Court of Appeal for Ontario

DATE: 20231027 DOCKET: COA-23-CV-0095

Pepall, van Rensburg and Monahan JJ.A.

BETWEEN

Mehrzad Zarei personally and on behalf of the Estate of Arad Zarei deceased or as Personal Representative of Arad Zarei deceased and; Shahin Moghaddam personally and on behalf of the Estate of Shakiba Feghahati deceased or as Personal Representative of Shakiba Feghahati deceased and on behalf of the Estate of Rosstin Moghaddam deceased or as Personal Representative of Rosstin Moghaddam deceased and; Ali Gorji personally and on behalf of the Estate of Pouneh Gorji deceased or as Personal Representative of Pouneh Gorji deceased and on behalf of the Estate of Arash Pourzarradi deceased or as Personal Representative of Arash Pourzarradi deceased and; John Doe, Jane Doe, Bill Doe, and Sam Do

Plaintiffs (Appellants)

and

Islamic Republic of Iran, Islamic Revolutionary Guard Corps, also known as Army of the Guardians of the Islamic Revolution also known as Iranian Revolutionary Guard Corps, Iranian Armed Forces, also known as Armed Forces of the Islamic Republic of Iran, Ali Khamenei, also known as Supreme Leader of Iran, Mohammad Bagheri, also known as Mohammad-Hossein Afshordi, Hossein Salami, Seyyed Asdolrahim Mousavi, and Amir Ali Hajizadeh

Defendants (Respondents)

AND BETWEEN

John Smith, Bill Smith, Sam Smith, Jane Smith, Mary Smith, Sally Smith, personally and on behalf of the Estates of their deceased family members or as Personal Representative of their deceased family members

Plaintiffs (Appellants)

and

Islamic Republic of Iran, Islamic Revolutionary Guard Corps, also known as Army of the Guardians of the Islamic Revolution also known as Iranian Revolutionary Guard Corps, Iranian Armed Forces, also known as Armed Forces of the Islamic Republic of Iran, Ali Khamenei, also known as Supreme Leader of Iran, Mohammad Bagheri, also known as Mohammad-Hossein Afshordi, Hossein Salami, Seyyed Asdolrahim Mousavi, and Amir Ali Hajizadeh

Defendants (Respondents)

Counsel: Mark H. Arnold and Jonah A. Arnold, for the appellants No one appearing for the respondents Christine Mohr and Jacob Blackwell, for the intervener Attorney General of Canada

Heard: September 27, 2023

On appeal from the judgment of Justice Grant R. Dow of the Superior Court of Justice, dated January 10, 2023, with reasons at 2023 ONSC 221.

REASONS FOR DECISION

[1] The appellants are the estates and family members of victims who were killed when Ukrainian Airlines flight PS752 (“flight 752”) was shot down by the Islamic Republic of Iran (“Iran”) on January 8, 2020. Having obtained a default judgment against Iran for $107 million plus interest and costs in May of 2021, the appellants move to enforce that judgment against certain properties and bank accounts of Iran in Canada (the “Iranian Property”) [1].

[2] The motion judge dismissed that motion, finding that the Iranian Property continues to enjoy diplomatic immunity under Canadian law. The appellants appeal from that judgment on the basis that diplomatic relations between Canada and Iran were severed on September 7, 2012, due to Iran’s involvement in terrorist activity. Therefore, the appellants argue, Iran no longer has any diplomatic property in Canada that is immune from execution.

[3] Although Iran did not participate in these proceedings, the Attorney General of Canada intervened and took the position that the motion judge correctly found that the Iranian Property continues to enjoy diplomatic immunity and is therefore immune from execution.

A. Decision of the motion judge

[4] The motion judge acknowledged that Canada severed diplomatic relations with Iran on September 7, 2012, as a result of Iran’s involvement in acts of terrorism. However, relying upon this court’s decision in Tracy v. Iran (Information and Security), 2017 ONCA 549, 415 D.L.R. (4th) 314, the motion judge noted that the conduct of foreign relations is exclusively a matter for the executive arm of government, in accordance with the Crown’s prerogative to conduct international affairs. Therefore, the Canadian government alone has the right to determine whether to extend diplomatic immunity to the property of a foreign state in Canada.

