect to the mineral and other natural resources of the seabed and subsoil from the ordinary low-water mark of the Province of Newfoundland to the seaward limit of the continental shelf or any part thereof belong or otherwise appertain to the Province of Newfoundland?

The Newfoundland Court of Appeal, in Reference re Mineral and other Natural Resources of the Continental Shelf (the Newfoundland Reference) (1983), 145 D.L.R. (3d) 9, answered the question in respect of a three mile territorial sea in favour of Newfoundland, but answered the question in respect of the continental shelf against Newfoundland. The Attorney General of Newfoundland has filed a Notice of Appeal in respect of the continental shelf and the Attorney General of Canada has filed a Notice of Appeal in respect of the territorial sea. Nothing further has been done to bring these appeals before this Court.

Accordingly, the Newfoundland Court of Appeal’s decision is not actually before this Court in the present reference. The Court of Appeal’s decision, however, was rendered on February 17, 1983, the week before this Court’s hearing on the present federal reference. Much of the oral argument in the present case was directed toward the reasons of the Newfoundland Court of Appeal since, in respect of the continental shelf, the identical issue is raised. We therefore think it proper in these reasons to comment on the reasons of the

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Court of Appeal insofar as they relate to the continental shelf.

The 1967 Offshore Reference

In Reference re Offshore Mineral Rights of British Columbia, [1967] S.C.R. 792 (the 1967 Offshore Reference), this Court was asked to give its opinion upon the following questions:

1. In respect of the lands, including the mineral and other natural resources, of the sea bed and subsoil seaward from the ordinary low-water mark on the coast of the mainland and the several islands of British Columbia, outside the harbours, bays, esturaries and other similar inland waters, to the outer limit of the territorial sea of Canada, as defined in the Territorial Sea and Fishing Zones Acts, Statutes of Canada 1964, Chapter 22, as between Canada and British Columbia,

(a) Are the said lands the property of Canada or British Columbia?

(b) Has Canada or British Columbia the right to explore and exploit the said lands?

(c) Has Canada or British Columbia legislative jurisdiction in relation to the said lands?

2. In respect of the mineral and other natural resources of the sea bed and subsoil beyond that part of the territorial sea of Canada referred to in Question 1, to a depth of 200 metres or, beyond that limit, to where the depth of the superjacent waters admits of the exploitation of the mineral and other natural resources of the said areas, as between Canada and British Columbia,

(a) Has Canada or British Columbia the right to explore and exploit the said mineral and other natural resources?

(b) Has Canada or British Columbia legislative jurisdiction in relation to the said mineral and other natural resources?

The Court unanimously answered both questions in favour of Canada. In all material respects, the second question in the 1967 Offshore Reference is identical to the questions in the present reference. The primary argument in favour of Newfoundland is that Newfoundland’s historical and constitutional position distinguishes its case from that of Brit-

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ish Columbia. In the alternative, we are asked to reconsider the 1967 Offshore Reference.

In the 1967 Offshore Reference the major part of this Court’s analysis was directed toward the question as to property in the territorial sea. The Court distinguished between two meanings of the word “property”: the common law sense of ownership and the type of property rights recognized by international law. British Columbia’s claim to property in the territorial sea could only be based on the common law notion. In particular, British Columbia’s case depended on s. 109  of the Constitution Act, 1867 , made applicable to British Columbia upon its entry into Confederation in 1871.

109. All Lands, Mines, Minerals and Royalties belonging to the several Provinces of Canada, Nova Scotia, and New Brunswick at the Union, and all Sums then due or payable for such Lands, Mines, Minerals, or Royalties, shall belong to the several Provinces of Ontario, Quebec, Nova Scotia, and New Brunswick in which the same are situate or arise, subject to any Trusts existing in respect thereof, and to any Interest other than that of the Province in the same.

This Court held, on its analysis of R. v. Keyn (1876), 2 Ex. D. 63 and other authorities, that at common law the realm ends at low water mark such that the Crown has no property, in the common law sense, below low water mark unless expressly claimed. There being no such claim in respect of British Columbia prior to 1871, and no alteration of boundaries since 1871, the Court decided the territorial sea was outside British Columbia. It followed that British Columbia had no legislative jurisdiction either. It was Canada that was in the position to acquire the property in the territorial sea recognized by international law.

Once it had been decided that Canada had property and legislative jurisdiction in the territorial sea, it followed almost automatically that

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Canada had the right to explore and exploit in the continental shelf. It would be illogical to hold that the province had property in its land mass, that Canada had property in the territorial sea, but that the province had the right to explore and exploit in the continental shelf. Accordingly, in the 1967 Offshore Reference, the Court was not required to undertake a detailed separate analysis of the continental shelf. After a review of the recent emergence of the continental shelf regime in international law, the Court simply said this, at p. 821:

As with the territorial sea, so with the continental shelf. There are two reasons why British Columbia lacks the right to explore and exploit and lacks legislative jurisdiction:

(1) The continental shelf is outside the boundaries of British Columbia, and

(2) Canada is the sovereign state which will be recognized by international law as having the rights stated in the Convention of 1958, and it is Canada, not the Province of British Columbia, that will have to answer the claims of other members of the international community for breach of the obligations and responsibilities imposed by the Convention.

There is no historical, legal or constitutional basis upon which the Province of British Columbia could claim the right to explore and exploit or claim legislative jurisdiction over the resources of the continental shelf.

The fact that the constitutional position regarding the territorial sea off Newfoundland is not at issue in the present reference, and indeed is pending in a separate appeal, means that we cannot use any conclusions about the territorial sea to lead us to the result in respect of the continental shelf. Accordingly, in the present case, it is necessary to undertake a careful analysis of the issues as they relate to the continental shelf alone.

The Nature of Continental Shelf Rights

The reference speaks of the right to explore and exploit mineral and other natural resources. The precise language is taken from international law. Article 2 of the 1958 Geneva Convention on the

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Continental Shelf, signed in 1958, in force in 1964 upon receiving the requisite number of ratifications, and ratified by Canada in 1970, reads as follows:

Article 2

1. The coastal State exercises over the continental shelf sovereign rights for the purpose of exploring it and exploiting its natural resources.

2. The rights referred to in paragraph 1 of this article are exclusive in the sense that if the coastal State does not explore the continental shelf or exploit its natural resources, no one may undertake these activities, or make a claim to the continental shelf, without the express consent of the coastal State.

3. The rights of the coastal State over the continental shelf do not depend on occupation, effective or notional, or on any express proclamation.

4. The natural resources referred to in these articles consist of the mineral and other non-living resources of the sea-bed and subsoil together with living organisms belonging to sedentary species, that is to say, organisms which, at the harvestable stage, either are immobile on or under the sea-bed or are unable to move except in constant physical contact with the sea-bed or the subsoil.

Both Canada and Newfoundland claim the rights of the coastal State recognized by international law. Neither purports to claim anything more or anything different. Neither Canada nor Newfoundland made any claims to the continental shelf prior to the codification of the regime in the 1958 Geneva Convention. The rights claimed are those accorded by operation of international law.

There has developed in international law a carefully constructed regime respecting the continental shelf. International law was forced to take note of the continental shelf when, in the middle of this century, the technology was developed to exploit offshore resources. A consensus developed that the exploitation should be under the control of the coastal State. The 1958 Geneva Convention was drafted so as to do no more than was necessary to achieve this result. Thus the Convention does not grant “sovereignty” over the continental shelf but rather “sovereign rights to explore and exploit”.

