Date: 20221206

Docket: A-311-19

Citation: 2022 FCA 211

CORAM:

PELLETIER J.A. DE MONTIGNY J.A. LOCKE J.A.

 

BETWEEN:

INTERNATIONAL AIR TRANSPORT ASSOCIATION, AIR TRANSPORTATION ASSOCIATION OF AMERICA DBA AIRLINES FOR AMERICA, DEUTSCHE LUFTHANSA AG, SOCIÉTÉ AIR FRANCE, S.A., BRITISH AIRWAYS PLC, AIR CHINA LIMITED, ALL NIPPON AIRWAYS CO., LTD., CATHAY PACIFIC AIRWAYS LIMITED, SWISS INTERNATIONAL AIRLINES LTD., QATAR AIRWAYS GROUP Q.C.S.C., AIR CANADA, PORTER AIRLINES INC., AMERICAN AIRLINES INC., UNITED AIRLINES INC., DELTA AIR LINES INC., ALASKA AIRLINES INC., HAWAIIAN AIRLINES, INC. and JETBLUE AIRWAYS CORPORATION

Appellants

and

CANADIAN TRANSPORTATION AGENCY and THE ATTORNEY GENERAL OF CANADA

Respondents

and

DR. GÁBOR LUKÁCS

Intervener

Heard at Ottawa, Ontario, on April 6 and 7, 2022.

Judgment delivered at Ottawa, Ontario, on December 6, 2022.

REASONS FOR JUDGMENT BY:	DE MONTIGNY J.A.
CONCURRED IN BY:	PELLETIER J.A. LOCKE J.A.

 

Date: 20221206

Docket: A-311-19

Citation: 2022 FCA 211

CORAM:

PELLETIER J.A. DE MONTIGNY J.A. LOCKE J.A.

 

BETWEEN:

INTERNATIONAL AIR TRANSPORT ASSOCIATION, AIR TRANSPORTATION ASSOCIATION OF AMERICA DBA AIRLINES FOR AMERICA, DEUTSCHE LUFTHANSA AG, SOCIÉTÉ AIR FRANCE, S.A., BRITISH AIRWAYS PLC, AIR CHINA LIMITED, ALL NIPPON AIRWAYS CO., LTD., CATHAY PACIFIC AIRWAYS LIMITED, SWISS INTERNATIONAL AIRLINES LTD., QATAR AIRWAYS GROUP Q.C.S.C., AIR CANADA, PORTER AIRLINES INC., AMERICAN AIRLINES INC., UNITED AIRLINES INC., DELTA AIR LINES INC., ALASKA AIRLINES INC., HAWAIIAN AIRLINES, INC. and JETBLUE AIRWAYS CORPORATION

Appellants

and

CANADIAN TRANSPORTATION AGENCY and THE ATTORNEY GENERAL OF CANADA

Respondents

and

DR. GÁBOR LUKÁCS

Intervener

REASONS FOR JUDGMENT

DE MONTIGNY J.A.

[1] In this appeal, this Court is seized with a challenge to the validity of regulations adopted by the Canadian Transportation Agency (the Agency) to compensate air passengers for various delays, losses and inconveniences experienced in the course of international air travel.

[2] In May 2018, Parliament adopted the Transportation Modernization Act, S.C. 2018, c. 10 (the TMA), which amended the Canada Transportation Act, S.C. 1996, c. 10 (the CTA) by creating the new section 86.11. This new provision requires the Agency, after consulting with the Minister of Transport (the Minister), to make regulations imposing certain obligations on air carriers, notably in relation to flight delays, flight cancellations, denial of boarding, and loss of or damage to baggage. In April 2019, pursuant to subsection 86.11(2) of the CTA, the Minister issued the Direction Respecting Tarmac Delays of Three Hours or Less, S.O.R./2019-110 (the Direction) requiring the Agency to adopt regulations imposing obligations on air carriers to provide timely information and assistance to passengers in cases of tarmac delays of three hours or less.

[3] Around the same time, the Agency adopted the Air Passenger Protection Regulations, S.O.R./2019-150 (the Regulations), imposing obligations – including liability – on air carriers with respect to tarmac delays, flight cancellations, flight delays, denial of boarding and damage or loss of baggage in the context of domestic and international air travel. For ease of reference, the text of the Regulations can be found in the Annex to these reasons.

[4] The appellants challenge numerous provisions of the new Regulations on the basis that they exceed the Agency’s authority under the CTA. They claim that the regulations contravene Canada’s international obligations under the Convention for the Unification of Certain Rules Relating to International Carriage by Air, 12 October 1929, 137 L.N.T.S. 11 (the Warsaw Convention), its successor the Convention for the Unification of Certain Rules for International Carriage by Air, 28 May 1999, 2242 U.N.T.S. 309 (the Montreal Convention), and the Carriage by Air Act, R.S.C. 1985, c. C-26 (the CAA). They also allege that many of the Regulations’ provisions are ultra vires because they have impermissible extraterritorial effects, which violate fundamental notions of international law. Finally, the appellants challenge the Minister’s Direction on the basis that it exceeds the limitations imposed by its enabling statute.

[5] For the reasons that follow, I am of the view that this appeal should be dismissed, except with respect to subsection 23(2) of the Regulations which I find ultra vires of the CTA.

I. Background

[6] The appellant International Air Transport Association (IATA) is a trade association whose members include 290 airlines from 120 countries, which carry approximately 82 per cent of the world’s air traffic. The appellant Air Transportation Association of America, DBA Airlines for America, is a trade association which brings together passenger and cargo airlines based in the United States, whose members transport more than 90 per cent of US air passenger and air cargo traffic. The remaining appellants are air carriers serving a large number of Canadian and international airports. With the exception of Air Canada and Porter, headquartered in Canada, all of the other appellant air carriers are foreign air carriers.

[7] The Agency is a regulator and quasi-judicial tribunal. It is empowered by the CTA, its enabling statute, to develop and apply rules that establish the rights and responsibilities of transportation service providers and users. As part of its regulatory function, the Agency makes determinations relating to matters such as the issuance of licenses, permits, and exemptions where appropriate, within the authority granted to it by Parliament. The Agency is also empowered to assign administrative monetary penalties to any breaches of the CTA or its regulations and to take enforcement action through designated enforcement officers. As a quasi-judicial tribunal, the Agency is tasked with resolving commercial and consumer transportation-related disputes, as well as adjudicating accessibility issues for persons with disabilities.

[8] Mr. Lukács describes himself as an “air passenger rights advocate”. He has appeared before this Court in a number of cases as an intervener. He was granted intervener status by Order of this Court dated March 3, 2020.

[9] In 2014, the Minister launched a review of the CTA to examine current issues in transportation, and to identify priorities and potential courses of action in the sector to support Canada’s long-term economic well-being. Informed by extensive consultations with Canadian transportation and trade stakeholders and individual Canadians, the review revealed the latter’s dissatisfaction with their air travel experiences, including with respect to the existing consumer protection regimes in place. The Report was tabled in Parliament by the Minister of Transport on February 25, 2016 (Canada Transportation Act Review, Pathways: Connecting Canada’s Transportation System to the World, Vol. 1 (Ottawa: Department of Transport, 2015)). It described the system in place as producing “suboptimal, piecemeal outcomes for industry, consumers, and the regulator alike” (at p. 203) and recommended that the government enhance air passengers’ rights.

[10] In response, the Minister tabled Bill C-49 in May 2017, which mandated the Agency to develop new regulations enhancing air passenger rights in Canada. On May 23, 2018, the legislature enacted the TMA, which amended the CTA to add the new section 86.11. This new provision required the Agency, after consulting with the Minister, to make regulations in relation “to flights to, from and within Canada, including connecting flights”, notably in respect of carriers’ obligations in case of flight delay, flight cancellation or denial of boarding, including minimum standards of treatment and minimum compensation, in certain circumstances, and for lost and damaged baggage.

[11] The Agency then launched a consultation process, to inform the development of the new air passenger protection regulations (Canadian Transportation Agency, Air Passenger Protection Regulations Consultations: What We Heard (Ottawa: Canadian Transportation Agency, 2018 (Air Passenger Protection Regulations Consultations)). Travellers and consumer advocates generally favoured the creation of a fair compensation regime that would reflect the inconvenience and losses suffered by passengers, including of their time. This suggestion was met with resistance by certain airlines, who warned that imposing minimum compensation for delays in international travel might contravene the Montreal Convention (see Appeal Book, Vol. 22, Tab 14, at p. 369-370). The Agency also considered best practices and lessons learned from air passenger protection regimes in other jurisdictions, including the European Union and the United States, as well as the regime provided by the Montreal Convention (Air Passenger Protection Regulations Consultations at p. 2).

[12] The proposed Regulations were published in Part I of the Canada Gazette in December 2018, and approved by the Governor in Council on May 21, 2019. The Regulations modified the rights and obligations of passengers and air carriers, defining carriers’ minimum obligations to passengers with respect to:

• Communication of passengers’ rights and recourse options (ss. 5-7);

• Flight delays, cancellations and denied boarding (ss. 10-21);

• Tarmac delays of three hours or more (ss. 8-9);

• The seating of children under the age of 14 (s. 22); and

• The terms and conditions on the transportation of musical instruments (s. 24).

[13] Shortly before the adoption of the Regulations (on or about April 26, 2019), the Minister also issued the Direction, purportedly in reliance of subsection 86.11(2) of the CTA. As we shall see later, the appellants contend that this Direction seeks to expand the Agency’s regulation-making authority, to the extent that paragraph 86.11(1)(f) only authorizes the imposition of obligations in respect to tarmac delays in excess of three (3) hours.

[14] With respect to flight delays, cancellations and denied boarding, the Regulations establish informational (s. 13) and assistance (ss. 14, 16) obligations, require carriers to provide alternate travel arrangements and, in certain circumstances, refund a ticket or an unused portion of it. Additionally, the Regulations imposed a standardized minimum compensation amount for passengers who experienced flight delays, cancellations or denial of boarding that was “within the carrier’s control” but is not required for safety purposes. The amount of compensation ranges from $125 to $2400, depending on the size of the carrier (large or small) and the length of time between the scheduled and actual arrival (ss. 12, 19-20).

[15] Under subsection 86.11(4) of the CTA, the new obligations flowing from the Regulations are “deemed to form part of the terms and conditions set out in the carrier’s tariff” insofar as they are more advantageous than the terms and conditions of carriage already provided for in the carrier’s tariffs. Where a carrier fails to comply with these obligations, passengers may file a complaint with the Agency, which would in turn determine whether the carrier had failed to apply its tariffs. If found not to have applied the tariffs, carriers could be subjected to the Agency’s “corrective measures”, including an order to pay the required compensation under the Regulations, and administrative financial penalties under section 32.

[16] The Regulations came into force on July 15, 2019, with the exception of sections 14, 19, 22, 35 and 36, which came into effect on December 15, 2019.

[17] On June 28, 2019, the appellants filed a motion under section 41 of the CTA before this Court for leave to appeal the Regulations. This Court granted leave on August 15, 2019.

[18] The Attorney General of Canada filed a motion on December 2, 2019, seeking leave to present expert evidence on foreign law, specifically air passengers’ rights in State parties to the Montreal Convention. The Attorney General argued that this evidence is relevant to the appeal since the practice of State parties, including their domestic legislation and judicial decisions, is a recognized means of interpreting a treaty such as the Montreal Convention. This Court (per Justice Rennie) granted leave on January 27, 2020. The Attorney General filed, in July 2020, the affidavit of Professor Vincent Correia, which purported to describe the state of the law concerning air passenger rights in 73 states.

[19] In response, the appellants filed affidavits from Professors Pablo Mendes de Leon and Paul S. Dempsey on July 3, 2020. In these affidavits, the experts presented the state of the law in foreign jurisdictions, but also opined on the interpretation of the Montreal Convention and its compatibility with foreign regimes. The Attorney General filed a motion to strike out parts of these affidavits on July 30, 2020. This Court (per Justice Mactavish) found that the jurisprudence on the necessity and admissibility of expert evidence on international law was equivocal, and dismissed the motion on October 19, 2020, leaving the matter to the panel hearing the appeal.

[20] On January 7, 2021, the Attorney General obtained leave from this Court (per Justice Mactavish) to file responding expert evidence relating to the interpretation of the Montreal Convention, subject to this Court’s ruling on the admissibility of the challenged evidence from Professors Mendes de Leon and Dempsey. On February 26, 2021, the Attorney General filed the affidavit of Professor Elma Giemulla on the interpretation of the Montreal Convention and on its compatibility with the European Union regime regarding air passenger rights.

II. Issues

[21] This appeal raises important questions as to how the Montreal Convention applies within Canadian law, and more broadly, on Parliament’s ability to provide for the regulation of air passenger rights in the context of international travel. To answer that question, three main issues must be addressed:

1. Is the minimum compensation to passengers required by the Regulations in the case of delay, cancellation, denial of boarding and lost or damaged baggage, when applied to international carriage by air, authorized by subparagraph 86.11(b)(i) of the CTA and compatible with the Montreal Convention?

2. Are any of sections 5-8, 10(3), 11(3)-(5), 12(2)-(4), 13-18, 23 or 24 of the Regulations ultra vires the CTA insofar as they apply to international service because of an impermissible extraterritorial application?

3. Is the Direction intra vires of the authority of the Minister under subsection 86.11(2) of the CTA?

[22] Before turning to these questions, however, two preliminary matters need be resolved. The first relates to the Court’s jurisdiction to invalidate the Direction. In his submissions, the intervener submits that this Court lacks jurisdiction to hear the challenge to the Minister’s Direction – which is the sole basis to the challenge of section 8 of the Regulations – because the Direction is not a “decision, order, rule or regulation” of the Agency within the meaning of section 41 of the CTA. Rather, the Direction emanates from the Minister, and is therefore a decision of a “federal board, commission or other tribunal” under section 2 of the Federal Courts Act, R.S.C. 1985, c. F-7, for which this Court does not have jurisdiction under section 28. Following this argument, the power to review the Minister’s Direction falls within the exclusive purview of the Federal Court under section 18 of the Federal Courts Act.

