James Thistle

The Attorney General of Newfoundland appealed a decision regarding the interpretation of Clause 2(e) of Part I of a statutory lease executed pursuant to the Churchill Falls (Labrador) Corporation Limited (Lease) Act, 1961.

The Supreme Court of Canada dismissed the appeal, holding that both the Trial Division and the Court of Appeal had arrived at the correct construction of the clause, albeit by different routes.

The Governor in Council referred a constitutional question to the Supreme Court of Canada regarding whether Canada or Newfoundland has the right to explore and exploit, and the legislative jurisdiction over, the mineral and other natural resources of the continental shelf offshore Newfoundland.

The Court held that the continental shelf rights are an extraterritorial manifestation of external sovereignty.

Since Newfoundland did not possess external sovereignty prior to joining Confederation, and international law did not recognize continental shelf rights at that time, the rights accrued to Canada.

Consequently, Canada has both the right to explore and exploit the resources and the legislative jurisdiction over them under its residual peace, order, and good government power.