Steen et al. v. Islamic Republic of Iran et al.

[Indexed as: Steen v. Islamic Republic of Iran]

Ontario Reports

Court of Appeal for Ontario,

Winkler C.J.O., R.P. Armstrong and Watt JJ.A.

January 21, 2013

114 O.R. (3d) 206 | 2013 ONCA 30

Case Summary

Actions — Bars — State immunity — Plaintiffs obtaining judgments against Iran in United States based on kidnapping for ransom, detention and physical and mental abuse of two American citizens — Plaintiffs bringing action to enforce those judgments in Ontario — Motion judge not erring in finding that action was barred by State Immunity Act — Kidnapping and detention not constituting commercial activity within s. 5 of State Immunity Act — Act being complete code and not allowing for common law exception to state immunity — Customary international law not recognizing exception for state immunity where violations of jus cogens norms are alleged — State Immunity Act, R.S.C. 1985, c. S-18, s. 5.

Between 1982 and 1988, Iran directed the kidnapping and detention of American citizens in Lebanon for the purpose of collecting a ransom. S and J were kidnapped, detained for an extended period of time, kept in inhumane conditions, and subjected to mental and physical abuse. In two separate actions, S and his wife and J's family members obtained judgments in the United States against Iran, the Iranian Ministry of Information and Security, and the Iranian Revolutionary Guard. They subsequently brought an action in Ontario to enforce those judgments. The defendants moved to dismiss the action on the basis that they were immune from the jurisdiction of any court in Canada pursuant to s. 3(1) of the State Immunity Act. The motion was granted. The plaintiffs appealed. The defendants cross-appealed the motion judge's decision to award costs against them even though they were successful on the motion.

Held, the appeal and cross-appeal should be dismissed.

The motion judge did not err in finding that the kidnapping and detention of S and J did not constitute commercial activity within s. 5 of the Act. A mere nexus to commercial activity is insufficient to invoke the exception in s. 5. Rather, the nature of the acts for which relief is sought -- in this case, kidnapping, detention and torture -- must be commercial. The fact that Iran demanded the payment of money and weapons before releasing S and J did not alter the true nature of hostage taking as a brutal criminal act.

The motion judge did not err in failing to apply a common law exception to state immunity. The exceptions to state immunity listed in the Act are exhaustive.

Customary international law has not developed to recognize an exception for state immunity where violations of jus cogens norms are alleged. The motion judge did not err in failing to conclude that the defendants lost the benefit of state immunity by committing acts in violation of peremptory norms of international law.

Given that the defendants did not seek their costs before the motion judge and left the issue of costs in the hands of the judge, there was no reason to interfere with the exercise of the motion judge's discretion to award costs against the defendants. [page207]

Cases referred to

Bouzari v. Islamic Republic of Iran (2004), 2004 CanLII 871 (ON CA), 71 O.R. (3d) 675, [2004] O.J. No. 2800, 243 D.L.R. (4th) 406, 220 O.A.C. 1, 122 C.R.R. (2d) 26, 132 A.C.W.S. (3d) 275 (C.A.), affg [2002] O.J. No. 1624, [2002] O.T.C. 297, 114 A.C.W.S. (3d) 57 (S.C.J.); Islamic Republic of Iran v. Hashemi, [2012] Q.J. No. 7754, 2012 QCCA 1449, 265 C.R.R. (2d) 265, 2012EXP-3082, J.E. 2012-1653, [2012] R.J.Q. 1567, EYB 2012-210131, apld

Kuwait Airways Corp. v. Iraq, [2010] 2 S.C.R. 571, [2010] S.C.J. No. 40, 2010 SCC 40, 407 N.R. 145, EYB 2010-180775, 94 C.P.C. (6th) 197, 2010EXP-3404, 325 D.L.R. (4th) 236, J.E. 2010-1877, consd

