Gulf Oil Corporation v. Gulf Canada Ltd. et al., [1980] 2 SCR 39

Supreme Court of Canada

Gulf Oil Corporation v. Gulf Canada Ltd. et al., [1980] 2 S.C.R. 39

Date: 1980-03-18

Gulf Oil Corporation Applicant;

and

Gulf Canada Limited, Gulf Minerals Canada Limited, R. Neil Taylor and C.D. Shepard Respondents.

1980: February 19, 20; 1980: March 18.

Present: Laskin C.J. and Martland, Ritchie, Beetz and McIntyre JJ.

APPLICATION TO ENFORCE LETTERS ROGATORY

Courts—Original application to enforce letters rogatory—Whether Uranium Information Security Regulations, 1976 ultra vires—Public policy—Court’s discretion—Consideration of comity—Crown privilege—Canada Evidence Act, R.S.C. 1970, c. E-10, s. 43—Uranium Information Security Regulations, C.R.C., c. 366—Atomic Energy Control Act, R.S.C. 1970, c. A-19, s. 9—Official Languages Act, R.S.C. 1970, c. 0-2, s.8—Federal Court Act, R.S.C. 1970, c. 10(2nd Supp.),s. 41.

An application, addressed to an unusual original jurisdiction of the Court, was made under s. 43 of the Canada Evidence Act to enforce letters rogatory issued by two courts of the United States to compel production, at trial, of documents in Canada in the possession or under the control of Gulf Canada and Gulf Minerals, two of the respondents which are Canadian subsidiaries of the applicant. The respondents agreed that the documents were necessary to establish their defence to the claims made in the two United States actions, but, because of the Uranium Information Security Regulations, were unwilling to violate the prohibition against disclosure prescribed by the Regulations or to risk the penalties prescribed for breach. Were it not for the Regulations, they were prepared to make disclosure and thus to assist the applicant, their parent company, in the two actions. The applicant thereupon applied for the letters rogatory which it now seeks to have enforced by this Court.

Held: The application should be dismissed.

1) Although the argument of the Attorney General of Canada that an application under s. 43 of the Canada Evidence Act should be made to a superior court in a

[Page 40]

province in the first instance was cogent, the Court, because the merits as to enforcement of the letters rogatory were fully argued, should exercise jurisdiction; 2) the drafting lapses or changes between the various versions of the Regulations do not make any substantial difference to their effect, especially in the light of s. 8(2) of the Official Languages Act; 3) the Regulations do not find support for their validity in subparas. 5 (d) and (e) of s. 9 of the Atomic Energy Act; they could find support in subpara. (f) but the question need not be decided in the present case; 4) if the Regulations were validly enacted, the application must fail because the Minister of Energy, Mines and Resources has refused consent to disclosure and because this is not a case where an order for disclosure should be made, assuming that such an order would come within the exception for disclosure under the words “by or under a law of Canada”; 5) if they were not validly enacted, nevertheless it would be a wrongful exercise of discretion for this Court to ignore federal government policy by enforcing the letters rogatory. Public policy is invoked here and not Crown privilege; and it is not for a court, when called upon to consider whether it should enforce letters rogatory, to take issue with the Government’s determination of public policy or to measure its impact. Further, there is no support for applicant’s contention that public policy considerations should not be recognized in respect of trading or commercial activities of the government.

Rio Tinto Zinc Corporation v. Westinghouse, [1978] 1 All E.R. 434; Re Westinghouse Electric Corporation and Duquesne Light Co. (1977), 16 O.R. (2d) 273; Re Forest and Registrar of Court of Appeal of Manitoba (1977), 77 D.L.R. (3d) 445; Ohio v. Wyandotte Chemical Corp. (1971), 401 U.S. 493; Burmah Oil Co. Ltd. v. Bank of England, [1979] 3 All E.R. 700, referred to.

APPLICATION pursuant to s. 43 of the Canada Evidence Act, concerning the enforcement of letters rogatory issued out of the United States. Application dismissed.

R.A. Smith, Q.C., and D.E. Wires, for the applicant.

R.M. Loudon, Q.C., for the respondents Gulf Canada Ltd. and Gulf Minerals Canada Ltd.

R.J. Morris, for the respondent R. Neil Taylor.

[Page 41]

M. Mungovan, for the respondent C.D. Shepard.

T.B. Smith, Q.C., and Lawson Hunter, for the Attorney General of Canada.

The judgment of the Court was delivered by

THE CHIEF JUSTICE—This is an application, addressed to an unusual original jurisdiction of this Court, to enforce letters rogatory issued (1), out of the United States District Court for the Northern District of Illinois, Eastern Division, by His Honour Judge Marshall of that Court, and (2) out of the United States District Court for the Southern District of California by His Honour Judge Enright of that Court. The letters rogatory were issued, respectively, on December 26, 1979 and on January 2, 1980 and were supplemented on February 12, 1980 and on February 14, 1980 to make it clear that the documents whose production was sought were not to be used for purposes of discovery or of deposition but only for purposes of trial in pending actions whose origin and course I will refer to later in these reasons.

