ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 13-44192
DATE: 2015-07-02
BETWEEN:
Canadian Planning And Design Consultants Inc.
Applicant
(Respondent on Cross-Motion)
- and -
State Of Libya aka Libya aka People’s Bureau Of The Great Socialist People’s Libyan Arab Jamahiriya-Canada aka The Great Socialist People’s Libyan Arab Jamahiriya-Canada aka Embassy Of Libya In Canada aka Embassy Of Libya aka Libyan Embassy Canada
Respondent
(Applicant on Cross-Motion)
- and -
Royal Bank of Canada
Garnishee
The Honourable Justice C.D. Braid
Jennifer King, Malcolm Ruby and John Adair for the Applicant, Canadian Planning
John Melia and Jennifer Radford for the Respondent, Libya
Catherine Francis, for the Garnishee, RBC
HEARD: February 6, March 13,
April 2, May 5 and June 2, 2015
RULING NO. 4 ON MOTIONS
[1] This case concerns issues of diplomatic immunity, State immunity and the right of a private debtor to recover judgment against bank accounts held by another State within Canada’s borders.
[2] This is the fourth ruling on motions related to Notices of Garnishment that have been served on the Royal Bank of Canada (“RBC”) in relation to Libyan bank accounts held in Canada. The first ruling was released on March 11, 2015 (“the first ruling”) and is cited at 2015 ONSC 1638. The second ruling was released on April 30, 2015 (“the second ruling”) and is cited at 2015 ONSC 2188. The third ruling was released on May 29, 2015 (“the third ruling”) and is cited at 2015 ONSC 3386.
[3] This fourth ruling is the final one in a series of rulings relating to garnishment of bank accounts held by the Libyan Embassy in Canada. This ruling addresses whether the creditor, Canadian Planning, has displaced the presumption of immunity over these bank accounts.
[4] Canadian Planning and Design Consultants (“Canadian Planning”) is a Canadian corporation who made a monetary claim against the State of Libya (“Libya”) for breach of contract arising out of a Hospital Management Agreement from 2007. In that agreement, both parties agreed that any disputes would be settled at the International Chamber of Commerce International Court of Arbitration in Paris (“ICC”). A dispute arose, and both parties submitted to the jurisdiction of the ICC for the purpose of arguing the dispute on its merits.
[5] On May 4, 2012, the ICC ordered Libya to pay damages to Canadian Planning for lost profit. The current value of this judgment is approximately $11 million Canadian dollars. Despite the fact that Libya submitted to the jurisdiction of the ICC, Libya has failed to pay the judgment.
[6] Canadian Planning brought an application seeking an order to permit them to enforce the ICC judgment in Canada. On June 20, 2014, Justice Parayeski of the Ontario Superior Court of Justice issued a recognition and enforcement order. Despite having been served with the application, Libya was not present for this hearing. The recognition and enforcement order stated that Libya “has, by implication, waived its immunity from attachment, execution, seizure, and forfeiture within the meaning of Section 12(1)(a) of the State Immunity Act, R.S.C. 1985, c. S-18”.
[7] Libya appealed the recognition and enforcement order. On December 19, 2014, the Ontario Court of Appeal found that there was no basis to interfere with the order on procedural fairness grounds and dismissed the appeal. The court stated that the appropriate procedure to raise this issue was by way of a motion to set aside the order pursuant to Rule 38.11. The Court ordered that Libya pay $20,000 to Canadian Planning for costs of the appeal. The costs were subsequently paid out of one of the bank accounts for which the garnishment notices were served.
[8] Libya subsequently brought a motion to set aside Justice Parayeski’s order, which will likely be heard later this year.
[9] On December 22, 2014 and January 12, 2015, the Department of Justice wrote to the Civil Enforcement Office. The letters enclosed a certificate that had been issued by the Department of Foreign Affairs, Trade and Development (“the DFATD certificate”) pursuant to s.11(a) and (c) of the Foreign Missions and International Organizations Act, S.C. 1991, c. 41 (“Foreign Missions Act”). The DFATD certificate stated that several named bank accounts were the “diplomatic property of Libya” and that the accounts “continue to enjoy privileges and immunities under the Foreign Missions and International Organizations Act”. In their letters to the court, the Department of Justice stated that the DFATD certificate was prima facie proof that the accounts were immune from enforcement and attachment. (For reasons set out in the first ruling, this court found that that the DFATD certificate, on its own, is not enough to confer immunity on the bank accounts).