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These limited rights co-exist with the rights of other nations to make use of the seabed for submarine cables and pipelines (Article 4) and do not affect the status of the superjacent waters or airspace (Article 3). They stand in marked contrast to the full sovereignty (saving only other nations’ rights of innocent passage) which international law accords to coastal States over their territorial sea.

In the North Sea Continental Shelf cases, I.C.J. Reports 1969, p. 3, the International Court of Justice, at p. 29, referred to the notion of appurtenance:

…the right of the coastal State to its continental shelf areas is based on its sovereignty over the land domain, of which the shelf area is the natural prolongation into and under the sea.

Continental shelf rights arise as an extension of the coastal State’s sovereignty, but it is an extension in the form of something less than full sovereignty. The Court referred to the “title” in the continental shelf (p. 31) and said the shelf may be “deemed” to be part of the coastal State’s territory in a certain sense (p. 31). But in the ordinary meaning of the term, the continental shelf is not part of a coastal State’s territory. The coastal State cannot “own” the continental shelf as it can “own” its land territory. The regulation by international law of the uses to which the continental shelf may be put is simply too extensive to consider the shelf to be part of the State’s territory. International law concedes dominion to the State in its land territory, subject to certain definite restrictions. By contrast, in the continental shelf the limited rights that international law accords are the sum total of the coastal State’s rights.

It is true that the United Kingdom moved to extend territorial boundaries to include the continental shelf (though not the superjacent waters) of certain of its then colonies: Trinidad and Tobago (1942); Bahamas (1948); Jamaica (1948); British

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Honduras (1950); Falkland Islands (1952). Consistent with this practice, in 1953, the United Kingdom government’s opinion in response to the International Law Commission’s draft was that the nature of the coastal State’s rights over the continental shelf were the same as over its land territory. There were other countries that, in the late 1940’s and early 1950’s, i.e. during the early development of international law on the continental shelf, claimed the continental shelf as part of their territory. Ultimately, however, international law did not accept this contention and it is significant that when the United Kingdom passed the Continental Shelf Act 1964 giving municipal effect to the 1958 Convention, no claim was made to extend United Kingdom territory.

At international law, then, the continental shelf off Newfoundland is outside the territory of the nation state of Canada. Since, as a matter of municipal law, neither Canada nor Newfoundland purports to claim anything more than international law recognizes, we are here concerned with an area outside the boundaries of either Newfoundland or Canada. In other words, we are concerned with extraterritorial rights.

Much of the argument in the present case is based on the assumption that continental shelf rights are proprietary. We do not think continental shelf rights are proprietary in the ordinary sense. In the words of the 1958 Geneva Convention, they are “sovereign rights” and they appertain to the coastal State as an extension of rights beyond where its ordinary sovereignty is exercised. In pith and substance they are an extraterritorial manifestation of, and an incident of, the external sovereignty of a coastal State.

Can the 1967 Offshore Reference be distinguished?

As we have said, the primary argument in favour of Newfoundland is that its historical and constitutional position differentiates its case from

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that of British Columbia. In order to distinguish the 1967 Offshore Reference, Newfoundland must succeed on each of the following three points:

(i) international law must have recognized the right to explore and exploit in the continental shelf prior to Newfoundland’s entry into Confederation on March 31, 1949;

(ii) the Crown in right of Newfoundland must have been in a position to acquire these rights;

(iii) the Crown in right of Newfoundland must not have lost those rights under the Terms of Union with Canada.

The Attorney General of Canada submits that Newfoundland loses on all three points. The Attorney General of Newfoundland, supported by the Attorneys General of the other provinces, submits that Newfoundland succeeds on all three points.

The first point concerns matters of international law; the latter two raise questions of constitutional law. We prefer to deal with the constitutional arguments first.

The Constitutional Position of the Crown in Right of Newfoundland

In assessing the constitutional position of Newfoundland, we will, for the moment, put Newfoundland’s international law argument at its highest. For the purposes of argument, we will assume that 1949 international law recognized that continental shelf rights of coastal States arose ipso jure, that is to say, by operation of law. On that assumption, was the Crown in right of Newfoundland constitutionally in a position to acquire continental shelf rights prior to joining Canada and to retain them after union with Canada?

In respect of Newfoundland’s position prior to joining Canada, the primary submission of the Attorney General of Newfoundland is that in 1949 Newfoundland was an international person such that the Crown in right of Newfoundland was the

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only entity to which these rights could accrue. In the alternative, the Attorney General of Newfoundland submits that the Crown in right of a colony could acquire continental shelf rights. The Attorney General of Canada submits that Newfoundland never attained the status of an international person and that only international persons can, at international law, acquire continental shelf rights.

We do not think it is necessary to determine whether, in the eyes of international law, Newfoundland ever became an independent State. In the days of Empire, international law had nothing to say about whether international rights accorded to the Empire accrued to the Crown in right of the colony or in right of the Imperial Crown. That is a matter for determination under Imperial constitutional law.

We said earlier that, in pith and substance, continental shelf rights are extraterritorial rights and a manifestation of external sovereignty. This is important because of the constitutional position of colonies. When colonies were established, they generally were given limited self‑government in the form of representative government. In Newfoundland’s case this happened in 1833. The grant of responsible government (1855 for Newfoundland) meant that, with limited exceptions, the colony was granted internal self-government, in other words, internal sovereignty. But what was universally withheld from the colonies was any right of external sovereignty. That was the distinguishing feature of a colony.

Extraterritorial legislative incompetence was a hallmark of colonies, often relied upon by colonial law officers in recommending disallowance of colonial laws. Judicial recognition of this incompetence is found in MacLeod v. Attorney-General for New South Wales, [1891] A.C. 455 (P.C.). The case concerned a bigamy statute which, on one reading, purportedly applied beyond the boundaries of the colony of New South Wales. In dealing with this construction of the statute Lord

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Halsbury L.C. said (at p. 458):

…it would have been beyond the jurisdiction of the Colony to enact such a law. Their jurisdiction is confined within their own territories, and the maxim which has been more than once quoted, “Extra territorium jus dicenti impune non paretur”, would be applicable to such a case.

In Nadan v. The King, [1926] A.C. 482, the Privy Council reiterated this view in holding that Canada did not have competence to abolish appeals to the Privy Council.

The precise limits of extraterritorial incompetence are unclear. The opinion of the Colonial Law Officers was that a colony could legislate in respect of the three nautical mile territorial sea, and there are numerous examples of Newfoundland having done so. Croft v. Dunphy, [1933] A.C. 156 (P.C.), seems to stand for the proposition that an incidental extraterritorial effect is permissible if necessary to the effectiveness of legislation operating within the colony. The basic principle, however, was that colonies were incompetent to legislate extraterritorially.

There was a parallel extraterritorial incompetence in executive powers. For example, colonies were not competent to sign treaties. They might be consulted about treaties affecting them. They might become involved in negotiations under the aegis of the Imperial authorities, but the ultimate control and responsibility in treaty matters rested with the Imperial government. One reflection of this is s. 132  of the Constitution Act, 1867 :

132. The Parliament and Government of Canada shall have all Powers necessary or proper for performing the Obligations of Canada or of any Province thereof, as Part of the British Empire, towards Foreign Countries, arising under Treaties between the Empire and such Foreign Countries.

Treaties were made by the Government of the United Kingdom and not Canada.

A particular example of the extraterritorial incompetence of colonies is that they were inca-

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pable of acquiring new territory. Boundaries could only be altered by the British authorities in the form of an order in council under the Colonial Boundaries Act.