The application is founded on s. 43 of Part II of the Canada Evidence Act, R.S.C. 1970, c. E‑10. Section 41 of the Act defines “court” to mean the Supreme Court of Canada and any superior court in any province of Canada; and “judge” is defined to mean any judge of the Supreme Court of Canada and any judge of any superior court in any province of Canada. Section 43 reads as follows:

43. Where, upon an application for that purpose, it is made to appear to any court or judge, that any court or tribunal of competent jurisdiction, in the Commonwealth and Dependent Territories, or in any foreign country, before which any civil, commercial or criminal matter is pending, is desirous of obtaining the testimony in relation to such matter, of a party or witness within the jurisdiction of such first mentioned court, or of the court to which such judge belongs, or of such judge, the court or judge may, in its or his discretion, order the examination upon oath upon interrogatories, or otherwise, before any person or persons named in the order, of such party or witness accordingly, and by the same or any subsequent order may command the attendance of such party or witness for the purpose of being examined,

[Page 42]

and for the production of any writings or other documents mentioned in the order, and of any other writings or documents relating to the matter in question that are in the possession or power of such party or witness.

The background to the pending actions (hereinafter referred to as the Chicago and California actions) in the two United States District Courts out of which the letters rogatory issued may be briefly stated. Canada, with federal government encouragement, had begun to develop a uranium industry in the 1950’s, having access to the United States and United Kingdom markets. Until an embargo was put on foreign uranium by the United States in 1964, it had consumed about 70 per cent of the free world demand for uranium. The embargo left only 30 per cent of the free-world market available to Canadian and other non-United States producers of uranium. After stockpiling uranium and instituting other programmes to assist the uranium industry in Canada, the federal government and representatives of private uranium producers entered into negotiations in 1972 with the governments of France, South Africa and Australia, with certain producers in those countries and with the United Kingdom to establish a marketing arrangement of which a central feature would be the maintenance of minimum prices for the export of uranium to countries other than to members of this cartel arrangement and to the United States. By 1975, uranium prices had risen above the fixed minimum prices and on March 27, 1975 federal government directions in this respect ended. Moreover, the United States announced a relaxation of restrictions on the importation of foreign uranium.

Prior to 1975 Westinghouse Electric Corporation, a Pennsylvania company, which sells, inter alia, nuclear reactors to public utility companies, had contracted with those companies to supply uranium for the reactors at prices ranging from $6 to $10 per pound. However, it did not make any arrangements for supplies of uranium to fulfil its contracts, and by 1975 the spot price for uranium escalated to $25 per pound and rose recently to $40 per pound. In September 1975, Westinghouse repudiated its supply contracts, claiming to be

[Page 43]

excused from performance because of supervening developments making performance commercially impracticable. A number of public utility companies in the United States thereupon sued in various courts therein to enforce their contracts with Westinghouse. The existence of the uranium cartel became known in the United States in 1976, and Westinghouse as defendant in the public utility companies’ actions against it sought the issue of letters rogatory by United States Courts to the High Court of Justice in England, to the Supreme Court of New South Wales and to the Supreme Court of Ontario. The letters rogatory were issued accordingly, but enforcement in England was refused by a decision of the House of Lords (Rio Tinto Zinc Corporation v. Westinghouse[1]) which reversed enforcement judgments in the courts below. Australian legislation of 1976 was held to preclude enforcement of the letters rogatory addressed to the Supreme Court of New South Wales. The enforcement action in the Ontario Supreme Court also failed because of a claim of Crown privilege pursuant to s. 41(1)(2) of the Federal Court Act, R.S.C. 1970, c. 10 (2nd Supp.) and because of the prior promulgation of the Unranium Information Security Regulations, P.C. 1976-2368, SOR/76-674: see Re Westinghouse Electric Corporation and Duquesne Light Co.[2] (Robins J.). Westinghouse appealed but later abandoned the appeal.

On October 15, 1976, Westinghouse brought the Chicago action against 29 United States and foreign producers, including the applicant Gulf Oil Corporation, an American company, and Gulf Minerals Canada Ltd., a Canadian subsidiary, which is a respondent to the application to enforce the letters rogatory. Gulf Canada Limited, also a subsidiary of Gulf Oil and a respondent here, is not a party in the Chicago action. Westinghouse has claimed unspecified treble damages for conspiracy in violation of United States anti-trust laws, estimating the damages at four to six billion

[Page 44]

dollars. Gulf Oil and Gulf Minerals have defended the action on several grounds, including act of state and sovereign compulsion. Moreover, Gulf Oil has counterclaimed, alleging illegal combinations and conspiracies as well as illegal monopolization by Westinghouse of the manufacture and sale of nuclear reactors and nuclear fuel and uranium. Three actions began by the Tennessee Valley Authority (TVA), in other districts and being of the same character, were consolidated by an order of July 31, 1978 with the Westinghouse proceedings and thus became part of the Chicago action. Gulf Oil and Gulf Minerals were defendants in one of the TVA actions.

The action in the District Court for the Southern District of California was instituted on April 7, 1978 by General Atomic Company (a partnership in which Gulf Oil is one of the partners with Scallop Nuclear Inc.) against Exxon Nuclear, Inc., seeking to enforce a contract of May 11, 1973 for the sale and delivery of six million pounds of uranium over a specified period from 1979 through to 1984, and also alleging a breach of anti-trust laws by Exxon. The latter defended on the ground that the contract was invalid because of anti-trust violations, fraud and negligent misrepresentations. Exxon also brought a counterclaim, raising the same issues as those in defence and claiming treble damages. General Atomic Company, Gulf Oil and Scallop were named counterclaim defendants and they raised defences, including act of state and sovereign compulsion.