[10] On December 29, 2014, the court issued Notices of Garnishment (“the original Notices of Garnishment”) naming the State of Libya as the debtor. On January 6, 2015, Canadian Planning served the original Notices of Garnishment on RBC bank accounts in Ottawa.
[11] On January 9, 2015, Canadian Planning obtained an order amending the style of cause in the recognition and enforcement order. The amendment added the Libyan Embassy as a defendant to the Application (as one of the aliases for the State of Libya).
[12] On January 26, 2015, Canadian Planning served Notices of Withdrawal of the Original Notices of Garnishment. Canadian Planning then attempted to withdraw the original Notices of Garnishment and replace them with the new Notices of Garnishment in order to reflect the amended title of proceedings. In light of the correspondence that it had received from the Department of Justice, the Civil Enforcement Office would not accept any further documents for filing, including the Notice of Withdrawal of Garnishment and the new Notices of Garnishment.
[13] On the original return date of February 6, 2015, the parties sought the following:
i) Libya sought an order quashing the original Notices of Garnishment; an order directing that no new Notices of Garnishment be issued; and an order restraining Canadian Planning from any further enforcement attempts in respect of the bank accounts.
ii) Canadian Planning sought a declaration that the original Notices of Garnishment are valid; and a direction from the court to permit the issuance of new, amended Notices of Garnishment that reflect the amended style of cause in the proceedings.
[14] In the first ruling in respect of those motions, this court concluded as follows:
- Procedurally, if a “competent authority” of the State of Libya provides a court with “due assurances” that a bank account’s funds are for the sovereign purposes of the functioning of the embassy, the court must be satisfied with those assurances unless Canadian Planning can prove that the funds are for another purpose (i.e. for a commercial purpose). If Libya asserts that these bank accounts exist for the proper functioning of its embassy, and Canadian Planning has no evidence to the contrary, the court must be satisfied with these assurances and provide the immunities due to such bank accounts at international law. The court is not entitled to inquire further into the use of the bank accounts, because doing so would be an undue interference into the affairs of the sending State, contrary to international law.
45... I will provide the parties with a further opportunity to provide a declaration or additional sworn evidence regarding the nature of the bank accounts. Once the court has received that evidence, the parties may provide additional submissions as to the nature of the bank accounts.
[15] Following the release of the first ruling, Libya filed a statutory declaration of the Libyan Ambassador in Canada, Fathi Mohammed Baja. This document is dated March 12, 2015 and affirms that the garnished bank accounts “exist and are utilized for the sovereign and diplomatic purposes of the proper functioning of the Libyan Embassy in Canada”. The Statutory Declaration states that it is being provided in response to this court’s ruling of March 11, 2015, and states “Neither the execution of this Statutory Declaration nor any statements herein represent or are intended to be construed as a waiver of the State immunity of the State of Libya or the diplomatic immunity afforded to me.”
[16] Canadian Planning then sought a further adjournment in order to provide evidence that the bank accounts are not purely for a diplomatic purpose, in an attempt to displace the immunity. Canadian Planning brought motions, returnable April 2, 2015, seeking to cross-examine the Libyan Ambassador and a representative of RBC; and seeking production of documents from Libya, RBC and other third parties.
[17] In the meantime, this court received a certificate signed by the Honourable Rob Nicholson, Minister of Foreign Affairs of Canada dated March 30, 2015 (“the Minister’s certificate”). The Minister’s certificate stated, in part, that “Canada and Libya enjoy diplomatic relations” and certified that “The Department of Foreign Affairs, Trade and Development has determined that the (following) bank accounts are the bank accounts of the Embassy of Libya, used by the Embassy of Libya for diplomatic purposes which enjoy the privileges and immunities accorded to embassy bank accounts under customary international law.” This statement was followed by a list of bank accounts held at RBC and the Toronto Dominion Bank.