[23] The second preliminary matter to be addressed is the admissibility of the appellants’ expert evidence. As previously mentioned, the Attorney General filed a motion to strike parts of the affidavits of Professors Mendes de Leon and Dempsey because they contained inadmissible legal opinions on the interpretation of the Montreal Convention. By direction of this Court, this issue was dealt with by the parties as part of their overall submission on the merits. Because it is essential to determine which parts of these opinions can be relied upon to determine the substantive issues of which this Court is seized, I will also deal with this issue in a preliminary manner.

III. Preliminary matters

A. The jurisdictional issue

[24] If the appellants were challenging the Minister’s Direction and were seeking an order setting it aside as a stand-alone issue, there is no doubt in my mind that they would have had to proceed by way of judicial review before the Federal Court. The intervener is correct that section 18 of the Federal Courts Act grants original and exclusive jurisdiction to hear applications for judicial review about the Minister’s actions to the Federal Court.

[25] In the case at bar, however, this is not what the appellants are seeking. As is made plain by the Notice of Appeal and the relief sought at paragraph 154 of their Memorandum of Fact and Law, the appellants challenge the validity of the impugned provisions of the Regulations (and in particular, section 8 of these Regulations). It is in the course of this challenge that they question the validity of the Direction, because the Direction is crucial to the validity of section 8 of the Regulations at least with respect to tarmac delays of less than three hours.

[26] As was made clear by the Supreme Court of Canada in Windsor (City) v. Canadian Transit Co., 2016 SCC 54 (at paras. 25-26), it is necessary to determine the “essential nature or character” of a claim to decide whether the Federal Court (or the Federal Court of Appeal) has jurisdiction over it. Quoting from Domtar Inc. v. Canada (Attorney General), 2009 FCA 218 (at para. 28), the Supreme Court went on to write that the essential nature of a claim will be determined on “a realistic appreciation of the practical result sought by the claimant”.

[27] The Attorney General rightly acknowledges that this Court must have jurisdiction to consider the legality of the Direction, to the extent that it is relevant (and even central, in my view) to its analysis of the validity of section 8 of the Regulations. It would be most impractical and inimical to the principle of access to justice to require the appellants to first challenge the Direction before the Federal Court by application for judicial review before challenging section 8 of the Regulations in a parallel appeal pursuant to section 41 of the CTA. As a superior court, this Court must have plenary jurisdiction to decide any matter of law arising out of its original jurisdiction: Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626 at para. 36; Deegan v. Canada (Attorney General), 2019 FC 960 at para. 227; Bilodeau-Massé v. Canada (Attorney General), 2017 FC 604 at paras. 74, 80, 82-83.

[28] As a result, the intervener’s argument on jurisdiction must be rejected. This Court undoubtedly has the power to rule on the validity of section 8 of the Regulations, and must therefore be able to determine whether the Direction that underpins it is intra vires section 86.11 of the CTA.

B. The admissibility issue

[29] As previously mentioned, the Attorney General filed a motion in writing under Rule 369 of the Federal Courts Rules, S.O.R./98-106 seeking an order striking out portions of the affidavit of Professor Mendes de Leon dated June 2, 2020 and of the affidavit of Professor Dempsey dated March 30, 2020 filed by the appellants. More particularly, the Attorney General asked this Court to strike out paragraphs 47, 59 to 91 and 115 of Professor Mendes de Leon’s affidavit, and paragraphs 28 to 41 of Professor Dempsey’s affidavit. In a nutshell, the Attorney General argues that these paragraphs of the two affidavits are inadmissible because they provide legal opinions with respect to the interpretation of the Convention, an issue that is at the very core of the present appeal. Moreover, in the Attorney General’s view, such legal opinions involve issues of international law, which are not matters of fact but rather matters of law of which Canadian judges can take judicial notice.

[30] After reviewing the case law and literature on the subject submitted by the parties, Justice Mactavish came to the conclusion that “the law appears to be somewhat less settled” with respect to the need for expert evidence when questions of international law, as opposed to questions of foreign law, are involved: International Air Transport Association v. Canada (Transportation Agency), 2020 FCA 172 at para. 14. On that basis, she decided that it was preferable to leave that issue to the panel assigned to hear the appeal on the merits.

[31] Before ruling on this motion, it is worth recalling that the Attorney General had previously been granted leave to introduce expert evidence on the law and practice applicable in certain foreign states with respect to air passengers’ rights. The Attorney General had argued that such evidence was relevant because the practice of State parties is a recognized means of interpreting a treaty such as the Montreal Convention. Justice Rennie agreed with the Attorney General, recognizing that expert evidence is the only permissible means by which evidence of foreign law and practice may be adduced.

[32] In Section II of his affidavit, Professor Mendes de Leon describes the relevant laws of the European Union and its member states, the member states of the European Free Trade Association and the European Common Aviation Agreement Area as it relates to the liability of air carriers to passengers in respect of flight delays, flight cancellations and denial of boarding. This section is not controversial, as it clearly qualifies as evidence on foreign law. The only paragraph of that section to which the Attorney General objects is paragraph 47, where Professor Mendes de Leon states that a decision of the European Court of Justice (ECJ) (Sturgeon v. Condor; Böck and Lepuschitz v. Air France, Joined cases C-402/07 and C-432/07, [2009] ECR I-10954 [Sturgeon]) was much criticized on the basis that the Court departed from its judicial role and in effect amended Regulation (EC) No. 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EC) No 295/91 [2004] OJ, L 46/01) (Regulation 261/2004) by creating a right to non-compensatory payments for flight delays. I will say more on that decision when dealing with the merits of the parties’ arguments.

[33] Sections III and IV of Professor Mendes de Leon’s affidavit are the most contentious. In section III (paragraphs 59-75), he states that whether EU Regulation 261 is in the application of the Montreal Convention requires him to opine on whether that Regulation is aimed at giving effect to the EU’s treaty obligations under the Montreal Convention (at para. 59). After providing the context in which Regulation 261/2004 was adopted and examining Regulation 261/2004 itself, Professor Mendes de Leon offers the following conclusions:

71. In my opinion, it is apparent that Regulation 261 was intended to address matters not governed by the Montreal Convention, 1999, and therefore was not adopted in order to give effect to the EU’s treaty obligations thereunder. As explained above in this Affidavit, in the Sturgeon case the ECJ controversially extended the obligation to provide compensation imposed on air carriers by Regulation 261 to flight delay. Significantly, the ECJ’s reasons for extending compensation beyond denial of boarding and flight cancellation are not at all based on the Montreal Convention, 1999, which is neither discussed nor even mentioned in its judgment.

72. In my opinion, the Sturgeon judgment’s extension of the compensation provided for in Article 7 of Regulation 261 to flight delay cannot, therefore, be seen as “giving effect” to the EU’s treaty obligations under the Montreal Convention, 1999.

[34] In Section IV of his affidavit (paragraphs 76-91), Professor Mendes de Leon provides his views as to whether the European Union regime governing passenger compensation, and in particular Regulation 261/2004, is consistent with the Montreal Convention. After describing in broad terms the Montreal Convention and critically commenting on the ECJ jurisprudence interpreting Regulation 261/2004 as not being in breach of the Montreal Convention, Professor Mendes de Leon offers his interpretation of the exclusivity principle found in Article 29 of the Convention:

89. The language of Article 29 of the Montreal Convention, 1999, is, in my opinion, clear and precise. Pursuant to the first, and principal method of treaty interpretation, a treaty provision must be interpreted in good faith, in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose, which, in the case of the Montreal Convention, 1999, is uniformity of rulemaking in respect of international carriage by air. Article 29, and therefore the Montreal Convention, 1999, thus clearly excludes claims by passengers against air carriers for damages for inconvenience caused by flight delay in respect of international carriage by air.

(emphasis in original)

[35] Section V and VI of his affidavit are not contentious, as they deal with air passenger compensation in other jurisdictions and therefore relate, strictly speaking, to foreign law.

[36] Professor Dempsey’s affidavit is focused on the law of the United States as it relates to the liability of air carriers to passengers. Section II of his affidavit (paragraphs 14 to 22) deals with the legal regime in respect of flight delays, flight cancellations, denial of boarding, and damage to or loss of baggage. Section III (paragraphs 23-46) purports to deal with the consistency of US law with the Montreal Convention. By way of introduction, Professor Dempsey explains that the US is a “monist” jurisdiction because the US Constitution provides that international treaties are the law of the land. Since international treaties are self-executing, without any requirement of formal promulgation into a statute, there is no distinction between international law and domestic US law, and the US law on passenger compensation in the field of international air travel is the Montreal Convention. An opinion on the latter is therefore an opinion on US law, the implication being that it should be admissible in Canadian law because it constitutes expert evidence on foreign law.

[37] Professor Dempsey then goes on with a brief description of the Montreal Convention, in the course of which he opines on the scope of the exclusivity principle found in Article 29 of the Montreal Convention:

30. As noted above, the Montreal Convention stipulates that the carrier is liable for damage sustained in case of destroyed, lost or damaged baggage, and damage occasioned by delay to passengers or baggage. In light of the aforementioned exclusivity principle of Article 29, any regime that provides for automatic minimum compensation in the event of delays to passengers, or for lost, delayed or damaged baggage, would be in violation of the Montreal Convention. The Convention provides for compensation for provable damages up to a specified amount, and explicitly provides the exclusive remedy for claims arising in international air transportation.

31. The Convention does not provide for any recourse for delay in the absence of proof of loss; any such recourse would be non-compensatory which is excluded by Article 29.

[38] At paragraphs 32 to 36 of his affidavit, Professor Dempsey addresses the issue of whether there is a conflict between US law and international law on issues of passenger delay or baggage loss, damage or delay. On most topics, there can be no conflict because the US Department of Transport refers consumers who have claims against airlines for international flights to the Montreal Convention. The only area in which the US regulations address air carrier liability and impose obligations of compensation to passengers is in the area of denied boarding compensation for overbooking, an issue which, in the opinion of Professor Dempsey, does not fall under the Montreal Convention. Once again, he comes to that conclusion on the basis of his interpretation of the Montreal Convention:

35. [...] Nonperformance of the contract of carriage falls outside of the Convention, for the Convention is based upon a contract of carriage for international transportation, whose flight originates and is destined to a contracting State. If the failure of the carrier to perform is deemed to constitute non-performance of the contract of carriage, then the dispute falls wholly outside the Warsaw or Montreal regime, and the aggrieved passenger may pursue his domestic law remedies, without any ceiling on actual damages recoverable.

[39] Interestingly, he relies for that proposition on a number of cases and legal commentaries, including some of his own publications.

[40] Finally, Professor Dempsey expresses the view in Section IV of his affidavit (paragraphs 37-41) that US laws were made in the application of the Montreal Convention. He comes to that conclusion because the US is a monist state, the US case law on delay applies the Montreal Convention, and the US government has refrained from promulgating aviation regulations addressing air carrier liability in international air transportation in deference to the exclusivity and pre-emption provision of the Montreal Convention.

[41] The Attorney General claims that much of Sections III and IV of Professor Mendes de Leon’s affidavit and Sections III and IV of Professor Dempsey’s affidavit, which opine on whether the law of the European Union and the United States is in the application of the Montreal Convention and is consistent with it, should be struck. According to the Attorney General, these portions of the two affidavits, along with Professor Mendes de Leon’s criticism of the Sturgeon decision of the ECJ (paragraph 47) and a paragraph on the application of the Montreal Convention in New Zealand (paragraph 115), are nothing more than legal opinions on the interpretation of an international convention that is at the core of the substantive legal issue to be decided by this Court. According to the Attorney General, the only purpose of that evidence is to give more weight to the legal position advanced by the appellants than it would have if it was merely argued by counsel.

[42] There is no doubt that the Montreal Convention, adopted on May 28, 1999 in Montreal, ratified by Canada and incorporated in its domestic law via amendments to the CAA (s.2(2.1)) is at the heart of this appeal. The appellants have advanced a number of arguments in support of their position that the Regulations are ultra vires the CTA. They have argued that in enacting section 86.11 of the CTA, Parliament must be presumed not to have authorized the adoption of delegated legislation that would be inconsistent with the Montreal Convention as incorporated in Canadian law. In a similar fashion, they have also submitted that section 86.11 must be construed as not authorizing the adoption of regulations that would be inconsistent with the Montreal Convention, since Parliament must be presumed to legislate in a manner compatible with Canada’s international obligations. The appellants do not dispute that the interpretation of the Montreal Convention is central to these two arguments.

[43] To be successful, the appellants must convince this Court that the non-compensatory damages for flight delays, flight cancellations, denials of boarding and lost or damaged baggage provided for by the Regulations are prohibited by the Montreal Convention, exceed the limit of liability set forth in the Convention and ignore the exclusion of liability of the Convention. If there is no inconsistency, the Regulations are not ultra vires since they would fall within the regulation-making authority of section 86.11 of the CTA. At least to that extent, there is agreement between the parties.

[44] It is well established in Canadian evidence law that facts are to be pleaded and proved, whereas law does not need to be proved and courts will take judicial notice of it. Opinions on matters of law are therefore not admissible, since it is for the court to decide questions of law. Although affidavit evidence must generally be confined to facts that are within the deponent’s personal knowledge (Rule 81(1) of the Federal Courts Rules), a party will exceptionally be allowed to adduce expert opinion on questions of fact when it meets some requirements.

[45] Foreign law has long been characterized as fact for the purpose of the law of evidence. It must be pleaded and proved at trial, unless otherwise provided by statute. In most cases, this will be done by expert evidence: R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292 at para. 120 [Hape]; Asad v. Canada (Citizenship and Immigration), 2015 FCA 141 at para. 24; JP Morgan Chase Bank v. Lanner (Le), 2008 FCA 399, [2009] 4 F.C.R. 109 at paras. 18, 35 and 57; Friedl v. Friedl, 2009 BCCA 314 at para. 20.