The Letters Rogatory

In both the Chicago and California actions, orders were made for the production of documents in Canada in the possession or under the control of Gulf Minerals and Gulf Canada. It was the position of Gulf Oil and Gulf Minerals that the documents were relevant to issues in the respective actions and were necessary to establish their defence to the claims made in the two actions. Because of the Uranium Information Security

[Page 45]

Regulations (to which I will refer later) the Canadian subsidiaries were unwilling to violate the prohibition against disclosure prescribed by the Regulations or to risk the penalties prescribed for breach. Were it not for the Regulations, they were quite prepared to make disclosure and thus to assist their parent company in the two actions.

Gulf Oil thereupon applied for the letters rogatory which it now seeks to have enforced by this Court. The two sets of letters rogatory are similar in their directions and it will be sufficient to refer to those issued in the Chicago action. They are addressed by Judge Marshall to “the Appropriate Judicial Authority in Canada”. Included in them are the following paragraphs:

AND WHEREAS this court is authorized and has exercised jurisdiction over the matters in issue in this consolidated action as a court of competent jurisdiction in the United States of America;

AND WHEREAS it has been shown to us that justice cannot be completely done in these consolidated actions without the testimony of, and the production of documents by, the following witnesses residing in the Province of Ontario, Canada, to wit: Gulf Minerals Canada Limited, 110 Yonge Street, Suite 1400, Toronto, Ontario, Canada M5C 1T4, and R.N. Taylor, its President; and Gulf Canada Limited, Post Office Box 460, Station A, Toronto, Ontario, Canada M5W 1E5, and CD. Shepard, its Chief Operating Officer;

AND WHEREAS it has been shown that the evidence obtained from the above-named witnesses is necessary for use at the trial of the issues in this consolidated action and we have ordered that this evidence be for purposes of trial herein;

AND WHEREAS the above-named witnesses are beyond the jurisdiction and process of this court and could not otherwise be compelled on pain of sanction to attend under the normal and usual process of this court as set forth under the Federal Rules of Civil Procedure and then and there answer, under oath, on direct and cross examination, questions propounded to them by counsel for the parties herein and to bring with them documents for inspection, copying and examination hereinafter more particularly described;

[Page 46]

AND WHEREAS this court has the jurisdiction and power to authorize the taking of depositions outside its jurisdiction and has hereby authorized by order Gulf Oil Corporation to take depositions from the above-named persons and to produce documents for use at the trial herein subject to this court’s rules on the admissibility of evidence.

WE, THEREFORE REQUEST that in the furtherance of justice you will cause such witnesses, Gulf Minerals Canada Limited, Gulf Canada Limited, R.N. Taylor and C.D. Shepard, by the proper and usual process, to appear before Mr. Paul Rosenberger, Special Examiner, a person authorized to administer oaths in the Province of Ontario, at his offices at 390 Bay Street in the City of Toronto, Province of Ontario at a precise time and place by you to be fixed by order and there to answer under oath, or affirmations, the questions and interrogatories to be propounded by counsel for the respective parties and to bring with them all notes, documents, or other written or printed material in their possession or control or in the possession or control of Gulf Minerals Canada Limited or Gulf Canada Limited in any way related to conversations, discussions or meetings that took place between January 1, 1972 and December 31, 1975 involving them or any director, officer, employee, servant or agent of Gulf Minerals Canada Limited and Gulf Canada Limited or any other person in relation to the exporting from Canada or marketing for use outside Canada of uranium or its derivatives or compounds;

AND WE FURTHER REQUEST that you cause the said questions and answers to be reduced to writing and duly signed by each of the witnesses under oath or affirmation, and such notes, documents or other written or printed material that the said witnesses may produce or identify be marked as Exhibits and returned to us under cover duly sealed and addressed to the clerk of the United States District Court for the Northern District of Illinois, United States of America for production for the purpose of trial herein;

And we shall be ready and willing to do the same for you in a similar case when required.

I should point out that the letters rogatory were sought by Gulf Oil in order to avoid sanctions orders which might result in default judgments or a denial of the right to raise defences to which the Canadian documents would be relevant. Westinghouse and TVA had obtained an order from Judge Marshall in the Chicago action on November 9,

[Page 47]

1979 that Gulf Oil and Gulf Minerals and certain other defendants produce documents in Canada which were subject to the Uranium Information Security Regulations by January 2, 1980. Judge Marshall accepted the contention that they were relevant to issues in the Chicago action and was not moved by the submission that production was prohibited by Canadian law. A similar order was obtained on November 16, 1979, in the California action, also for production by January 2, 1980.