The underlying basis of this denial of external sovereignty was that international relations were the preserve of the United Kingdom government and Parliament. Lack of external sovereignty made colonies incompetent to acquire continental shelf rights. The rights accrued initially to the Imperial Crown as the entity possessing external sovereignty in respect of colonies. The Imperial Crown could transfer them to the colony; this Court noted in the 1967 Offshore Reference, supra, at p. 808, that Imperial rights in the territorial sea could have been transferred to British Columbia. Indeed, continental shelf rights were given to certain colonies during the formative period of international law on the continental shelf. The territorial boundaries of Trinidad and Tobago (1942), Bahamas (1948), Jamaica (1948), British Honduras (1950), and Falkland Islands (1952) were extended by Imperial orders in council to include the continental shelf. In the background documents furnished in the case on appeal to constitutional incompetence of a colony itself to acquire such rights was alluded to. The Attorney General of Newfoundland does refer us to certain later colonial acts claiming continental shelf rights: Sierra Leone (1960); The Gambia (1963); Seychelles (1967); Cayman Islands (1978); British Virgin Islands (1972); St. Vincent (1970); British Solomon Islands Protectorate (1970). We have not been referred to the precise constitutional position of these colonies, nor is there any indication that the constitutional validity of these claims was tested, or even considered. We find these examples of slight persuasive value.

The Attorney General of Newfoundland argues that colonies could acquire continental shelf rights because rights of the Crown in overseas territories were held by the Crown in right of the colony. The

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Attorney General of Nova Scotia makes a similar argument. We quote from the factum of the Attorney General of Nova Scotia, at p. 30:

Accordingly, under colonial constitutional law, it was a general principle that any lands owned by the Crown in a Colony are lands owned by the Crown in Right of the Colony and not in Right of the United Kingdom. Exception to this rule may be made in respect to a particular property (that is it can be considered to be held by the Crown in Right of the United Kingdom) but such exception must be made by an overt act making this reservation and the burden to prove the exception lies with the person claiming the exception.

This argument ignores one critical element. The proposition enunciated applies only to property within the colony. This territorial restriction is stated expressly in one of the authorities relied on: St. Catherine’s Milling and Lumber Co. v. The Queen (1888), 14 App. Cas. 46 (P.C.) at p. 57-58:

The enactments of sect. 109 are, in the opinion of their Lordships, sufficient to give to each Province, subject to the administration and control of its own Legislature, the entire beneficial interest of the Crown in all lands within its boundaries, which at the time of the union were vested in the Crown, with the exception of such lands as the Dominion acquired right to under sect. 108, or might assume for the purposes specified in sect. 117. Its legal effect is to exclude from the “duties and revenues” appropriated to the Dominion, all the ordinary territorial revenues of the Crown arising within the Provinces.

(Emphasis added.)

There was considerable argument in the factums in this case to the effect that this Court was in error in holding in the 1967 Offshore Reference that the territorial sea was outside the boundaries of, and therefore not the property of, a colony. Even if valid these submissions would not advance Newfoundland’s position. Whatever the status of the territorial sea, continental shelf rights remain extraterritorial. The same reasoning that denies extraterritorial legislative and executive competence to colonies applies with equal force to pre-

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vent colonies from exercising any extraterritorial sovereign rights conferred by international law. It is only when a former colony, as a matter of constitutional law, acquires external sovereignty that it can also acquire continental shelf rights. Until such time it is the British Crown that is the beneficiary of the extraterritorial rights over the continental shelf accorded by international law.

In the 1967 Offshore Reference this Court noted that sometime between 1919 and 1931 the Canadian federal government acquired external sovereignty. The Canadian Parliament’s extraterritorial legislative competence was recognized in the Statute of Westminster, 1931 (U.K.), 22 Geo. V, c. 4. The first nine Canadian provinces, by contrast, never gained extraterritorial legislative competence: Interprovincial Co-Operatives Ltd. v. Dryden Chemicals Ltd., [1976] 1 S.C.R. 477 at p. 512. They have never acquired external sovereignty. They are thus incapable of acquiring continental shelf rights.

Is the situation of Newfoundland any different from that of the nine other provinces? Citing, inter alia, the Balfour Declaration, the Statute of Westminster, 1931 and the Terms of Union, the Attorney General of Newfoundland contends that it is and that Newfoundland acquired and retained external sovereignty sufficient to make it the beneficiary of the rights over the continental shelf recognized by international law.

Because of the change in Newfoundland’s constitutional status in 1934, it is convenient to consider this contention first with reference to the period before 1934 and then to the period between 1934 and Confederation in 1949.

(1) The Status of Newfoundland Prior to 1934

The Attorney General of Newfoundland provides us with an extensive review of the history of the colony of Newfoundland, but we think it sufficient to begin with the Imperial Conference of 1926, at which Newfoundland was a full partici-

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pant along with Great Britain and the other Dominions. The Conference produced the Balfour Declaration, which included the following passage:

There is, however, one most important element in it which from a strictly constitutional point of view, has now, as regards all vital matters, reached its full development—we refer to the group of self-governing communities composed of Great Britain and the Dominions. Their position and mutual relation may be readily defined. They are autonomous communities within the British Empire, equal in status, in no way subordinate one to another in any aspect of their domestic or external affairs, though united by a common allegiance to the Crown, and freely associated as members of the British Commonwealth of Nations.

(Emphasis added.)

The equating of status of Dominions, including Newfoundland, with Great Britain was an express recognition that, as a matter of Imperial constitutional law, the Dominions had evolved to the stage of possessing external sovereignty.

It was argued on behalf of Canada that, during the period immediately following 1926 two factors distinguished the position of Newfoundland from that of the other Dominions. Newfoundland chose not to be a member of the League of Nations and Newfoundland chose to leave the conduct of its external relations to the British authorities. These two factors did cause considerable confusion concerning the manner in which Newfoundland was to be dealt with in treaties. These considerations may reflect on whether Newfoundland was an independent person in the eyes of international law, but they were not constitutional impediments. We do not think they detract from the fact that as a matter of status, according to Imperial constitutional convention, Newfoundland possessed external sovereignty.

In 1931 the Statute of Westminster included Newfoundland within the category of “Dominion”. The following provisions of the Act are of particular significance:

1. In this Act the expression “Dominion” means any of the following Dominions, that is to say, the Dominion

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of Canada, the Commonwealth of Australia, the Dominion of New Zealand, the Union of South Africa, the Irish Free State and Newfoundland.

…

3. It is hereby declared and enacted that the Parliament of a Dominion has full power to make laws having extra-territorial operation.

…

10. (1) None of the following sections of this Act, that is to say, sections two, three, four, five and six, shall extend to a Dominion to which this section applies, as part of the law of that Dominion unless that section is adopted by the Parliament of the Dominion, and any Act of that Parliament adopting any section of this Act may provide that the adoption shall have effect either from the commencement of this Act or from such later date as is specified in the adopting Act.

(2) The Parliament of any such Dominion as aforesaid may at any time revoke the adoption of any section referred to in subsection (1) of this section.

(3) The Dominions to which this section applies are the Commonwealth of Australia, the Dominion of New Zealand and Newfoundland.

11. Notwithstanding anything in the Interpretation Act, 1889, the expression “Colony” shall not, in any Act of the Parliament of the United Kingdom passed after the commencement of this Act, include a Dominion or any Province or State forming part of a Dominion.

(Emphasis added.)