[18] In the second ruling, this court set out a framework for the motions to set aside Notices of Garnishment. Portions of the ruling bear repeating here, as the court must always return to this framework in each step of the process:
Customary international law dictates that funds of a foreign State held in an embassy bank account in the host State for diplomatic or sovereign purposes will be immune from attachment and execution…Some States, including most Western States, allow an exception for accounts that a judgment creditor proves are not used or intended for diplomatic or sovereign purposes. There is little dispute over this general rule. However, the limits, scope, and content of exceptions to the rule (and how courts should treat mixed-use accounts) is still unsettled.
Once it is clear that there is a diplomatic relationship between the two States, the court should, according to customary international law, review the nature of the accounts at issue, and should move on to the second step of the test: whether the sending State has provided due assurances that the funds are held in the embassy account for sovereign or diplomatic purposes.
The foreign State does not need to prove that the bank account is for a diplomatic purpose; all that is necessary at international law is an “assurance” from a competent authority that the accounts are for sovereign or diplomatic purposes…
International law requires that this statement must be respected without further proof, unless the creditor can prove the contrary, as doing otherwise would be an unacceptable interference with the internal affairs of a foreign State.
In the case at bar, the Ambassador for Libya has provided assurances that the bank account is for a sovereign purpose…This court takes this statutory declaration to be the due assurances from a competent authority necessary to create a presumption of diplomatic immunity over the bank accounts.
(This) is characterized as a strong but rebuttable presumption in favour of diplomatic immunity for embassy bank accounts…
If this court determines that it can proceed to the third question, this court will need to determine whether Canadian Planning has sufficient evidence to displace the mantle of immunity, and whether the court has the authority to compel production of information from third parties in order to assist Canadian Planning in their search for that evidence. In analyzing international cases, it appears that the creditor has rarely displaced the mantle of immunity.
[19] In the second ruling, this court concluded the Minister’s certificate is not dispositive of all issues on these motions. The Minister’s certificate is conclusive proof of the existence of a diplomatic relationship between Canada and Libya, but it does not end the enquiry regarding the immunity of the bank accounts. Canadian Planning must be given the opportunity to introduce evidence of a commercial (or other) purpose. This court will continue to assess the nature of the bank accounts, within the parameters established by customary international law.
[20] In the third ruling, the court dealt with Canadian Planning’s requests to compel cross-examination and production of documents, and declined to grant that relief. The court recognized the importance of immunity of bank accounts, and the admonition from international State practice that any attempt to check if such funds are effectively used in whole or in part for those purposes would inevitably result in undue interference in the affairs of the diplomatic mission.
[21] The court must now consider the evidence that has been adduced by Canadian Planning and determine whether it is sufficient to displace the presumption of diplomatic immunity over the garnished bank accounts. This is the final stage of the inquiry on the original garnishment motions.
EVIDENCE THAT CANADIAN PLANNING HAS INTRODUCED
[22] In support of the motions for production and cross-examination, Canadian Planning filed the affidavit of Mr. Gord McGuire. Canadian Planning relies on the contents of that affidavit on the final stage of the inquiry. The affidavit included the following documents:
a) Internet searches, including newspaper articles, purporting to demonstrate that Libya engages in commercial transactions in other countries through the Libyan Investment Authority; and that the Libyan Investment Authority purchased a Canadian-based company in 2009 or 2010 for approximately $300 million.
b) An internet article regarding a Memorandum of Understanding (“MOU”) that Libya entered into with Toronto’s University Health Network (“UHN”) to train Libyan medical professionals. The article also mentions an MOU with the Royal College of Physicians and Surgeons to build a medical college in Libya.
c) An internet article regarding an agreement between Libya and UHN for Libyans to be treated in Canada for injuries that they sustained in the civil war.
d) An internet article regarding a Letter of Intent that Libya signed with Algonquin College for the education of the faculty at a school in Libya.
e) Internet searches regarding scholarship grants to Libyan students who are studying in Canada. The material states that Libya funds scholarship programs in at least 41 different countries, through their embassies. The scholarship plan in Canada appears to include medical and dental insurance. The documentation states that the Central Bank of Libya transferred 12,154,961.00 to the Libyan Embassy in Canada in February 2015. The amount was paid for the first quarter of 2015 as a scholarship grant for 1,029 Libyan students in Canada.
f) Internet search and a title search demonstrating that a condominium was purchased in Toronto in 2008 by Saadi Gaddafi (son of the late Colonel Muammar Gaddafi) and that security services were provided, in Canada, by Can/Aus Security & Investigations International Inc. (“CSI”) for Saadi Gaddafi.