The reality of a threat of a default judgment was evidenced by what happened in an action brought on December 31, 1975 by United Nuclear Corporation against General Atomic Company in the District Court of Santa Fe County in New Mexico, invoking that State’s anti‑trust laws. The action was to set aside contracts under which United Nuclear had contracted to deliver more than twenty-five million pounds of uranium to General Atomic. Production was sought from General Atomic of documents in the possession of Gulf Minerals referable to the cartel and although efforts were made to obtain the consent of the then Canadian Minister of Energy, Mines and Resources to the production of the documents, consent was refused. Notwithstanding diplomatic intervention by the Canadian Embassy, expressing concern about an order of a United States Court that, it said, offended international comity, the judge in the New Mexico action issued a sanctions order and a default judgment against General Atomic for its failure to produce or identify the Canadian documents. It was said in an affidavit filed in the present proceedings by American counsel for General Atomic, who also acted for Gulf Oil and Gulf Minerals, that the sanctions order deprived General Atomic of the benefit of uranium contracts valued at nine hundred million dollars.

The Uranium Information Security Regulations

I come now to consider the Uranium Information Security Regulations which were first passed

[Page 48]

on September 21, 1976, as P.C. 1976-2368, SOR/76-644. They were replaced on October 13, 1977 by an amended version, P.C. 1977-2923, SOR/77-836. These, in turn, were consolidated on August 15, 1979, with some changes, in the Consolidated Regulations of Canada, c. 366. The authority for the regulations, recited in them, was s. 9 of the Atomic Energy Control Act, R.S.C. 1970, c. A-19, giving power to the Atomic Energy Control Board, with the approval of the Governor in Council, to make regulations as specified in paras. (a) to (g) of s. 9. I shall return to s. 9 later in these reasons.

Section 2 of the original regulations was as follows:

2. No person who has in his possession or under his control any note, document or other written or printed material in any way related to conversations, discussions or meetings that took place between January 1, 1972 and December 31, 1975 involving that person or any other person or any government, crown corporation, agency or other organization in respect of the production, import, export, transportation, refining, possession, ownership, use or sale of uranium or its derivatives or compounds, shall

(a) release any such note, document or material, or disclose or communicate the contents thereof to any person, government, crown corporation, agency or other organization unless

(i) he is required to do so by or under a law of Canada, or

(ii) he does so with the consent of the Minister of Energy, Mines and Resources; or

(b) fail to guard against or take reasonable care to prevent the unauthorized release of any such note, document or material or the disclosure or communication of the contents thereof.

In the substituted regulations, a definition of “foreign tribunal” was introduced as s. 2 and it defined the term to include any court or grand jury and any person authorized or permitted under foreign law to take or receive evidence whether on behalf of a court or grand jury or otherwise. Section 3 was in these words:

[Page 49]

3. No person who has in his possession or under his control any note, document or other written or printed material in any way related to conversations, discussions or meetings that took place between January 1, 1972 and December 31, 1975 involving that person or any other person in relation to the exporting from Canada or marketing for use outside Canada of uranium or its derivatives or compounds shall

(a) release any such note, document or material or disclose or communicate the contents thereof to any person, foreign government or branch or agency thereof or to any foreign tribunal unless

(i) he is required to do so by or under a law of Canada, or

(ii) he does so with the consent of the Minister of Energy, Mines and Resources; or

(b) fail to guard against or take reasonable care to prevent the unauthorized release of any such note, document or material or the disclosure or communication of the contents thereof.

The French version of s. 3 does not mention “any person” and the same discordance appears in the consolidation. On the other hand, although both the English and French versions define “foreign tribunal”, the English consolidated version does not include the term in its substantive s. 3, having adopted, by mistake, the original s. 2, a mistake not made in the French version. Again, there is a difference between s. 3 in the substituted regulations of October 13, 1977 and the same section in the consolidation: the former prohibits disclosure of documents in the possession of any person respecting conversations or meetings during a specified period “involving that person or any other person in relation to the exporting from Canada or marketing for use outside Canada of uranium or its derivatives or compounds” and the latter encompasses not only “that person or any other person” but also “any government, crown corporation, agency or other organization” and “in respect of the production, import, export, transportation, refining, possession, ownership, use or sale of uranium or its derivatives or compounds”.

[Page 50]

I do not think that these drafting lapses or changes make any substantial difference to the effect of the regulations, especially in the light of s. 8(2) of the Official Languages Act, R.S.C. 1970, c. 0-2. Section 8(1) of the Official Languages Act gives authenticity to an enactment in both its versions in the official languages, and s. 8(2) is directed to ensuring compatibility in application, although there may be differences in meaning in the two versions. There is no insuperable difficulty here in giving a compatible meaning to the regulations; nor can I find that such differences as exist in the two versions affect adversely the position of the applicant Gulf Oil.

It was the contention of the applicant Gulf Oil (and I may say here that counsel for Gulf Minerals supported Gulf Oil in this proceeding in all respects but, acting also for Gulf Canada, took no position on any of the issues) that the Uranium Information Security Regulations were ultra vires in all of their versions because they were not authorized under any of the subparagraphs of s. 9 of the Atomic Energy Control Act. The relevant subparas, are (d), (e) and (g) and they read as follows (preceded by the opening words of s. 9):

9. The Board may with the approval of the Governor in Council make regulations

…

(d) regulating the production, import, export, transportation, refining, possession, ownership, use or sale of prescribed substances and any other things that in the opinion of the Board may be used for the production, use or application of atomic energy;

(e) for the purpose of keeping secret information respecting the production, use and application of, and research and investigations with respect to, atomic energy, as in the opinion of the Board, the public interest may require;

…

(g) generally as the Board may deem necessary for carrying out any of the provisions or purposes of this Act.