[46] On that basis, should international law be treated as a question of fact? This is a vexed question, which doesn’t lend itself to an easy answer in Canadian law and which has been the subject of varied treatment in the jurisprudence. The appellants submit that there is no rule according to which expert evidence on international law is inadmissible per se. Courts may take judicial notice of international law that is incorporated into Canadian law, but it is argued that courts may also receive and rely on expert evidence on international law where the normative content of the international law principles at issue is “unsettled, controversial or emerging” (Appellants’ Responding Written Representations re Attorney General’s motion to strike parts of the appellants’ affidavits at para. 41 [Appellants’ Responding Written Representations]). The Attorney General, on the other hand, forcefully argues that international law is a question of law, that Canadian courts should take judicial notice of it, and that evidence purporting to give a legal opinion on the interpretation or application of an international convention is inadmissible, “especially when this is a central issue the Court has to resolve to dispose of a case” (Attorney General’s Written Representations on motion to strike parts of appellants’ affidavits at para. 55).

[47] In my opinion, the latter view is to be preferred, at least with respect to customary international law and to international treaties that have been incorporated into Canadian law. I leave aside for the purpose of this discussion international conventions and treaties that have not been implemented by Canadian (federal or provincial) statutes, since they are not part of Canadian law. There is no need to consider how an international instrument that Canada has ratified but not yet implemented ought to be brought into evidence given that the Montreal Convention was incorporated into Canadian law through the CAA.

[48] There are many reasons why Canadian courts should take judicial notice of international law without the need to resort to expert opinion. First of all, international law is in many respects domestic law. I appreciate that Canada, unlike other legal systems like that of the United States, is a dualist system to the extent that rules of international law must be incorporated or adopted into the domestic legal order in order to be applied by domestic courts. This is true, however, only with respect to international treaties. Following the common law rule of adoption, it has long been recognized that prohibitive rules of customary international law forms part of Canadian law in the absence of conflicting legislation: see Hape at paras. 36-39 and the cases referred to. As for treaties, once incorporated, they are Canadian law for all intents and purposes. Accordingly, the fact that Canada is a dualist state should not be overblown and is not critical to resolve the issue that is before us.

[49] A second related reason why international law should be subject to the same rules of evidence as Canadian law is the presumption that domestic law will be interpreted so as to conform to Canadian international obligations. As noted by Gibran van Ert (“The Admissibility of International Legal Evidence” (2005) 84 C.B.R. 31, at p. 38 [van Ert]), there is no presumption that Canadian law respects the requirements of the law of foreign countries, since these laws do not bind Canada. On the contrary, customary international law and treaties that have been ratified by the Canadian government are binding and violations will attract international responsibility.

[50] A third reason for courts to take judicial notice of international law derives from the law relating to the admissibility of expert opinion evidence. The leading authority on that question is the decision of the Supreme Court of Canada in R. v. Mohan, [1994] 2 S.C.R. 9, (at p. 20) [Mohan]. In that case, the Court set out four criteria for the admissibility of such evidence: relevance, necessity in assisting the trier of fact, the absence of any exclusionary rule, and a properly qualified expert. In a subsequent case, the Court added a second step, namely the balancing of the potential risks and the benefits of admitting the evidence, in order to decide whether the potential benefits outweigh the risks: White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 S.C.R. 182 at para. 24 [White Burgess]; see also: R. v. Bingley, 2017 SCC 12, [2017] 1 S.C.R. 170 at paras. 16-17.

[51] Before discussing the application of these criteria, it is worth considering, as pointed out by van Ert, that Mohan and White Burgess were not dealing with expert opinion on questions of law but rather on questions of fact. It could be argued, therefore, that the criteria set forth in these decisions were not meant to apply to expert opinions on questions of law, and thus cannot be relied upon to justify the introduction of such opinions into the evidence.

[52] Be that as it may, I agree with the Attorney General that expert opinion on a question of law can hardly be necessary, given the Court’s expertise on matters of law. Even if necessity should not be judged “by too strict a standard” (Mohan at p. 23), the expert opinion must still bring an expertise that is outside the purview of a judge’s skills and knowledge. This is clearly the case when the application of the law is predicated on a good grasp of scientific and technical matters, as is often the case in patent law. This is to be contrasted with those cases where the legal issue, albeit novel or complex, does not require any particular expertise beyond that expected from a judge. In those cases, a judge can come to his or her own conclusions and will not need expert opinions. As this Court stated in Canada (Board of Internal Economy) v. Canada (Attorney General), 2017 FCA 43 (at para. 18) [Board of Internal Economy], “[t]his is precisely why questions of domestic law (as opposed to foreign law) are not matters upon which a court will receive opinion evidence. Such matters clearly fall within the purview of the court’s expertise and opinion evidence on these issues would usurp the court’s role as expert in matters of law”; see also: Es-Sayyid v. Canada (Public Safety and Emergency Preparedness), 2012 FCA 59 at para. 41; Brandon (City) v. Canada, 2010 FCA 244 at para. 27; Dywidag Systems International, Canada, Ltd. v. Garford PTY Ltd., 2010 FCA 223 at paras. 10-11; Sopinka, Lederman & Bryant: The Law of Evidence in Canada, 4th ed. (Markham, Ontario: LexisNexis, 2014) at paras. 12.155 and 12.156.

[53] As for IATA’s argument that expert evidence can be adduced when the principles of international law are contested, controversial or emerging, I find it totally unpersuasive. This has never been the test to accept expert evidence, and indeed IATA cites no authority in support of that new principle. A disagreement between parties on the proper interpretation of the law (be it constitutional law, civil law, criminal law or international law) cannot be the test to determine the admissibility of expert opinion evidence. That would amount to an usurpation of the role of the judge. As van Ert aptly remarked in his previously cited article:

While it is no doubt true that a scholar who has long studied a particular question of law may be more knowledgeable about it than a trial judge at the outset of a hearing, our adversarial legal system is predicated upon the conviction that a qualified judge, assisted by learned counsel presenting competing views and acting for parties with a real interest in the outcome, and protected (if all else fails) by the possibility of reversal on appeal, is capable of correctly resolving any legal controversy. If we begin to doubt this proposition for international law, on the ground that it may be unfamiliar to many judges, why should we not also doubt it for other lesser-known areas of law? (at p. 41)

[54] The case law has not been consistent and is not free from ambiguity in its treatment of expert opinion evidence as it relates to international law. By and large, however, I think it is fair to say that the jurisprudence has moved towards the exclusion of such evidence. It is noteworthy that the appellants, despite stating that Canadian courts have, “on numerous occasions” (Appellants’ Responding Written Representations at para. 41), received and relied on expert evidence on international law, have only been able to provide two cases where expert evidence on issues of international law has been explicitly ruled admissible: see Holding Tusculum B.V. c. S.A. Louis Dreyfus & Cie, 2006 QCCS 2827 at para. 16; Fédération des travailleurs du Québec (FTQ – Construction) c. Procureure générale du Québec, 2018 QCCS 4548 at para. 20. These two trial court decisions did not discuss the issue thoroughly, and the same court expressly refused to follow the second one of these decisions in a more recent case: Fédération des policiers et policières municipaux du Québec c. Procureure générale du Québec, 2020 QCCS 2496 at para. 22.

[55] The appellants have also referred the Court to a few cases where expert evidence on international law was adduced: see Romania (State) v. Cheng, 1997 CanLII 9914 (NS SC), aff'd 1997 CanLII 1949 (NS CA); Amaratunga v. Northwest Atlantic Fisheries Organization, 2010 NSSC 346; 2011 NSCA 73; Saskatchewan v. Saskatchewan Federation of Labour, 2012 SKQB 62; 2013 SKCA 43; 2015 SCC 4, [2015] 1 S.C.R. 245 (Saskatchewan Federation of Labour); Najafi v. Canada (Public Safety and Emergency Preparedness), 2013 FC 876; 2014 FCA 262; [2015] 4 F.C.R. 162; Tracy v. The Iranian Ministry of Information and Security, 2016 ONSC 3759. In none of these cases was the admissibility of the expert evidence discussed by the court. Moreover, the expert evidence was only briefly referred to in all of these cases, sometimes just to acknowledge that it was filed; in the two cases that reached the Supreme Court, there was no mention at all of the expert affidavit in one and a mere parenthesis (“See also affidavit of ...”) in the other (Saskatchewan Federation of Labour at para. 65). Needless to say, the decisions on whether or not to file certain evidence to challenge the admissibility of each other’s evidence are often tactical and made on a case-by-case basis, and do not amount to rulings as to the admissibility of such evidence. It is well established that courts will not generally raise proprio motu an objection to the admissibility of evidence: Café Cimo Inc. v. Abruzzo Italian Imports Inc., 2014 FC 810 at para. 6; Mallet v. Administrator of the Motor Vehicle Accident Claims Act, 2002 ABCA 297 at paras. 57-58.

[56] On the other hand, expert evidence on international law has been rejected by this Court and the British Columbia Court of Appeal. In Board of Internal Economy, this Court struck out a law professor’s affidavit purporting to show that parliamentary expenses fall outside the scope of the protection afforded to parliamentary privilege. In support of that proposition, the law professor relied on the experience of other Commonwealth countries, which in his view demonstrated that the administration of parliamentary expenses does not fall within the common law concept of parliamentary privilege. As pointed out by the appellants, while it is no doubt true that the issue of admissibility of expert evidence on international law was not squarely addressed, it remains that the affidavit was riddled with opinions relating to an allegedly “international global standard of constitutional law” (Board of Internal Economy at paras. 6 and 21). The Court came to the conclusion that the affidavit was not a mere factual brief providing neutral information on comparative and foreign law, as argued by the appellants in that case, but was more in the nature of a legal opinion that was meant to advocate for the restrictive interpretation of parliamentary privilege advanced by the appellants. As the Court stated:

23. It cannot credibly be contended that the St-Hilaire affidavit is in the nature of a factual brief providing neutral information with respect to the historical development of the parliamentary privilege, and on comparative and foreign law. It reads like a legal opinion: it draws from Canadian and foreign sources to offer a conclusion which happens to support the respondent MPs’ argument...

[57] That decision is consistent with the notion that an expert cannot opine on a question of law (which must necessarily include questions of international law) to be decided by the Court, especially when that question is at the heart of the determination to be made to resolve the dispute between the parties: see the case law cited in Board of Internal Economy at para. 18. The British Columbia Court of Appeal confirmed as much when called upon to deal explicitly with expert evidence pertaining to international law. In R. v. Appulonappa, 2014 BCCA 163, it stated (at para. 62):

Finally, with respect to expert evidence, the respondents called Professor Dauvergne, who testified to issues of refugee law and policy. Mr. Dandurand, who was called by the Crown, gave evidence as an expert in human smuggling as a transnational crime. I agree with the respondents that, to the extent that both experts strayed into providing opinions on the interpretation and application of international law and s. 117 of the IRPA, their testimony was not properly admissible as these were questions of law for the court. I accordingly limit my consideration of their evidence to factual matters.

[58] More recently, a majority of this Court noted in obiter that the parties do not need to file experts’ reports to establish international law, because the Court can take judicial notice of said law: Turp v. Canada (Foreign Affairs), 2018 FCA 133 at para. 82. In coming to that conclusion, the Court relied on R. v. The Ship “North”, (1906) 37 S.C.R. 385 and Jose Pereira E Hijos, S.A. v. Canada (Attorney General), [1997] 2 FC 84 [Jose Pereira], and also on the decision of the Scottish High Court of Justiciary in Lord Advocate’s Reference No. 1, [2001] ScotHC 15.

[59] There may admittedly be few cases where Canadian courts have explicitly stated that they can take judicial notice of international law. There are, however, a number of Supreme Court cases where customary and conventional international norms were considered without any reference to supporting expert evidence. In my view, this speaks volumes as to the propriety of doing so: see, for example, R. v. Malmo-Levine; R. v. Caine, [2003] 3 S.C.R. 571; Suresh v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 3 [Suresh]; United States v. Burns, [2001] 1 S.C.R. 283; Ordon Estate v. Grail, [1998] 3 S.C.R. 437; Re Canada Labour Code, [1992] 2 S.C.R. 50; Slaight Communications Inc. v. Davidson, [1989] 1 S.C.R. 1038; R. v. Crown Zellerbach Canada Ltd., [1988] 1 S.C.R. 401; Reference re Newfoundland Continental Shelf, [1984] 1 S.C.R. 86; Reference Re: Offshore Mineral Rights, [1967] S.C.R. 792; The Municipality of the City and County of Saint-John et al. v. Fraser-Brace Overseas Corporation et al., [1958] S.C.R. 263.

[60] Even more to the point are those cases where Canadian courts interpreted various provisions of international treaties ratified and implemented by Canada without resorting to any expert evidence. In Pan American World Airways Inc. v. The Queen et al., 1979 CanLII 4179, [1979] 2 F.C. 34 at p. 274-275, aff’d at 1980 CanLII 2610 (FCA) and 1981 CanLII 215 (SCC), for example, the Federal Court found that expert evidence as to the proper interpretation of the Convention on International Civil Aviation, 7 December 1944, 15 UNTS 295 [Chicago Convention] was inadmissible. Interestingly, the Court nevertheless agreed to consider it on the assumption that counsel would have adopted it as argument. Similarly, the Supreme Court applied two provisions of the Vienna Convention on the Law of Treaties, 23 May 1969, 1155 U.N.T.S. 331 [Vienna Convention] without resorting to any expert evidence: see Yugraneft Corp. v. Rexx Management Corp., 2010 SCC 19, [2010] 1 S.C.R. 649 at paras. 19 and 21 [Yugraneft]; Office of the Children’s Lawyer v. Balev, [2018] 1 S.C.R. 398 at para. 35. Especially relevant for our purposes is the decision of the Supreme Court in Thibodeau v. Air Canada, [2014] 3 S.C.R. 340 [Thibodeau], where Article 29 and other provisions of the Montreal Convention were interpreted without the need for any expert evidence.

[61] Counsel for the appellants argued that the Attorney General has adduced expert evidence in a number of cases, and should therefore be estopped from arguing that expert evidence on international law is inadmissible. In support of their argument, they referred the Court to a number of cases where international law experts have been called by the Attorney General, on his own motion or otherwise, to provide reports or affidavit evidence on various issues of international law. Of course, I agree with the appellants that the Attorney General should strive for consistency in the interpretation of the laws upon which he relies in the various courts of the country in the fulfilment of his responsibilities.

