Docket: T-1147-13
Citation:
2015 FC 335
Ottawa, Ontario, March 17, 2015
PRESENT: The
Honourable Mr. Justice Rennie
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BETWEEN:
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UNITED STATES
OF AMERICA
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Applicant
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and
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NADIA ZAKHARY
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Respondent
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JUDGMENT AND REASONS
I.
Nature of the Matter
[1]
The applicant applies under section 26 of the Federal
Courts Act (RSC, 1985, c F-7) and section 10(4) of the State Immunity
Act, RSC 1985, c S‑18 (SIA), for an order setting aside a
Certificate of Filing of Order (the Certificate) issued on February 20, 2013 under
section 244 of the Canada Labour Code, RSC 1985, c L-2 (the Code).
For the reasons that follow, the application is granted.
II.
Facts
[2]
The Certificate that the United States of America seeks to set aside or revoke was obtained by the respondent Ms. Nadia Zakhary
in Nadia Zakhary v United States of America, Court File No T-1460-12.
By way of background, the respondent filed a complaint (the Complaint) with
Human Resources and Skills Development Canada (HRSDC) on October 6, 2010 under
section 240 of the Code alleging unjust dismissal. The respondent had
worked for 25 years as a cashier at the United States Consulate in Toronto before her termination in August, 2010.
[3]
On November 9, 2010, Mr. Paul Bozzo, an
Inspector in the Federal Ministry of Labour, sent the Complaint to the
Consulate. Importantly, the Complaint was not served according to section 9(2)
of SIA. This section requires service of legal documents through
diplomatic transmittal by the Deputy Minister of Foreign Affairs. Instead, the
Complaint was served on the United States via registered mail. Mr. Bozzo’s
cover letter stated:
In accordance with subsection 241(1) of the
Canada Labour Code, Part III, you are requested to provide the undersigned with
a written statement giving the reasons for this dismissal within (15) days of
the receipt of this letter.
[4]
The only response to the Complaint from the
Consulate was an acknowledgment of receipt by Ms. Elenita M. Shorter, Human
Resources Officer with the Embassy of the United States of America in Ottawa, Ontario. Ms. Shorter’s letter stated:
Thank you for your letter dated November 9,
2010.
As stated in our 30 September 2010
correspondence with Mr. Markowitz, the decision to terminate Ms. Zakhary for
cause was carefully thought out and the reasons for the decision were provided
to Ms. Zakhary in writing on August 3, 2010, a copy of which you can obtain
from Ms. Zakhary. The Consulate continues to stand by its decision.
[5]
On December 1, 2010, Mr. Bozzo wrote to both the
respondent and the United States Consulate General inviting the parties to
participate in the Labour Program’s voluntary Alternative Dispute Resolution
process. Attempts to mediate went unanswered by the applicant and, as such,
the Complaint was subsequently referred to Mr. Lorne Slotnick, an Adjudicator
appointed under section 242 of the Code.
[6]
On July 7, 2011, the United States sent a
diplomatic note to the Canadian Department of Foreign Affairs and International
Trade (DFAIT) asking it “to inform the Ministry of
Labour that because service was defective, the United States is not a party to
this case and, therefore, the United States will not respond”. The United States also advised the Adjudicator that the United States was not properly served under the SIA
and would take no steps in the proceeding.
[7]
The Adjudicator scheduled a preliminary hearing
to discuss the jurisdictional objection that had been raised by the United
States, however, the United States, through its Canadian counsel, adhered to
the position articulated in the note of July 7, 2011. The Adjudicator
nevertheless held the hearing in the absence of the United States and on March
26, 2012, made a finding of unjust dismissal. The Adjudicator ordered the
applicant to reinstate the respondent to her former position, compensate her for
lost pay and benefits, and awarded $5,000 in legal costs. I will turn to the
reasons which underlie the Adjudicator’s decision later in this judgment.
[8]
On February 20, 2013, a copy of the
Adjudicator’s Order was filed for enforcement in the Federal Court pursuant to
section 244 of the Code. The Certificate was issued on March 15, 2013
and served on the United States through diplomatic transmittal on April 26,
2013. It is this certificate that is the subject of the application and is
sought to be set aside.
[9]
The originating application commenced by the
United States to set aside the Certificate joined the Attorney General of
Canada (AGC) as a respondent. On December 19, 2013, the AGC brought a motion
to be removed from the proceeding. The motion was settled with a term that the
AGC would provide a letter to the United States that could be filed with the
Court as part of the record in this application. The letter states, in part:
(a) The AGC is unaware of any authority to
suggest that the requirements of [SIA] are not applicable to service on foreign
states of complaints under the [Code] (assuming there is jurisdiction over
foreign states for claims filed under that legislation).