Subparagraph (e) respecting secrecy of information covers “production” and “use” which were referred to in the original regulations, were dropped in the substituted regulations and restored

[Page 51]

in the consolidation. However, it is production and use of atomic energy which is referred to in subpara. (e) and not uranium or its derivatives or compounds. Section 2 of the Atomic Energy Control Act defines “atomic energy” to mean all energy of whatever type derived from or created by the transmutation of atoms. The regulations cannot therefore find support in subpara. (e). Nor does it appear that they can be supported under subpara. (d). However, in Re Westinghouse Electric Corporation and Duquesne Light Co., supra, Robins J. held that they were within the authority granted by subpara. (g).

If they were validly enacted, the application to enforce the letters rogatory must fail because (1) the Minister of Energy, Mines and Resources has, despite various submissions to him, refused consent to disclosure and, (2) in my opinion, this is not a case where an order for disclosure should be made, assuming that such an order would come within the exception for disclosure under the words “by or under a law of Canada”. I should point out that the Minister took the position, in some of his refusals of consent, that he had no authority to give consent because of the decision in Re Clark and the Attorney-General of Canada[3], which invalidated the provision for consent by application of the maxim delegatus non potest delegare. This is not a matter, however, which I need review here.

Counsel for Gulf Oil contended that its application under s. 43 of the Canada Evidence Act came within the exception in the regulations for disclosure upon a favourable order being made by this Court. The counter argument is that, having regard to the thrust of the regulations, the words “by or under a law of Canada” are directed to Canadian legislation providing for the production of evidence in purely domestic litigation. Re John McManus and Atomic Energy Control Board, an as yet unreported decision of the Federal Court of Appeal of January 11, 1980, held that the exception under the regulations for disclosure by or under a law of Canada entitled the Court to act

[Page 52]

under s. 17 of the Combines Investigation Act, giving it discretionary power to order production of documents for the purposes of that Act. This does not conclude the matter against the position taken by counsel for Gulf Oil and, assuming that the position is a tenable one, the question remains whether this Court should make an order for disclosure and thus enforce the letters rogatory. For the reasons which follow, I hold that it should not.

If the regulations were not validly enacted (and I am prepared for the purposes of this application to proceed on this basis), this does not mean that enforcement of the letters rogatory must automatically follow and disclosure made. A number of serious questions touching the discretionary authority vested in this Court by s. 43 of the Canada Evidence Act arise, questions raised by the Attorney General of Canada in opposing Gulf Oil’s application.

The Attorney General of Canada submitted that even if the regulations went beyond the statutory authority under which they were purportedly promulgated, they nonetheless reflected federal government policy and it would be a wrongful exercise of discretion for this Court to ignore the policy by enforcing the letters rogatory. Moreover, it was the further contention of the Attorney General of Canada that the applicant was seeking a declaration from this Court as to the validity of the regulations; it was not defending itself against charges in Canada or defending a civil suit in which it was relevant to impugn the regulations. Indeed, so the submission went, it was clear that a declaration was sought because if the regulations were declared invalid, there would be no need to enforce the letters rogatory because the respondents would then gladly produce the documents. In any event, an application under s. 43 of the Canada Evidence Act was said to be an inappropriate vehicle for challenging the validity of regulations; validity should not be determined to enable the enforcement of letters rogatory which were issued by a foreign court in the full knowledge that there were prohibitory regulations in Canada that

[Page 53]

expressed government policy. Comity should have operated to support a refusal to issue the letters.

The foregoing contentions were subsumed under a wider argument by the Attorney General of Canada which had two main prongs; first, that this Court should not entertain Gulf Oil’s application and, second, that in the exercise of discretion, this Court should refuse the application. I turn to consider this two-fold submission.

The Jurisdiction and Discretion of this Court

Although the relevant sections of the Canada Evidence Act vest jurisdiction in this Court, there is also concurrent jurisdiction in provincial superior courts, and the contention of the Attorney General of Canada was that since this Court is generally an ultimate appellate court, it should refuse to act under s. 43 and leave such original applications under that provision to the provincial superior courts. The documents whose disclosure is sought under the letters rogatory are now in or can be brought to Toronto, and the forum conveniens, it was contended, is the Supreme Court of Ontario. It was also submitted that there was no such urgency as to make it appropriate to leap frog the ordinary processes of the Canadian judicial system. Again, the applicant, although allegedly in jeopardy of a sanctions order (Judge Marshall in the Chicago action ordered the plaintiffs on January 16, 1980 to file sanctions motions by March 3, 1980 and replies in opposition by April 3, 1980) did not ask for a suspension of the order pending efforts to enforce the letters rogatory and, moreover, the trial in the Chicago action is not to commence until September 1981. There is the further submission that there are factual issues to be resolved under the letters rogatory and this is best done in a trial court. Reference was made to the judgment of the Manitoba Court of Appeal in Re Forest and Registrar of Court of Appeal of

[Page 54]

Manitoba[4] where the Court of Appeal, having concurrent jurisdiction with the Court of Queen’s Bench in mandamus, refused to take jurisdiction. A similar position was taken by the Supreme Court of the United States in Ohio v. Wyandotte Chemical Corp.[5] where it had concurrent jurisdiction with United States District Courts.

