Thales DIS Canada Inc. v. Ontario (Transportation), 2023 ONCA 866

COURT OF APPEAL FOR ONTARIO DATE: 20231229 DOCKET: COA-22-CV-0357

Doherty, Hoy and Favreau JJ.A.

BETWEEN

Thales DIS Canada Inc. Applicant (Respondent)

and

Ontario (Minister of Transportation, Minister of Health, Minister of Government and Consumer Services, Minister of Finance – Ontario Digital Services)* and the Attorney General of Ontario Respondents (Appellants*)

Counsel: William R. MacLarkey, Andi Jin and Jacob Eidinger, for the appellants Peter Mantas, Nabila Abdul Malik, Novera Khan, Alexandra Logvin, Marcia Mills, Gabrielle Cyr and Julien Frigon for the respondent

Heard: June 6, 2023

On appeal from the order of the Divisional Court (Justices Herman J. Wilton-Siegel, David L. Corbett, concurring, and Sandra Nishikawa), dated June 1, 2022, with reasons reported at 2022 ONSC 3166.

Favreau J.A.:

A. Overview

[1] In 2021, Ontario’s Ministry of Transportation (“MTO” or the “Ministry”) issued a request for bids for the production of identification cards, including drivers’ licences and health cards. The identification cards were to be produced with card stock with specified security features. The request for bids included a requirement that production of the identification cards, including the card stock, take place in Canada.

[2] The respondent, Thales DIS Canada Inc. (“Thales”), is a member of the Thales Group, which is based in France. Thales bid on the project and proposed to produce the card stock at a manufacturing plant in Poland.

[3] Thales challenged the requirement that the card stock be produced in Canada through an internal bid review process within the Ontario government. One of Thales’s arguments was that the requirement that the card stock be produced in Canada breached Canada’s non-discrimination obligations under the Canada-European Union Comprehensive Economic and Trade Agreement (the “CETA”).

[4] Thales’s complaint was dismissed on the basis that the requirement fit within the public safety exception under the CETA, because manufacturing card stock outside of Canada and transporting it to Canada increased the risk of identity theft and fraud. Thales’s position that the Ontario government failed to implement a proper dispute resolution process under the CETA was also rejected.

[5] Thales brought an application for judicial review, challenging the decision dismissing its complaint and the request for bids itself. The Divisional Court granted the application for judicial review. The majority found that the decision and request for bids were unreasonable for two reasons. First, they were inconsistent with the analysis in World Trade Organization (“WTO”) decisions concerning the circumstances in which the public safety exception is warranted. Second, based on those WTO decisions, the requirement that the card stock be manufactured in Canada was discriminatory under the CETA. In concurring reasons, Corbett J. would have granted the application for judicial review on the basis that Ontario failed to implement a proper process for deciding CETA disputes.

[6] The appellant, Ontario, argues that the majority of the Divisional Court erred in its application of the reasonableness standard of review to the decision. Rather than focusing on the decision itself, the majority improperly decided the issues de novo. Ontario also argues that the Divisional Court erred in finding that the issuance of the request for bids is a decision subject to judicial review.

[7] I would allow the appeal. I agree with Ontario that the majority of the Divisional Court erred in its application of the reasonableness standard of review. Instead of considering whether the reasons, in light of the law, the record and the submissions made by the parties, contain a rational line of analysis, the majority improperly decided the issue afresh. Applying the deference mandated by the reasonableness standard of review, I find that the decision was reasonable. In addition, I agree with Ontario that the request for bids is not subject to judicial review, although I arrive at this conclusion based on the circumstances of this case. Finally, I disagree with the concurring reasons of the Divisional Court. It was open to Ontario to rely on an already established dispute resolution process to address Thales’s complaint, given that the outcome of that process was subject to judicial review.

[8] Accordingly, I would allow the appeal and dismiss the application for judicial review.

B. Background

(1) The CETA

[9] Before addressing the specific circumstances of this case, it is helpful to start with a review of the relevant provisions of the CETA.

[10] On October 30, 2016, Canada and the European Union (“EU”) signed the CETA. The agreement came into force provisionally on September 21, 2017.

[11] The preamble to the CETA states that its purposes include the creation of “an expanded and secure market for [the parties’] goods and services through the reduction or elimination of barriers to trade and investment” and the establishment of “clear, transparent, predictable and mutually-advantageous rules to govern [the parties’] trade and investment”.

[12] Chapter 19 of the CETA addresses government procurement. The rules set out in Chapter 19 explicitly apply to procurement by provinces.

[13] Article 19.4 of the CETA sets out the general principles governing procurement, which include “non-discrimination”. The prohibition against discrimination precludes a government from discriminating against a local supplier on the basis that goods or services will be manufactured or provided by a supplier based in one of the signatory countries:

1. With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall accord immediately and unconditionally to the goods and services of the other Party and to the suppliers of the other Party offering such goods or services, treatment no less favourable than the treatment the Party, including its procuring entities, accords to its own goods, services and suppliers.

2. With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not: a. treat a locally established supplier less favourably than another locally established supplier on the basis of the degree of foreign affiliation or ownership; or b. discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party. [Emphasis added.]

[14] Article 19.3 of the CETA creates exceptions to the principle of non-discrimination, including permitting procurement measures that are necessary for the protection of public morals, order or safety:

2. Subject to the requirement that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Parties where the same conditions prevail or a disguised restriction on international trade, nothing in this Chapter shall be construed to prevent a Party from imposing or enforcing measures: a. necessary to protect public morals, order or safety. [Emphasis added.]

[15] Article 19.17 requires each party under the CETA to “provide a timely, effective, transparent and non-discriminatory administrative or judicial review procedure through which a supplier may challenge … a breach of the Chapter”.

[16] Article 19.17 specifies some of the features the challenge process is to have, which include:

4. Each party shall establish or designate at least one impartial administrative or judicial authority that is independent of its procuring entities to receive and review a challenge by a supplier arising in the context of a covered procurement.

5. If a body other than an authority referred to in paragraph 4 initially reviews a challenge, the Party shall ensure that the supplier may appeal the initial decision to an impartial administrative body or judicial authority that is independent of the procuring entity whose procurement is the subject of the challenge.

6. Each party shall ensure that a review body that is not a court shall have its decision subject to judicial review….

[17] The challenge process also requires that each party put in place “rapid interim measures to preserve the supplier’s opportunity to participate in the procurement”. In addition, each party is to put measures in place that allow for “corrective action or compensation for the loss or damages suffered, which may be limited to either the costs for the preparation of the tender or the costs relating to the challenge, or both”.