Newfoundland never did adopt the Statute of Westminster, 1931. Sections 1 and 11 automatically applied to it. Section 3, however, did not. It may well be that, because it failed to adopt the Statute, Newfoundland did not have power to make extraterritorial law. For the sake of argument, however, we are willing to assume that this failure is of no particular consequence and that, at least from 1926 to 1934, Newfoundland had sufficient external sovereignty to acquire continental shelf rights. By itself, though, that conclusion would do little to assist Newfoundland. As we shall see, there is not even a faint argument that continental shelf rights existed at international law by 1934. There was no State practice as of that date. The critical question respecting pre-Confederation

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status is the position of Newfoundland from 1934 to 1949.

(2) The Status of Newfoundland under The Commission of Government, 1934-1949

In the early 1930’s Newfoundland was facing serious financial difficulties. It turned to the United Kingdom for assistance. The United Kingdom was prepared to assume financial responsibility for Newfoundland on the condition that the form of government of Newfoundland be changed. A joint Newfoundland-United Kingdom royal commission made the following recommendations:

We therefore recommend that the Newfoundland Government, recognising that it is impossible for the Island to surmount unaided the unprecedented difficulties that now confront it, should make an immediate appeal for the sympathetic co-operation of Your Majesty’s Government in the United Kingdom in the adoption and execution of a joint plan of reconstruction, of which the following would be the main features:

(a) The existing form of government would be suspended until such time as the Island may become self-supporting again.

(b) A special Commission of Government would be created which would be presided over by His Excellency the Governor, would be vested with full legislative and executive authority, and would take the place of the existing Legislature and Executive Council.

(c) The Commission of Government would be composed of six members, exclusive of the governor, three of whom would be drawn from Newfoundland and three from the United Kingdom.

(d) The government Departments in the Island would be divided into six groups. Each group would be placed in the charge of a Member of the Commission of Government, who would be responsible for the efficient working of the Departments in the group, and the Commission would be collectively responsible for the several Departments.

(e) The proceedings of the Commission of Government would be subject to supervisory control by Your Majesty’s Government in the United Kingdom, and

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the Governor-in-Commission would be responsible to the Secretary of State for Dominion Affairs in the United Kingdom for the good government of the Island.

(f) Your Majesty’s Government in the United Kingdom would, for their part, assume general responsibility for the finances of the Island until such time as it may become self-supporting again, and would, in particular, make such arrangements as may be deemed just and practicable with a view to securing to Newfoundland a reduction in the present burden of the public debt.

(g) It would be understood that, as soon as the Island’s difficulties are overcome and the country is again self-supporting, responsible government, on request from the people of Newfoundland, would be restored.

At the request of the Newfoundland Assembly, the Parliament at Westminster enacted the Newfoundland Act, 1933 (U.K.), Geo. V, c. 2, to give effect to the recommendations. The Act authorized the suspension of the existing Letters Patent, which recognized responsible government. New Letters Patent establishing the Commission of Government in fact came into force February 18, 1934.

The new government was neither representative nor responsible. Its undemocratic nature has little bearing on questions of sovereignty, but the fact that the government was not responsible clearly does. The control to be exercised by the United Kingdom government, referred to in paragraph (e) of the Royal Commission’s recommendations, was not a paper control, but a real one. This was acknowledged by Gordon Bradley, member of the Newfoundland delegation, during the 1947 meeting with Canadian representatives at which the possibility of union was discussed:

Newfoundland may be described as a country in search of a satisfactory form of government. For upwards of thirteen years the country has been managed by what we fairly call a caretaker administration. This administration, known as Government by Commission, is appointed and controlled by His Majesty’s Government in the United Kingdom. It is not representative of the people except in the limited sense that three of its seven members are residents of Newfoundland who have been

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selected and appointed by the British Government, the other four being residents of the United Kingdom. It was frankly admitted, when this Commission system of administration was first proposed and inaugurated, that it was to be of a temporary character, lasting for a limited period of years. The two conditions of its abolition were set forth clearly in the beginning; it was to continue until Newfoundland became self‑supporting again and the Newfoundland people requested its discontinuance.

The view of the Secretary of State for Dominion Affairs was that supervisory control by the Dominions Office was a constitutional necessity. A government must be accountable to an elected body, and the only body to which the Commission of Government could be answerable was the Parliament at Westminster, through the Secretary of State for Dominion Affairs (Dispatch 539, December 19, 1935).

The Attorney General of Newfoundland submits in Appendix “A” to his factum, at p. 149:

Although the new form of Government thus brought about was neither representative nor responsible it was nevertheless, equally with its predecessor, the government of Newfoundland and of no other place.

The government was certainly the government of Newfoundland; the difficulty is that it was not the government by Newfoundland.

During the Commission of Government, Newfoundland still technically had the status of a Dominion under the Statute of Westminster, 1931. In practice, though, Newfoundland was treated differently from the other Dominions. For example, in Imperial legislation which referred to the Dominions the formula used was to define Dominion as “a Dominion within the meaning of the Statute of Westminster, 1931 except Newfoundland”, and then deal with Newfoundland separately, treating it in the same manner as colonies.

The Attorney General of Newfoundland makes a strong argument to the effect that during the Commission of Government, Newfoundland was not like an ordinary colony. This may well be true

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but that does not mean it had the requisite external sovereignty to acquire continental shelf rights.

In the conduct of international relations, the United Kingdom government acted on behalf of Newfoundland, though representatives of the Newfoundland government were de facto closely involved. Newfoundland participated in the 1943 Fisheries Conference and signed the Final Act of the Conference on its own, but this was later described as “irregular” by the Foreign Office (Case, p. 1673). It seems clear that the United Kingdom authorities were concerned that the Newfoundland government not act as an independent State. Thus Newfoundland’s response to the Truman Proclamation, (the claim to continental shelf rights enunciated by the United States in 1945), was thought to raise constitutional questions. In a letter dated July 31, 1947 from C. Costley-White, of the Commonwealth Relations Office, to P.D.H. Dunn, Newfoundland Minister of Agriculture and Fisheries, the following observation was made (Case, p. 2098):

Under the present constitutional arrangements (which may not however of course last much longer) it would not seem appropriate for the Newfoundland Government to raise direct with the United States Government a matter of this kind concerning external relations. It would be necessary for the United Kingdom Government to approach the United States Government.

The Attorney General of Newfoundland makes an argument, accepted by the Court of Appeal in the Newfoundland Reference, (p. 32) that the United Kingdom government and the Commission of Government were constitutionally trustees for the future government of Newfoundland. Correct or not, this analysis does not aid in resolving the question at issue. The powers of the “future government of Newfoundland” were in 1949 divided between the new province of Newfoundland and the Canadian federal government. Newfoundland’s analysis does not tell us what was preserved or acquired for the future province as opposed to the federal government.

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The Attorney General of Newfoundland stresses that the Commission of Government was voluntarily submitted to by Newfoundland, and that self-government was only suspended. We accept both propositions, but they do not alter the situation that during the period of suspension Newfoundland did not even have internal sovereignty, much less external sovereignty. We think that the suspension of self-government necessarily suspended the external sovereignty of Newfoundland recognized in the Balfour Declaration. Any continental shelf rights available at international law between 1934 and 1949 therefore accrued to the Crown in right of the United Kingdom, not the Crown in right of Newfoundland.

(3) The Effect of Term 7 on the Status of Newfoundland

The Attorney General of Newfoundland submits, in the alternative, that even if Newfoundland lost its external sovereignty during the Commission of Government, it entered Canada with the same external sovereignty it had in 1933 because of Term 7 of the Terms of Union:

PROVINCIAL CONSTITUTION

7. The Constitution of Newfoundland as it existed immediately prior to the sixteenth day of February 1934, is revived at the date of Union and shall, subject to these Terms and the British America Acts, 1867 to 1946, continue as the Constitution of the Province of Newfoundland from and after the date of Union, until altered under the authority of the said Acts.