[62] The appellants’ argument is essentially that having led expert evidence of international law in other cases, the Attorney General is estopped from objecting to the introduction of similar evidence by other parties. While I agree that the Attorney General stands in a unique position before the Courts, as a practical matter it is not possible to compare what the Attorney General has done in any other case and what is being done in the case before this Court. Counsel make evidentiary decisions on the basis of the facts upon which a case turns. It is not for the Court to audit the facts of every case in which an issue has arisen to determine if the Attorney General is being consistent in the treatment of that same issue.

[63] Moreover, even if practice was relevant, the decisions to file evidence and to raise objections to the admissibility of evidence are made on a case-by-case basis, very often for tactical purposes. Each case raises different issues and requires judges to make different judgment calls on all sorts of issues including the type of evidence to be admitted. In some cases, for example, the evidence was of a historical nature (R. v. Finta, [1994] 1 S.C.R. 701, at p. 795), related to the preparatory work of a treaty (Québec (Ministre de la Justice) c. Canada (Ministre de la Justice), 2003 CanLII 52182 (QC CA)), or consisted of expert reports appended to a factum in a reference (Reference re Secession of Quebec, [1998] 2 S.C.R. 217). A sample of a dozen cases over the course of thirty years is certainly not sufficient to establish any kind of practice, especially in light of the other numerous cases where the Attorney General chose not to file expert evidence on international law: see, for example, Kazemi Estate v. Islamic Republic of Iran, [2014] 3 S.C.R. 176; Febles v. Canada (Citizenship and Immigration), 2014 SCC 68, [2014] 3 S.C.R. 431 [Febles]; Hape; Suresh.

[64] For all of the above reasons, I am therefore of the view that courts ought to take judicial notice of customary international law and of treaties that have been ratified and implemented in Canadian law. As the Supreme Court recognized in Nevsun Resources Ltd. v. Araya, 2020 SCC 5 (at paras. 94-98), customary international law is to be treated as the law of Canada, and as such must be judicially noticed without the need of any expert evidence. I see no reason, either principled or practical, to distinguish between customary international law and treaties that have been implemented in Canadian law. For all intents and purposes, both are incorporated into Canadian law and judges are expected to treat them as law, not as fact. The trend of the case law to which I have referred in the preceding paragraphs clearly points in that direction. Indeed, that trend can be traced back as far as the decision of the Federal Court in Jose Pereira, where one of the arguments put forward by the plaintiffs was that regulations adopted pursuant to the Coastal Fisheries Protection Act, R.S.C. 1985, c. C-33 were beyond the authority of the Governor in Council. Ruling on a motion to strike portions of the statements of claim filed by the defendants, Justice MacKay first summarized the principles concerning the application of international law in our courts, and then went on with the issue of pleadings as it relates to international law:

That issue [the vires of the Regulations], one fundamental to these proceedings, may be raised without reference in the pleadings or particulars to specific international treaties or conventions which, in so far as they are considered a source of law, will be applied in the action only if they are incorporated in Canadian domestic law by legislation specifically so providing. To the extent that international conventions or treaties are considered authority for international law principles, it is unnecessary to plead them specifically, in the same way that it is unnecessary to plead other authority, e.g., jurisprudence or legislation, and such pleading is not of facts, the essence of pleading, but of law, which is not to be pleaded... (at p. 101) (emphasis added)

[65] Expert evidence on international law, just like expert evidence on any issue of domestic law, should therefore not be countenanced. Counsel should make submissions on international law themselves, without resorting to the added credibility of an expert. Of course, a learned article canvassing some of the legal issues in an expert opinion could, if published, be put before the Court, along with case law and other types of legal sources. But international law should definitely not be pleaded as a fact, to be proven by way of affidavit or testimonial evidence, especially when the objective is to provide legal conclusions on the very issue that is at the core of the dispute between the parties.

[66] On the basis of that principle, I agree with the Attorney General that paragraphs 47, 59 to 91 and 115 of Professor Mendes de Leon’s affidavit, and paragraphs 28 to 41 of Professor Dempsey’s affidavit should be struck out. Contrary to the appellants’ submission, they address issues that are matters of argument to be decided by the judge, and not matters of fact. The normative content of international law falls within the bailiwick of the court’s exclusive jurisdiction.

[67] It is one thing to adduce evidence on foreign legislation and decisions as Professor Correia does in his affidavit, and it is another to opine on the consistency of that foreign law with the Montreal Convention, thereby at least indirectly interpreting the scope of the Convention and of the exclusivity principle contained therein. When Professors Mendes de Leon and Dempsey cross that line, they usurp the role of the Court because this is precisely the question that we are being asked to adjudicate. It is ultimately for the Court to determine whether the state practice adduced by the parties through their expert is or is not in conformity with the Montreal Convention, on the basis of its own interpretation of the ground covered by that Convention and of its Article 29.

[68] The evidence of foreign law introduced by Professor Correia will obviously not relieve the Attorney General of establishing that it amounts to “state practice” under the Vienna Convention. According to Section 38 of the Statute of the International Court of Justice (26 June 1945, Can. T.S. 1945 No. 7), the main sources of international law are international conventions, international custom, general principles of law and, as subsidiary means for determining the law, judicial decisions and the writings of pre-eminent authors. State practice is not a source of international law and does not create, per se, international law obligations. It is rather factual, and it can be used as an aid in interpreting a treaty, pursuant to paragraph 31(3)(b) of the Vienna Convention on the Law of Treaties (23 May 1969, Can. T.S. 1980 No. 37). To qualify as “state practice”, however, the foreign law relied upon must be “in the application of” and “consistent with” the treaty to which it relates. To the extent that the Attorney General intends to show that the State parties to the Montreal Convention do not consider that this Convention bars them from establishing air passenger protections similar to those included in the Canadian regime, he will have to demonstrate that the foreign law (a fact) is consistent with and in the application of the Convention, a matter of legal argument.

[69] Finally, the appellants’ argument that they are entitled to challenge whether some or all of the foreign law the Attorney General wishes to rely on constitutes relevant state practice that can serve to interpret the Montreal Convention, must similarly be rejected. First of all, there is no doubt that the appellants are free to make that counter argument, but this is a matter of law and not of fact. This should be done by counsel, and not by way of expert evidence introduced by affidavit. Moreover, this submission is somewhat circular. State practice can only be characterized as incompatible with a convention once that convention has been interpreted. One cannot short-circuit this logical reasoning by opining from the outset that the foreign law is or is not in the application or in conformity with the Convention. In doing so, the appellants’ experts pronounce on the consistency of the foreign law with the Montreal Convention on the basis of their own interpretation of that convention, which is precisely what must be demonstrated. Once again, this is a matter of law for this Court to decide and not an issue of fact upon which expert evidence is required.

[70] I will therefore proceed without taking into account the above-mentioned paragraphs of the affidavits of Professors Dempsey and Mendes de Leon. The expert evidence submitted by Professor Elmar M. Giemulla on behalf of the Attorney General, which was filed with the express purpose of responding to the expert affidavits of Professor Mendes de Leon and Professor Dempsey, will similarly be disregarded. I hasten to say, however, that counsel were free to make similar arguments in their oral presentations, and that the Court did consider all of the legal arguments as such.

IV. Standard of review

[71] The appellants do not challenge the validity of section 86.11 of the CTA, nor of any other of its provisions. The core of their challenges is that the minimum compensation scheme set out in the Regulations, insofar as it applies to international carriage, is ultra vires of the enabling provision found in section 86.11. Challenging the vires of a regulation is certainly a question of law. Indeed, section 41 of the CTA provides for an appeal from the Agency to this Court, with leave, only on questions of law and jurisdiction.

[72] A statutory right to appeal signals Parliament’s intent for the appellate standards to apply, thereby rebutting the presumption of reasonableness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653 at para. 17 [Vavilov]. On appeal, questions of law attract the correctness standard: Vavilov at paras. 36-37; Bell Canada v. Canada (Attorney General), 2019 SCC 66, [2019] 4 S.C.R. 845 at para. 35; Ward v. Québec (Commission des droits de la personne et des droits de la jeunesse), 2021 SCC 43, 463 D.L.R. (4th) 567 at para. 24; Canadian Pacific Railway Company v. Canada (Transportation Agency), 2021 FCA 69, [2021] CarswellNat 947 at para. 41. The task is therefore to interpret section 86.11 of the CTA to ascertain the statutory grant of power Parliament intended to afford the Agency, and then to interpret the text, context and purpose of the impugned provisions of the Regulations with a view to determining whether they fall within the purview of what Parliament authorized when it enacted section 86.11.

V. Analysis

A. Is the minimum compensation to passengers required by the Regulations in the case of delay, cancellation, denial of boarding and lost or damaged baggage, when applied to international carriage by air, authorized by subparagraph 86.11(b)(i) of the CTA and compatible with the Montreal Convention?

[73] Relying on the presumptions of compliance with international law and of legislative coherence, the appellants submit that section 86.11 can and should be construed as only authorizing regulations that are consistent with Canada’s obligation under international law.

[74] There is no doubt that Parliament must be presumed not to have intended to adopt legislation inconsistent with Canada’s international obligations under treaty or customary international law: see, for example, R. v. Appulonappa, [2015] 3 S.C.R. 754, 478 N.R. 3 at para. 40; Hape at paras. 53-54; R. Sullivan, The Construction of Statutes, 6^th ed. (Markham, ON: LexisNexis, 2014), paras. 18.5-18.7 (Sullivan). The Supreme Court explicitly reiterated this principle in the context of the Montreal Convention: see Thibodeau at paras. 6 and 113. In the absence of clear language to the contrary, a statute must be construed as only authorizing subordinate legislation that is respectful of Canada’s international obligations.

[75] The appellants also submit that the scope of the Agency’s regulation-making authority under section 86.11 of the CTA is further constrained by the presumption of legislative coherence. Pursuant to that well established presumption, overlapping provisions from different statutes must be interpreted so as to avoid conflict wherever this is possible: Thibodeau at paras. 89, 93 and 99; Barreau du Québec v. Quebec (Attorney General), 2017 SCC 56, 404 D.L.R. (4th) 201 at para. 73; Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, 88 D.L.R. (4th) 1 at p. 38 [Oldman River]; P.-A. Côté, The Interpretation of Legislation in Canada, 4^th ed. (Toronto: Thomson Reuters, 2011), at p. 365. What is true of statutes is also true of delegated legislation: regulations can neither conflict with their enabling legislation nor with any other act of the legislature: Oldman River, at p. 38; D.J.M. Brown & J.M. Evans, Judicial Review of Administrative Action in Canada (Toronto: Thomson Reuters, 2022), at § 15:61. Since the Montreal Convention has the force of law in Canada as its provisions have been incorporated into Canadian law by subsection 2(2.2) of the CAA, the appellants argue that Parliament must be presumed not to have authorized the adoption of delegated legislation pursuant to section 86.11 that would be inconsistent with the Montreal Convention.

[76] On the basis of these two presumptions, the appellants contend that section 86.11 of the CTA can and must be construed in a manner that is consistent with the Montreal Convention, and that any regulations regarding compensation should apply only to domestic itineraries. In adopting the impugned provisions of the Regulations, which define air carriers’ minimum obligations towards passengers in relation to both domestic and international flights, the appellants are of the view that the Agency went beyond the true scope of the authority conferred by section 86.11, when properly interpreted in light of the above-mentioned presumptions.

[77] The Attorney General retorts that the interpretative presumptions are of no assistance to the appellants, since they cannot be used to alter the clear language of section 86.11 which directs the Agency to make regulations that set minimum compensation for inconvenience in the case of delay, cancellation and denial of boarding for both domestic and international flights. To the extent that there is a conflict between the Regulations, as mandated by subparagraph 86.11(1)(b)(i) of the CTA and subsection 2(2.1) of the CAA, which incorporates the Montreal Convention, the former should therefore prevail.

[78] At this stage, and before turning to the merits of these arguments, it is worth reproducing section 86.11 in its entirety:

[79] The Attorney General submits that conflicts between subordinate legislation, such as the Regulations, and another statute (i.e. not the enabling statute) should be resolved using the rules for resolving conflicts between statutes. Because section 86.11 of the CTA is more specific and more recent than subsection 2(2.1) of the CAA, the former should accordingly prevail in case of conflict. In my view, this analogy is not entirely apposite.

[80] It is no doubt true that subsection 2(2.1) of the CAA which generally incorporates the provisions of the Montreal Convention insofar as they relate to “the rights and liabilities” of various actors involved in air transportation, is on its face less precise than the detailed obligations and compensation provided for by section 86.11 of the CTA. Subsection 2(2.1) of the CAA is only meant to be a short hand reference to the various provisions of the Montreal Convention dealing with the rights and liabilities of carriers, passengers and other persons covered by the Convention, not a full-fledged description of these rights and liabilities. For that, one must refer to the Convention itself. And the Convention can hardly be said to be less specific than the CTA.

[81] More importantly, form must not prevail over substance. What is at stake here is not merely a conflict between a regulation (and, by extension, its enabling statute) and any other statute, as the Attorney General would have it, but between a domestic regulation and an international treaty that has been ratified and incorporated in domestic law. The focus of the inquiry cannot be the implementing legislation, but the treaty itself. This is clearly not a case of conflict between an enabling statute and another statute.

[82] The real question to be resolved, therefore, is whether the wording of the Regulations is clear enough to prevail over the Convention in the event that a conflict is found between these two legal instruments. To address that question, the ordinary rules of conflict between statutes (or between statute and regulation) cannot be resorted to.

[83] As mentioned earlier, it is a well established principle of statutory interpretation that legislation is presumed to be in conformity with Canada’s international obligations under treaty or customary international law. For that reason, courts will strive to avoid constructions of domestic law that would result in violation of those obligations, unless it is unavoidable. To come to that conclusion, the statute must demonstrate “an unequivocal legislative intent to default on an international obligation”: Hape at para. 53.

[84] The Supreme Court expanded on the notion of conflicting legislation in Thibodeau, precisely in a context involving the Montreal Convention. In that case, the Supreme Court made it clear that a conflict will be found when two provisions are “incapable of standing together”, and when “the application of one law excludes the application of the other”: Thibodeau at paras. 94 and 96. The Court went on to say that overlapping provisions do not necessarily conflict, so long as they can both apply, unless there is evidence to the effect that one of the provisions was meant to provide an exhaustive declaration of the applicable law: Thibodeau at para. 98. Since interpretations which result in conflict should be eschewed as much as possible unless it is unavoidable, courts will be “slow to find that broadly worded provisions were intended to be an exhaustive declaration of the applicable law where the result of that conclusion creates rather than avoids conflict”: Thibodeau at para. 99.