[18] Article 29 of the CETA sets out the dispute resolution process for disagreements over the interpretation or application of the CETA. Under Article 29.6, if a resolution cannot be reached through mediation, the dispute is to be resolved through arbitration between the parties to the CETA. Article 29.17 sets out the rules of interpretation for arbitration panels. It specifies that the panel “shall interpret the provisions of [the CETA] in accordance with customary rules of interpretation of public international law” and “take into account relevant interpretations in reports of Panels and the Appellate Body adopted by the WTO Dispute Settlement Body.”

(2) The request for bids and Thales’s participation in the bid process

[19] The Ontario government issues over 9 million drivers’ licences, health cards and other identification cards to Ontarians every year.

[20] On September 16, 2021, Ontario issued a request for bids for a vendor to provide image capture services, photo comparison technology services, and identification card production services. The contract was to be for a term of at least seven years, with a potential three-year extension. The contract was valued at approximately $80 million.

[21] MTO was the lead ministry conducting the procurement. The request for bids also involved other ministries such as the Ministry of Health.

[22] The deadline for submissions was originally November 10, 2021, which was later extended to December 1, 2021.

[23] The manufacture of identification cards was a significant component of the request for bids. The request for bids described the services to be provided in relation to the identification cards as an “end-to-end … design, processing, production/manufacturing, personalization … and mail-out” service.

[24] Part of the manufacturing process for identification cards requires the production of card stock. Card stock includes the visual and tactile security features of a finished identification card, including cut out blank cards with unique numbers. However, blank card stock does not yet include a person’s photograph or identifying information.

[25] The request for bids included a section dealing with the production of materials and requirements for card stock. The original provision stated that the printing and personalization of the cards was to take place in a single secured facility in Canada:

1.5.6.2.3.1 Production Materials and Card Stock requirements

1. Card stock shall be produced in a secure facility that must comply with PHIPA standards.
2. Printing and personalization of the Cards shall occur in the single secured Card Production facility in Canada. All Card Holder’s personal information must stay in Canada.

[26] After MTO issued the request for bids, Thales participated in the bid process. Thales is a security technology company, which is part of the multinational Thales Group. Thales Poland, which is part of the Thales Group, produces identification cards and passports at a facility in Gdansk, Poland for governments in the EU, the United Kingdom, some American states and some Canadian provinces.

[27] The bidding process included an opportunity for potential bidders to ask questions and seek clarifications. During that part of the process, Thales asked whether the card stock was to be manufactured in Canada. In response, MTO confirmed that card stock was to be manufactured in Canada. The Ministry then amended subsection 1 of s. 1.5.6.2.3.1 of the request for bids to add the following clarification:

1. Card stock shall be produced in a secure facility that must comply with PHIPA standards. Card stock shall be produced in the single secured Card Stock Production facility in Canada. The Ministry confirms that Card Stock with background designs must be produced as part of the manufacturing process. [Amendment shown with underline.]

[28] The request for bids explicitly stated that it was subject to the CETA and the Canadian Free Trade Agreement (the “CFTA”).

[29] Thales submitted a bid on November 30, 2021, in which it indicated its intention to produce the card stock at its facility in Gdansk, Poland, and to complete the balance of the work on the identification cards in Canada.

[30] In early December 2021, before Ontario made any decisions on awarding the contract, Thales sought to challenge the domestic production requirement.

(3) Ontario’s procurement dispute resolution process

[31] Before addressing Thales’s challenge, it is helpful to describe the dispute resolution process followed in this case.

[32] The Government of Ontario has an internal dispute resolution process to address bid disputes. A description of the process is set out in a document titled “Detailed Description of the Government of Ontario’s Bid Dispute Process” (“Detailed Description”).

[33] The Director of the Procurement Policy Branch, Supply Chain Ontario, Ontario Shared Services, of the Ministry of Government Services (the “Director”) is responsible for centrally reviewing all complaints.

[34] The complaint process is in writing. Vendors who have a complaint are to submit a complaint form with a detailed description of their complaint. The Director can then solicit further information, including seeking submissions from the affected Ministry.

[35] Once the Director has reviewed the complaint, the Director prepares an analysis that is presented to the Assistant Deputy Minister of Supply Chain Ontario, who in turn makes a recommendation to the affected Ministry. The Deputy Minister of the affected ministry is then responsible for assessing the implications of the recommendation. The complaint process is completed as follows:

The Ministry will have an opportunity to consider the operational impacts of this recommendation, its obligations under Ontario’s trade commitments and this bid dispute process, and will make a final decision that will be communicated to the [Assistant Deputy Minister, Supply Chain Ontario and the Director]. This decision will be adopted as the Government of Ontario’s position and the [Assistant Deputy Minister, Supply Chain Ontario] will communicate it back to the vendor.

[36] The complaint process provides that vendors who have complaints may be eligible for certain remedies, including measures to preserve their ability to participate in the process and monetary compensation limited to the costs of preparing the bid and making a complaint. In addition, where a complaint is made regarding a contract that has not yet been awarded, the dispute resolution process proceeds on expedited timelines and the government has the option of applying interim measures to preserve the vendor’s opportunity to participate in the bidding process. Notably, both the remedies and interim measures provisions mirror the requirements of Article 19.17 of the CETA.

[37] The complaint process further provides that vendors who are not satisfied with the outcome can proceed to court or, in the case of a non-competitive bid process, to arbitration.

(4) Thales’s complaint and MTO’s response

[38] On December 10, 2021, Thales submitted a complaint form to the Director.

[39] At the same time, Thales brought an application for judicial review to the Divisional Court. (The application for judicial review did not proceed at that time and was later amended to include review of the decision made through the bid dispute resolution process.)

[40] Given the issues raised on appeal, it is helpful to review the parties’ submissions to the Director in some detail.

(a) Thales’s initial complaint

[41] In its initial complaint form, Thales claimed that the request for bids breached the CETA and the CFTA because of the requirement that the card stock be manufactured in Canada. Thales also claimed that the Ministry improperly changed the terms of the bid at the “eleventh hour” by adding the requirement that card stock be manufactured in Canada.

[42] Thales further took the position that Ontario failed to implement a “timely, effective, transparent and non-discriminatory” procedure as required by the CETA to resolve its complaint. In this respect, Thales submitted that the process was not publicly available and did not clearly delineate the process that would be followed in reviewing the complaint.

(b) MTO’s response

[43] On January 21, 2022, MTO submitted its response to Thales’s complaint.

[44] In its response, MTO disagreed that it added the Canadian production requirement to the request for bids at the “eleventh hour”. Rather, it argued that the amendment to the request for bids clarified this requirement.