Other cases referred to

Brad-Jay Investments Ltd. v. Szijjarto, 2006 CanLII 42636 (ON CA), [2006] O.J. No. 5078, 218 O.A.C. 315, 154 A.C.W.S. (3d) 226 (C.A.); Cicippio v. Islamic Republic of Iran, 18 F. Supp. 2d 62 (D.D.C. 1998); Jurisdictional Immunities of the State (Germany v. Italy: Greece Intervening), Judgment (3 February 2012), ICJ General List No. 143, online International Court of Justice, <http:// www.icj-cij.org/docket/files/143/16883.pdf>

Statutes referred to

Courts of Justice Act, R.S.O. 1990, c. C.43, s. 106

Justice for Victims of Terrorism Act, S.C. 2012, c. 1, ss. 2, 4, (5)

State Immunity Act, R.S.C. 1985, c. S-18 [as am.], ss. 3(1), 5, 6.1(1), (2)

Rules and regulations referred to

Order Establishing a List of Foreign State Supporters of Terrorism, SOR/2012-170, s. 2

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21.01(2), 57.01(2)

Authorities referred to

Currie, John H., Craig Forcese and Valerie Oosterveld, International Law: Doctrine, Practice, and Theory (Toronto: Irwin Law Inc., 2007)

APPEAL from the judgment of Corrick J. (2011), 108 O.R. (3d) 301, [2011] O.J. No. 5074, 2011 ONSC 6464 (S.C.J.) dismissing the action; CROSS-APPEAL from a costs order.

Mark H. Arnold, François Larocque and Syed Ali Ahmed, for appellants/respondents by way of cross-appeal.

James A. Woods, Sarah Woods and Barbra Miller, for respondents/appellants by way of cross-appeal.

The judgment of the court was delivered by

R.P. ARMSTRONG J.A.: —

Introduction

[1] This is an appeal from a judgment granting a motion to dismiss the appellants' claim for enforcement of two American judgments against the respondents, Islamic Republic of Iran, Iranian Ministry of Information and Security, and Iranian Revolutionary Guard. The motion judge granted the respondents' motion on the [page208] basis that the State Immunity Act, R.S.C. 1985, c. S-18 (the "SIA") bars the appellants' enforcement claim. The cross-appeal concerns the motion judge's decision to award costs against the respondents even though they were successful on the motion. For the reasons that follow, I would dismiss both the appeal and the cross-appeal.

Background

[2] Between 1982 and 1988, Iran directed the kidnapping and detention of 18 American citizens in Beirut, Lebanon for the purpose of collecting a ransom. Alann Steen and David Jacobson were two of the individuals kidnapped. Both were detained for an extended period of time, kept in inhumane conditions and subjected to mental and physical abuse.

[3] Alann Steen and his wife, Virginia Steen, sued the respondents in the United States District Court for the District of Columbia for damages arising out of Mr. Steen's captivity. The respondents did not appear. On July 31, 2003, the court awarded a judgment of US$342,750,000 against the respondents.

[4] David Jacobsen's children, Eric, Paul and Diane, and his sister, Doris Fisher, sued the respondents in the same court for damages arising out of David Jacobson's captivity.¹ Again, the respondents did not appear. On October 6, 2006, the court awarded a judgment totalling US$6,400,000 against the respondents.

[5] These judgments have not been satisfied in the United States and the appellants commenced an action in Ontario seeking to enforce them. The respondents moved under rule 21.01(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to dismiss this action on the basis that they are immune from the jurisdiction of any court in Canada pursuant to s. 3(1) of the SIA. This provision reads: "Except as provided by this Act, a foreign state is immune from the jurisdiction of any court in Canada."

[6] Before the motion judge, the appellants submitted that the respondents' conduct that gave rise to the American judgments constituted "commercial activity" within the definition of s. 5 of the SIA, which states: "A foreign state is not immune from the jurisdiction of a court in any proceedings that relate to any commercial activity of the foreign state." The appellants argued that, based on the commercial activity exception, the respondents are not immune from the court's jurisdiction. In the alternative, the [page209] appellants contended that the common law of state immunity continues to apply, which precludes immunity for acts of terrorism, kidnapping, torture and hostage-taking committed by or on behalf of sovereign states.