[23] The parties have admitted that Libya paid the $20,000 costs of the appeal out of one of the garnished bank accounts.
ISSUES
[24] The following issues are relevant to this stage of the motion:
A. How can a creditor displace the presumption of immunity?
B. Diplomatic purpose
C. Mixed-use bank accounts
D. Effect of the waiver of State immunity
E. Nature of evidence adduced
a) Costs of the Appeal
b) Scholarships
c) Other evidence
F. Has Canadian Planning displaced the presumption of immunity?
G. Request for a stay
ANALYSIS
A. How Can A Creditor Displace The Presumption Of Immunity?
[25] As stated above, in the second ruling this court noted that the test for diplomatic immunity in a garnishment proceeding is in the nature of a strong but rebuttable presumption.
[26] The scope of exceptions to foreign State immunity in the execution and attachment context is far more limited than that for trial proceedings, “since preventive measures and measures of forced execution generally have a much more direct and drastic impact on the exercise of sovereignty by the foreign State than do judicial judgments.” See Alcom Ltd v. Republic of Colombia, [1984] 1 AC 580 (HL) [Alcom] and The Philippine Embassy Bank Account Case, (1977) 65 ILR 146 (Fed Const Ct) (Germany).
[27] At this step of the inquiry, the onus is on the creditor to rebut the presumption in favour of immunity by proving to the court that the account is not for a diplomatic purpose (Alcom, supra, at page 604; see also Netherlands v. Azeta BV (1998), 128 ILR 688 (Dist. Ct. of Rotterdam) [Netherlands v. Azeta]). This onus makes sense given the context, where consequences of interfering with another State’s property loom large. It also makes sense given the purpose and function of immunity:
To require proof of the allocation of funds to be the responsibility of the State against which attachment is sought would be contrary to the very principle of immunity that, by definition, establishes a presumption in favour of the State that enjoys immunity. The imposition of a duty on a State to prove systematically and at any moment that it is indeed entitled to rely on its immunity would in practice exclude reliance on its immunity. (Iraq v. Vinci Constructions, Court of Appeal of Brussels (9th Chamber) 2002, 127 ILR 101 [Iraq v. Vinci], at part 1, page 106).
[28] The international jurisprudence is unsettled regarding what type of non-diplomatic purpose would displace the immunity. The absence of a consensus regarding the nature of the exception was recognized in Banamar-Capizzi v. Embassy of the Popular Democratic Republic of Algeria (1989), 87 ILR 56 (Ct of Cassation) [Banamar] at p 59-60:
Undoubtedly there is a general rule of customary international law forbidding the forum State from instituting execution proceedings on the asset of foreign States. On the other hand, States do not seem to agree in a conclusive and coherent manner on the content, scope, and limits of immunity…
There is still no uniform evaluation within the international community, especially with respect to the treatment of assets devoted to commercial uses or employed in commercial activities, but the prevailing tendency is to consider the assets used for a public function or power, or indeed for sovereign purposes, as immune. [Emphasis added]
[29] While State practice consistently upholds the principle that where embassy bank accounts are used for diplomatic and sovereign purposes, they are immune from attachment and execution (such that it has become customary international law), there is less consistency when it comes to recognizing exceptions to immunity. The court must consider the purpose of the funds in the bank account, but it is not clear which purposes will create an exception. Some courts refer to “nonsovereign” purposes while others use the word “public”. In many cases, courts relied on specific domestic legislative provisions that outline exceptions, such as a commercial exception. Canada’s legislation is not so explicit. There is wide variation of State practice regarding the boundaries of diplomatic use of funds. Thus, there is no customary international law principle governing the exception(s) to diplomatic immunity.