[45] MTO took the position that the Canadian production requirement did not breach the CETA, because it was permitted by the “public morals, order or safety” exception in Article 19.3. MTO submitted that this requirement was meant to reduce the risk of identity theft and fraud. In support of this position, MTO relied on a note (the “Fraud Note”) prepared by its Fraud Prevention and Business Integrity Office (“the Fraud Office”).

[46] The Fraud Note was attached to MTO’s response. The Fraud Note stated that the Fraud Office “works closely with … enforcement agencies in Ontario, Canada and throughout the world, as well as stakeholders including other provincial and national governments to ensure the integrity” of driver’s licences and other identification cards. The Fraud Note also stated that “incidents of theft and fraud are often deliberately under-reported or not reported for security reasons.” The Fraud Note explained that card stock is printed to “contain overt, covert and forensic level security features”, and that, once printed, the card is cut into individual blank cards with a unique stock number printed on each card. The Fraud Note then explained that “[b]ecause the manufacture of card stock is a complex, technical process and personalization is comparatively easier to forge, card stock has a high value to criminals and fraudsters.”

[47] The Fraud Note went on to describe two areas of risk if card stock were to be produced offshore outside of Canada. First, if card stock is produced outside of Canada, MTO would not have the same level of control it would have in supervising the security of the manufacturing process in Canada. Second, the transportation of card stock from offshore to Canada would increase the number of handovers and the opportunities for theft. The Fraud Note elaborated on each area of risk.

[48] The Fraud Note also mentioned that the American Association of Motor Vehicle Administrators (“AAMVA”) recommended in its “‘DL/ID Card Design Standard’ to centralize production and personalization wherever possible” (emphasis added).

[49] In its response, besides relying on the Fraud Note, MTO identified a two-step material necessity analysis which it said should be applied to determine whether the domestic production measure fell within the scope of the public morals, order or safety exception. First, the policy rationale must be materially connected to the protection of public morals, order or safety. Second, the domestic production requirement must be necessary in order to protect public morals, order or safety.

[50] MTO went on to apply this two-step analysis to the domestic production requirement for card stock. Relying on the Fraud Note, MTO stated that the measure is “clearly connected to protecting ‘public morals, order or safety’ of Ontario residents, as the measure is intended to, and will, mitigate the risk of danger or injury related to loss, theft or compromise from offshoring card stock production”. MTO next addressed the issue of necessity. In doing so, MTO relied on the WTO decision in Brazil – Measures Affecting Imports of Retreaded Tyres (2007), WTO Doc. WT/DS332/AB/R (Appellate Body Report), at para. 210, to argue that any alternative measure would have to preserve the Ontario government’s desired level of protection with respect to its objective of protecting against fraud and identity theft. MTO submitted that no alternatives would provide the level of protection it sought.

[51] Finally, MTO disagreed that Ontario’s internal review process violated the CETA because it allowed for judicial review of the final decision once the review process was completed.

(c) Thales’s reply

[52] Thales replied to MTO’s submission on January 28, 2022. Thales noted that MTO’s submission was the first time it had indicated that it relied on the public morals, order and safety exception to justify the domestic production requirement. Thales also took issue with MTO’s reliance on the Fraud Note, observing that MTO had obtained the note after Thales made its complaint. Thales argued that this had the effect of improperly imposing additional undisclosed evaluation criteria to the request for bids.

[53] Thales further argued that the public safety exception could not apply to its bid. Thales claimed that it had a record of safely manufacturing card stock and identification cards in the EU and transporting them to other Canadian provinces and to states in the United States with which it had supply contracts. Thales described in detail its record of safely manufacturing and transporting card stock from Europe to North America. Thales also argued that MTO’s position on offshore manufacturing was internally inconsistent because, while it sought to preclude offshore manufacturing of card stock, it did not preclude the design work to be done outside of Canada.

[54] In a section dealing with the applicable law, Thales did not adopt or respond to the material necessity two-step test that MTO said was applicable for determining whether the domestic production requirement fell under the “public morals, order or safety” exception. In fact, Thales pointed out that the General Agreement on Tariffs and Trade (“GATT”) and the General Agreement on Trade in Services (“GATS”) do not include “public safety” exceptions, thereby suggesting that the decisions on which MTO relied were not pertinent.

[55] Instead, Thales first indicated that there is a “public safety” exception in the Agreement on Government Procurement (“GPA”), which includes Canada and the EU as signatories. Thales pointed to guidance on the WTO interpretation of “public safety” in the Decision of the WTO Committee on Government Procurement regarding Safety Standards in International Procurement dated March 30, 2012. Thales described this guidance as giving rise to the following principles:

(i) there must be a balanced approach between public safety and unnecessary obstacles to international trade; (ii) diverging practices among States regarding public safety may have an adverse impact on the performance of GPA; and (iii) public safety concerns are expected to be addressed in legislation, regulations, State practices and guidelines relating to the implementation of GPA by procuring entities.

[56] Thales argued that the domestic production requirement failed to account for these principles. MTO should have addressed any concerns that it had with respect to the increased risks of fraud from offshoring identity card production in “legislation, regulations, practice or guidelines”. It failed to do so, instead relying on the terms of the request for bids. Further, foreclosing all offshoring was not a ”measured approach” but an “unnecessary obstacle to international trade” that “adversely impact[ed] the performance of [Ontario’s] obligations under … CETA.”

[57] Second, relying on interpretations of the GATS, Thales submitted that public safety includes consideration of public order, such that the exception may be warranted when it relates to a “fundamental interest of society”. Thales argued that MTO had failed to produce any evidence to establish both that reducing the risk of card stock theft was such an interest and that the domestic production requirement furthered that interest.

[58] Finally, Thales argued that, even if the term “public safety” is to be considered on its own, the facts in this case did not justify a public safety requirement because of Thales’s demonstrated record of producing and transporting card stock securely from Europe to North America.

[59] Thales also disputed MTO’s contention that the dispute resolution process followed by Ontario complied with the CETA. In particular, Thales argued that the Ontario government failed to make its Detailed Document setting out the dispute resolution process generally available and in writing, as required by Article 19.17. Thales described the steps it took to obtain information about the process, saying that it only obtained the document setting out the complaint process after it had submitted its initial complaint.

[60] Thales concluded with one paragraph raising concerns about the impartiality of the decision maker:

The fact that the ultimate decision is made by the Ministry against whom the Complaint is launched raises profound concerns as to the impartiality of the decision maker and transparency of the bid review process, in violation of both CETA and CFTA.