(b) There is no dispute that the originating
process in this case was mailed to the Consulate of the United States, rather than being served by the Deputy Minister of Foreign Affairs under
cover of diplomatic note as required by section 9 of the SIA.
[10]
It should also be noted that in a separate
proceeding, on August 31, 2012, the Canadian Embassy in Washington delivered to
the United States a Diplomatic Note enclosing a Statement of Claim issued by
the respondent in the Ontario Superior Court of Justice. This proceeding seeks
damages for wrongful dismissal against the United States. The United States filed a Statement of Defence in response on October 30, 2012.
III.
Decision
[11]
On March 26, 2012, the Adjudicator rendered his
decision with respect to the unjust dismissal claim. The decision noted the
jurisdiction objection of the United States and its absence from the hearing. The
Adjudicator explained he would address the jurisdictional arguments even though
no submissions were made.
[12]
After a review of the history of the case and
the relevant legislation, the Adjudicator concluded that Ms. Shorter’s response
to Mr. Bozzo’s letter of November 9, 2010 constituted a waiver of the right of
the United States to object to any failure to comply with the service
requirements under section 9 of SIA. In reaching this conclusion the Adjudicator
reasoned that the “employer responded” and “did not raise any claim of immunity”. That is, the “employer took a step” in the proceeding and “therefore has waived immunity pursuant to section 4 of
[SIA].”
[13]
The Adjudicator went on to analyze whether the
activities of the United States consulate that were the subject of the Code
complaint were a “commercial activity” and thus
exempt from state immunity pursuant to section 5 of SIA. The
Adjudicator reviewed the nature of the job performed by the respondent and concluded
that Ms. Zachary’s employment situation involved an individual contract of
employment in a purely administrative position. Therefore, the activity ought
to be viewed as a commercial activity of the foreign state and was therefore
outside the protection of state immunity.
[14]
The Adjudicator also concluded that the Code
applied to the respondent’s employment relationship with the United States. The Adjudicator relied on the dissenting Supreme Court of Canada judges in Re
Canada Labour Code, [1992] 2 S.C.R. 50 at paragraph 107 to state that “a Canadian worker, working on Canadian soil, should not be
deprived of the benefits of Canadian law unless the foreign state is acting in
a context which warrants immunity.”
[15]
Having found that the Adjudicator and the Code
had jurisdiction to deal with the Complaint, the Adjudicator also found that
the respondent had been unjustly dismissed. The allegations made against the
respondent in the termination letter were not proved before the Adjudicator,
and the respondent received no pay in lieu of notice or severance pay upon her
termination.
IV.
Issues
[16]
The United States contends that the Complaint
was not served in accordance with the SIA; that the doctrine of waiver
was inapplicable and, in the alternative, there was no waiver of the defect in
service. The United States further contends that the reinstatement order
violated section 11 of SIA, which precludes the availability of certain
remedies, such as specific performance, against foreign states.
[17]
In response, Ms. Zakhary says that the United
States, as a matter of equity, cannot complain of any defect of service, as
service was effective. The objection is purely technical or procedural, and
should not be allowed to defeat the substance of the respondent’s claim, or
evade the Adjudicator’s decision. She also relies on the Adjudicator’s finding
that her duties as cashier were commercial in nature and therefore exempt from
state immunity pursuant to section 5 of SIA.
[18]
I propose to consider these issues in the
following manner:
1.
Whether the United States was properly served;
2.
Whether the United States waived any defect in
service;
3.
Whether the United States was otherwise immune
from a labour proceeding involving the Code; and
4.
Whether the reinstatement order violated section
11 of SIA.
[19]
The relevant statutory provisions are set out in
Schedule A to these reasons.
V.
Analysis
A.
The United States was not properly served with
the Complaint
[20]
The case law in this Court, and others, is both
unequivocal and longstanding; service on foreign states must be made pursuant
to section 9(2) of SIA: Tritt v United States of America, (1989),
68 OR (2d) 284 (QL) (HCJ); Softrade v Tanzania, [2004] OJ No 2325 (SCJ).
Leaving documents at the feet of a representative of the US Consulate is not
proper service. Apart from agreement by a foreign state as to the manner of
service, a state can only be served through the medium of the Deputy Minister
of Foreign Affairs: Janet Walker, Castel & Walker: Canadian Conflict of
Laws, 6th ed., loose-leaf (Markham, ON: LexisNexis, 2005), at
10-21; H.L Molot and M.L. Jewett, “The State Immunity Act of Canada”, (1983)
Can Bar Rev 843.