[85] Applying these principles, the majority in Thibodeau found that the Montreal Convention does not permit an award of damages for breach of language rights during international carriage by air, and that to hold otherwise would be both contrary to the text and purpose of that convention, and would be inconsistent with a “strong international consensus” concerning its scope and effect: Thibodeau at para. 6. Accordingly, the majority interpreted the general remedial power under subsection 77(4) of the Official Languages Act, R.S.C. 1985, c. 31 (the OLA), as not authorizing an award of damages so as to avoid a conflict that was not inescapable. The Supreme Court thereby confirmed the decision of this Court that there is no conflict between the two regimes, since a court must not award damages in circumstances to which the Montreal Convention applies when determining whether a remedy is “appropriate and just” under subsection 77(4) of the OLA.

[86] The appellants submit that the same reasoning should be followed in the case at bar, and that the Regulations should be interpreted so as not to apply to international flights, thereby avoiding any conflict with the rules governing damage liability of international air carriers under the Montreal Convention. The Attorney General disputes this approach and claims that it is inapplicable in the context of the present case, because the language of subsection 86.11(1) is prescriptive and specific and does not allow for an interpretation that would eschew a conflict if there is indeed a discrepancy between the Montreal Convention and the Regulations. According to the Attorney General, Parliament could not have made its intent clearer (by using the word “shall”) when it required the Agency to make regulations that set minimum compensation for inconvenience in the case of delay, cancellation and denial of boarding for both domestic and international flights: CTA at section 86.11; Memorandum of Fact and Law of the Attorney General at para. 40. There is therefore no room in his view to read down section 86.11 along the lines suggested by the appellants.

[87] I do not find this argument entirely convincing. Parliament is presumed not to intend to legislate in breach of Canada’s international law obligations, and this presumption will only be displaced by clear and unequivocal wording. Such is not the case here. Quite to the contrary, subsection 78(1) of the CTA stipulates that the “powers conferred on the Agency by this Part [Part II - Air Transportation] shall be exercised in accordance with any international agreement, convention or arrangement relating to civil aviation to which Canada is a party”. That provision appears to have transformed a presumption of statutory interpretation into an explicit legislative constraint, and it clearly applies to the new regulatory powers conferred on the Agency by section 86.11, which also falls within Part II of the CTA. The fact that the Regulations adopted pursuant to that section are made after consulting with the Minister does not detract from the fact that they are adopted in the exercise of the powers conferred on the Agency by the CTA. In any event, every regulation made by the Agency under the CTA must receive the approval of the Governor in Council: subsection 36(1) of the CTA. Had Parliament intended to authorize the Agency to adopt regulations in breach of the Montreal Convention, section 86.11 could have explicitly exempted the Agency from the constraint of section 78.

[88] The Agency appears to share the view that the Regulations are meant to be respectful of Canada’s international obligations. In the Regulatory Impact Analysis Statement (2018) C Gaz 1 [RIAS] accompanying the Regulations, we find the following assertion relating to lost or damaged baggage:

Under the regime, liability limits established under the Montreal Convention for international travel would also apply to domestic flights, which would ensure consistency for travellers. This approach also recognizes that the regime cannot conflict with the Montreal Convention, which provides an exclusive scheme for international travel, a consideration that was emphasized by stakeholders generally...

[89] Curiously, we find no equivalent acknowledgement in the sections of the RIAS dealing with minimum compensation levels for delays and cancellations, denied boarding and tarmac delays. Yet one would be entitled to believe that if Canada cannot derogate from the Montreal Convention with respect to lost or damaged baggage, the same should be true for other heads of the liability regime put in place by the Regulations. What we find instead is that the standards of treatment and the minimum compensation levels for delays and cancellations are comparable to those established in the European Union regime and generally align with comments provided by the public and consumer advocates (Appeal Book, Vol. 2, at pp. 420-421).

[90] Finally, the Attorney General argues that if the Agency had only required carriers to pay the compensation provided for by the Montreal Convention for international flights, limiting the minimum compensation found in the Regulations to domestic flights, as advocated by the appellants, Parliament would have merely mandated the Agency to make regulations duplicative of the CAA. I am not convinced that the principle of statutory interpretation that no legislative provision should be interpreted so as to render it mere surplusage (R. v. Proulx, 2000 SCC 5, [2000] 1 S.C.R. 61 at para. 28) is weightier than the strong presumption of compliance with international law. The case law is replete with clear statements that courts, when choosing among possible interpretations, must avoid an interpretation that would put Canada in breach of its international obligations: see Sullivan at § 18.6 and case law referred to.

[91] In any event, paragraph 23(1)(b) of the Regulations illustrates how the Agency could have exercised its authority in a manner consistent with the Montreal Convention by distinguishing between international and domestic flights. Pursuant to that paragraph, the compensation the carrier must provide for lost or damaged baggage is, “in cases where the Carriage by Air Act [i.e. the Montreal Convention] applies, the compensation payable in accordance with that Act”. The Agency could have done the same in the case of flight cancellation, denied boarding or delay exceeding three hours. It is to be noted that paragraphs 86.11(1)(b) and (c) use the same language with respect to delay, cancellation, denial of boarding and lost or damaged baggage; in all cases, it mandates the Agency to prescribe the minimum compensation the carrier is required to pay.

[92] As for the argument that the interpretation suggested by the appellants would make section 86.11 superfluous, at least with respect to international air travel, it is not totally accurate. The Agency has various enforcement and oversight powers with respect to its regulations (see ss. 25, 33(1) and (4)), and may also sanction the contravention of its regulations with administrative monetary penalties (see s. 177 of the CTA). These powers are not available under the Carriage by Air Act.

[93] For all of the foregoing reasons, I am therefore of the view that in the event there is a conflict between the Regulations and the Montreal Convention, the former would have to be construed in a manner that is consistent with the latter. I can find nothing in section 86.11 or in its overall context suggesting that Parliament intended to require or authorize the making of regulations that are inconsistent with Canada’s international obligations.

(1) The Montreal Convention

[94] Because the Montreal Convention is at the heart of this appeal, it is essential to deal with it in some detail. My task is made easier by virtue of the fact that the Supreme Court extensively reviewed that Convention and set out some interpretative considerations less than ten years ago in Thibodeau. I shall therefore draw heavily on that decision in the following paragraphs of these reasons.

[95] The Montreal Convention was adopted in 1999 and it applies to all international carriage by air, of persons, baggage or cargo. The expression “international carriage” is defined in Article 1(2) and essentially encompasses any flight or combination of flights constituting a passenger’s journey of carriage by air (which may include flights between two points within Canada when combined with flights to or from Canada) that is intended to depart, arrive or stop in Canada, and depart, arrive or stop in another State party (or stop in any other country, should they depart and arrive in Canada).

[96] The Montreal Convention was meant to “modernize” its predecessor, the Warsaw Convention, which was signed in 1929 (see Preamble, Montreal Convention). Like the Warsaw Convention, its ultimate goal was to ensure the orderly development of international air transport operations and the smooth flow of passengers, baggage and cargo. Interestingly, the Montreal Convention also recognized in its Preamble “the importance of ensuring protection of the interests of consumers in international carriage by air and the need for equitable compensation based on the principle of restitution”. This new consumer protective approach is evidenced notably by the abandonment of limits to liability for death and bodily injury, and by restrictions on the possibilities for the carrier to exonerate itself.

[97] As noted in Thibodeau, the quid pro quo between limiting air carriers’ liability and facilitating consumers’ claims that was apparent in the Warsaw Convention, was maintained in the Montreal Convention. In a nutshell, these Conventions impose a strict liability regime on air carriers for accidents causing passenger bodily injury, passenger death, passenger delay, and delay, damage to or loss of baggage. Under these regimes passengers do not bear the burden of proving fault to establish the air carriers’ liability. In exchange, limits are imposed on the amounts payable by air carriers.

[98] It is worth at this stage to quote from the reasons of the majority in Thibodeau with respect to the threefold object of the Montreal Convention:

[41] The Warsaw Convention (and therefore its successor the Montreal Convention) had three main purposes: to create uniform rules governing claims arising from international air transportation; to protect the international air carriage industry by limiting carrier liability; and to balance that protective goal with the interests of passengers and others seeking recovery. These purposes responded to concerns that many legal regimes might apply to international carriage by air with the result that there could be no uniformity or predictability with respect to either carrier liability or the rights of passengers and others using the service. Both passengers and carriers were potentially harmed by this lack of uniformity. There were also concerns that the fledging international airline business needed protection against potentially ruinous multi-state litigation and virtually unlimited liability.

[99] The broad purposes were therefore the same, and the Montreal Convention also borrowed the same basic structure and constituent elements from the Warsaw Convention. For that reason, it is appropriate to refer to court decisions and commentary respecting the Warsaw Convention when interpreting the Montreal Convention (Thibodeau at para. 31).

[100] As previously mentioned, the Montreal Convention was ratified by Canada in 2002 and came into force in 2003. It has been incorporated into Canadian law through section 2 of the CAA, and its text is set out at Schedule VI of that statute. Of crucial importance for the debate before us is the fact that the Montreal Convention, much like the Warsaw Convention, contains only “certain rules” for international carriage by air, as its title indicates (Convention for the Unification of Certain Rules for International Carriage by Air). The most relevant provisions of the Montreal Convention for the purposes of this appeal are: 1) Articles 17 to 19, which clarify the kind of events for which a carrier is liable in case of damages (death and injury of passengers and damage to baggage in Article 17, damage to cargo in Article 18, and damage occasioned by delay in Article 19); 2) Articles 21 and 22, setting out the limits of the carrier’s liability linked to the claims addressed in Articles 17 to 19; and 3) Article 29, the so-called exclusivity clause. The relevant portions of these provisions read as follows:

[101] Needless to say, Article 29 is of paramount importance in the assessment of the appellants’ claim that the liability regime created by the Regulations is incompatible with the Montreal Convention, just as it was in determining whether the Thibodeau’s claim for damages under the OLA were precluded by the Convention. It is also critical for the overall scheme of the Convention.

[102] The Supreme Court gave an expansive interpretation of Article 29 after reviewing the text and purpose of that provision and the international jurisprudence. It first noted that “any action for damages” in the carriage of passengers, baggage and cargo are subject to the conditions and limitations set out in the Convention. To quote from the Supreme Court’s reasons, “[t]he provision could hardly be expressed more broadly; it applies to ‘any action for damages, however founded’” (Thibodeau at para. 37, emphasis in the original). It also points out that the language used in that clause is even broader than that used in the equivalent section of the Warsaw Convention, thereby signalling the State signatories’ intention to exclude any actions not specifically addressed in Articles 17 to 19. It could also have added that Article 29 explicitly excludes (in fine) any action for punitive, exemplary or any other non-compensatory damages.

[103] In terms of purpose, the Supreme Court found that two of the main purposes of the Convention, namely the creation of a uniform set of rules governing the liability of carriers in the context of international itineraries and the creation of limitations on air carrier liability, cannot be achieved without providing that the set of rules in relation to these matters are exclusive and bar resort to any other bases for liability in those areas: Thibodeau at para. 47. While the Convention does not purport to be comprehensive and to deal with all aspects of international air transportation, it is nevertheless exclusive within the scope of the matters it does address.

[104] Finally, a lengthy review of the international jurisprudence led the Supreme Court to conclude that it broadly confirms its previous understanding of the exclusivity principle. The Court then summarized its finding with respect to the Montreal Convention and its Article 29 in the following paragraph:

To sum up, the text and purpose of the Montreal Convention and a strong current of international jurisprudence show that actions for damages in relation to matters falling within the scope of Montreal Convention may only be pursued if they are the types of actions specifically permitted under its provisions. As the Supreme Court of the United Kingdom put it very recently, “[t]he Convention is intended to deal comprehensively with the carrier’s liability for whatever may physically happen to passengers between embarkation and disembarkation”.

Thibodeau at para. 57

[105] As important as this principle is, one must always bear in mind that the scope of the exclusivity principle is limited to the situations covered by Articles 17 to 19, since Article 29 is located in Chapter III (“Liability of the Carrier and Extent of Compensation for Damages”) where Articles 17 to 19 are found. The exclusivity principle does not apply to matters falling outside this Chapter, nor indeed to matters falling outside the Montreal Convention such as domestic flights, claims filed by employees, subcontractors or suppliers, or critically, claims not covered by the circumstances contemplated by Articles 17 to 19. It is within these confines that the exclusivity principle applies. As stated by the majority in Thibodeau, “[t]he Montreal Convention of course does not deal with all aspects of international carriage by air: it is not comprehensive. But within the scope of the matters which it does address, it is exclusive in that it bars resort to other bases for liability in those areas” (at para. 47).

[106] The decision actually reached by the Supreme Court in Thibodeau is instructive in that respect. At issue in that case were claims for damages in relation to the airline’s breaches of the Thibodeaus’ right to services in French. These claims were filed under section 77 of the OLA, which allows the Federal Court to award “such remedy as it considers appropriate and just in the circumstances” if it finds that a federal institution has failed to comply with the OLA. The airline defended against the claims by relying on the limitation on liability for damages set out in the Montreal Convention. The majority ultimately concluded that the Convention did not permit an award of damages for breach of language rights during international carriage by air, and that the general remedial power under the OLA to award appropriate and just remedies could not be read as authorizing Canadian courts to depart from the Convention. In coming to that conclusion, the majority offered precious clues as to the proper interpretation of the exclusivity principle that are most relevant for our purposes.

[107] In answer to the Attorney General’s defence that the Montreal Convention precluded their claims for damages, the appellants argued that they were not within the type of “action for damages” contemplated by Article 29 of the Convention. In support of that submission, the appellants argued that the violation of language rights was not an inherent risk to air carriage covered by Article 17, and that the Montreal Convention did not intend to govern statutory claims based on fundamental rights nor the public law damages they would give rise to.