(d) MTO’s sur-reply

[61] On February 2, 2022, MTO submitted a two-page sur-reply in which it took issue with some of Thales’s assertions in its reply submission of January 28, 2022 about the bid process, the risk of fraud and MTO’s alleged inconsistency in requiring domestic production of card stock but not domestic design of the identification cards.

(5) The Decision

[62] By letter dated February 8, 2022, the Assistant Deputy Minister of Supply Chain Ontario notified Thales that Supply Chain Ontario had concluded that the complaint was not substantiated, and that this recommendation was accepted by the Government of Ontario. The letter included a copy of a briefing note prepared by the Director setting out the recommendation. As noted by the Divisional Court, the letter and briefing note together constitute the decision at issue in this case, which I refer to going forward as the “Decision”.

[63] The Decision was organized into four separate sections, which the Director described as the four principal issues raised by Thales.

[64] First, the Director addressed Thales’s argument that MTO introduced fundamental and significant changes to the request for bids at the “eleventh hour”. The Director rejected this argument, finding that the original request for bids already “clearly require[d] the domestic manufacture of card stock” and that, in any event, MTO responded swiftly to Thales’s questions, issuing the domestic production addendum “a full 3 weeks prior to tender close.”

[65] Second, the Director addressed the issue of whether there was discrimination under the CETA. In doing so, the Director started with a detailed review of the respective arguments made by MTO and Thales. When describing MTO’s submissions, the Director reviewed the contents of the Fraud Note and described MTO’s proposed application of the two-part material application test. When describing Thales’s position, the Direction reviewed in detail Thales’s stated positive record of safely producing and transporting identification cards and Thales’s position that MTO should not be allowed to rely on the Fraud Note because it is not proper evidence.

[66] After reviewing the parties’ positions, the Director stated that there was little disagreement between the parties about the applicable law and that Thales primarily focused on MTO’s failure to provide evidence in support of its position:

Thales and the Ministry do not differ significantly in their substantive review of the international trade case law applicable to the analysis of the safety exception under CETA. Rather, the thrust of Thales’ argument is that the Ministry has produced “no evidence to support [its] position” that foreign production of card stock increases the risk of loss and theft.

[67] The Director then provided her analysis of the CETA discrimination issue. In doing so, she addressed and rejected specific arguments made by Thales:

a. The Director found that there was no merit to Thales’s argument that MTO had failed to disclose its reliance on the public safety exception. The Director stated that MTO’s “reliance on the public safety exception is the justification for, or defence of, the domestic production requirement” (emphasis in original). There was no obligation for MTO to include that justification in its request for bids. b. The Director rejected Thales’s argument that the public safety requirement should not apply because of its track record at its Polish facility. The Director reasoned that “Thales’ argument necessarily requires accepting that, based on its own track record, the domestic production requirement is not warranted for any bidders and therefore is not justified under the CETA’s safety exception. I do not accept this argument as a factual matter, nor have I been pointed to a legal authority that would support it.” c. The Director rejected Thales’s argument that the Ministry had provided no evidence in support of the public safety exception. The Director accepted that the Fraud Note supported MTO’s concerns and stated that she was entitled to rely on the note as evidence and was not restricted to sworn evidence. The Director was satisfied that the information in the Fraud Note was reliable because “the Fraud Office works closely with the Ministry program area, enforcement agencies in Ontario, Canada and throughout the world, as well as provincial and national governments worldwide to ensure the integrity of Ontario’s Driver’s Licences and Photo Cards. As such, the Fraud Office is well positioned to provide evidence on the risks of foreign manufacture and transportation of card stock across jurisdictions”. The Director further accepted that statistics about theft and fraud of identity documents are not readily available because they are under-reported for security reasons. d. The Director did not accept Thales’s argument that there was an internal inconsistency in MTO allowing the design to take place outside Canada while imposing domestic production requirements. The Director pointed out that if digital files are intercepted in transit this would not compromise actual identity cards.

[68] The third issue the Director addressed was Thales’s position that the domestic production requirement breached the CFTA. The Director did not accept this position because the request for bids did not have any inter-provincial impact, as the CFTA requires. The domestic production requirement applied to all bidders equally irrespective of the province in which they resided.

[69] The fourth and final issue addressed by the Director was Thales’s position that the review process breached the CETA and the CFTA. Again, the Director rejected this position. In doing so, the Director focused on Thales’s submission that it had not received all the information setting out the review process in writing. The Director concluded that there was no requirement that Thales be provided with all the information in its “Detailed Description” of the complaints process but that, in any event, Thales was provided with all necessary information when it was requested.

(6) The Divisional Court’s decision

[70] Following the issuance of the Decision, Thales proceeded with an application for judicial review to the Divisional Court challenging the Decision and the request for bids itself.

[71] The Divisional Court granted the application for judicial review, quashing both the Decision and the request for bids. The majority and concurring judge arrived at this outcome through different analyses.

(a) The majority reasons

[72] First, the majority considered whether the application for judicial review was moot. The basis for Ontario’s position that the application was moot was that, by the time of the application for judicial review, Ontario had awarded the contract and Thales was ranked fourth of all bidders. Ontario took the position that, even without the domestic production requirement, Thales would not have been the successful bidder. The court held that the application was not moot because it was mathematically possible that Thales was disqualified because of its proposed foreign production of card stock. The court further held that, even if the application for judicial review was moot, it raised a matter of public interest that should be resolved, namely “Ontario’s compliance with its international trade obligations”.

[73] The majority went on to consider the application for judicial review on its merits.

[74] The majority rejected Thales’s argument that the matter raised an issue of central importance to the legal system and held that the standard of review applicable to the decision and the request for bids was reasonableness.

[75] The majority proceeded to find that the Decision was unreasonable. In assessing whether the Decision was reasonable, the court focused on the issue of whether the Director properly applied the two-stage material necessity test. In this respect, the majority stated that the parties agreed that deciding whether there was a violation of the CETA required “an assessment of the application of the two-stage test described in paragraph 178 of the Brazil Decision.” The majority held that the Director “did not express her conclusions in conformity with that test”, and the Director therefore failed to address what the majority described as “the four principal issues … which must be considered in the application of that test.” On this basis, the majority then concluded that it was not possible to find a rational and logical chain of analysis leading to the Director’s conclusion that the public safety exception in the CETA was available in this case. The majority went on to identify and discuss the fours issues that it claimed the Director should have addressed:

a. The Director failed to address the specific matter of public morals, order or safety that the domestic production requirement was meant to address. b. The Director failed to address whether the domestic production requirement was materially connected to the risk of loss, theft and fraud associated with identification documents. c. The Director failed to address whether the domestic production requirement materially reduced the alleged risk. d. The Director failed to consider possible alternatives.