[30] Rarely has a court struck down immunity in favour of a creditor. This was recognized by scholar Xiaodong Yang, in State Immunity in International Law (Cambridge: Cambridge University Press, 2012), at p 421:
Courts have displayed remarkable caution and restraint with respect to enforcement and execution against foreign State property, and even those most liberal in exercising their jurisdiction of adjudication have treated the issue with circumspection, and have taken meticulous care to ensure that measures of constraint are allowed only in the most indisputable cases where the least possible hassle and hindrance is caused to the defendant foreign State in performing its public functions.
[31] As noted by scholars Hazel Fox and Philippa Webb, in The Law of State Immunity, 3rd ed. (Oxford: Oxford University Press, 2013), it will be nearly impossible for creditors to displace the immunity where the State does not cooperate, unless the funds are in an earmarked account (at p. 507, 518):
The specific purpose for which intangible assets, funds, or securities are deposited in banks in the forum State in accounts in the name of the State is much less easy to ascertain. Future use of the property without evidence on behalf of the State which, as the cases show, is not generally available, and in consequence virtually impossible to establish…
The problems of identification of the use of State funds are particularly acute where funds are mixed in an account, particularly when, as is a frequent practice, the account is opened in the name of the diplomatic mission. Where an account is opened by a foreign State in the forum State territory for the specified purpose of purchasing goods or payment of commercial services rendered there is little difficulty in establishing that the funds are in use or intended use for commercial purposes. But where funds are placed in a general account to meet disbursements of a foreign State, some of which relate to commercial transactions and others to expenses of diplomatic staff or other public purpose, proof of the use or intended purpose of the funds becomes more difficult.
B. Diplomatic Purpose
[32] Canadian Planning argues that the definition of diplomatic purpose is narrow, and that it is limited to the funds required for covering the day to day costs of running the embassy facilities. This argument only permits the sending State a very narrow range of activity to preserve diplomatic immunity. Canadian Planning asserts that the evidence it provides the court is proof of activities outside of this narrow range, and therefore states that they have provided sufficient evidence to displace the immunity.
[33] Libya argues that any activity of the diplomatic mission pursuant to its mandate under Article 3 of the Vienna Convention on Diplomatic Relations, 18 April 1961, UN Doc. A/Conf.20/13; U.N.T.S. Vol 500 (“Vienna Convention”), constitutes “diplomatic activity”. Libya states that the definition is broad, and that Canadian Planning can only displace the immunity if it provides evidence of activity that has a commercial purpose. This argument suggests a wider range of activity is permissible in the accounts without jeopardizing the account’s diplomatic immunity status.
[34] In The Philippine Embassy Bank Account Case, supra, the court recognized the importance of diplomatic immunity to facilitate the performance of the diplomatic mission as set out in Article 3 of the Vienna Convention:
The purpose of both inviolability and immunity…is to ensure the unimpeded functioning of the diplomatic mission of the sending State in the receiving State as regards the performance of its diplomatic duties.
[35] In Alcom, supra, the House of Lords also cited the Vienna Convention as having been recognized in public international law as a proper list of functions of a diplomatic mission.
[36] The Vienna Convention is the cornerstone of diplomatic relations. Canada is a signatory to the Vienna Convention and has ratified it via the Foreign Missions Act. The parties on this motion accept that this is the starting point, although Canadian Planning argues that Article 3 should be construed narrowly while Libya argues it should be construed broadly.
[37] Article 3 of Vienna Convention pronounces the functions of a diplomatic mission:
Article 3
- The functions of a diplomatic mission consist, inter alia, in:
(a) Representing the sending State in the receiving State;
(b) Protecting in the receiving State the interests of the sending State and of its nationals, within the limits permitted by international law;
(c) Negotiating with the Government of the receiving State;
(d) Ascertaining by all lawful means conditions and developments in the receiving State, and reporting thereon to the Government of the sending State;
(e) Promoting friendly relations between the sending State and the receiving State, and developing their economic, cultural and scientific relations.
[38] Article 3 provides a very broad definition of the functions of a diplomatic mission. The use of the phrase “inter alia”, which is Latin for “among other things”, demonstrates that Article 3 is not meant to be an exhaustive list of functions of a diplomatic mission.
