Canada’s Jurisdictional Test
Like many of its international partners, Canada has domestic legislation designed to advance bedrock anti-corruption principles underlying the OECD Convention against bribing foreign public officials. However, Canada stands alone in terms of its jurisdictional approach. While all other signatories have embraced both nationality and territoriality based jurisdictional principles, Canada relies solely on the latter to give effect to the Corruption of Foreign Public Officials Act (CFPOA).
Territorial jurisdiction means that unless a significant portion of the activities constituting the offence take place in Canada the CFPOA does not apply. Considering the CFPOA is intended to capture conduct that is inherently likely to take place outside of the country, the Canadian approach appears at odds with the inherent purpose of the CFPOA. In practical terms, this could mean that a Canadian flying from a Canadian airport to a foreign jurisdiction to meet with a foreign public official in order to pay or promise a benefit is conduct that would likely be beyond the reach of the CFPOA.
However, change “Canadian” to “American” and “Canada” to the “United States” in the above example and the outcome would be diametrically opposite under the U.S. Foreign Corrupt Practice Act. Why the difference? When drafting the CFPOA, Parliament expressed its confidence in the sufficiency of Canada’s common law test for extending the territorial reach of the criminal law to circumstances taking place, in part, outside of the country. That test is whether there is “a real and substantial link” between the offence and Canada. If not, Canadian law does not apply
Of course whether a real and substantial link exists will turn on the facts, can be unpredictable, and will – at times – yield questionable results. For example, in a case called R. v. B.(O.), the Ontario Court of Appeal held that Canadian courts did not have jurisdiction over a Canadian trucker who sexually assaulted his 13-year-old Canadian granddaughter in his Canadian registered vehicle while travelling through the U.S. en route back to Canada. Moreover, given that Canada has only recorded two convictions under the CFPOA – both the result of guilty pleas – courts have not yet had the opportunity to consider the jurisdictional question in the context of foreign bribery. Until now.
In 2010 the Royal Canadian Mounted Police laid charges under the CFPOA against Nazir Karigar. Investigators allege Mr. Karigar paid significant bribes to a former Mumbai police chief and Indian cabinet minister in exchange for showing favour to a Canadian security company in relation to a lucrative $100-million Air India contract. At the time Mr. Karigar was head of that company’s Indian operations, and he is alleged to have facilitated a $250,000 payment to a political ally of India’s then Minister of Aviation. He has pled not guilty.
As the case is still pending before the Ontario Superior Court of Justice many details are not yet available. However, the conduct alleged to constitute the offence appears to have taken place predominantly in India and comments from Mr. Karigar’s lawyer suggest that challenging Canada’s jurisdiction will form one pillar of the defence.
As this case unfolds Canada will likely have its first judicial statement on the extent of its territorial reach over foreign corruption. If Mr. Karigar’s jurisdictional challenge carries the day, the federal government will come under increasing pressure to expressly legislate extraterritorial application to the CFPOA based on nationality, as it has for a series of other Criminal Code offences. In fact, the OECD and Transparency International have been calling for this change for some time and in 2009 a legislative amendment to this effect was proposed but died on the order paper.
Regardless of the result of Mr. Karigar’s case, recent signs are that the government has again been seeking input on an amendment to broaden the jurisdictional reach of the CFPOA. In the end, our prediction is that it is only a matter of time before Canada closes this jurisdictional loophole in its legislation.