[76] On each of these issues, the majority explained how the Director should have addressed these four issues based on the record before her. The Divisional Court ultimately concluded that the Director’s finding that the domestic production requirement was “necessary” was unreasonable.

[77] Based on this conclusion, the court granted an order in the nature of certiorari quashing the Decision. The majority also decided “it would serve no useful purpose to remit the matter back to the Director” because “it is clear that the only reasonable conclusion that the Director could have reached on the record before her is that the domestic production requirement contravened the CETA.”

[78] The majority went on to consider the request for bids. The majority first found that it had jurisdiction to consider the issuance of the request for bids on judicial review because the decision to issue the request for bids had a sufficiently public character. In reaching this conclusion, the majority considered several factors, including that (i) the request for bids was issued by multiple ministries under Ontario’s procurement directives, (ii) the contract was for the design and production of foundational identification documents, (iii) the CETA and the CFTA applied to the request for bids, (iv) the contract involved a significant sum of public funds and (v) the issue could not be addressed as a matter of contract law. The majority then relied on its reasoning regarding the unreasonableness of the Decision, and found that the decision to issue a request for bids with a domestic production requirement was also unreasonable. On this basis the majority quashed the request for bids.

(b) The concurring reasons

[79] In his reasons, the concurring judge held that the Decision was made without jurisdiction because Ontario had failed to establish a CETA compliant dispute resolution process. In reaching this conclusion, the concurring judge relied on the wording of Articles 19.17.4 and 19.17.5 referred to above. Specifically, the concurring judge found that, given that the initial decision maker was not impartial, Ontario had an obligation to set up a process that would allow for an “appeal” to the court. Judicial review, by the terms of these provisions and in accordance with the legal principles, is not a proper substitute for the process contemplated by the CETA. He concluded that the decision maker below did not have jurisdiction over the dispute “because it was not a tribunal that fits within either Article 19.17.4 or 19.17.5 of CETA”, and on that basis he would have quashed the decision as a nullity.

[80] The concurring judge further stated that, if the process established by the Ontario Government for reviewing the complaint had been CETA compliant, it would not be appropriate for the Divisional Court to usurp the role of the administrative decision maker by reviewing the request for bids afresh.

[81] However, given the concurring judge’s finding that the decision was made without jurisdiction, he went on to review the domestic production requirement in the request for bids and found that it was unreasonable. The concurring judge found that the request for bids was unreasonable in two respects: first, because Ontario failed to set up a CETA-compliant dispute resolution process and, second, because it discriminated against Thales as the public safety exception did not apply. In this respect, the concurring judge held that, given the decision maker’s lack of jurisdiction, the Divisional Court’s role would be to decide the issue of whether domestic production requirement was met as though it were the original decision maker. On that basis, he found that Ontario failed to put forward any evidence of the quality required to demonstrate that the domestic production requirement was necessary for public safety; there was no credible evidence that the requirement was material, that it was necessary or that there were no reasonable alternatives.

C. Issues on Appeal

[82] Ontario argues that the Divisional Court erred in quashing the Decision and the request for bids. With respect to the Decision, Ontario argues that the Divisional Court erred in its application of the reasonableness standard of review. With respect to the request for bids, Ontario argues that the Divisional Court erred in finding that it was properly subject to judicial review.

[83] Below, I address the issues of the Decision and the request for bids separately. Given that the question of whether the Divisional Court erred in finding that the Decision was unreasonable raises the issue of the application of the reasonableness standard, my discussion of the standard of review is in this first section, although it has some application to the issue of the request for bids.

D. The Reasonableness of the Director’s Decision

[84] I agree with Ontario that the majority of the Divisional Court misapplied the reasonableness standard of review. I start with a review of applicable principles, followed by a discussion of the majority’s reasons and then a discussion of the reasonableness of the Decision.

(1) General principles relevant to the standard of review

[85] As this court explained in Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780, 476 D.L.R. (4th) 421, at para. 46, on an appeal from a decision of the Divisional Court dealing with an application for judicial review, there are two steps for identifying the standard of review. First, the court must determine the standard of review that applies when reviewing the decision of the Divisional Court. Second, the court must determine the standard of review that the Divisional Court was to apply to the Decision.

(a) Standard of review on appeal

[86] On an appeal from a judicial review decision of the Divisional Court, this court must decide whether the Divisional Court identified the correct standard of review to be applied and whether it applied that standard of review correctly: Turkiewicz, at para. 49; Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, 157 O.R. (3d) 753, at para. 20. In determining whether the Divisional Court correctly applied the appropriate standard of review, this court is to “step into the shoes” of the Divisional Court: Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559, at para. 46; Turkiewicz, at para. 49.

(b) Standard of review to be applied by the Divisional Court to the Decision

[87] In Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at para. 23, the Supreme Court held that there is a presumption that the reasonableness standard of review will apply to the review of an administrative decision on an application for judicial review. The presumption can be rebutted where a different standard of review is prescribed by legislation or where the rule of law requires a correctness standard of review because the matter raises a constitutional issue, a question of central importance to the legal system or an issue of jurisdiction as between two administrative tribunals.

[88] In this case, the majority of the Divisional Court held that the presumption that reasonableness was the standard of review applied. I agree.

[89] As held by the majority, the issue of whether the domestic production requirement is an allowable exception is a question of mixed fact and law. In addition, while Ontario’s trade law obligations are important, the issue of whether the request for bids is compliant with those obligations is not an issue of central importance to the legal system.

(c) How the reasonableness standard of review is to be applied

[90] The more significant issue in this case is the application of the reasonableness standard of review to the Decision.

[91] In Vavilov, at para. 83, the court emphasized that the reasonableness review must focus on the reasons of the administrative decision maker. The reviewing court’s role is not to decide the issue afresh: “a court applying the reasonableness standard does not ask what decision it would have made in place of that of the administrative decision maker, attempt to ascertain the ‘range’ of possible conclusions that would have been open to the decision maker, conduct a de novo analysis or seek to determine the ‘correct’ solution to the problem.” The court further emphasized, at para. 84, that the “reviewing court must begin its inquiry into the reasonableness of a decision by examining the reasons provided with ‘respectful attention’ and seeking to understand the reasoning process followed by the decision maker to arrive at its conclusion”.

[92] The hallmarks of a reasonable decision are justification, transparency and intelligibility: Vavilov, at para. 99.

[93] There are two types of “fundamental flaws” that may make a decision unreasonable: Vavilov, at para. 101. First, a decision may be unreasonable because the reasoning process is internally irrational: Vavilov, at para. 101. As explained in Turkiewicz, at para. 59, the “reviewing court must be able to trace the decision maker’s reasoning without encountering any fatal flaws in its overarching logic”: see also Vavilov, at para. 102.