[39] Canadian Planning argues that the court should apply a more narrow definition of a diplomatic purpose. However, it is clear from the language of the provision itself that Article 3 encompasses a broad area of functions for a diplomatic mission. I find that diplomatic immunity protects the functions of the mission that fall into the categories set out in Article 3.
[40] Libya submits that the court can also consider the Vienna Convention on Consular Relations. However there were no submissions that the embassy in this case was acting in a consular capacity. Consideration of the Vienna Convention on Consular Relations is not necessary for this analysis.
C. Mixed-use Bank Accounts
[41] In the case of Banamar, supra, at page 61, the court recognized that mixed use accounts present a particular challenge:
In the presence of mixed uses, the magistrate cannot be obliged to try and identify that portion of assets not used for sovereign purposes. Such intervention would be inadmissible as it would intrude into the exercise of sovereignty. Unless a non-sovereign use emerges clearly from the investigation and the evidence, the concept of immunity must prevail and be maintained.
[42] Yang, supra, at page 419, also recognizes that mixed bank accounts present a unique challenge to the creditor:
The important principle established by Alcom is that, in cases of mixed accounts in the name of an embassy, immunity should be presumed unless commercial uses can be proved by the judgment creditor. In most, if not all, cases this would be an impossible task to accomplish.
[43] There is a lack of clear authority regarding embassy bank accounts that are mixed use accounts. It is difficult to determine what quantity, volume or monetary value of transactions would constitute sufficient non-diplomatic activity to cause the sending State to lose the mantle of immunity over the account. As Fox, supra, suggests at p. 516, quoting the International Law Commission commentary to Article 21 of the UN Convention on Jurisdictional Immunities of States and Their Property:
Difficulties sometimes arise concerning a ‘mixed account’ which is maintained in the name of a diplomatic mission, but occasionally used for payment, for instance, of supply of goods or services to defray the running costs of the mission. The recent case law seems to suggest the trend that the balance of such a bank account to the credit of the foreign State should not be subject to an attachment order issued by the court of the forum State because of the non-commercial character of the account in general.
D. Effect of the Waiver of State Immunity
[44] The functions of a diplomatic mission are to represent the sending State in the receiving State. In that sense, diplomatic functions lie within the greater circle of State functions. However, it is recognized that the diplomatic functions enjoy greater immunity and protection than the larger circle of State activity.
[45] There is no question that, as a matter of law, diplomatic immunity is different from State immunity. In the text Diplomatic Law: Commentary on the Vienna Convention on Diplomatic Relations, 3rd Ed. (Oxford: Oxford, 2008), Eileen Denza recognizes that they serve different purposes:
As international rules on State immunity have developed on more restrictive lines there has always been a saving for the rules of diplomatic and consular law and an increasing understanding that although these sets of rules overlap they serve different purposes and cannot in any sense be unified.
[46] In the recent 2012 case of Jurisdictional Immunities of the State (Germany v. Italy: Greece intervening), Judgment, I.C.J. Reports 2012, p. 99, the International Court of Justice affirmed this, stating (at para 113):
…the immunity from enforcement enjoyed by States in regard to their property situated on foreign territory goes further than the jurisdictional immunity enjoyed by those same States before foreign courts…The rules of customary international law governing immunity from enforcement and those governing jurisdictional immunity (understood stricto sensu as the right of a State not to be the subject of judicial proceedings in the courts of another State) are distinct, and must be applied separately.
[47] I accept Canadian Planning’s submissions that the rules of diplomatic immunity are not the same as State immunity. However, as suggested above by my interpretation of Article 3 of the Vienna Convention, I do not accept Canadian Planning’s narrow interpretation of diplomatic immunity. Thus, the waiver of State immunity does not strengthen their position on this motion.
E. Nature Of Evidence Adduced
a) Costs of the Appeal
[48] In the first ruling, the court reflected on the fact that costs of the appeal had been paid out of one of the garnished bank accounts. The court stated that, standing alone, the payment of costs is not sufficient to displace the immunity.