I think that these are cogent considerations that point to the desirability of original resort to a provincial superior court. However, because the merits as to enforcement of the letters rogatory were fully argued, I think I should deal with the matter by asserting jurisdiction and considering whether the Court’s discretion should be exercised to enforce or to refuse to enforce the letters rogatory.

Crown privilege was not invoked in this case by an affidavit under s. 41(1) or (2) of the Federal Court Act, R.S.C. 1970, c. 10 (2nd Supp.) as it was in the Westinghouse case decided by Robins J. The central issue touching the discretion of this Court was whether public interest immunity (to use Gulf Oil’s phrase) or public policy (to use the term of the Attorney General of Canada) could be invoked instead and, if so, whether it was of sufficient weight to overcome considerations of comity. It was not disputed that it was open to the Attorney General of Canada to rely on public policy apart from Crown privilege. Moreover, in my opinion, it is not a ground for denying recognition of the public policy asserted here by the Attorney General of Canada that the cartel arrangement came to an end before the Chicago and California actions were instituted or that the government of Canada wished to prevent disclosure of the information sought under the letters rogatory, despite the previous abandonment of the arrangements under which the information was collected and recorded.

[Page 55]

The participation of the government of Canada in the cartel arrangement was made known to the public, and it seems to me that the resistance to disclosure was not so much a matter of the maintenance of secrecy as it was of an assertion of Canadian sovereignty to resist the extraterritorial application of United States anti-trust laws.

The government of Canada was on record in the Chicago action by an amicus brief presented to Judge Marshall that it regarded its sovereign position to be put in question by the attempt to secure disclosure of the information now sought under the letters rogatory. I quote here a small portion of the brief.

Canada considered it contrary to her sovereign prerogatives for foreign tribunals to question the propriety or legality of the actions of Canadian uranium producers that were taken outside the United States and were required by Canadian law or taken in implementation of Canadian government policy. Accordingly, when it became clear that documents located in Canada bearing on the international uranium marketing arrangement might be removed to the United States in response to proceedings there, the Canadian government promulgated the Uranium Information Security Regulations, on September 23, 1976. The Canadian government promulgated the Regulations to serve a vital national interest, particularly the preservation of Canada’s past and future sovereign authority to secure compliance with its own laws and policies respecting a vital Canadian natural resource in the face of assertions of jurisdiction by non-Canadian tribunals. These Regulations were not procured by members of the uranium industry, and they were not adopted to protect the commercial interests of those companies.

It is true that the brief concentrated on the Uranium Information Security Regulations but the national interest which was expressed in the brief transcended the regulations. This is particularly evident in the press release of the then Minister of Energy, Mines and Resources of October 14, 1977, being an exhibit to the affidavit of John R. Light, filed in these proceedings. I reproduce the opening paragraphs of this release:

Over the past several weeks, the government has been criticized for actions that it took from 1972-75 to protect the Canadian uranium industry from the conse-

[Page 56]

quences of U.S. actions. I want to respond to these criticisms today in order to set the record straight.

The government has indicated on a number of occasions that it viewed the establishment of an international marketing arrangement for uranium in 1972 to be in the national interest. It, therefore, authorized its crown corporations to participate in the arrangement and passed a regulation under the Atomic Energy Control Act requiring the Canadian uranium producers to comply with the pricing and quota provisions which had been agreed upon internationally. The government approved this arrangement in 1972, on the specific understanding that it would not apply to the markets of Canada, Australia, South Africa, France and the United States. It was necessary as a matter of public policy for the government to protect our producing industry from extinction and to do so by helping to stabilize world prices at levels above the cost of production. This policy was defensible in 1972 and it is no less defensible today.

Again, although the Minister later in the release emphasized the Uranium Information Security Regulations, they were merely an expression of the Government’s public policy and it is the policy rather than the regulations that, in this case, is a factor in the Court’s exercise of its discretion.

Robins J, in the Westinghouse case, supra, took account of the policy in refusing to enforce certain letters rogatory and did so as I read his reasons, even apart from Crown privilege which was asserted before him and apart from the regulations. Thus, he said (at p. 290 of 16 O.R. 2d):

The enforcement of letters rogatory is always a matter within the discretionary power of the Court. Their enforcement is based upon international comity or courtesy proceeding from the law of nations. Inherent in the idea of international comity is a mutuality of purpose and of power. As a matter of principle Courts of justice of different countries are in aid of justice under a mutual obligation consistent with their own jurisdiction to assist each other in obtaining testimony upon which the rights of a cause may depend; so generally are individuals under a duty to give their testimony to Courts of justice in all inquiries where it may be ma-

[Page 57]

terial. Courts in Canada recognize, and have often said, that, in the interests of comity, judicial assistance should whenever possible be given at the request of Courts of other countries: see, for example, National Telefilm Associates Inc. v. United Artists’ Corp. et al (1958), 14 D.L.R. (2d) 343, generally, Castel, Canadian Conflict of Laws (1975), p. 691 et seq. It is also fundamental that comity will not be exercised in violation of the public policy of the state to which the appeal is made or at the expense of injustice to its citizens; and comity leaves to the Court whose power is invoked the determination of the legality, propriety or rightfulness of its exercise: see generally 15A Corp. Jur. Sec, pp. 391-7; Szaszy, International Civil Procedure (1967), pp. 652-3.