[94] Second, a decision may be unreasonable because it is “untenable in light of the relevant factual and legal constraints that bear on it”: Vavilov, at para. 101. Again, as described in Turkiewicz, at para. 60, the relevant factual and legal constraints include “the governing statutory scheme; other relevant statutory or common law; the principles of statutory interpretation; the evidence before the decision maker and facts of which the decision maker may take notice; the parties’ submissions; the past practices and decisions of the administrative body; and the potential impact on the individual to whom it applies”: see also Vavilov, at para. 106.

[95] In Vavilov, at para. 114, the Supreme Court explained that one of the potentially relevant legal constraints on an administrative decision maker is international law and international treaties:

We would also note that in some administrative decision making contexts, international law will operate as an important constraint on an administrative decision maker. It is well established that legislation is presumed to operate in conformity with Canada’s international obligations, and the legislature is “presumed to comply with the values and principles of customary and conventional international law”: R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292, at para. 53; R. v. Appulonappa, 2015 SCC 59, [2015] 3 S.C.R. 754, at para. 40. Since Baker, it has also been clear that international treaties and conventions, even where they have not been implemented domestically by statute, can help to inform whether a decision was a reasonable exercise of administrative power: Baker, at paras. 69-71.

[96] In Vavilov, at para. 127, the court also emphasized that the principles of justification and transparency require that reasons should be responsive to the issues raised by the parties:

The principles of justification and transparency require that an administrative decision maker’s reasons meaningfully account for the central issues and concerns raised by the parties. The principle that the individual or individuals affected by a decision should have the opportunity to present their case fully and fairly underlies the duty of procedural fairness and is rooted in the right to be heard: Baker, at para. 28. The concept of responsive reasons is inherently bound up with this principle, because reasons are the primary mechanism by which decision makers demonstrate that they actually listened to the parties. [Underlined emphasis added.]

[97] Finally, the review of an administrative decision maker’s reasons cannot be divorced from the institutional context in which the decision was made or the history of the proceedings: Vavilov, at para. 91. Factors such as expediency or the nature of the decision maker are relevant to assessing whether a decision is reasonable.

(2) The Divisional Court erred in its application of the reasonableness standard of review

[98] Ontario submits that the majority of the Divisional Court erred in its application of the reasonableness standard of review because it failed to focus on the reasons and instead conducted a de novo assessment of whether the requirement that card stock be manufactured in Canada contravened the CETA. I agree.

[99] In my view, the majority made three related errors.

[100] First, in evaluating whether the Decision was reasonable, the majority failed to consider the context in which it was made and specifically the submissions made by the parties. As reviewed above, in addressing the reasonableness of the Decision, the majority’s primary focus was on whether the Director properly applied the Brazil decision in determining whether the public safety exception was available for imposing a domestic production requirement. In doing so, the majority stated that both parties agreed that the material necessity test in Brazil applied. However, this was inconsistent with the submissions made by the parties. MTO’s submissions relied on the material necessity test in Brazil, and explained why the test was met in this case. Thales, on the other hand, did not rely on Brazil. Instead, Thales took issue with MTO’s description of the applicable law and proposed alternative approaches. More importantly, the thrust of Thales’s submissions was that the public safety exception should not be accepted in this case because, based on its prior record, it had the ability to manufacture and transport the card stock securely from Poland to Ontario. In this sense, contrary to the direction in Vavilov, the majority failed to assess whether the Decision was reasonable in the context of the submissions made by the parties.

[101] The majority’s second and related error is that, contrary to Vavilov, it assessed the Decision against its own determination of whether the domestic production requirement met the public safety exception. Having found that the Decision was unreasonable because the Director failed to apply the two-part material necessity test, the Divisional Court went on to assess whether the material necessity test would be met in this case. Again, this is contrary to the direction in Vavilov that a reviewing court should not substitute its decision for that of the administrative decision maker or measure the administrative decision against how it would have decided the issue.

[102] Third, even if the Decision was unreasonable because the Director failed to apply the two-part material necessity test, the majority erred in deciding that the appropriate remedy was to quash the decision without remitting it back to the Director. Where, as here, the reviewing court concludes that the reasons are flawed, for example by failing to follow the applicable law, then the reviewing court should refrain from conducting its own analysis to determine the appropriate outcome. Unless the matter fits into one of the “limited scenarios” described in Vavilov, at para. 142, the reviewing court should instead remit the matter back to the original decision maker to be decided in accordance with the applicable law.

[103] Here, it was an error for the majority to decide how the material necessity test should have been applied and to find that it was not made out. If it was in fact unreasonable for the Director not to have considered and applied the material necessity test, the matter should have been remitted back for her consideration. This is not a case where “a particular outcome was inevitable”: Vavilov, at para. 142. The material necessity test, as described by the Divisional Court, is a multi-part test that requires balancing and consideration of various factors and interests. While it is generally inappropriate for a reviewing court to substitute its own reasons for those of the original decision maker, this is especially true in a case such as this one involving a complex set of considerations and interests.

[104] Accordingly, I agree with Ontario that the majority of the Divisional Court erred in its application of the reasonableness standard of review to the Decision.

(3) The Decision was reasonable

[105] Given my finding that the Divisional Court erred in its application of the reasonableness standard of review, I now turn to the issue of whether the Decision was reasonable. I find that it was. I first address whether the decision was internally rational and logical, followed by a discussion of whether it was tenable in light of its factual and legal constraints.

(a) The Decision was rational and logical

[106] This aspect of the analysis focuses on the reasons, and whether they are internally coherent and rational.

[107] As discussed above, the Director’s analysis was responsive to the arguments made by Thales. For example, one of Thales’s primary arguments is that the domestic manufacturing requirement was unnecessary on public safety grounds because Thales itself had demonstrated its ability to produce and transport the card stock securely from Poland given its prior track record. The Director rejected this position, reasoning that Thales was using its own experience to take issue with a requirement imposed on all bidders. Thales’s ability to produce card stock offshore and transport it securely did not assist in determining whether other potential bidders would have the ability to do so. Further, the Director found that, even with Thales’s exemplary security measures, there are inherently more opportunities for loss and theft when card stock is produced offshore. Ontario would lose regulatory control over the production facilities and there would be a longer chain of custody in transport.