[5] On March 9, 2022, the Minister of Foreign Affairs issued a certificate (the “Certificate”) pursuant to s. 11 of the Foreign Missions and International Organizations Act, S.C. 1991, c. 41, (the “FMIOA”) certifying that the Iranian Property is diplomatic property that continues to enjoy privileges and immunities under the FMIOA. The motion judge reasoned that, since the determination of the diplomatic status of a foreign state’s property in Canada is one for the government alone to make, the Certificate is binding on the issue of whether the Iranian Property enjoys diplomatic immunity. This precludes the enforcement of the default judgment against the Iranian Property and the appellant’s motion was therefore dismissed.

B. Arguments on Appeal

[6] The appellants do not appear to dispute that diplomatic property of a foreign state in Canada continues to enjoy immunity from execution, despite the fact that the 2012 amendments to the State Immunity Act, R.S.C. 1985, c. S-18 (the “SIA”) alongside the enactment of the Justice for Victims of Terrorism Act, S.C. 2010, c. 1, s. 2 (the “JVTA”), limit state immunity for states who have engaged in terrorist activity. The appellant’s position, rather, is that because Iran has not operated a diplomatic mission in Canada since 2012, it no longer has any diplomatic property here to which diplomatic immunity could extend.

[7] The appellants rely upon Article 1 of the Vienna Convention on Diplomatic Relations, 18 April 1961, 50 U.N.T.S. 95 (the “VCDR”), which has been incorporated into Canadian law by virtue of s. 3 of the FMIOA, and which defines “premises of the mission” as property “used for the purposes of the mission”. Based on transcripts of evidence that were adduced in Tracy, and which the appellants seek to have admitted as evidence in this appeal (the “Tracy Transcripts”), the appellants argue that it is incontrovertible that Iran has not “used” any property in Canada for diplomatic purposes since 2012.

[8] Therefore, according to the appellants, given the fact that Article 1 of the VCDR defines “premises of the mission” as property used for diplomatic purposes, Iran no longer has any diplomatic property in Canada. The appellants also point out that article 45 of the VCDR, which obligates a receiving state to continue to protect diplomatic premises of a sending state even after diplomatic relations have been broken off, has not been incorporated into Canadian law.

[9] With regards to the statements in the Certificate that the Iranian Property continues to enjoy diplomatic privileges and immunities in Canada, the appellants argue that such statements of fact in a certificate issued pursuant to s. 11 of the FMIOA are subject to evidence to the contrary. This is because, although s. 11 provides that statements of fact in a certificate shall be “received in evidence…as proof of the fact stated…”, s. 11 does not provide that such evidence is “conclusive”. Therefore, pursuant to s. 25 of the Interpretation Act, R.S.C. 1985, c. I-21, facts in a s. 11 certificate are “deemed to be established in the absence of any evidence to the contrary”. Here, because there is evidence to the contrary, namely, the fact that Iran has not operated a diplomatic mission in Canada for over a decade, the Certificate is not conclusive on the issue of whether the Iranian Property continues to enjoy diplomatic immunity.

[10] Finally, the appellants argue that permitting execution against the Iranian Property is consistent with an October 4, 2022 statement of the Prime Minister, in which he described the downing of flight 752 as a “crime”. The Prime Minister’s statement also indicated that Canada is committed to holding Iran accountable, in accordance with international law, and will “remain relentless in our pursuit of justice for the families of these victims, and we will stop at nothing to ensure the regime is held accountable.”

[11] The Attorney General takes the position that the motion judge correctly found that diplomatic property subject to a s. 11 certificate is immune from execution. The motion judge’s conclusion, namely, that recognition of diplomatic immunity is a matter reserved to the Executive, is consistent with this court’s ruling in Tracy. Whether or not the Iranian Property has been “used” for diplomatic purposes since 2012, the Minister’s decision to accord diplomatic status to that Property is not justiciable except in relation to its constitutionality. Moreover, the Tracy Transcripts are irrelevant and should not be admitted or, if admitted, should be accorded no weight.