[7] The motion judge held that kidnapping and detention do not constitute "commercial activity" under the SIA and therefore the exception under s. 5 does not apply. Following this court's decision in Bouzari v. Islamic Republic of Iran (2004), 2004 CanLII 871 (ON CA), 71 O.R. (3d) 675, [2004] O.J. No. 2800 (C.A.), the motion judge also concluded that the SIA is a complete code that permits no common law exceptions.

[8] The appellants also sought a stay of the proceedings pursuant to s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43 in the event that the motion judge ruled that the SIA barred the action. The request for a stay was premised on proposed legislation then before the House of Commons, which would have amended the SIA to prevent a listed foreign state from claiming immunity from the jurisdiction of the Canadian courts in relation to its actions in support of terrorism. It was submitted that Iran would be one of the listed states, which would remove its immunity under the SIA.

[9] The motion judge declined to grant the stay as the proposed legislation had not passed through Parliament.

[10] Despite the respondents' success on the motion, the appellants were awarded costs of $70,000.

The Change in the Law Since the Decision of the Motion Judge

[11] Following the motion judge's decision, the Justice for Victims of Terrorism Act, S.C. 2012, c. 1, s. 2 (the "JVTA") came into force on March 13, 2012. Section 4(5) of the JVTA provides:

4(5) A court of competent jurisdiction must recognize a judgment of a foreign court that, in addition to meeting the criteria under Canadian law for being recognized in Canada, is in favour of a person that has suffered loss or damage . . . [as a result of terrorist acts that would be punishable under Part II.1 of the Criminal Code]. However, if the judgment is against a foreign state, that state must be set out on the list referred to in subsection 6.1(2) of the State Immunity Act for the judgment to be recognized.

Concomitantly, the SIA was amended to provide for a list of countries that would "not [be] immune from the jurisdiction of a court in proceedings against it for its support of terrorism on or after January 1, 1985": SIA, s. 6.1(1). On September 7, 2012 -- after this appeal had been heard -- the Governor-General- in-Council established the list of countries, which includes the Islamic Republic of Iran: Order Establishing a List of Foreign State Supporters of Terrorism, SOR/2012-170, s. 2. [page210]

[12] At the time of the argument of this appeal (May 23, 2012), counsel for the appellants knew that Iran would likely be listed pursuant to s. 6.1(2) of the SIA in September 2012. Counsel advised that he expected the appellants would pursue whatever rights they had as a result of the new legislative regime. However, the appellants still wished to pursue this appeal.

[13] In oral argument, the court questioned counsel for the appellants about the need for pursuing this appeal. The court pointed to what appeared to be at that time the imminent addition of Iran to the list of countries that are not immune from jurisdiction in proceedings concerning a state's support for terrorism.

[14] Counsel acknowledged having considered the question of mootness with respect to this appeal. However, counsel took the position that it was not certain at that point whether Iran would be added to the list, and so the appeal was not yet moot. Counsel requested the court to decide the issues on the appeal in light of the law as it stood at the time the appeal was argued.

[15] This court cannot simply ignore that Iran has been added to the list of foreign state supporters of terrorism referred to in s. 6.1(2) of the SIA. However, I would be prepared to decide the issues raised by the appellants because it is not a foregone conclusion that the addition of Iran to the list will result in a successful proceeding to enforce the two American judgments. Such further proceeding in the Superior Court of Justice would require a consideration, inter alia, of the application of s. 6.1(1) of the SIA and s. 4 of the JVTA to the present circumstances.

The Appeal

[16] The appellants raise the following grounds of appeal:

(i) the motion judge erred in concluding that the kidnapping and detention of Alann Steen and David Jacobsen did not constitute commercial activity within s. 5 of the SIA;

(ii) the motion judge erred in failing to apply a common law exception to state immunity;

(iii) the motion judge erred in failing to conclude that the respondents lost the benefit of state immunity by committing acts in violation of peremptory norms of international law (jus cogens).

Analysis

(i) The commercial activity exception

[17] In Bouzari, some of the same legal issues were raised before this court. While the facts in Bouzari are not identical, [page211] there are similarities to the case at bar. Over a six-month period, Houshang Bouzari was abducted, imprisoned and brutally tortured by agents of the Iranian government. After his release, he escaped from Iran and eventually ended up in Canada as a landed immigrant where he sued Iran for damages.