[21]
The provenance of state immunity in
international law, its codification in the Vienna Convention on
Diplomatic Relations and its incorporation into domestic law is traced in
detail in the recent decision of the Supreme Court of Canada in Kazemi
Estate v Islamic Republic of Iran, 2014 SCC 62, where Justice LeBel,
writing for the majority, observed at paras 42 and 43:
In Canada, state immunity from civil suits
is codified in the SIA. The purposes of the Act largely mirror the
purpose of the doctrine in international law: the upholding of sovereign
equality. The “cornerstone” of the Act is found in s. 3 which confirms that
foreign states are immune from the jurisdiction of our domestic courts “except
as provided by th[e] Act” (Bouzari v. Islamic Republic of Iran (2004),
71 O.R. (3d) 675 (C.A.), at para. 42; SIA, s. 3). Significantly, the SIA
does not apply to criminal proceedings, suggesting that Parliament was
satisfied that the common law with respect to state immunity should continue
governing that area of the law (SIA, s. 18).
When enacting the SIA, Parliament
recognized a number of exceptions to the broad scope of state immunity. Besides
the commercial activity exception, canvassed above, Canada has chosen to
include exceptions to immunity in situations where a foreign state waives such
right, as well as for cases involving: death, bodily injury, or damage to
property occurring in Canada; maritime matters; and foreign state property in
Canada (SIA, ss. 4, 6, 7 and 8; Currie, at pp. 395-400; Emanuelli, at
pp. 346-49; J.-M. Arbour and G. Parent, Droit international public (6th
ed. 2012), at pp. 500-8.3).
[22]
The policy objectives furthered by section 9 of
the SIA are articulated in a Government of Canada Circular of March 28,
2014 titled “Service of Originating Documents in
Judicial and Administrative Proceedings Against the Government of Canada in
other States.” The Circular emphasizes that “under
Canada’s State Immunity Act, all other States receive in Canada the
protections…with respect to service by diplomatic means to their Ministries of
Foreign affairs in their respective capitals of Canadian originating documents
with at least 60 days’ notice before the next step in the proceedings.”
The Circular also notes that “[s]ervice on a diplomatic
mission or consular post is therefore invalid, however accomplished, and
additionally constitutes a breach of Article 22 of the Vienna Convention on
Diplomatic Relations…”
[23]
The service of the Complaint on the Consulate by
registered mail did not conform with section 9 of SIA. As service
pursuant to section 9 of SIA is a mandatory, jurisdictional
pre-condition to the commencement of proceedings against a foreign state, the
Adjudicator could have no jurisdiction over the United States.
[24]
To conclude on this point, Ms. Zakhary submits
that when she was terminated she followed the proper procedure under section
240 of the Code and filed a complaint. Once the Complaint was filed, it
was the Canada Labour Board which was charged with the responsibility of proper
service of her complaint. The respondent therefore had no participation or
control over the service process, and should not bear the consequences of
improper service.
[25]
In my view, this does not alter the analysis.
The service provisions of the SIA are mandatory, regardless of which
individual or agency is responsible for service under any particular recourse
mechanism.
B.
The United States did not waive any defect in
service
[26]
I turn next to the argument that the United States had waived its immunity and had therefore also waived the ability to object
to defective service.
[27]
As noted, the waiver argument is founded on the
acknowledgment by a Human Resources Officer in the United States Embassy in Ottawa of receipt of Mr. Bozzo’s correspondence. This does not constitute a waiver of
immunity. The case law in respect of waiver of immunity accorded foreign
states, both under the SIA and at international law, is not analogous to
the treatment of waiver in a domestic law context. Waiver by a foreign state
must be explicit, it must be unequivocal or unconditional and it must be
certain. The waiver must also be that of the state itself, and the
representative who waives immunity must be authorized by the state to do so. In
the present case, none of those requirements are met; see for example, Defense
Contract Management Agency – America (Canada) v Public Service Alliance of
Canada and Ontario Labour Relations Board, 2013 ONSC 2005.
C.