[12] The Attorney General further argues that the fact that the Iranian Property is immune from execution is not inconsistent either with public statements of the Prime Minister, or the purposes of the JVTA. The Attorney General notes that Canada has condemned the downing of flight 752 as a violation of international law and is taking steps to hold Iran accountable. Further, other victims of terrorism have seized Iran’s known non-diplomatic properties in Canada, in accordance with the 2012 amendments to the SIA and the JVTA, reflecting Canada’s commitment to holding Iran accountable for the downing of flight 752.

C. Governing Legal Principles

[13] State immunity, as reflected in norms of customary international law and the SIA, provides states with immunity from the jurisdiction of our courts, save in prescribed circumstances. As noted above, in 2012 Canada amended the SIA and enacted the JVTA so as to permit plaintiffs in certain civil actions to recover damages against states that have been listed as foreign state supporters of terrorism.

[14] Nevertheless, in doing so, Parliament did not abolish or limit diplomatic immunity, namely, the protection afforded to a diplomatic mission’s property and people from state interference and detention. Rather, as this court’s decision in Tracy at para. 103 makes plain, the determination of whether and to what extent a foreign state’s diplomatic property in Canada enjoys diplomatic immunity continues to be determined in accordance with relevant principles of customary international law, as well as Canadian constitutional, statutory and common law. Thus, although the plaintiffs in Tracy enforced a judgment against certain property owned by Iran in Canada, execution did not extend to Iran’s diplomatic property, despite the fact that diplomatic relations between Canada and Iran had been severed in 2012.

[15] The relevant norms of customary international law regarding diplomatic immunity are set out in the VCDR and the Vienna Convention on Consular Relations, 24 April 1963, 596 U.N.T.S. 261 (entered into force 19 March 1967). Within that framework, and subject to relevant Canadian constitutional and statutory requirements, the Executive alone determines on behalf of Canada whether to establish diplomatic relations with a foreign state and, further, whether and to what extent to attribute diplomatic status to property of the foreign state in Canada. The Executive’s jurisdiction to make such determinations arises from the Crown’s prerogative to conduct international affairs, exercised in accordance with the FMIOA.

[16] Section 11 of the FMIOA permits the Minister of Foreign affairs to deliver certificates to communicate a fact to a court pertaining to foreign relations. Such a certificate may communicate any fact relevant to, amongst other things, “whether any person, diplomatic mission, consular post, office of a political subdivision of a foreign state, international organization or accredited mission has privileges, immunities or benefits under this Act”.

D. Discussion

[17] In our view, the motion judge was correct in finding that the Iranian Property continues to be immune from execution.

[18] This conclusion arises from the following chain of reasoning.

[19] First, despite the 2012 amendments to the SIA and the enactment of the JVTA restricting state immunity in respect of states supporting terrorism, the diplomatic property of such states may continue to be immune from execution in Canada. That issue will turn on whether Canada has decided that it will continue to accord diplomatic status to the property of such a foreign state.

[20] Second, the determination of whether Canada will accord diplomatic status to the property of a foreign state in Canada is one made exclusively by the Executive, through the exercise of the Crown’s prerogative to conduct international affairs as well as the authority set out in the FMIOA. Such a determination is judicially reviewable only in cases where it implicates constitutionally protected rights or freedoms, or other legal rights or legitimate expectations of individuals: Black v. Canada (Prime Minister) (2001), 54 O.R. (3d) 215 (C.A.), at paras. 46 to 51.

[21] Third, there may in some cases be some uncertainty as to whether Canada has in fact accorded diplomatic status to the property of a foreign state in Canada. However, any such uncertainty will be conclusively resolved where Canada issues a s. 11 certificate under the FMIOA certifying that at the relevant time, identifiable property of a foreign state in Canada enjoys diplomatic immunity. What matters is the intention of the Executive, of which the s. 11 certificate is the authoritative source, and which must therefore be treated as conclusive.