The argument is that the revival of the pre-1934 Constitution means that whatever continental shelf rights arose during the Commission of Government attached to Newfoundland immediately prior to Union.

Term 7 first appeared in the seventh of the eight preliminary drafts of the Terms of Union. It then read simply:

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PROVINCIAL CONSTITUTION

7. The Constitution of Newfoundland as it existed immediately prior to the sixteenth day of February, 1934, is revived at the date of Union as provided in these Terms.

It was revised in the eighth draft to read:

PROVINCIAL CONSTITUTION

7. The Constitution of Newfoundland as it existed immediately prior to the sixteenth day of February, 1934, is revived at the date of Union and shall, subject to the provisions of these Terms, continue as the Constitution of the Province of Newfoundland from and after the date of Union, until altered under the authority of the British North America Acts, 1867 to 1946.

It was changed to its final form in the supplement to the eighth draft.

The thrust of each of the drafts of Term 7 is the same. The phrase “at the date of Union” in Term 7 is defined in Term 1 as “the coming into force of these Terms”. Accordingly, the revival takes effect at the same time as the rest of the Terms. The pre-1934 Constitution is revived only as amended. One of the amendments is that Newfoundland is to have the status of a province under the Statute of Westminster, 1931 (Term 48). Term 7 is preceded by the heading “Provincial Constitution”. The obvious purpose of Term 7 is to give Newfoundland responsible government, but as a province of Canada (Newfoundland Reference, supra, p. 34). Term 7 refers to the manner of internal self-government only.

Accordingly, we do not think Term 7 in any way affects our conclusion that, if continental shelf rights existed at international law prior to Union, they accrued to the Crown in right of the United Kingdom not the Crown in right of Newfoundland.

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(4) The Effect of Term 37 on the Status of Newfoundland

Even if Newfoundland had possessed external sovereignty immediately prior to joining Canada, it clearly lost such external sovereignty as a result of the Union when it acquired the status of a province. Assuming, for the purposes of argument only, that in 1949 Newfoundland had external sovereignty to lose, would that loss of external sovereignty also have entailed a loss of continental shelf rights already acquired?

The Attorney General of Newfoundland relies on Term 37 to support the argument that the province retained continental shelf rights. Terms 2, 3, and 35 are also relevant:

2. The Province of Newfoundland shall comprise the same territory as at the date of Union, that is to say, the island of Newfoundland and the islands adjacent thereto, the Coast of Labrador as delimited in the report delivered by the Judicial Committee of His Majesty’s Privy Council on the first day of March, 1927, and approved by His Majesty in His Privy Council on the twenty-second day of March, 1927, and the islands adjacent to the said Coast of Labrador.

APPLICATION OF THE BRITISH NORTH AMERICA ACTS

3. The British North America Acts, 1867 to 1946, shall apply to the Province of Newfoundland in the same way, and to the like extent as they apply to the provinces heretofore comprised in Canada, as if the Province of Newfoundland had been one of the provinces originally united, except in so far as varied by these Terms and except such provisions as are in terms made or by reasonable intendment may be held to be specially applicable to or only to affect one or more and not all of the provinces originally united.

…

35. Newfoundland public works and property not transferred to Canada by or under these Terms will remain the property of the Province of Newfoundland.

…

Natural Resources

37. All lands, mines, minerals, and royalties belonging to Newfoundland at the date of Union, and all sums

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then due or payable for such lands, mines, minerals, or royalties, shall belong to the Province of Newfoundland, subject-to any trusts existing in respect thereof, and to any interest other than that of the Province in the same.

Term 37 (which was in the same form throughout all eight preliminary drafts) is analogous to s. 109  of the Constitution Act, 1867 

109. All Lands, Mines, Minerals, and Royalties belonging to the several Provinces of Canada, Nova Scotia, and New Brunswick at the Union, and all Sums then due or payable for such Lands, Mines, Minerals or Royalties, shall belong to the several Provinces of Ontario, Quebec, Nova Scotia, and New Brunswick in which the same are situate or arise, subject to any Trusts existing in respect thereof, and to any Interest other than that of the Province in the same.

(Emphasis added.)

Noting that Term 3 contemplates that there may be differences between Newfoundland and the rest of the provinces, the Attorney General of Newfoundland draws a distinction based on the fact that the words “in which the same are situate or arise” which appear in s. 109  do not appear in Term 37. As adopted by the Court of Appeal in the Newfoundland Reference, supra, at pp. 35-36 this argument runs as follows:

If it were intended that on union with Canada, Newfoundland’s ownership of natural resources was restricted to these resources found within its defined boundaries, then Term 37 becomes superfluous in view of the fact that Term 3 had already made s. 109 of the British North America Act, 1867 applicable to Newfoundland in the absence of a specific variation, in the same way that s. 10 of British Columbia’s Terms of Union made s. 109 applicable to that province. The general rule of construction is that not only must the whole Act be read, but every provision of the Act should, if possible, be given meaning. The significant difference between Term 37 and s. 109 is the omission of any language from Term 37 confining the resources reserved to Newfoundland to those found within its boundaries as defined in Term 2. The presumption is that words are not omitted, when they have been used in a corresponding clause in an earlier statute, without a reason. To give effect to Term 37, then, it must be construed as a variation of s. 109 of the British North America Act, 1867 and of having the effect of reserving to the Province of Newfoundland all

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proprietary rights both within and outside the land mass described in Term 2.

Despite its concurrence with the Attorney General of Newfoundland as to the significance of the Terms in question, the Newfoundland Court of Appeal found that Term 37 did not apply to continental shelf rights because Newfoundland had not claimed any proprietary interest in the continental shelf. The Court explained at p. 40:

The Supreme Court of Canada in the B.C. Reference [the 1967 Offshore Reference] determined that international law cannot, of itself, endow a State with additional territory or rights therein. The acquisition of such rights is a matter of municipal law and must be accomplished by some constitutional act. We must, of course, accept that decision as determinative of the issue. The historical record of Newfoundland prior to Union establishes there was no such act.

In the 1967 Offshore Reference this Court concluded on the basis of R. v. Keyn, supra, that the territory of British Columbia did not include the territorial sea because of the lack of a claim under municipal law. This requirement of a claim applies, we think, only to extension of territories and not to the acquisition of proprietary interests beyond territorial limits. We do not think that it is the absence of a claim by Newfoundland that precludes it from acquiring a proprietary interest. In the 1967 Offshore Reference Canada was held to have the right to explore and exploit the continental shelf though it had made no claim. Our conclusion that Term 37 would not have assisted Newfoundland in retaining whatever pre-1949 continental shelf rights it might have acquired is based on different considerations.

We do not attribute the same significance as did the Court of Appeal of Newfoundland to the specific inclusion of Term 37 nor to the absence of the words “in which the same are situate or arise”.

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The Terms of Union fully dealt with property division, though much of it could be characterized as superfluous. There were certain things that could not be covered by the Constitution Act, 1867 , such as Gander Airport and the property of Newfoundland Broadcasting Corporation, but many other transfers in the Terms of Union had direct parallels in the Constitution Act, 1867 , for example railways or public harbours. There seems simply to have been a desire to collect all the provisions related to property division in one place and hence the inclusion of Terms 35 and 37 in addition to Term 3.