[108] This reasoning was logical and coherent. The Director was assessing the necessity of the domestic production requirement as it applied to all bidders. The Fraud Note addressed the risks associated with offshore manufacturing and the transport of cardstock generally. Thales only addressed its own experience. The Director could have concluded that the domestic production requirement was unnecessary given Thales’s track record, reasoning that only one manufacturer needed to be able to securely manufacture and transport card stock. But it was not irrational or incoherent for the Director to reason that one manufacturer’s ability to do the work offshore securely was insufficient to displace the necessity of the requirement, in the face of evidence of an inherent and generalized risk.

[109] Moreover, even if one manufacturer could securely manufacture and transport card stock from offshore, that does not mean that the Director could not have reasonably concluded that domestic production of card stock would further reduce the risk of loss or theft. Domestically produced card stock is under Ontario’s direct regulatory control and passes through fewer hands. No matter the quality of the producer’s security, this results in fewer opportunities for loss or theft and the Director’s finding to this effect was reasonable.

(b) The Decision was tenable having regard to its factual and legal constraints

(i) Factual Constraints

[110] As held in Turkiewicz, at para. 72, the factual constraints include the evidence before the decision maker and the submissions made by the parties. In this case, Thales’s submissions play a significant role in guiding the analysis of whether the Decision was reasonable. As discussed above, the Decision is responsive to the issues raised by Thales. The majority of the Divisional Court faulted the Decision for only focusing on the issues of the timing of the Fraud Note, Thales’s argument that it had the ability to produce and transport the card stock securely, and the discrepancy between the requirement that production be domestic with no similar requirement for design. However, these were the issues raised by Thales. The Decision was responsive to Thales’s complaint. A decision will not generally be unreasonable for failing to respond to an issue not raised by the parties.

[111] With respect to the evidence, the Director had the benefit of affidavit evidence from Thales explaining that it had the capacity to manufacture the card stock in Poland and transport it securely. She also had the Fraud Note. Thales took issue with the Director’s consideration of the Fraud Note on the basis that it was not proper evidence. However, the Director responded to this issue, stating that she was permitted to consider non-affidavit evidence and that the information in the Fraud Note came from a department with a depth of expertise in identity theft and fraud. The rules of evidence are generally relaxed for administrative proceedings, inquiries and investigations, and sworn testimony is not typically required: see e.g., Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, s. 15(1); Public Inquiries Act, 2009, S.O. 2009, c. 33, Sched. 6, s. 8(1); Laporte v. United Steelworkers, Local 1998, 2019 ONSC 3705 (Div. Ct.), at para. 45; Payne v. Peel (Regional Municipality) Police Services Board, 186 O.A.C. 69 (Div. Ct.), at paras. 1, 7. This was an in-writing administrative process. In these circumstances, the Director was entitled to consider the Fraud Note.

[112] It is evident from the Decision that the Director considered Thales’s evidence and the information in the Fraud Note. It was open to her, as explained above, to accept that Thales’s own experience did not justify a finding that the domestic manufacturing requirement, as a requirement imposed on all bidders, was unnecessary.

(ii) Legal constraints

[113] The more challenging issue in this case is whether the Decision is consistent with the applicable legal constraints. The majority of the Divisional Court was persuaded that the Decision was unreasonable because it did not comply with trade law precedents, specifically the material necessity test as articulated in Brazil.

[114] This assumes that the two-part material necessity test was a legal constraint on the administrative decision maker.

[115] The first point to make on this issue is that WTO decisions are not binding on either Canadian courts or subsequent WTO panels: Uniboard Surfaces Inc. v. Kronotex Fussboden GmbH & Co. KG, 2006 FCA 398, at para. 74; US – Stainless Steel (Mexico) (2008), WTO Doc. WT/DS344/AB/R (Appellate Body), at para. 158. In this case, as discussed more fully below, the parties to the CETA agreed that each government, including sub-governments, could set up their own dispute resolution processes. Article 19.17 does not address what law or rules will govern the resolution of these disputes. From this perspective, it is unclear that the two-part material necessity test is a legal constraint on the decision. Rather, the obvious legal constraint is the wording of the relevant CETA provision: Article 19.4, which precludes discrimination, and Article 19.3, which allows for exceptions that are necessary for public safety reasons.

[116] In this case, based on the Fraud Note, the Director accepted that it was necessary to produce card stock domestically in order to reduce the risk of identity theft and fraud. This interpretation and application of the relevant provisions was open to her and reasonable.

[117] The second point to be made is that, while MTO referred to and relied on the two-part material necessity step, Thales did not engage with the test in its reply submissions. The Decision describes MTO’s position and then addresses the specific issued raised by Thales. In the circumstances, the Director appears to have implicitly accepted MTO’s analysis of the applicable law, but focused on responding to Thales’s submission. This too was reasonable.

[118] I conclude that the Decision was reasonable. It was internally coherent and it was consistent with its factual and legal constraints.

E. The Reviewability of the Requests for Bids

[119] Ontario argues that the Divisional Court erred in holding that the request for bids was unreasonable. In making this argument, Ontario submits that the issuance of a request for bids is not generally subject to judicial review.

[120] I agree with Ontario that the Divisional Court erred in this case in finding that the request for bids was subject to judicial review on its own apart from the Decision. However, I arrive at this conclusion through a different route than proposed by Ontario.

[121] I deal first with Ontario’s argument, followed by a discussion of how I would address the issue of the reviewability of the request for bids in this case.

(1) There is no general authority that a request for bids should not be subject to judicial review

[122] Ontario relies on the decision in Wauzhushk Onigum Nation v. Minister of Finance (Ontario), 2019 ONSC 3491 (Div. Ct.), to argue that the terms of the request for bids is not subject to judicial review. However, Wauzhushk does not stand for that proposition. In Wauzhushk, the applicant sought to challenge a Cabinet decision directing the Ontario Minister of Finance to seek to increase revenues from land-based gaming. As part of this decision, Cabinet directed the Minister of Finance to shift operations of its gaming sites to private operators through a competitive procurement process. The Divisional Court held that the directive was not justiciable because it was a policy decision of Cabinet. The Divisional Court further held that the manner in which the Ontario Lottery and Gaming Corporation, a Crown corporation, chose to seek bids was not subject to judicial review because it was a commercial matter and not a matter of public law. It was in that context that the Divisional Court stated that “[t]o date, a public tender process has not been subject to public law remedies in Ontario”: at para. 108.

[123] In making this statement, the Divisional Court relied on this court’s decision in Bot Construction Limited v. Ontario (Minister of Transportation), 2009 ONCA 879, 85 C.L.R. (3d) 25. There, the court considered an appeal from a decision of the Divisional Court that had found the rejection of a bid as non-compliant to be unreasonable. This court reversed that conclusion, finding that MTO’s decision in that context was reasonable. However, in the course of the reasons, the court specified that it came to that conclusion “without expressing any view as to the availability of judicial review as a remedy with respect to the tendering process for government procurement contracts”: at para. 19. In other words, there is no definitive authority from this court on the issue of whether a tendering process can or cannot be subject to judicial review.