[49] In the decision of Wyatt v. Syrian Arab Republic, 08 cv. 502, (D.D.C. Mar 18, 2015), the United States District Court for the District of Columbia held that the Syrian embassy paying a legal fee arising out of litigation in the United States, incurred in Syria’s defence, is fundamentally an action to protect Syria’s interest. The court found that the funds fell squarely within “protecting in the receiving State the interests of the sending State and of its nationals” as set out in Article 3 of the Vienna Convention. The funds were therefore protected from attachment.
[50] Article 3(b) of the Vienna Convention states that one of the functions of a diplomatic mission is to protects the sending State’s interests. The Libyan Embassy paid the costs of a legal action to protect Libya’s interest in Canada. This payment of costs falls squarely within the diplomatic functions described in Article 3 of the Vienna Convention, and more specifically “protecting in the receiving State the interests of the sending State.” This evidence is not sufficient to displace the immunity.
b) Scholarships
[51] In February 2015, the Central Bank of Libya transferred millions of dollars to the Libyan Embassy in Canada, in order to provide the funds necessary to support Libyan students in Canada. The evidence demonstrates a strong link between the payment of these funds and the garnished bank accounts.
[52] Article 3(e) of the Vienna Convention states that the functions of a diplomatic mission includes the promoting of friendly relations and developing the sending State’s economic, cultural and scientific relations. In her text, supra, at p.42, Denza quoted from the United Kingdom’s 1985 Review of the Vienna Convention:
As a general rule we regard the following types of activity as being incompatible with the functions of a mission: trading or other activities conducted for financial gain (e.g. selling tickets for airlines or holidays, or charging fees for language classes or public lectures) and educational activities (e.g. schools or students’ hostels).
[53] While this excerpt references educational activities, instituting schools or students’ hostels involve profit motivations as well as far more elaborate logistics than providing scholarships to the State’s nationals abroad. To set up a school or hostel the embassy would need to locate an appropriate building, likely enter a tenancy contract, employ teachers and other staff, and probably also engage in recruitment efforts. All of these activities are far more removed from the functions of a diplomatic mission as set out in Article 3 than the disbursement of scholarship funds to Libyan nationals studying in Canada.
[54] Article 3(e) refers to developing “economic, cultural and scientific relations”. It seems clear to this court that by sending students to study abroad at respected universities, the Libyan embassy is developing economic, cultural and scientific relations, and also possibly protecting the interests of its nationals in Canada.
[55] The decision of the English Employment Appeal Tribunal in Arab Republic of Egypt v Gamal-Eldin was summarized at p. 42 of Denza’s text. In that case, the tribunal held that “functions of the medical office are consistent with the non-exhaustive list of functions set out in article 3 of the Vienna Convention.” This decision bolsters the conclusion that scholarships would also be included in Article 3.
[56] The payment of scholarship funds falls within the diplomatic functions described in Article 3 of the Vienna Convention and is therefore a proper function of a diplomatic mission. This evidence is not sufficient to displace the immunity.
c) Other Evidence
[57] Canadian Planning has introduced other evidence, including payments for health care expenses, which it relies on in an effort to displace the immunity. This additional evidence does not demonstrate a link to the garnished bank accounts. It is sheer speculation that payments were made or are being made to these organizations out of these accounts. This evidence is insufficient to displace the immunity.
F. Has Canadian Planning Displaced The Presumption Of Immunity?
[58] For the reasons noted above, I find that Article 3 of the Vienna Convention must be interpreted broadly and that the payment of scholarships and costs fall within that breadth. Further, I also find that Canadian Planning has not proved that these payments are for non-diplomatic purposes.
[59] Even if I am wrong about the breadth of the definition of diplomatic purpose, I find that the evidence is still not sufficient to displace the immunity.
[60] Although I have found that there is evidence of payments being made for costs and scholarships, the Court has no evidence about what else is going on in the accounts, aside from the assurances of the Libyan Ambassador that the funds are used for diplomatic purposes. They are likely mixed bank accounts that are used for other diplomatic purposes. The court cannot inquire about the other funds in those accounts and also cannot interfere with diplomatic funds.
[61] In some cases, courts have considered bank accounts that were specifically earmarked for non-diplomatic bank accounts to lose their immunity. If a dedicated account had been created and earmarked for scholarship money, and the court had accepted the narrow definition of diplomatic purpose, the court could consider garnishing the account. However, that is not the evidence in this case.