In my judgment, there are aspects to the present case which bear upon the Court’s exercise of its discretion and militate against honouring these letters rogatory.

The most important of these is public policy. This case constitutes a rare occasion, certainly in relations with the United States, in which, in my opinion, legal assistance should be denied on the ground that to grant it would be to run counter to a public policy of this country. The policy I refer to has been clearly and forcefully expressed; it relates specifically to the evidence and documents in issue. By affidavit and public statement a Minister of the Crown has made it plain that the Government of Canada has, as a matter of public policy, taken the position that the information and documents sought should not be disclosed. Crown privilege has been asserted on the basis, inter alia, that the documents relate to the marketing of uranium which constituted “an essential part of the policy” of the Government and in the public interest should not be produced or discovered; Security Regulations have been promulgated with the approval of the Governor in Council that prohibit the production of the documents or the disclosure of their contents; the Minister has indicated that the matter must be regarded as an issue of sovereignty. In these circumstances the Court, in my view, should take judicial cognizance of the stated public policy in exercising its discretionary power—Adams v. Adams, [1971] P. 188 at p. 198; The “Arantzazu Mendi”, [1939] A.C. 256 at p. 264—and should not force the disclosure of information if to do so would, on the authority of the Government, be harmful to the public interest. To decline to lend a foreign Court assistance through the use of domestic judicial ma-

[Page 58]

chinery in such circumstances is not to act in breach of the doctrine of comity but in accord with it.

Nor should the Court exercise its discretionary power to enforce letters rogatory of a foreign Court when one of the purposes of those letters rogatory is, as the argument was put to me, to procure evidence that “the activities of the Federal Government and/or its representatives, relative to the cartel, constitute the commission of and/or the counselling of an offence under… the laws of the lex fori”. It is inappropriate, in my opinion, to invoke the doctrine of comity of nations in an effort to search out testimony and documents designed to permit a foreign tribunal to determine whether actions taken by or on behalf of the Government of Canada were contrary or inconsistent with the laws of a foreign country. It should not be necessary to add that Canada is a fully sovereign nation and not accountable to the tribunals of a foreign State. Similarly, in this very special factual situation, letters rogatory should not, in my opinion, be enforced against officers of Canadian corporations whose actions during the pertinent period had received the stamp of approval of the Canadian Government. The refusal of judicial assistance for these reasons does not disappoint comity.

The same point was made in Rio Tinto Zinc Corp. v. Westinghouse Electric Corp.[6], a judgment of the House of Lords. I refer to the words of Lord Wilberforce, at p. 448.

My Lords, I think that there is no doubt that, in deciding whether to give effect to letters rogatory, the courts are entitled to have regard to any possible prejudices to the sovereignty of the United Kingdom; that is expressly provided for in art 12(b) of the Hague Convention. Equally, that in a matter affecting the sovereignty of the United Kingdom the courts are entitled to take account of the declared policy of Her Majesty’s Government is in my opinion beyond doubt. Indeed, this follows as the counterpart of the action which the United States Government has taken. For, as the order of 18th July 1977 and the letter of 12th July 1977 make plain, the order compelling testimony and granting immunity is made in extraordinary circumstances relating to the public interest of the United States. That the making of the order is a matter of government policy, and not related to the civil proceedings in Richmond, is confirmed beyond doubt by the statement made before

[Page 59]

Judge Merhige on 16th June 1977, and repeated in the letter of the Attorney General of the United States of 12th July 1977, that there is a firm policy against seeking orders under ss. 6002 and 6003 in private litigation. It appears that the present is the only case in which such an order has been made. (One other instance cited is not comparable.) But if public interest enters into this matter on one side, so it must be taken account of on the other; and as the views of the executive in the United States of America impel the making of the order, so must the views of the executive in the United Kingdom be considered when it is a question of implementing the order here. It is axiomatic that in anti-trust matters the policy of one state may be to defend what it is the policy of another state to attack.

The intervention of Her Majesty’s Attorney-General establishes that quite apart from the present case, over a number of years and in a number of cases, the policy of Her Majesty’s Government has been against recognition of United States investigatory jurisdiction extra-territorially against United Kingdom companies. The courts should in such matters speak with the same voice as the executive (see The Fagernes [1927] P. 311); they have, as I have stated, no difficulty in doing so.

Counsel for Gulf Oil submitted that public policy or public interest immunity should not be attached to trading or commercial ativities of the government; that it should not be recognized in respect of communications between persons who are not government employees or Ministers of the Crown or between government employees or Ministers and other persons; that, in any event, the public interest relied upon was not adequately described and that it was not shown how the public interest would be damaged by disclosure of the documents requested under the letters rogatory.