[108] The Supreme Court gave short shrift to that argument. First, it found no indication in the text of Article 29 suggesting an intention to exclude certain types of claims for damages based on their legal foundation. Indeed, the terms “action” and “damages” demanded a broad interpretation, and to do otherwise would unduly limit the scope of the Montreal Convention (Thibodeau at para. 60). The Court found that what the appellants sought were effectively “damages for moral prejudice, pain and suffering and loss of enjoyment of their vacation”, and that:

Permitting an action in damages to compensate for “moral prejudice, pain and suffering and loss of enjoyment of [a passenger’s] vacation” that does not otherwise fulfill the conditions of Article 17 of the Montreal Convention (because the action does not relate to death or bodily injury) would fly in the face of Article 29. It would also undermine one of the main purposes of the Montreal Convention, which is to bring uniformity across jurisdictions to the types and upper limits of claims for damages that may be made against international carriers for damages sustained in the course of carriage of passengers, baggage and cargo. As the international jurisprudence makes clear, the application of the Montreal Convention focuses on the factual circumstances surrounding the monetary claim, not the legal foundation of it. To decide otherwise would be to permit artful pleading to define the scope of the Montreal Convention.

Thibodeau at para. 64

[109] The Supreme Court also reviewed the international jurisprudence and opined that accepting the appellants’ position would sail against the interpretation given to the exclusivity principle by foreign courts (Thibodeau at paras. 65-79). It noted that American district and appellate courts had rejected the validity of claims against air carriers based on fundamental rights under the Warsaw Convention, despite recognizing the stark distinction between tort and discrimination claims. It also remarked that a recent decision from the Supreme Court of the United Kingdom supported the view that exclusion under the Montreal Convention turned on whether the relevant claim was one for damages “related to the circumstances contemplated by the Montreal Convention, not on the alleged source of the obligation to pay them” (Thibodeau at para. 71).

[110] After having rejected the appellants’ argument that statutory claims for quasi-constitutional rights fall outside the Montreal Convention, the Supreme Court then addressed the Commissioner’s contention that the Convention does not apply to claims based on a statutory right that are more akin to administrative complaints mechanisms than private law proceedings. Again, the Court swiftly rejected this argument, on the basis that the relevant question is not the underlying source of the claim but rather the nature of the claim. It also dismissed the related argument based on a distinction between public law and private law damages.

[111] Most importantly, however, the Supreme Court expressly refused to consider whether the Montreal Convention excluded only claims for “individual damages” or if it also excluded claims for “standardized damages”. The Thibodeaus relied on jurisprudence from the ECJ, about which I will have more to say later, to argue that damage that is almost identical for every passenger, and for which redress may take the form of uniform damages, was not covered by the Montreal Convention. The Court refused to deal with this question, because the damages sought by the appellants were clearly individualized (Thibodeau at para. 81).

[112] It is against this backdrop that I will now address the appellants’ arguments that the impugned liability provisions of the Regulations, namely paragraphs 12(2)(d), 12(3)(d), 12(4)(d), and sections 19, 20 and 23, are in breach of the Montreal Convention.

(2) The minimum compensation for delay (paragraph 12(2)(d) and section 19 of the Regulations)

[113] In the appellants’ submission, delay in carriage by air falls squarely within the scope of Article 19 of the Montreal Convention, and Article 22 stipulates that the liability for passenger delay is limited to 5,346 Special Drawing Rights (SDR) from the International Monetary Fund (approximately CAD $9,350) per passenger. While proof of fault is not required, the passenger must prove that the delay they have experienced in international travel has caused compensable damage, as evidenced by the language “damage occasioned by delay” found in Article 19 and the fact that Article 29 expressly precludes liability for all forms of non-compensatory monetary relief.

[114] However, the Regulations at paragraph 12(2)(d) and subsection 19(1) impose automatic, fixed liability on carriers for the mere occurrence of delay in excess of three hours, without requiring proof of compensable loss. The appellants argued that because these provisions presume fault, injury and causation, they run afoul of Articles 19 and 22 of the Montreal Convention and breach its requirement of uniformity in the law governing liability in international air carriage. Moreover, imposing fixed compensation for delay that is wholly independent of the passenger’s individual circumstances contradicts sub-Article 22(1) of the Montreal Convention, which defines the liability of an air carrier for delay in terms of the actual damages suffered by the passenger. Additionally, the appellants submit that the liability imposed by paragraph 12(2)(d) and subsection 19(1) of the Regulations are not truly compensatory, as they are fixed and automatic without regard to the actual damage sustained nor to the actual period of delay, and because they vary depending on the characterization of the relevant air carrier as “large” or “small”. As such, they contradict Article 29, which excludes “punitive, exemplary or any other non-compensatory damages”.

[115] Furthermore, the appellants submit that the liability regime under the Regulations prevents air carriers from relying on the “due diligence” defence provided for in the Montreal Convention. This defence provides that a carrier can avoid liability for damage by proving that they took all measures that could reasonably be required to avoid the damage or that it was impossible to take any such measures. Under the Regulations, air carrier liability for delay is imposed where the delay is within the carrier’s control but is not required for safety purposes, thereby imposing liability in circumstances where the carrier would be exonerated under the Montreal Convention.

[116] To illustrate the foregoing, the appellants gave the example of a delay due to mechanical malfunction. The Regulations (at ss. 1(1)) exclude from the definition of “mechanical malfunction” mechanical problems that reduce passenger safety but that have been “identified further to scheduled maintenance undertaken in compliance with legal requirements”. Such problems are not considered “outside the carrier’s control” nor “required for safety purposes”, and would therefore be subject to liability under paragraph 12(2)(d) of the Regulations if they occasion delay, even if the air carrier had a sound defense and took all reasonable measures to avoid liability for delay. All of the preceding arguments, of course, apply to the liability imposed by subsections 19(1) and (2) of the Regulations.

[117] The Attorney General responds that the impugned provisions of the Regulations do not conflict with the Montreal Convention because neither the CTA nor the Regulations provide for an action for damage, and because in any event the minimum compensation required by the Regulations falls outside the scope of Article 19 of the Montreal Convention. The Attorney General further submits that this interpretation of the Montreal Convention is confirmed by the state practice. I will deal first with the true nature of the compensatory scheme put in place by the CTA and the Regulations and then with the state practice argument.

(3) The true nature of the compensatory scheme

[118] In conformity with the rules for treaty interpretation set out in the Vienna Convention, one must start with the text of Article 29 and with the Montreal Convention as a whole to understand the scope of the exclusivity principle. Article 29 speaks of “any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise”, and uses language that pertains to judicial proceedings such as by referring to the persons “who have the right to bring suit”, and to “any such action”. Article 33(1) similarly refers to “[a]n action for damages must be brought...before the court of the domicile of the carrier [...] or before the court at the place of destination”. Article 35(1) specifies that the right to damages shall be extinguished “if an action is not brought within a period of two years”, and Article 35(2) goes on to state that the method of calculating limitation periods “shall be determined by the law of the court seised of the case”. Finally, Article 22(6) indicates that the prescribed limits “shall not prevent the court from awarding [...] court costs and of the other expenses of the litigation”.

[119] There is no doubt that the expression “action for damages” in Article 29 of the Montreal Convention must be understood in a broad sense. The notion of damages, in particular, cannot be left to the vagaries of domestic law; as noted by the Supreme Court in Thibodeau, “the scope of the exclusivity principle in the Montreal Convention cannot be modeled on national definitions of damages” (at para. 77). This is also why the Supreme Court reiterated that the focus of the inquiry must be the factual circumstances giving rise to the claim, not the alleged legal foundation of the claim (Thibodeau at paras. 66, 71 and 75). This is precisely why the Court rejected the Thibodeaus’ argument that there was a distinction between public law and private law damages. As a result, the Court rejected their claim for breaches of quasi-constitutional statutes because it did not fall within the purview of the Montreal Convention.

[120] As much as we must strive to give Article 29 its fullest meaning, consistent with the broad language in which it is couched, and thereby avoid “artful pleading to define the scope of the Montreal Convention” (Thibodeau at para. 64), the Attorney General submits that the Convention was meant only to regulate actions in courts. The Attorney General argues that the use of the words “action” and “damages” in the Convention must still be accounted for and relies on the definitions in Black’s Law Dictionary (Brian A. Garner, ed., Black’s Law Dictionary, 11^th ed. (St Paul (Minn): Thomson Reuters, 2019), and in particular on its definition of “action” (defined as “any judicial proceeding, which, if conducted to a determination, will result in a judgment or decree”) and of “damages” (defined as “money claimed by, or ordered to be paid to, a person as compensation for loss or injury”).

[121] This understanding of Article 29 appears to be borne out by the Travaux Préparatoires leading to the Montreal Convention. When asked to clarify the scope of that provision by the Delegate from Sri Lanka, the Chairman indicated that “the scope of the Convention would govern the regulation of the types of actions which could be brought before the Courts”. He went on to say:

The purpose behind Article 28 [renumbered 29 in the final version] was to ensure that, in circumstances in which the Convention applied, it was not possible to circumvent its provisions by bringing an action for damages in the carriage of passengers, baggage and cargo in contract or in tort or otherwise. Once the Convention applied, its conditions and limits of liability were applicable. (emphasis added)

ICAO, International Conference on Air Law, Montreal, 10-28 May 1999, Vol. 1, Minutes, 9775-DC/2, at p. 235

[122] It may be that in some legal systems, an action for damage may not necessarily involve judicial proceedings at the behest of a litigant. Indeed, Article 33(4) seems to leave questions of procedure to domestic law. In the common law world and in the civil law tradition, however, courts are traditionally called upon to rule on such remedies. Be that as it may, and whether judicial proceedings are an essential component of Article 29, the proper focus must be on what the claim aims to achieve, or what it seeks to redress, not on its legal foundation or how it is brought. It is at this juncture, in my view, that the scheme of the CTA and the Regulations part with the action for damages envisioned by the Montreal Convention.

[123] The scheme of the Regulations with regards to air carrier liability is of an entirely different nature than what was contemplated by the Montreal Convention. First, and most importantly, the carrier’s liability for delay, as contemplated by Article 19 of the Convention, is meant to address individualized damages. Even if a passenger does not bear the burden of proving fault or causation to establish the air carrier’s liability under the Montreal Convention, individualized damages must still be established before an air carrier can be held liable for compensation. Under the Regulations, the amount of compensation to which a passenger is entitled is fixed by the Regulations and is the same for all the passengers on a particular flight, and it is payable as soon as certain objective conditions are met. It is meant to compensate for the inconvenience that delay causes, in and of itself and independently of any demonstrable loss due to a particular situation. Contrary to the Convention, which is concerned with the period of time after the delayed arrival, the Regulations cover the time period before the delayed arrival.

[124] It is telling, that the amount of compensation fixed by the Regulations is not linked to the price of the ticket purchased, nor does it depend on the passenger’s travel purposes (business or personal). To that extent, it is closer to a consumer protection scheme than to an action in damage. Indeed, the RIAS makes it clear that the objective of the Regulations is “to normalize the minimum standard across all carriers operating in Canada to ensure that the obligations on carriers are clear, concise and easily understood by carriers and passengers” (RIAS at 4893).

[125] Prior to the coming into force of the Regulations, the Air Transportation Regulations (S.O.R./88-58) prescribed the topics that carriers had to address in their terms and conditions pursuant to paragraph 86(1)(h) of the CTA, but did not describe the content of these provisions. The mandate to review the content of the terms and conditions was left to the Agency. The review of these provisions therefore proceeded on a carrier-by-carrier and tariff-by-tariff basis.

[126] With the advent of the Regulations, the content of the terms and conditions that have to be covered by the tariffs of all carriers are uniform and standardized. Instead of leaving it to each carrier to determine the compensation for flight disruption within the carrier’s control based on criteria described in a carrier’s tariff or at the discretion of a carrier, the Regulations establish minimum levels of compensation with a view to enhance clarity and to better protect passengers. These minimal obligations pertain not only to delays, but also to denied boarding, lost or damaged baggage, transportation of musical instruments, seating of children under the age of 14 years, and unaccompanied minors.

[127] The other important characteristic of the Regulations that sets them apart from an action for damages is their enforcement mechanism. The minimum compensation required by the Regulations is meant to be enforced by the Agency through administrative measures. It is noteworthy that even before the advent of standardized minimum tariff introduced by the Regulations, the Agency was empowered to review individual carriers’ terms and conditions of carriage, primarily on the basis of individual complaints, to ensure that they were clear, just, and reasonable (s. 111 of the Air Transportation Regulations).

[128] Pursuant to section 85.1 of the CTA, the Agency shall review any complaint made by a person with respect to any issue dealt with in that part of the CTA (which obviously includes the terms and conditions set out in tariffs). If an air carrier refuses to compensate a passenger in accordance with the Regulations, for example, the Agency may attempt to resolve the complaint. Air travel complaints typically first follow an alternative dispute resolution process, whereby Agency staff will try to resolve the complaint through facilitation or mediation.

[129] If this informal process does not work to the complainant’s satisfaction, the complainant may then ask for adjudication before a panel of Agency Members (ss. 37 and 85.1(3) of the CTA). This power is consistent, and indeed rooted, in the Agency’s jurisdiction to determine whether a carrier has applied the terms and conditions set out in its tariff (see s. 67.1 of the CTA for domestic services and s. 113.1 for international services). It must be remembered that Parliament has deemed the obligations established by the Regulations made under subsection 86.11(1) to form part of the terms and conditions set out in the carrier’s tariffs (ss. 86.11(4)), and that the Regulations were so promulgated (see also s. 122 of the Air Transportation Regulations).

[130] If the Agency finds that a carrier has failed to apply its tariff, it can order the carrier to take the corrective measures that the Agency considers appropriate, which could include the payment of the applicable amount set out in the Regulations, and compensation for any expense incurred by the passenger (s. 113.1 of the Air Transportation Regulations and subpara. 86(1)(h)(iii) of the CTA). Interestingly, the Agency has also been granted discretion to make its decisions applicable to some or all passengers affected by a flight that is the subject of a complaint concerning the delay, cancellation and denied boarding provisions of the Regulations (subpara. 86(1)(h)(iii.1).