[18] On a motion before in the Ontario Superior Court of Justice, Swinton J. found that the action could not succeed because it was barred by the SIA and it did not fall within the exceptions in the SIA [[2002] O.J. No. 1624, [2002] O.T.C. 297 (S.C.J.)]. The case was appealed to this court.

[19] Goudge J.A., writing for the court, agreed with the motion judge that the commercial activity exception in s. 5 of the SIA did not apply. At para. 51 of his reasons, he said:

I agree . . . that the commercial activity exception does not apply here. Section 5 of the Act requires that the acts to which the proceedings relate (namely the acts of torture) be commercial in nature. It is not enough that the proceedings relate to acts which, in turn, relate to commercial activity of the foreign state. To interpret the exception in this way, as the appellant contends, would broaden the exception beyond the clear language of the SIA.

[20] The appellants submit that the present case is distinguishable from Bouzari. In that case, Mr. Bouzari was kidnapped, imprisoned and tortured for refusing to pay a bribe in the context of an oil and gas transaction. Goudge J.A. held, at para. 53, that "apart from their purpose, the acts of torture underpinning the appellant's action cannot be said to have anything to do with commerce". In essence, torture is not a commercial act.

[21] The appellants argue that in this case, the systematic exchange of hostages for money and guns does constitute a commercial act. They contend that it makes no difference to the legal analysis that the consideration for money and guns was human beings, rather than a commodity like oil.

[22] I agree with the motion judge, at para. 42, that "the exchange of human beings for weapons and money [does not fall] within the ordinary meaning of commercial activity in s. 5 of the [SIA]". A mere nexus to commercial activity is insufficient to invoke the exception. Rather, the nature of the acts for which relief is sought -- in this case, kidnapping, detention and torture -- must be commercial. As the motion judge held, at para. 42, "[t]he fact that Iran demanded the payment of money and weapons before releasing Mr. Jacobsen and Mr. Steen does not alter the true nature of hostage taking as a brutal criminal act".

[23] I thus would not give effect to the first ground of appeal. [page212]

(ii) The alleged common law exception to state immunity

[24] The appellants argue that the motion judge failed to apply the decision of the Supreme Court of Canada in Kuwait Airways Corp. v. Iraq, [2010] 2 S.C.R. 571, [2010] S.C.J. No. 40, 2010 SCC 40, which they submit left open the question whether there is a common law exception to state immunity. LeBel J., writing for the court, said, at para. 24:

As I mentioned above, the SIA represents a clear rejection of the view that the immunity of foreign states is absolute. It reflects a recognition that there are now exceptions to the principle of state immunity and in so doing reflects the evolution of that principle at the international level. But I need not determine here whether the SIA is exhaustive in this respect or whether the evolution of international law and of the common law has led to the development of new exceptions to the principles of immunity from jurisdiction and immunity from execution (on this issue and the controversies it has generated, see F. Larocque, "La Loi sur l'immunité des États canadienne et la torture" (2010), 55 McGill L.J. 81). It will suffice to determine whether the commercial activity exception applies in the case at bar.

According to the appellants, at common law, Iran does not benefit from state immunity on the facts of this case.

[25] In Kuwait Airways, LeBel J. found it was unnecessary to decide the issue whether common law exceptions to state immunity exist, since the case could be disposed of on other grounds. However, this court in Bouzari concluded that the exceptions to state immunity listed in the SIA are exhaustive. At paras. 56-59, Goudge J.A. said:

The final argument related to the SIA issue is raised by the intervener CLAIHR. It argues that the enactment of the SIA has not displaced the common law of state immunity and that, under that common law, torture cannot be legitimized as a government act and cannot therefore attract immunity.

In my view, the wording of the SIA must be taken as a complete answer to this argument. Section 3(1) could not be clearer. To reiterate, it says:

3.(1) Except as provided by this Act, a foreign state is immune from the jurisdiction of any court in Canada [Emphasis added].