[124] However, as discussed below, this is not an appropriate case in which to decide the general issue of whether a request for bids can be subject to judicial review. The issue in this case should be decided based on its specific circumstances.

(2) The request for bids is not subject to judicial review because it first went through the Ontario Government’s bid dispute process

[125] In this case, the issue of whether the request for bids is subject to judicial review must be considered in the context of Ontario’s obligations to establish a dispute resolution process under the CETA. Given that the CETA foresees that the participant countries and their sub-governments must establish a review process, the ability to judicially review the request for bids must be considered in the context of that process.

[126] The majority of the Divisional Court reasoned that the request for bids was subject to judicial review because it raised matters of public law. In arriving at this conclusion, the court relied on the decision in Air Canada v. Toronto Port Authority, 2011 FCA 347, [2013] 3 F.C.R. 605. The court based its decision on the various factors to which Air Canada referred at para. 60 to conclude that the request for bids had a sufficiently public character to warrant subjecting it to judicial review.

[127] However, in approaching the issue from this perspective, the majority failed to consider the impact of the review process on the issue of whether the Divisional Court should exercise its discretion to review the request for bids on its own, and separate from the review of the Decision.

[128] In this respect, I agree with the concurring judge who stated that, if Ontario established a CETA compliant process for addressing complaints about a request for bids, the request for bids itself should not separately be subject to judicial review:

I disagree with my colleague’s approach because of what it could signal for future cases. If Ontario establishes a CETA-compliant dispute resolution process – as it is obliged to do under CETA – then this court should, in future [cases], respect the process established by Ontario. This would ordinarily foreclose this court from taking original jurisdiction to review an RFB, and instead, this court would leave it to the decisionmaker assigned this task by Ontario in a CETA-compliant process. Or, in other words, faced with an unreasonable decision from a lawful decisionmaker, we would send the issue back.

[129] Indeed, as a general principle, if an administrative process is set up for dealing with an issue, what is typically referred to as an adequate alternative remedy, the parties should first participate in that process before seeking judicial review: Canada (Border Services Agency) v. C.B. Powell Limited, 2010 FCA 61, [2011] 2 F.C.R. 332, at paras. 31-32; Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541, 111 O.R. (3d) 561, at paras. 68-69. The reviewing court then has the benefit of the administrative decision makers’ reasons and expertise. If the parties have participated in the administrative process, there is no basis for ignoring the administrative decision and separately reviewing the request for bids afresh. That is not the role of the court on an application for judicial review.

[130] Of course, if the original decision maker did not have jurisdiction to review the request for bids, this may be a different issue. However, in this case, with respect, I disagree with the concurring judge’s conclusion that Ontario failed to establish a CETA compliant review process.

[131] First, based on the wording of the Detailed Description document describing the review process, it is evident that it is intended to apply to all disputes involving requests for bids arising from Ontario’s trade obligations. It specifically refers to complaints over requests for bids arising from trade agreements. In addition, some of its provisions explicitly echo requirements in Article 19.17 of the CETA, including the requirement that there be interim measures and provision for damages.

[132] Second, in my view, the process is compliant with the CETA requirements. Article 19.17 does not prescribe a specific process that must be established. Rather, it sets out general requirements and, otherwise, leaves to each government or sub-government the discretion to establish a process that complies with these general requirements. Notably, the first level of decision making can be administrative and in writing; there is no requirement for an oral hearing with the formalities of a tribunal or court proceeding. The only specific requirement is that the process be “timely, effective, transparent and non-discriminatory”, and that, where the first level of decision is not made by an impartial decision maker, there must be a right of “appeal” to a court. In this case, the process set out in the Detailed Description complies with these requirements. Thales was informed of the process, it had an opportunity to make submissions and to reply to MTO’s submissions, and the Director issued a written timely decision. Further, once the Decision was made, Thales had an opportunity to apply for judicial review.

[133] The concurring judge’s primary reason for finding that the process was not CETA compliant was his view that a right of appeal is not the same as a right of judicial review. This is no doubt an accurate statement of the law as a general proposition. However, in the context of implementing the dispute resolution provisions of Article 19 of the CETA, in my view this difference is of no moment. An appeal from an administrative decision maker and an application for judicial review both proceed on the record before the original decision maker. Neither allows for a hearing de novo or for the ability to call evidence. Notably, at the time the CETA was signed, in 2016, the standard of review applicable to an appeal from an administrative decision maker and on judicial review were the same and were usually decided on a standard of reasonableness: McLean v. British Columbia (Securities Commission), 2013 SCC 67, [2013] 3 S.C.R. 895, at para. 21; Vavilov, at paras. 37-42, 224-226. It was only in 2019, when Vavilov was decided, and after the CETA came into effect, that the standard of review for an administrative appeal became presumptively different than the standard of review applicable to an application for judicial review. On this basis, certainly at the time the parties entered into the CETA, there was little substantive difference between a right of appeal and a right of judicial review. In either case, there was judicial oversight with the same level of scrutiny.

[134] Third, despite my analysis above, it is not clear that it is the role of the Divisional Court or this court to determine whether Ontario’s process complies with its obligations under the CETA. While Article 19.17 contemplates that Ontario has an obligation to set up a dispute resolution process for resolving disputes under the CETA related to procurement, as reviewed above, Article 29 of the CETA deals with the process for resolving disputes over the interpretation and application of the CETA. If Ontario has failed to meet its obligation to set up an appropriate dispute process, this may well be a matter more properly addressed under Article 29 through mediation and arbitration between the parties to the CETA.

[135] In the circumstances, I am satisfied that the Divisional Court erred in reviewing the request for bids because the review process is an adequate alternative method of review. The majority erred in failing to consider whether it was appropriate to review the request for bids de novo given the review process, and the concurring judge erred in finding that the review process did not comply with the CETA.

[136] On that basis I would set aside the Divisional Court’s finding that the request for bids is unreasonable and would decline to exercise the court’s discretion to review the request for bids.

F. Conclusion

[137] I would allow the appeal and dismiss Thales’s application for judicial review.

[138] As agreed between the parties, I would award costs to Ontario in the amount of $45,000 all inclusive, and reverse the costs below to Ontario in the amount of $75,000 all inclusive.

Released: December 29, 2023 “D.D.” “L. Favreau J.A.” “I agree. Doherty J.A.” “I agree. Alexandra Hoy J.A.”