[131] Aside from its oversight role with respect to the application of tariff provisions, the Agency may also enforce the Regulations through administrative monetary penalties. Pursuant to subsection 117(1) of the CTA, the Agency may designate any provisions of the CTA or any regulation as a provision, which if contravened, is a violation under the CTA. The Agency exercised this power at section 32 of the Regulations by designating significant portions, including the compensation provisions at issue in this appeal, as subject to administrative monetary penalties (see Schedule to the Regulations). Administrative monetary penalties are issued by designated enforcement officers named under the CTA (s. 178), and notices of violation are reviewable before the Transportation Appeal Tribunal of Canada (ss. 180.3 to 180.6).

[132] It appears to me, therefore, that the minimum compensation scheme set out in the CTA and the Regulations is markedly different from an action for damages. Not only is it based on a form of standardized and uniform compensation with a view to providing passengers with clear and transparent information and protection, and to avoiding the haphazard application of the various tariffs applicable to the carriers, but it is also enforced through an administrative mechanism rather than through an action for damages: see, by way of analogy, Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402, 413 D.L.R. (4th) 284 at paras. 109-119. Such a scheme provides benefits to certain persons subject to objective conditions which are independent of any cause of action a person may have. Those benefits are not intended to diminish an injured person’s damage claim, to which the usual principles of causation, remoteness and mitigation will apply.

[133] Even though the possibility of filing an action in court to recover the amount set out in the Regulations is not excluded by the CTA, the fact remains that in most instances the Regulations will be implemented through an administrative process for obvious reasons (costs, delay, simplicity of the proceedings). In any case, even in those rare instances where a passenger might want to institute an action in court, it would still not be an action for damages since the compensation is fixed and bears no relationship to the actual damage incurred but rather hinges on certain conditions being met.

[134] This is precisely what distinguishes the action launched by the Thibodeaus in the Federal Court from the present matter. As noted by the Supreme Court, the Thibodeaus’ claims were clearly an action for damages within the meaning of Article 29 of the Montreal Convention, as their claim was for damages for injuries suffered in the course of an international flight (Thibodeau at para. 61). Indeed, their pleading revealed that they were claiming $25,000 in damages and $250,000 in punitive and exemplary damages. As such, their claim did not respect the conditions and limits of Article 17 of the Montreal Convention, and were therefore barred by Article 29. As the Supreme Court made clear, to decide otherwise would undermine one of the main goals of the Montreal Convention, “which is to bring uniformity across jurisdictions to the types and upper limits of claims for damages that may be made against international carriers for damages sustained in the course of carriage of passengers, baggage and cargo” (Thibodeau at para. 64; emphasis added). As noted earlier, the Supreme Court was very cautious not to pronounce on the Thibodeaus’ further argument that the Montreal Convention excludes only individual damages and not claims for standardized damages, because it was not relevant to the issue in that case. Once again, the claims of the Thibodeaus were for damages on an individual basis, and their argument based on standardized damages could not assist them.

[135] This brings me to the international jurisprudence, and especially to the case law of the ECJ, to which the Supreme Court referred without commenting on it. The jurisprudence interpreting Article 19 of the Montreal Convention, in the context of its Article 29, comes in vast majority from the ECJ for the simple reason that the European Union was first to promulgate several consumer protection oriented regulations that address a variety of airline passenger issues (e.g. flight delay, cancellation, and denied boarding). The first such regulation to attract judicial scrutiny was Regulation 261/2004, which requires airlines to grant financial compensation to passengers in the event of denied boarding, flight delay, or flight cancellation, to assist them in revising their travel plans by giving them the choice between rescheduling the ticket or a refund, and to pay for their board and lodging.

[136] In a complaint brought before the ECJ, IATA argued that Regulation 261/2004 violated the Montreal Convention. The Court rejected that claim, and took the position that excessive delay causes two types of damages: (1) “damage that is almost identical for every passenger, redress for which may take the form of standardized and immediate assistance or care for everybody concerned”; and (2) “individual damage, inherent in the reason for travelling, redress for which requires a case-by-case assessment of the damage caused and can consequently only be the subject of compensation granted subsequently on an individual basis” (International Air Transport Association and European Low Fares Airline Association v. Department for Transport, C-344/04, [2006] ECR I-443 at para. 43 [IATA et al.]). The Court reasoned that the Regulation addressed the former, while the Montreal Convention addressed the latter. Another way to distinguish Regulation 261/2004 and the Montreal Convention is that the Regulation works at an earlier stage, namely prior to departure of the flight, whereas the system created by the Montreal Convention applies after the flight has been operated. In two critical paragraphs of that decision, the Court stated:

It is clear from Articles 19, 22 and 29 of the Montreal Convention that they merely govern the conditions under which, after a flight has been delayed, the passengers concerned may bring actions for damages by way of redress on an individual basis, that is to say for compensation, from the carriers liable for damage resulting from that delay.

It does not follow from these provisions, or from any other provision of the Montreal Convention, that the authors of the Convention intended to shield those carriers form any other form of intervention, in particular action which could be envisaged by the public authorities to redress, in a standardised and immediate manner, the damage that is constituted by the inconvenience that delay in the carriage of passengers by air causes, without the passengers having to suffer the inconvenience inherent in the bringing of actions for damages before the courts.

IATA et al. at paras. 44-45

See also: Opinion of Advocate General Geelhoed, delivered on 8 Sept. 2005, C-344-04 at paras. 50-53

[137] That decision has been denounced for a number of reasons. Aside from the criticism that the right to compensation contained in Article 7 of Regulation 261/2004 (which deals with flight cancellation) has been improperly read into Article 6 (which deals with delay), some have argued that the compensation for delay is not standardized but particularized, to the extent that it depends upon the distance flown and the time of delay. It has also been suggested that because the penalties imposed for delay are paid to the passengers rather than to a governmental authority, Regulation 261/2004 is closer to an effort to compensate passengers for the damages they incurred rather than to an administrative fine for violating consumer protection regulations. Whether they are compensatory or punitive, critics say, they run afoul of Article 19 and 29 of the Montreal Convention, because the only actions for damages that can be brought are subject to the conditions and limits set out in the Convention and any other punitive, exemplary or other non-compensatory damages are prohibited: see, for example, Paul Stephen Dempsey & Svante Johansson, “Montreal v. Brussels: The Conflict of Laws on the Issue of Delay in International Air Carriage” (2010) 35:3 Air & Space L 207, at pp. 218 ff.

[138] Despite these criticisms, the ECJ reaffirmed that Regulation 261/2004 does not conflict with Article 19 of the Montreal Convention in Wallentin-Hermann v. Alitalia, C-549/07 [2008] ECR I - 11065 and in Sturgeon. In the latter case, the ECJ ruled that delays exceeding three hours must be treated as cancellations for compensation purposes under Regulation 261/2004, even though delay was deliberately left outside the scope of the application of Article 7. By bringing delays within the situations in which compensation can be claimed under the Regulation, the Sturgeon case gave new impetus to the exclusivity debate of the Montreal Convention.

[139] The ECJ confirmed the Sturgeon judgment and Regulation 261/2004’s consistency with the Montreal Convention in Nelson and others v. Deutsche Lufthansa AG, TUI Travel and others v. Civil Aviation Authority, Joined cases C-581/10 & C-629-10, [2012] ECR I-295 where it explained that a loss of time cannot be categorized as “damage occasioned by delay” (at para. 55) within the meaning of Article 19 and therefore cannot come within the scope of Article 29 of the Montreal Convention. First, a loss of time is not damage arising as a result of delay, but rather an inconvenience, just like other inconveniences resulting from denied boarding, flight cancellation and long delay. Second, since a loss of time is suffered identically by all passengers whose flights are delayed, their redress can be effected by means of a pre-determined amount, without the necessity of individual assessments. Finally, there is not necessarily a causal link between the actual delay and the loss of time considered relevant for the purpose of giving rise to a right to compensation or calculating the amount of that compensation. For those reasons, the loss of time inherent in a flight delay does not fall within the “damage occasioned by delay” envisaged by Article 19 of the Montreal Convention and does not come within the exclusivity principle of Article 29 of that Convention. Much like previous decisions, this case drew a fair amount of negative commentary: see, for example, Peter Haanappel, “Compensation for Denied Boarding, Flight Delays and Cancellation Revisited” (2013) 62 German J of Air and Space L 38, at pp. 48-50; Robert Lawson and Tim Marland, “The Montreal Convention 1999 and the Decisions of the ECJ in the Cases of IATA and Sturgeon – in Harmony or Discord?” (2011) 36:2 Air & Space L 99; Sonja Radosevic, “CJEU’s Decision in Nelson and Others in Light of the Exclusivity of the Montreal Convention” (2013) 38:2 Air & Space L 95; Charlotte Thijssen, “The Montreal Convention, EU Regulation 261/2004 and the Sturgeon Doctrine: How to Reconcile the Three?” (2013) 12:3 Issues in Aviation L & Pol’y 413.

[140] The reasoning of the ECJ was followed by a number of national courts, notably by the Court of Appeal of England and Wales (see, for example, Dawson v. Thomson Airways Ltd., [2014] EWCA Civ 845 and Graham v. Emirates, [2017] EWCA Civ 1530) and by the French Court of Cassation (see, for example, Cass Civ 1ère, 15 June 2017, [2017] no. 16-19.375; Cass Civ 1ère, 22 February 2017, [2017] no. 15-27.809; Cass Civ 1ère, 25 March 2015, [2015] no. 13-24.431; Cass Civ 1re, 14 March 2018, [2018] no. 17-15.378). The ECJ itself recently reiterated the distinction made in its earlier jurisprudence between standardized damages compensable under Regulation 261/2004 and individualized damages requiring a case-by-case assessment in Radu Lucian Rusu and Oana Maria Rusu v. SC Blue Air- Airline Management Solutions SRL, C-354/18, [2019] ECR I-319.

[141] On the basis of that case law, therefore, it would appear that a regulatory regime providing minimum compensation for the inconvenience inherent in a delay, which essentially consists of a loss of time identical for all passengers, can operate side by side with Article 19 of the Montreal Convention, which is meant to cover liability for the individual damage occasioned by the delay and which necessarily varies from one passenger to another. Both regimes are compensatory in nature, even if they do not compensate for the same kind of loss. The two regimes also differ in two important respects. First, Article 19 creates a strict liability regime, whereby passengers do not have to show fault on the part of the carrier but must prove their individual damage, whereas Regulation 261/2004 provides for a fixed and standardized amount of damage depending on the length of the delay instead of proof of damage. Second, the carriers can exonerate themselves by proving that they took all reasonable measures that could avoid the damage under Article 19 of the Montreal Convention, whereas no such exoneration is contemplated by Regulation 261/2004.

[142] It is obvious from a reading of the RIAS that the Regulations were adopted with a view to emulating and aligning with the European Union regime. While they are not identical, they build upon the same framework and share the same rationale of better protecting passengers and compensating them for inconvenience resulting from the disruption of their flight schedules. As previously mentioned, the Supreme Court expressly left open the question of whether the Montreal Convention extends to bar claims for standardized compensation, as it did not have to rule on that issue to decide the Thibodeaus’ claims. It nevertheless considered the cases decided under both the Warsaw Convention and the Montreal Convention (many of which I just referred to), and stated emphatically that “[i]n light of the Montreal Convention’s objective of achieving international uniformity, we should pay close attention to the international jurisprudence and be especially reluctant to depart from any strong international consensus that has developed in relation to its interpretation” (Thibodeau at para. 50). I therefore draw further support from that jurisprudence for my conclusion that the Regulations, far from being incompatible with the Montreal Convention, are more properly characterized as complementary to it and thus do not infringe on its exclusivity principle.

(a) The minimum compensation for cancellation and denied boarding

[143] Paragraph 12(3)(d) and section 19 of the Regulations impose automatic, fixed liability for flight cancellation identical to that for flight delay in circumstances that are “within the carrier’s control”, but are not required for “safety purposes”. In a similar fashion, paragraph 12(4)(d) and section 20 provide for automatic, fixed liability for denial of boarding in similar circumstances. Denial of boarding is defined at subsection 1(3) of the Regulations as the situation where “a passenger is not permitted to occupy a seat on board a flight because the number of seats that may be occupied on the flight is less than the number of passengers who have checked in by the required time, hold a confirmed reservation and valid travel documentation and are present at the boarding gate at the required boarding time”. In both instances, the quantum of liability is tiered as a function of delay in arrival time.

[144] The appellants concede that the Montreal Convention does not explicitly address carrier liability for cancellation or denial of boarding, but nevertheless argue that these two occurrences fall within its scope. They point out that the term “delay” is not defined, and rely on the case law interpreting and applying the Montreal Convention and the Warsaw Convention to argue that only total non-performance of the contract of carriage by air falls outside the scope of these Conventions. The appellants submit that where, despite a cancellation or denial of boarding, the carrier ultimately performs the contract of carriage, it falls within the category of “delay”. Yet, the Regulations impose liability for cancellation and denial of boarding based on the scheduled and actual arrival time, using identical language and structure to the delay provisions. It is thus evident, the appellants contend, that paragraphs 12(3)(d), 12(4)(d), and sections 19 and 20 of the Regulations seek to impose liability on air carriers that relates to delay, a matter which in their view falls within the Montreal Convention’s uniform and exclusive liability regime.

[145] This argument cannot succeed. Even if flight cancellation or denial of boarding could be assimilated to delay, the compensation scheme set out in paragraphs 12(3)(d), 12(4)(d), and sections 19 and 20 would not be incompatible with the Convention for the reasons already given above with respect to the compensation for delay.

[146] Moreover, I agree with the Attorney General that cancellation, denial of boarding and delay are three different concepts, both factually and legally. Cancellation obviously results in the non-performance of the contract of carriage. The same is true for a denial of boarding: while the traveller may eventually get to his or her destination, it will not be pursuant to the original ticket/contract, such that it also represents non-performance of that contract. On the other hand, delay is better characterized as the late performance of the contract. The fact that the amount of compensation is established on the basis of the length of the delayed arrival does not change the nature of the circumstances that mandated the compensation and does not transform a cancellation or denial of boarding into a delay. As a matter of fact, passengers can opt for a refund if the alternate travel arrangement does not accommodate their needs and the cancellation or denial of boarding is within the carrier’s control. In that scenario, the compensation is fixed: Regulations, subsections 17(2) and 19(2). I note, parenthetically, that the passenger who has been denied boarding and who has opted for a refund does not seem to be entitled to a compensation; there is no equivalent to paragraph 19(2) in section 20. Compensation for cancellation and denial of boarding will be determined according to the length of time between scheduled and actual arrival only if alternate travel arrangement takes place: Regulations, subsections 19(1) and 20(1).