The plain and ordinary meaning of these words is that they codify the law of sovereign immunity. Indeed in Re Canada Labour Code, [1992 CanLII 54 (SCC), [1992] 2 S.C.R. 50] La Forest J. says exactly that at 69:

This appeal raises the issue of sovereign immunity, as codified in the State Immunity Act. [Emphasis added].

Thus the appellant is left with the exceptions in the Act[.]

[26] Counsel for the appellants invites us to reconsider the court's characterization of the SIA in Bouzari and to apply a common law exception to state immunity. In my view, not only [page213] are we bound by the court's conclusion in Bouzari, Goudge J.A.'s reasoning for reaching that conclusion is persuasive.

[27] Indeed, after this appeal was argued, the Quebec Court of Appeal in Islamic Republic of Iran v. Hashemi, [2012] Q.J. No. 7754, 2012 QCCA 1449 expressed its agreement with the above analysis in Bouzari. Morissette J.A., writing for the court held, at para. 42:

In my view, what Goudge J.A. wrote on behalf of the Court in paragraphs [56] to [59] of his reasons is entirely apposite -- in fact, it coincides with most of the preceding observations on the SIA. I therefore see no reason to depart from his reasoning: the exceptions to state immunity in Canadian positive law are those set out in the SIA, not in some remnant of a hypothetical common law doctrine that would coexist with the Act, or in some rule of customary international law that might modulate the interpretation of a statutory phrase which in fact is in no need of interpretation.

[28] I agree that the language in s. 3(1) of the SIA is clear and does not permit the application of a common law exception to state immunity.

(iii) Jus cogens

[29] I now turn to the concept of jus cogens and whether the motion judge erred in failing to conclude that the respondents lost their entitlement to sovereign immunity because their acts were in violation of peremptory norms of international law.

[30] Peremptory norms of international law, or jus cogens, are higher forms of customary international law from which no derogation is permitted: see Bouzari, at para. 86. The content of jus cogens is not settled; however, generally accepted examples of such norms include the prohibitions against genocide, slavery, apartheid and torture: John H. Currie, Craig Forcese and Valerie Oosterveld, International Law: Doctrine, Practice, and Theory (Toronto: Irwin Law Inc., 2007), at p. 159. According to the appellants, a state that violates peremptory norms of international law -- which they say include prohibitions against torture and terrorism -- cannot rely on the immunity provided in the SIA because, in committing such acts, the state is not acting in a sovereign capacity.

[31] The jus cogens issue was addressed by the court in Bouzari. Goudge J.A. concluded, at para. 94 of the reasons: "The peremptory norm of prohibition against torture does not encompass the civil remedy contended for by the appellant." Goudge J.A. further remarked, at para. 95:

Both under customary international law and international treaty there is today a balance struck between the condemnation of torture as an international crime against humanity and the principle that states must treat each [page214] other as equals not to be subjected to each other's jurisdiction. It would be inconsistent with this balance to provide a civil remedy against a foreign state for torture committed abroad. In the future, perhaps as the international human rights movement gathers greater force, this balance may change, either through the domestic legislation of states or by international treaty. However, this is not a change to be effected by a domestic court adding an exception to the SIA that is not there, or seeing a widespread state practice that does not exist today.

[32] In the recent decision in Hashemi, released on August 15, 2012, the Quebec Court of Appeal rejected the argument that customary international law has developed to recognize an exception to state immunity in cases where violations of jus cogens norms are alleged. In rejecting this argument, Morissette J.A. relied on the decision of the International Court of Justice in Jurisdictional Immunities of the State (Germany v. Italy: Greece Intervening), Judgment (3 February 2012), ICJ General List No. 143, online: International Court of Justice, http://www.icj-cij.org/docket/files/143/16883.pdf.

[33] The majority judgment of the ICJ considered the relationship between jus cogens and the rule of state immunity, at para. 93:

This argument therefore depends upon the existence of a conflict between a rule, or rules, of jus cogens, and the rule of customary law which requires one State to accord immunity to another. In the opinion of the Court, however, no such conflict exists . . . The two sets of rules address different matters. The rules of State immunity are procedural in character and are confined to determining whether or not the courts of one State may exercise jurisdiction in respect of another State. They do not bear upon the question whether or not the conduct in respect of which the proceedings are brought was lawful or unlawful.