The last point may be answered shortly. It is not for a Court, when called upon to consider whether it should enforce letters rogatory, to take issue with the government’s determination of public policy or to measure its impact. It may be that different considerations will operate where a Canadian court is concerned with Canadian litigation arising out of issues turning on Canadian law. Nor do I think that there is any doubt in this

[Page 60]

application by Gulf Oil as to what is the public policy which the government of Canada asserts. Again, there may be room for closer examination, and even assessment, where in Canadian litigation Crown privilege is asserted and the Court may be disposed to examine the documents for which the privilege is claimed. I do not agree that any such assessment or examination is invariably required to enable a Court to consider whether, in its discretion, it should enforce letters rogatory calling for the production of the documents for purposes of proceedings before a foreign tribunal.

Gulf Oil relied on Burmah Oil Co. Ltd. v. Bank of England (Attorney-General intervening[7]) in support of the first two points in its above-mentioned submission. It appears to have taken the phrase “public interest immunity” from that case, where it was used in assessing whether Crown privilege should be recognized in respect of a number of documents among those that were listed by the defendant Bank of England as being in its possession. The bank was quite prepared to make disclosure, but the government intervened to object to disclosure and supported its objection by an affidavit. The majority of the House of Lords took the view that it ought to examine the documents for which privilege was claimed, being of the opinion that the mere assertion of Crown privilege was not conclusive, and that the case called for balancing the prevention of harm to the state and the interest in the proper administration of justice. As a result of inspection, the conclusion was reached that the documents were not necessary to dispose fairly of the case, and so the objection to production was upheld.

Although “public interest immunity” was associated in the Burmah Oil case with a claim of Crown privilege, a situation which is not present here, I take it that counsel for Gulf Oil was using the phrase to encompass also a public policy claim such as was made here by the Attorney General of Canada. (In the Burmah Oil case, Lord Scarman (at p. 731) referred to public interest immunity as

[Page 61]

a manifestation of public policy.) It does not follow, however, that the same considerations should apply to an assertion of public policy, referable to a request for disclosure to a foreign tribunal, as apply to an assertion of Crown privilege in respect of litigation in Canada under and for the enforcement of Canadian law. The Burmah Oil case was a case in the English courts, turning on English law and not involving any element of extraterritorial enforcement of foreign law such as exists in the present application. It must be noted too that the documents for which production was sought in the Burmah Oil case were for the purpose of discovery and not, as here, for the purpose of trial.

I do not find anything in the Burmah Oil case, and, in particular, in the reasons of Lord Edmund-Davies relied on by counsel for Gulf Oil, to support his contention that public policy considerations should not be recognized in respect of trading or commercial activities of the government. I can understand that the matter may be one of degree. However, where the government is party to the arrangements out of which the documents, whose disclosure is sought, emerge, and it has promoted the arrangements as a facet of its energy policy in which the marketing of uranium is a central feature, I fail to see how public policy can be ignored in the interests of comity towards a foreign court, as if the policy was essentially a reflection of private considerations without any public, governmental interest. Again, the voluminous documents (said to cover 25,000 pages) are not simply private documents drawn up as a result of discussions and negotiations in which the government of Canada played no part but, concededly, reflect an input by representatives of the government.

I think it desirable to clarify the difference between an assertion of Crown privilege, supported by a ministerial affidavit, and a claim of nondisclo-

[Page 62]

sure based on public policy. It seemed to me that counsel for Gulf Oil, especially in his reliance on the Burmah Oil case and on other cases cited in his factum, dealt with these two matters as if they were interchangeable. Where Crown privilege is asserted, whether in domestic litigation or in litigation arising out of an attempt by a foreign tribunal to obtain evidence for the purposes of the enforcement of foreign law, nondisclosure is the preservation of secrecy in the public interest. However, as the case law indicates, the courts may decide to inspect the documents, whose production is refused on the ground of Crown privilege, in order to satisfy themselves that the claimed privilege is borne out and that the documents are relevant to the issues in the litigation. As already noted, there is no claim of Crown privilege here but rather one of public policy as an assertion of sovereignty against an attempt to enforce foreign law. I do not see that the Crown, the government, would be entitled to assert public policy against the enforcement of Canadian law in a Canadian court, but would be so entitled against an attempt to enforce foreign law in a Canadian court. Public policy is therefore involved in the application of rules of conflict of laws, as where the enforcement of foreign law in Canadian litigation may be denied because, for example, the foreign law may be a penal law or a tax law and therefore within the categories that are denied enforcement on policy grounds. So too, where letters rogatory are addressed to a Canadian court, Canadian government intervention on grounds of public policy may simply reflect an objection to extraterritorial enforcement of foreign law in violation of Canadian sovereignty.

For the reasons that I have given, I would refuse Gulf Oil’s application. In coming to this conclusion I have not dealt with the Attorney General’s submission that the letters rogatory should have been more specific in their reference to the documents

[Page 63]

whose disclosure was sought, and I leave that issue open.

Although I would dismiss the application of Gulf Oil to enforce the letters rogatory, I would not, in the circumstances, make any order as to costs.

Application dismissed.

Solicitors for the applicant: Smith, Lyons, Torrance, Stevenson & Mayer, Toronto.

Solicitors for the respondents Gulf Canada Limited and Gulf Minerals Canada Limited: Harries, Houser, Toronto.

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