The commercial activity exception does not apply
[28]
In my view, the commercial activity exception
under section 5 of SIA does not apply in the context of this case, and
the Adjudicator erred in suggesting the employment of personnel in the United
States Consulate was a commercial activity.
[29]
In Re Canada Labour Code, Justice La Forest found that the operation of an embassy was a quintessentially sovereign
activity and did not fall within the commercial activity exception:
While bare employment contracts are primarily
commercial in nature, the management and operation of a military base is
undoubtedly a sovereign activity. The operations of embassies and offshore
military posts are the quintessential examples of state activity that should be
immune from foreign review.
[30]
The question of who works within an embassy, and
whether they perform their responsibilities to the satisfaction of the foreign
government, is not a commercial activity. It is not a commercial matter, such
as hiring someone to repaint the interior or to repair the plumbing; rather
employment within the embassy is integral to its operations and is immune from
review in domestic courts. Nor can any principled distinction can be drawn
between employment in the United States Consulate, in Toronto, and the United
States Embassy, in Ottawa.
[31]
The nature of the functions and responsibilities
of the employee, whether administrative, clerical or, as in this case,
financial, do not limit the immunity. The immunity extends to the operations
of the Consulate. The Court does not parse or dissect, within the walls of embassies
or consulates, which functions are purely diplomatic, or which functions may be
administrative. It is doubtful that such bright lines can be drawn, a further
reason as to why the Court will not engage in a dissection of specific
employment responsibilities within embassies or consulates.
[32]
In Canada v The Employment Appeals
Tribunal, [1992] IR 484 (Irish SC), a chauffeur, engaged by the Canadian embassy
in Ireland was released. He sued for damages, contending that the commercial
activity exception to state immunity applied. In rejecting the argument, O’Flaherty
J, writing for a five member panel of the Irish Supreme Court wrote:
Into which category does Mr. Burke’s claim
fall, public or private? The employment of a chauffeur at the Canadian Embassy
is clearly not a commercial contract in the ordinary sense of the word; it is a
contract of service. Is it any different to having the heating system in the
embassy repaired? (cf. the claim against the Empire of Iran (1963) 45
ILR 57). I believe it is. I think once one approaches the embassy gates one
must do so on an amber light. Prima facie anything to do with the
embassy is within the public domain of the government in question. It may be
that this presumption can be rebutted as happened in the Empire of Iran
case. I believe that the element of trust and confidentiality that is reposed
in the driver of an embassy car creates a bond with his employers that has the
effect of involving him in the employing government’s public business
organisation and interests. Accordingly, I hold that the doctrine of
restrictive state immunity applies in this case.
[33]
The respondent’s duties within the financial
operation of the consulate, however administrative they may be, engaged
elements of trust and confidentiality, and were thus integral to the operations
of the consulate. The prima facie presumption of immunity alluded to by the Irish Supreme Court is
not rebutted.
[34]
To conclude on this point, Ms. Zakhary has
issued a Statement of Claim in the Ontario Superior Court of Justice seeking
damages for wrongful dismissal. The United States has defended, and has not asserted
immunity in respect of the claim for monetary damages relating to termination
from employment. The fact that the Ms. Zakhary may, as a practical matter,
have a remedy in the form of an action for damages has no bearing on the scope
of the immunity provisions. Even had the United States raised an immunity
defence in the Ontario action, the result in this Court would be the same.
[35]
In Amaratunga v Northwest Atlantic Fisheries
Organization, 2013 SCC 66, the applicant commenced a suit for wrongful
dismissal against an international organization. His plea was met with a
defence of state immunity. In response to the argument that to accede to the
immunity argument would leave the plaintiff with no recourse, the Supreme Court
said:
The fact that the appellant has no forum in
which to air his grievances and seek a remedy is unfortunate. However, it is the
nature of an immunity to shield certain matters from the jurisdiction of the
host state’s courts. As La Forest J. said in Re Canada Labour Code in
the context of sovereign immunity, it is an “inevitable result” of a grant of
immunity that certain parties will be left without legal recourse, and this is
a “policy choice implicit” in the legislation: p. 91. The same holds true in
the instant case.
D.
The reinstatement order violated section 11 of SIA
[36]
While not necessary to my disposition of the
matter, the reinstatement order granted by the Adjudicator contravenes section
11 of SIA. Section 11 of the SIA prohibits any “relief by way of an injunction [or] specific performance”
against a foreign state. An order reinstating an employee interferes with a
foreign state’s ability to conduct the operations of its consulate in Canada, a
“quintessentially sovereign” activity, and is
void.
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