[34] The majority went on to survey the treatment of this issue in courts of various nations, including this court in Bouzari. The majority, at paras. 96-97, concluded that alleged violations of jus cogens norms do not affect state immunity:

[T]his argument about the effect of jus cogens displacing the law of State immunity has been rejected by the national courts of the United Kingdom (Jones v. Saudi Arabia, House of Lords, [2007] 1 AC 270; ILR, Vol. 129, p. 629), Canada (Bouzari v. Islamic Republic of Iran, Court of Appeal of Ontario, DLR, 4th Series, Vol. 243, p. 406; ILR, Vol. 128, p. 586), Poland (Natoniewski, Supreme Court, Polish Yearbook of International Law, Vol. XXX, 2010, p. 299), Slovenia (case No. Up-13/99, Constitutional Court of Slovenia), New Zealand (Fang v. Jiang, High Court, [2007] NZAR p. 420; ILR, Vol. 141, p. 702), and Greece (Margellos, Special Supreme Court, ILR, Vol. 129, p. 525), as well as by the European Court of Human Rights in Al-Adsani v. United Kingdom and Kalogeropoulou and others v. Greece and Germany (which are discussed in paragraph 90 above), in each case after careful consideration.

. . . . . [page215]

Accordingly, the Court concludes that even on the assumption that the proceedings in the Italian courts involved violations of jus cogens rules, the applicability of the customary international law on State immunity was not affected.

[35] In Hashemi, at para. 55, Morissette J.A. observed that the ICJ's judgment in Germany v. Italy "provides a conclusive refutation of the arguments against jurisdictional immunity which several parties in this case based on customary international law and on a jus cogens protection of human rights".

[36] In sum, the appellants' contention that customary international law has developed to recognize an exception for state immunity where violations of jus cogens norms are alleged is contrary to this court's conclusion in Bouzari, and the more recent decisions of the majority of the ICJ in Germany v. Italy and the Quebec Court of Appeal in Hashemi. I thus see no merit in this ground of appeal.

[37] For the above reasons, I would dismiss the appeal.

A. The Cross-Appeal

[38] The respondents require leave to appeal the costs award. In Brad-Jay Investments Ltd. v. Szijjarto, 2006 CanLII 42636 (ON CA), [2006] O.J. No. 5078, 218 O.A.C. 315 (C.A.), at para. 21, this court set out the test for leave to appeal a costs order as follows:

Leave to appeal a costs order will not be granted save in obvious cases where the party seeking leave convinces the court that there are "strong grounds upon which the appellate court could find that the judge erred in exercising his discretion".

[39] In making her costs award, the motion judge said, at para. 56 of her reasons: "The defendants [respondents in the appeal] did not seek costs and are content to leave the matter of costs to the court." In spite of this position before the motion judge, the respondents now seek to appeal her costs award.

[40] The respondents submit that the motion judge did not have jurisdiction to make a costs award against them by virtue of sovereign immunity under the SIA or, in the alternative, that the motion judge improperly exercised her discretion under rule 57.01(2) to award costs against the respondents who were successful on the motion.

[41] I am not satisfied that there are strong grounds to find that the motion judge erred in exercising her discretion. This is particularly so when the respondents left the issue of costs in the hands of the judge.

[42] In these circumstances, I would not grant leave to appeal the costs award. [page216]

Disposition

[43] I would dismiss the appeal without prejudice to the appellants' right to take the appropriate steps to have their judgments recognized by the Superior Court pursuant to the new legislative regime under the JVTA and the SIA referred to above. I would not make any award as to the costs of the appeal.

[44] I would not grant the respondents leave to appeal the costs award. I would not make any costs award in respect of the leave to appeal.

Appeal and cross-appeal dismissed.

Notes

1 David Jacobsen had previously pursued an action on his own behalf and successfully collected on a judgment of US$9 million: see Cicippio v. Islamic Republic of Iran, 18 F. Supp. 2d 62 (D.D.C. 1998). As such, he is not a party to this action.

End of Document