As for the words “in which the same are situate or arise” in s. 109 , these are grammatically necessary because the section dealt originally with three former colonies becoming four provinces. They have no further purpose or effect. The property rights being dealt with in s. 109  are public property rights: Attorney-General of British Columbia v. Attorney-General of Canada (1889), 14 App. Cas. 295 (P.C.), at p. 301. The Crown in right of the province holds ultimate title in such property within the province because it is the Crown. Outside their boundaries the provinces can hold no such public property; whatever extraprovincial property they do hold—such as provincial offices in foreign countries—is held by them as private property in their capacity as legal persons. This is a basic principle of constitutional law and not the result of the inclusion of the phrase “in which the same are situate or arise” in s. 109  of the Constitution Act, 1867 . It would take much more than the omission of these words from Term 37 of the Terms of Union to give the Province of Newfoundland the capacity to hold extraterritorial public property.

Finally and beyond all this there is a fundamental conceptual difficulty in attempting to apply Terms 35 and 37 to continental shelf rights. These Terms deal with proprietary rights to be retained by the Province of Newfoundland after Confederation. Continental shelf rights are in pith and sub-

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stance incidents of external sovereignty. They are not in pith and substance proprietary rights and are therefore not properly dealt with by provisions governing division of property. Term 37 cannot advance Newfoundland’s argument.

Assuming, arguendo, that a right to explore and exploit the continental shelf was recognized by international law in 1949, we conclude that on Union it would have had to devolve as an incident of external sovereignty, whether from the Crown in right of Newfoundland or, as we think, from the Crown in right of the United Kingdom, to the only entity within Canada possessing external sovereignty—the Crown in right of Canada. Even if—contrary to our opinion—Newfoundland did have the external sovereignty necessary to acquire continental shelf rights prior to joining Canada, the effect of the Terms of Union would be that Canada, not Newfoundland would have the right to explore and exploit the continental shelf.

The State of International Law in 1949

Up to now we have been making assumptions about international law most favourable to Newfoundland’s position. On these assumptions we have been unable to conclude that Newfoundland was constitutionally capable of acquiring or retaining continental shelf rights. We turn now to examine these assumptions and to consider the international law question.

In the late 1940’s there was some discussion between the Commission of Government of Newfoundland and the United Kingdom government about the possibility of a claim to the continental shelf being made “by or on behalf of Newfoundland”, but no such claim was ever made. Accordingly, in order for Newfoundland to have acquired continental shelf rights under international law prior to its joining Canada in 1949, it must be shown that by that date international law had reached the stage not only of recognizing as valid State claims to the continental shelf, but also that

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States that had made no such claim were accorded the rights in question ipso jure, that is to say, by operation of law. There is no question that the current position at international law is that no such claim is necessary. Paragraph 3 of Article 2 of the 1958 Geneva Convention states this expressly:

The rights of the coastal State over the continental shelf do not depend on occupation, effective or notional, or on any express proclamation.

The question is whether international law had sufficiently crystalized to make this the law in 1949.

Article 38(1) of the Statute of the International Court of Justice lists three primary sources of international law as indicated in (a), (b) and (c) below:

1. The Court whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply:

(a) international conventions, whether general or particular, establishing rules expressly recognized by the contesting states;

(b) international custom, as evidence of a general practice accepted as law;

(c) the general principles of law recognized by civilized nations;

(d) subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.

There was no conventional law respecting the continental shelf prior to the 1958 Geneva Convention and therefore source (a) has no application. Source (c) refers to principles of municipal law, Oppenheim on International Law, 8th ed. by Lauterpacht, 1955, at p. 29, and equally has no application in the present case. The critical issue then is whether the sovereign right, arising ipso jure, to explore and exploit in the continental shelf was a matter of customary international law by 1949. Oppenheim on International Law, supra, gives the following description of customs (at p. 17):

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International jurists speak of a custom when a clear and continuous habit of doing certain actions has grown up under the aegis of the conviction that these actions are, according to International Law, obligatory or right.

In order to constitute a custom there must be substantial uniformity or consistency, and general acceptance.

The positive law on the continental shelf had its inception in State claims. The first was in 1942, concerning the Gulf of Paria between Venezuela and Trinidad. A treaty concluded between Venezuela and the United Kingdom contained a mutual agreement to recognize each other’s claims to sovereignty over designated submarine areas in this Gulf. The United Kingdom followed up on the Treaty by passing an order in council, dated August 6, 1942, declaring that the submarine areas:

shall be annexed to and form part of His Majesty’s dominions and shall be attached to the colony of Trinidad and Tobago for administrative purposes, and the said submarine areas are annexed and attached accordingly.

The British proceeded upon the theory that the seabed beyond territorial waters was res nullius—the property of nobody—and could therefore be appropriated only by occupation. This is quite different from the manner in which international law ultimately developed.

More in keeping with the current international law approach to the continental shelf was the claim of the United States by the Truman Proclamation, dated September 28, 1945, which, omitting the preamble, reads as follows:

Now, therefore, I, Harry S. Truman, President of the United States of America, do hereby proclaim the following policy of the United States of America with respect to the natural resources of the sub-soil and sea bed of the continental shelf.

Having concern for the urgency of conserving and prudently utilizing its natural resources, the Government of the United States regards the natural resources of the subsoil and sea bed of the continental shelf beneath the high seas but contiguous to the coasts of the

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United States as appertaining to the United States, subject to its jurisdiction and control. In cases where the continental shelf extends to the shores of another State, or is shared with an adjacent State, the boundary shall be determined by the United States and the State concerned in accordance with equitable principles. The character as high seas of the waters above the continental shelf and the right to their free and unimpeded navigation are in no way thus affected.

In the North Sea Continental cases, supra, the International Court of Justice confirmed that the Truman Proclamation was the starting point of the positive law on the subject.

Prior to Newfoundland’s entry into Confederation, seven Latin American States (Mexico, Argentina, Panama, Nicaragua, Chile, Peru, and Costa Rica) issued decrees in respect of the continental shelf, all of which used language broader than that of the Truman Proclamation. All claimed at least sovereignty over the continental shelf; most treated it as territorial. A majority claimed not only the continental shelf, but also the superjacent waters. Some States claimed the geographic shelf to a limited depth; others claimed to a limit of 200 miles from the coast, whatever the depth.

To complete the picture prior to Newfoundland’s entry into Canada, reference must be made to the United Kingdom’s extension, by order in council, of the territorial boundaries of two additional colonies: Jamaica and the Bahamas, both on November 26, 1948.

Within six months of Newfoundland’s joining Confederation there were claims by 13 additional States, mostly from the Persian Gulf. Most of the Persian Gulf declarations were drafted by the British authorities because the States concerned were then British protectorates. Even with the inclusion of these 13 additional claims the numbers were not large and the terms of the claims were far from uniform.

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In 1950 the International Law Commission began its work on the continental shelf. There were several comments among the members which indicated they perceived they were engaged in the progressive development of international law rather than the codification of existing law. In 1950 the special rapporteur, J.P.A. François, in his first memorandum to the Commission, expressed the view that continental shelf rights were not yet part of international law:

[TRANSLATION] Does international law recognize a rule that control and jurisdiction, or even sovereignty, over the seabed and subsoil of the continental shelf, and the superjacent waters, beyond the territorial limit, belong to the riparian state?