G. Request For A Stay
[62] Canadian Planning seeks a stay for seven days to permit them to pursue any appeal rights.
[63] Rule 63.02(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that a stay may be ordered by either a) “the court whose decision is to be appealed”, or b) “the court to which…an appeal has been taken”. Thus, this court has jurisdiction to issue a stay.
[64] The test for a stay is set out in RJR MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] S.C.J. No. 17, [1994] 1 S.C.R. 311:
- There is a serious question to be tried.
- If the stay is refused, the applicant will suffer irreparable harm.
- The balance of inconvenience favours the applicant.
[65] The onus is on the moving party, namely Canadian Planning, to establish the case for a stay. The three components are interrelated, and should be considered in light of the overarching consideration: whether the interests of justice call for a stay.
[66] The first step is a low threshold, requiring the court to determine that the appeal is not frivolous or vexatious. The court has made rulings on issues that are novel in Canadian law and the Notices of Garnishment sought to enforce an $11 million judgment. I find that there is a serious question to be tried, and the appeal is neither frivolous nor vexatious.
[67] The second step requires the court to consider whether there will be “irreparable harm”. The court must consider the nature rather than the magnitude of the harm; i.e. that the party will not be able to obtain damages to cure the harm. Canadian Planning wishes to preserve the garnishments for a short period of time to permit the filing of a Notice of Appeal. Failure to grant a stay would provide Libya with the opportunity to empty or close the accounts, which would be extremely prejudicial to Canadian Planning’s position if this decision is reversed on appeal. Canadian Planning would likely find it impossible to cure the harm suffered if the Libyan embassy took such action, since no damages would be available to it. I find that there will be irreparable harm if the stay is refused.
[68] In the third step, balance of inconvenience refers to which party would suffer the greater harm as a result of granting or not granting a stay. If the stay is not granted, Canadian Planning may suffer irreparable harm as noted above. If the stay is granted, Libya will continue to suffer the practical consequences of having its embassy bank accounts frozen.
[69] Whether to issue a stay is a difficult decision in this case, especially in light of the fact that Libya and RBC have consistently expressed their concerns regarding the detrimental effect that the garnishments have had by preventing the proper functioning of the Libyan embassy. However, in my view, the potential irreparable harm to Canadian Planning outweighs those concerns.
[70] I am satisfied that a brief stay is appropriate and in the interests of justice. The operation of this order shall be stayed for seven days to permit Canadian Planning the opportunity to pursue any appeal rights.
CONCLUSION
[71] In the result, the court finds that the garnished bank accounts enjoy diplomatic immunity and are immune from attachment.
[72] Therefore, this court orders as follows:
a) The Notices of Garnishment dated December 29, 2014 naming Canadian Planning and Design Consultants Inc. as the Creditor and the State of Libya as the Debtor, are hereby quashed.
b) No new Notices of Garnishment shall be issued in respect of the bank accounts that are listed in the original Notices of Garnishment dated December 29, 2014.
c) Canadian Planning is hereby restrained from any further enforcement attempts in respect of the bank accounts that are listed in the original Notices of Garnishment dated December 29, 2014.
d) The operation of this order shall be stayed for seven days to permit Canadian Planning to pursue any appeal rights.
Braid J.
Released: July 2, 2015
COURT FILE NO.: 13-44192
DATE: 2015-07-02
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CANADIAN PLANNING AND DESIGN CONSULTANTS INC.
Applicant
- and –
STATE OF LIBYA aka LIBYA aka PEOPLE’S BUREAU OF THE GREAT SOCIALIST PEOPLE’S LIBYAN ARAB JAMAHIRIYA-CANADA aka THE GREAT SOCIALIST PEOPLE’S LIBYAN ARAB JAMAHIRIYA-CANADA aka EMBASSY OF LIBYA IN CANADA aka EMBASSY OF LIBYA aka LIBYAN EMBASSY CANADA
Respondents
- and –
ROYAL BANK OF CANADA
Garnishee
RULING ON MOTION
Braid J.
Released: July 2, 2015