[22] This conclusion is entirely consistent with this court’s decision in Tracy, which held that, in determining whether Iranian property has diplomatic status, “the question becomes whether on the evidence the Minister had conferred diplomatic status on the Iranian Assets”: Tracy, at para. 118. To be sure, the court in Tracy (at para. 119) also held that it was appropriate for the motion judge in that case to have considered other relevant sources in determining whether Iranian property not referenced in a s. 11 certificate was entitled to diplomatic status. But Tracy affirmed that where Iranian property has been expressly identified in a s. 11 certificate as entitled to diplomatic immunity, such property is immune from execution or legal process.

[23] We note that the United Kingdom Supreme Court came to a similar conclusion recently in finding that the recognition of a head of a foreign state is a decision made exclusively by the U.K. government, as a fact of state “peculiarly within the cognizance of the executive which has the conduct of foreign relations”: “Maduro Board” of the Central Bank of Venezuela v. “Guaido Board” of the Central Bank of Venezuela, [2021] UKSC 57, at para. 78. In that case, a U.K. government statement recognizing a particular individual as the President of Venezuela was conclusive and legally binding in any court proceeding in the U.K.

[24] It follows that, contrary to the submissions of the appellants, the issue of whether the Iranian Property is being “used” for diplomatic purposes simply does not arise on this appeal. The Certificate establishes conclusively that Canada continues to extend diplomatic immunity to the Iranian Property. For the same reason, the Tracy Transcripts are not admissible on this appeal, since the issue of whether the Iranian Property is being used for diplomatic purposes is legally irrelevant in light of the unequivocal statements in the Certificate.

[25] The appellants argue that the decision of the motion judge violated their rights under ss. 7 and 15 of the Charter, because “a decision contrary to the law violates the Charter.” But mere violation of law, without more, does not engage Charter-protected interests. In any event, as we have already explained, the decision of the motion judge was legally correct.

[26] The appellants have not identified any other non-constitutional rights or legitimate expectations that were violated by according diplomatic recognition to the Iranian Property. An Iranian diplomatic mission was established in Ottawa in 1956. Iran’s diplomatic property has been protected from execution or other legal processes since that time. The fact that the Iranian Property continued to enjoy diplomatic status, despite the severing of diplomatic relations with Iran in 2012, was confirmed in Tracy, a decision the appellants acknowledge is binding on this court.

[27] The statement by the Prime Minister relied upon by the appellants does not address the specific issues raised in this litigation. In the face of the unequivocal statements in the Certificate, these statements cannot be viewed as creating legitimate expectations regarding the availability of the Iranian Property for execution.

E. Disposition

[28] For the reasons outlined above, the Iranian Property continues to enjoy diplomatic status in Canada and is immune from execution. The appeal is therefore dismissed.

[29] While the appellants were unsuccessful, they nevertheless seek their costs from the Attorney General on the basis that the Attorney General in effect stepped into the shoes of Iran in this proceeding, after Iran refused to participate.

[30] An unsuccessful party is not normally entitled to its costs. There is no reason to depart from that rule in this case, particularly since the appellants are seeking costs from an intervenor, who is normally neither liable for, nor entitled to costs: Daly v. Ontario Secondary School Teachers’ Federation (1999), 124 O.A.C. 152 (Ont. C.A.), at para. 6. We would also observe that in this case, the Attorney General intervened to provide submissions with regard to the relevant principles of international and domestic law and provide the court with the legal basis for the government’s continued recognition of the diplomatic status of the Iranian Property. Those submissions were of considerable assistance to the court and, in fact, were relied upon in our analysis and conclusions on the appeal.

[31] Accordingly, there shall be no order as to costs.

“S.E. Pepall J.A.”

“K. van Rensburg J.A.”

“P.J. Monahan J.A.”

[1] The Iranian Property consists of three properties and two bank accounts located in Ottawa.