The Rapporteur does not feel that an affirmative answer can be given to this question at this time. The number of proclamations claiming special rights continues to increase, it is true, but is still limited. Most states have not so far claimed such rights, and they have not expressly recognized the validity of such claims. In certain cases, where rights of sovereignty have been claimed, formal protests have been made. In cases involving rights of control and jurisdiction, doubts subsist as to the scope of such claims: are they much less extensive than sovereignty itself?

…

In this situation the Rapporteur feels the conclusion should be avoided that international law at present recognizes as a rule of customary law that either sovereignty or control and jurisdiction over the continental shelf belong to the riparian state, ipso facto or simply as the result of a notional occupation.

The 1950 deliberations of the Commission make it clear that the notion of continental shelf rights arising ipso jure was considered to be new law:

The CHAIRMAN read out the text of question 9 “To what extent can there be any question in this connexion of rights already recognized under existing international law?”

Mr. FRANÇOIS said that the Commission had already answered that question by accepting the formula submitted by Mr. Brierly, according to which the international right of control and jurisdiction of the littoral State existed ipso jure.

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Mr. BRIERLY disagreed. He thought that the question of the continental shelf was a matter which concerned the development of international law, and he had submitted his formula in the hope that it might serve as a basis for a right to be determined later.

…

Mr. FRANÇOIS observed that, after the explanation furnished by Mr. Brierly, the two sections of the Commission were not so far apart.

Confirmation of these views is to be found in the 1952 decision of Lord Asquith in the Abu Dhabi Arbitration (1952), 1 International and Comparative Law Quarterly 247, much relied upon by the Attorney General of Canada. The arbitration concerned the construction of a 1939 contract. One of the issues was whether concessions had been granted in the submarine areas beyond the territorial sea of Abu Dhabi. Lord Asquith said at pp. 253-56:

Directed, as I apprehend I am, to apply a simple and broad jurisprudence to the construction of this contract, it seems to me that it would be a most artificial refinement to read back into the contract the implications of a doctrine not mooted till seven years later, and, if the view which I am about to express is sound, not even today admitted to the canon of international law….

…

The preceding section calls attention not only to the recent origin of the doctrine but to the great variety of forms which in its short life it has assumed. Some States claim sovereignty over the Shelf. Others pointedly avoid doing so, claiming only “jurisdiction” or “control”, “appurtenance” and the like. Whatever the scope of the rights claimed, some States assert those rights by declaratory proclamations implying their pre‑existence; others issued proclamations which are on the face of them a new departure and designed to be constitutive of title. What is the seaward limit of the Shelf? Here again the answers given differ. Some States say, “its geological or geographical limit, its ‘edge’ or its ‘drop’”. Others (whether because their particular Shelf has got no edge and has got no drop, or for other reasons), say, “the point at which the sea become [sic] 100 fathoms or 200 metres deep”; while yet others say, “a line drawn parallel to the coast of the contiguous power and 200 nautical miles from it”. The 200‑mile claims seems to be more or

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less universally discredited. The other two criteria seem on their face much more reasonable…. Again how are rights of whatever character to the subsoil of the Shelf acquired? Can they indeed be acquired at all? Or would their existence inevitably conflict with the “freedom” of the high seas? Before the doctrine of the Shelf was promulgated I think the general answer might well have been that they cannot be acquired at all—that the Shelf is as inappropriate as the high seas that roll or repose above it: subject to this reservation, that the sea-bed (not the subsoil) of the submarine area, is in certain rare cases, subject to a customary right vested in certain States to conduct “sedentary” fisheries in such sea-bed. For instance, the right to fish for sponges, coral, oysters, pearls and chank. Indeed, the shallow seas of the Persian Gulf are subject to mutual pearling rights by subjects of the various littoral States. If, however, the submarine area is capable not merely of being the subject-matter of these limited occupational rights over the sea-bed and pro tanto a “res nullius” is its subsoil as a whole res nullius? that is to say, something in which rights can be acquired, but only by effective occupation? Or is the position, as the claimants’ main argument maintains, that the rights in the subsoil of the Shelf adhere (and must be taken always to have adhered) ipso jure—occupation or no occupation—to the contiguous coastal Power? Or failing that, if occupation be indeed necessary; in cases where it is almost impracticable, may proclamations, or similar acts be treated as constructive or symbolic or inchoate occupation (the claimants’ alternative contention under this head)?

Conclusion as to doctrine of the Continental Shelf

Neither the practice of nations nor the pronouncements of learned jurists give any certain or consistent answer to many—perhaps most—of these questions. I am of opinion that there are in this field so many ragged ends and unfilled blanks, so much that is merely tentative and exploratory, that in no form can the doctrine claim as yet to have been assumed hitherto the hard lineaments or the definitive status of an established rule of international law.

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The Attorney General of Newfoundland for his part relies on the contrary opinion expressed by Professor H. Lauterpacht (incidentally, the losing counsel in the Abu Dhabi Arbitration) in “Sovereignty over Submarine Areas”, [1950] British Yearbook of International Law 376. Writing in 1950, Lauterpacht said, at pp. 376-77 and 394:

…the doctrine and the practice of the continental shelf…has now, in any case, become part of international law by unequivocal positive acts of some states, including the leading maritime Powers, and general acquiescence on the part of others.

…

Moreover, assuming that we are confronted here with the creation of new international law by custom, what matters is not so much the number of states participating in its creation and the length of the period within which that change takes place, as the relative importance, in any particular sphere, of states inaugurating the change. In a matter closely related to the principle of the freedom of the seas the conduct of the two principal maritime Powers—such as Great Britain and the United States—is of special importance. With regard to the continental shelf and submarine areas generally these two states inaugurated the development and their initiative was treated as authoritative almost as a matter of course from the outset. This was so in particular having regard to the traditional attachment of these states to the principle of the freedom of the seas and the customary limit of the territorial waters.

On the general issue of the existence of continental shelf rights, Lauterpacht seems, in the context of the entire article, to have succeeded only in demonstrating that this doctrine ought to be accepted into international law. In any event, however, on the crucial issue of whether rights in the continental shelf arise ipso jure Lauterpacht provides little support for Newfoundland’s position; indeed he leans to the view that a proclamation was necessary (at pp. 418-19):

A proclamation is a means by which a title, claimed or acquired, is announced. It is not a source of a title or a means of acquiring it. That does not mean that it is meaningless or unnecessary. When the Rulers of various Sheikdoms in the Persian Gulf were advised in 1949 by the Brisith authorities that the issue of a proclamation is

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a pre-requisite of their effective assertion of rights over the adjacent submarine areas, the advice was given in deference to an obvious proposition of order and orderliness which requires that a person—or a state—asserting a claim, however inherently valid, must make his claim known by a formal pronouncement or notification. This is so especially if the subject of the claim in question is novel in character, undefined in extent, and likely to require determination in relation to similar claims by other persons or states. Accordingly, the issue of the proclamations of the continental shelf in no way militates against the view that they were of declaratory character in relation to what was considered to be a title claimed or acquired by or belonging to the state by reference to a legal basis other than occupation.

(Emphasis added.)

We think Lauterpacht’s comments give rise to a further point. During the embryonic stage of the development of a rule of international law it is difficult to say that rights arise ipso jure when it is not yet settled what those rights are. In 1949, in the absence of any proclamation by Newfoundland, one would have been hard pressed to state with any precision what rights were consistent with State practice to that date. We think this point is reinforced by the fact that in the documents relating to the consideration given to making a claim by or on behalf of Newfoundland, there was no hint that anyone thought Newfoundland rights in the continental shelf already existed.

We conclude that international law had not sufficiently developed by 1949 to confer, ipso jure, the right of the coastal State to explore and exploit the continental shelf. We think that in 1949 State practice was neither sufficiently widespread to constitute a general practice nor sufficiently consistent to constitute settled law. Furthermore, several of the early State claims exceeded that which international law subsequently recognized in the 1958 Geneva Convention. International law on the continental shelf developed relatively quickly, but it had not attained concrete form by 1949.

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The Attorney General of Newfoundland argues, in the alternative, that even if continental shelf rights were not part of customary international law in 1949, the subsequent developments had retroactive effect. The following passage of the North Sea Continental Shelf cases, supra, at p. 22, is cited in support of that proposition:

Delimitation in an equitable manner is one thing, but not the same thing as awarding a just and equitable share of a previously undelimited area, even though in a number of cases the results may be comparable, or even identical.

…the doctrine of the just and equitable share appears to be wholly at variance with what the Court entertains no doubt is the most fundamental of all the rules of law relating to the continental shelf, enshrined in Article 2 of the 1958 Geneva Convention, though quite independent of it,—namely that the rights of the coastal State in respect of the area of continental shelf that constitutes a natural prolongation of its land territory into and under the sea exist ipso facto and ab initio, by virtue of its sovereignty over the land, and an extension of it in an exercise of sovereign rights for the purpose of exploring the seabed and exploiting its natural resources. In short, there is here an inherent right. In order to exercise it, no special legal process has to be gone through, nor have any special legal acts to be performed. Its existence can be declared (and many States have done this) but does not need to be constituted. Furthermore, the right does not depend on its being exercised. To echo the language of the Geneva Convention, it is “exclusive” in the sense that if the coastal State does not choose to explore or exploit the areas of shelf appertaining to it, that is its own affair, but no one else may do so without its express consent.

(Emphasis added.)

The Court of Appeal in the Newfoundland Reference, supra, decided the international law point in Newfoundland’s favour, on the basis of this retroactivity argument. The Court said, at p. 39:

The phrase “ipso facto and ab initio” used by the court [the International Court of Justice], may be interpreted as meaning that the rights in international law extended back in geological time, as suggested by D.P. O’Connell, or to when sovereignty over the land mass was first established and recognized, or to when the submarine areas in question became exploitable as a

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result of modern developments of science and technology, or, more specifically, to when these areas became the object of active interest of States. In our opinion, the last is the most logical and is in accord with British practice at the time.

There was no issue of retroactivity in the North Sea Continental Shelf cases. We do not think the terms “ipso facto” and “ab initio” were meant to suggest retroactivity. The point of this passage was simply to counter the German argument that the Court was dealing with the delineation of new areas. The Newfoundland Court of Apeal listed possible starting dates for the “ab initio” reference, but left out one—the time at which international law recognized continental shelf rights. We think that is what the “ab initio” refers to. As noted earlier, the discussions in the International Law Commission considered that the doctrine of continental shelf rights arising ipso jure enunciated new law. The development of customary or conventional international law is, by definition, the development of new law. There is no concept in international law of discovering law that always was. In our view, continental shelf rights have no retroactive application to a time before they were recognized by international law.

Even if there were a retroactive element to continental shelf rights, we do not, in any event, see how this would help Newfoundland’s case. The Newfoundland argument amounts to this: In 1949 there were no continental shelf rights recognized at international law so that Newfoundland had no such rights when it joined Canada. Subsequently, however, international law did recognize these rights with retroactive effect. Even if international law as to the continental shelf were to have retroactive effect, we think the benefit would accrue to the entity within Canada currently competent to acquire continental shelf rights and that entity is not Newfoundland but Canada. We agree with the following passage of Gibbs J., dissenting on other grounds, in New South Wales v. Com-

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monwealth of Australia (1975), 135 C.L.R. 337, at p. 416:

To say that the rights of coastal states in respect of the continental shelf existed from the beginning of time may or may not be correct as a matter of legal theory. In fact, however, the rights now recognized represent the response of international law to modern developments of science and technology, which permit the seabed to be exploited in a way which it was quite impossible for governments or lawyers of earlier centuries to foresee. In this matter the arguments of history are stronger than those of logic. In truth, when the Act was passed, the States had not asserted and did not have the rights to the continental shelf which the convention now accords to coastal states. Those rights, if theoretically inherent in the sovereignty of coastal states, were in fact the result of the operation of a new legal principle. When those rights were recognized by the international law the Commonwealth was the international person entitled to assert them, and it did so. The assertion by the Commonwealth of those rights in no way interfered with any existing right of any State.

We therefore conclude that Newfoundland could not, upon its entry into Confederation, have held rights to explore and exploit in the continental shelf by virtue of international law, because international law then conferred no such rights. Nor was it in any position to acquire such rights subsequent to Confederation.

Legislative Jurisdiction

The conclusion that Canada has the right to explore and exploit in the continental shelf leads easily to the conclusion that Canada has legislative jurisdiction. There is nothing in s. 92  of the Constitution Act, 1867  which could confer legislative jurisdiction upon Newfoundland in respect of such rights held by Canada. Legislative jurisdiction falls to Canada under the peace, order, and good government power in its residual capacity.

Newfoundland’s legislative competence, like that of all the other provinces, is confined to

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legislation operating within the provinces. This restriction is found expressly in s. 92(13)  and s. 92A(1) :

92. (13) Property and Civil Rights in the Province.

…

92A. (1) In each province, the legislature may exclusively make laws in relation to

(a) exploration for non-renewable natural resources in the province;

(b) development, conservation and management of non-renewable natural resources and forestry resources in the province, including laws in relation to the rate of primary production therefrom; and

(c) development, conservation and management of sites and facilities in the province for the generation and production of electrical energy.

(Emphasis added.)

In respect of s. 92(5) , the limitation to “in the Province”, as we discussed earlier, arises by virtue of the common law.

92. (5) The Management and Sale of Public Lands belonging to the Province and of the Timber and Wood thereon.

Conclusion

In summary, we conclude:

(1) Continental shelf rights are, in pith and substance, an extraterritorial manifestation of external sovereignty.

(2) Canada has the right to explore and exploit in the continental shelf off Newfoundland because:

(a) any continental shelf rights available at international law in 1949 would have been acquired by the Crown in right of the United Kingdom, not the Crown in right of Newfoundland;

(b) even if Newfoundland could have held continental shelf rights prior to Union, they would have passed to Canada by virtue of the Terms of Union.

(c) in any event, international law did not recognize continental shelf rights by

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1949; such rights were not indisputably recognized before the Geneva Convention of 1958.

(3) Canada has legislative jurisdiction in relation to the right to explore and exploit in the continental shelf off Newfoundland by virtue of the peace, order, and good government power in its residual capacity.

In short, in our opinion both parts of the question should be answered in favour of Canada.

Both parts of the question answered in favour of Canada.

Solicitor for the Attorney General of Canada: R. Tassé, Ottawa.

Solicitors for the Attorney General of Newfoundland: O’Dea, Greene, St. Johns.

Solicitors for the Attorney General of Nova Scotia: Gowling & Henderson, Ottawa; Edward C. Foley, Halifax.

Solicitor for the Attorney General for New Brunswick: The Attorney General for New Brunswick, Fredericton.

Solicitor for the Attorney General of Manitoba: Gordon E. Pilkey, Winnipeg.

Solicitor for the Attorney General of British Columbia: The Ministry of the Attorney General, Victoria.

Solicitor for the Attorney General of Prince Edward Island: Ralph C Thompson, Charlottetown.

Solicitor for the Attorney General for Alberta: R.W. Paisley, Edmonton.