[147] I am of the view, therefore, that the minimum compensation required by the Regulations for cancellation and denied boarding falls outside the scope of Article 19 of the Montreal Convention.

(b) The minimum compensation for lost or damaged baggage

[148] The appellants submit that the baggage liability provisions under the Regulations contravene the Montreal Convention. They submit that Article 17(2) of that Convention provides that air carriers are liable for damage sustained by passengers in the event of destruction or loss of, or damage to checked baggage caused by an event occurring while the baggage is in the charge of the air carrier. Moreover, Article 19 imposes liability for damage occasioned by delay in the carriage of baggage. This liability is capped at Article 22(2) to a maximum of 1,288 SDR on proof of loss, unless the passenger made a special declaration of value when the baggage was handed over to the air carrier. The Montreal Convention therefore caps liability for the damages actually sustained, and the loss must be demonstrated.

[149] However, subsections 23(1) and (2) of the Regulations set the carrier’s liability for lost or damaged baggage at an amount equal to the sum of the fees paid for that baggage and the compensation payable under the Carriage by Air Act (i.e. under the Montreal Convention). As a result, the liability imposed by the Regulations will in many instances exceed the cap set by Article 22(2) of the Montreal Convention.

[150] Moreover, subsection 23(2) of the Regulations imposes liability for temporary loss of baggage for “21 days or less”, which the appellants submit should be more correctly referred to as “delay” rather than “temporary loss”. Framed as such, they submit, this liability not only contravenes the exclusivity principle enshrined in the Convention because its Article 19 imposes liability for delay of baggage, but it is also ultra vires of its enabling legislation. Section 86.11 of the CTA does not authorize the making of regulations in respect of delay of baggage, and the Agency cannot trespass beyond that provision’s limitations by using the label “temporary loss” to regulate delay.

[151] I agree with the Attorney General that requiring carriers to reimburse baggage fees does not contravene the Montreal Convention. While the baggage provisions in the Regulations do not explicitly seek to compensate passengers for the “inconvenience” of the occurrence, as do the provisions relating to delay, cancellation and denied boarding provisions, they achieve the same purpose: providing standardized and immediate assistance that is almost identical for every passenger. Even if all passengers do not lose their baggage or have their baggage damaged at the same time, subsection 23(1) of the Regulations treats each occurrence in an identical manner, one which does not account for individualized loss.

[152] Moreover, baggage fees do not represent any sort of individualized loss or harm, and they are not part of the value of the baggage. The fees remain the same for each passenger, depending on the number of bags. Interpreted within the context of the statutory scheme, both subsection 23(1) of the Regulations and the authorizing paragraph 86.11(1)(c) of the CTA implicitly aim to compensate passengers for the inconvenience of lost or damaged baggage.

[153] That being said, I agree with the appellants on the second point. The explicit text of paragraph 86.11(1)(c) of the CTA states that the baggage regulations must relate to “lost or damaged” baggage, and do not expressly provide for compensation in the event of a “temporary loss” of baggage. The Attorney General claims that the ordinary meaning of the words “lost baggage” encompasses baggage that cannot be located by an air carrier upon arrival, even if such baggage is found a few days later by the air carrier. With all due respect, I do not think this interpretation is possible in light of the context and purpose of the CTA and its paragraph 86.11(1)(c).

[154] The Montreal Convention entitles passengers to damages for lost or damaged baggage, in addition to delay in the carriage of baggage. Thus, it distinguishes between baggage that is “lost” from that which is “delayed”, as the appellants suggest. Given that dichotomy, it is important to underscore Parliament’s choice to provide for regulations relating to “lost or damaged” baggage, but not for “delayed” baggage. Interpreting “lost baggage” in paragraph 86.11(1)(c) to include baggage delay would be inconsistent with the clear distinction drawn by the Montreal Convention between these two terms, without any good reason for doing so. I also note that the objective of the Regulations with respect to lost or damaged baggage, according to the RIAS, was apparently to extend the application of the Montreal Convention regime to domestic travel, and to require the reimbursement of any baggage fees. In my view, this is quite telling as it says nothing about temporary loss.

[155] In light of the foregoing, I agree with the appellants that Parliament only intended to authorize the Agency to regulate minimum compensation relating to lost or damaged baggage, but not for delayed baggage. Subsection 23(2) of the Regulations should therefore be held ultra vires the CTA.

(4) The state practice

[156] Pursuant to Article 31 of the Vienna Convention, a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose. Paragraph 31(3)(b) provides that “any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation” shall be taken into account in the interpretation of a treaty. This is to be contrasted with the supplementary means of interpretation enumerated in Article 32, such as the preparatory work of the treaty and the circumstances of its conclusion, which may be used to confirm the meaning resulting from the application of Article 31. As a result, resort to state practice is not contingent on the existence of an ambiguity in the text of a treaty; on the contrary, it is an integral part of the interpretation process and is on a par with the words of the treaty and its context: Richard Gardiner, Treaty Interpretation, 2nd ed., (Oxford: Oxford UP, 2015) at p. 253 and 347; “Draft conclusions on subsequent agreements and subsequent practice in relation to the interpretation of treaties, with commentaries” in Report of the International Law Commission, UNILC, 70^th Sess, Supp. No. 10, UN Doc A/73/10 (2018) at p. 20; Yugraneft at para. 21; Febles at para. 90. In both their written and oral submissions, the parties have devoted much time and effort to that notion of state practice, either to show (from the Attorney General’s perspective) that the state practice confirms its interpretation of the Montreal Convention or (from the appellants’ point of view) that the evidence adduced by the Attorney General does not establish such a practice.

[157] There is no doubt that the practice of the parties to a treaty can be quite useful in clarifying the meaning to be given to the treaty, and may result in narrowing, widening or otherwise determining the range of possible interpretations. This is important because it constitutes objective evidence of the understanding of the parties with respect to the treaty that they signed: see Case Concerning Kasikili/Sedudu Island (Botswana/Namibia), [1999] ICJ Rep 1045 at para. 49, quoting from Yearbook of the International Law Commissions 1966, Vol. II (New York: UN, 1967) at para. 15 (A/CN.4/SER. A/1966/Add. 1). As noted by the authors, state practice can include any conduct—actions or omissions, including silence—of a party, whether in the exercise of its executive, legislative, judicial or other functions: see Oliver Dörr & Kirsten Schmalenbach, Vienna Convention on the Law of Treaties: A Commentary, 2nd ed. (Berlin: Springer, 2018), at p. 597; Richard Gardiner, Treaty Interpretation, 2nd ed., (Oxford: Oxford University Press, 2015), at p. 257; Report of the International Law Commission, supra, at pp. 31 and 37; Giovanni Distefano, “La pratique subséquente des états parties à un traité” (1994) 40 Annuaire français de Dr Intl 41, at p. 48. Needless to say, the practice must be generalized, consistent and uniform; subsequent practice which does not fall within this narrow definition will, at best, constitute a supplementary means of interpretation within the meaning of Article 32: see, inter alia, Case Concerning Kasikili/Sedudu Island, supra at paras. 79-80; Loizidou v. Turkey (Preliminary Objections) (1995), No. 15318/89, ECHR (Ser A) No. 310 at paras. 79-81; Mustafa Kamil Yasseen, “L’interprétation des traités d’après la Convention de Vienne sur le droit des traités” in Collected Courses of the Hague Academy of International Law, Vol. 151 at p. 52; Ian Sinclair, The Vienna Convention on the Law of Treaties, 2^nd ed. (Manchester: Manchester UP, 1984), at p. 137-138.

[158] In support of its position that state practice confirms its interpretation of the Montreal Convention, the Attorney General has tendered the expert affidavit evidence of Professor Vincent Correia. Professor Correia holds a Doctorate in law and has published extensively in the field of European and international air and space law. He currently teaches at the University of Paris-Saclay (France) and at the University of Leiden (Netherlands). In his expert report, he looked at various legal regimes adopted throughout the world to protect the rights of the passengers.

[159] He first focuses on the legal regime of the European Union because it was in Europe that the movement aimed to better protect air passengers, which started in 1991. In 2004, Regulation (EC) No. 261/2004, which I have already mentioned, expanded the initially proposed rights to establish “minimum rights for passengers when: (a) they are denied boarding against their will; (b) their flight is cancelled; (c) their flight is delayed” (Regulation 261/2004, supra, Article 1(1)). This Regulation applies to all carriers, whether European or not, that depart from an airport in the Union, as well as European carriers that depart from a third state to a European Union destination. Passengers who were denied boarding or whose flight was cancelled are entitled to choose between being reimbursed and being re-routed, and they are entitled to be adequately cared for and to compensation in the form of a lump sum payment. Passengers whose flight was delayed are also entitled to various types of compensation, which vary depending on the length of the delay. In the event of a cancellation or a delay that was longer than three hours, airlines may be exempted from paying compensation if they can prove that there were extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken. For delayed, lost or damaged baggage, the provisions of the Montreal Convention apply. Under the Regulation, recourse is governed by the rules of procedure of each member state.

[160] This regime is not only applicable in the 27 European Union member states, but has also been implemented in the four member states of the European Free Trade Association, and in the five member states of the European Common Aviation Area which are not otherwise members of the European Union or of the European Free Trade Association, and in a few other neighbouring states of the European Union. In practice, 39 states therefore apply Regulation 261/2004 (except for the right to monetary compensation in the case of delays of more than three hours, which derives from the Sturgeon decision and not from Regulation 261/2004). Other states have also adopted internal legislation broadly similar to Regulation 261/2004 without taking the European Union regime as a model.

[161] In his expert report, Professor Correia also summarizes the legal regime of a number of other states in the Middle East, the Americas, Africa, and Asia Pacific. On the basis of his extensive review, he draws a number of conclusions, chief among which is the fact that 73 state parties to the Montreal Convention (excluding Canada) have established a local regime requiring standardized compensation of air passengers in the case of cancellation and/or denial of boarding; of those states, 45 also require compensation in the case of delay. These regimes vary in some respects. For example, the basis for establishing the amount of compensation varies: compensation is sometimes a fixed amount based on the length of the delay or the distance of the flight while other regimes provide for the reimbursement of the price of the ticket. Despite these variations, these regimes clearly illustrate a trend in favour of better protecting air passengers. As Professor Correia states in his concluding remarks:

[TRANSLATION] In conclusion, the various instruments that have been reviewed reflect the reality of developments in passenger protection around the globe and demonstrate the consistency—which is admittedly relative as the details sometimes differ—of the regulations adopted in this regard. While it is certain that not every country in the world has introduced specific regulations concerning delays, cancellations and denied boarding as yet, it is clear that the number of instruments continues to grow.

Correia affidavit, at p. 110, para. 304

[162] On the basis of that expert evidence, the Attorney General submits that the state practice, coupled with the absence of any objection from other signatories of the Montreal Convention, is indicative of acceptance by all state parties that a standardized compensation regime for delay, cancellation and denial of boarding of the kind enacted in the Regulations does not contravene the Montreal Convention. The appellants have not filed any evidence to the contrary.

[163] Rather, the appellants have sought to undermine Professor Correia’s credibility, arguing that he has repeatedly concluded in past publications that Regulation 261/2004 is incompatible with the Montreal Convention. Moreover, the appellants claim that the Attorney General improperly attempted to shield him during cross-examination by objecting to all questions relating to his past published opinions regarding the compatibility of the European regime with the Montreal Convention.

[164] This argument is without merit. I have read the cross-examination of Professor Correia on his affidavit, and I agree with the Attorney General that the questions that were put to him relating to the views he has expressed in his writings on the conformity of the ECJ jurisprudence with the Montreal Convention were irrelevant. Professor Correia was asked to give evidence on two topics: 1) to present the airline passenger protection regimes of member [signatory] states to the Montreal Convention, whether they are analogous or not to the Canadian regime established by the [Airline Passenger Protection] Regulations; and 2) as appropriate, to identify the trends and the elements of similarity or distinction in the treatment of denial of boarding, cancellations, flight delays and lost or damaged baggage (Correia affidavit, at p. 4, para. 11). His mandate was clearly not, nor could it be, to give his opinion on the proper interpretation of the Montreal Convention or on the compatibility of the ECJ jurisprudence with that Convention. As a result, the questions seeking to elucidate his views on these topics (whether directly or by referring to the views he has expressed elsewhere) were clearly outside the scope of the expert opinion he presented to the Court in this appeal, and the Attorney General rightly objected to them. Both the questions and the answers ought to be disregarded.

[165] The appellants also contend that the Attorney General’s attempt to prove and rely on state practice fails on numerous levels. First, they claim that the affidavit of Professor Correia is “largely irrelevant” because it falls silent on the key issue of whether the European Union passenger rights regime is “in the application of” the Montreal Convention, and thus properly the subject of state practice. In fact, they submit, the US is the only jurisdiction where the expert evidence establishes that the domestic regime governing compensation for delay is aimed at fulfilling the country’s treaty obligations.

[166] The appellants also argue that there is no evidence showing that the various domestic regimes reviewed by Professor Correia establish the agreement of the parties with respect to the interpretation of the Montreal Convention. These various regimes, they say, are too heterogeneous and diverge in so many respects that they cannot reflect any agreement. Finally, they argue that Articles 19 and 29 of the Montreal Convention are not ambiguous, and the invocation of expert evidence on purported state practice is an attempt to create ambiguity in the text via domestic law.

[167] There is no doubt that the expression “in the application of the treaty” conveys the notion that the conduct of state parties must be in good faith. Nor is there any doubt that the parties must regard their conduct as falling within the scope of the application of the treaty to which they are signatories: Oliver Dörr & Kirsten Schmalenbach, supra, at p. 598. A manifest misapplication of a treaty, or a practice that is clearly meant to diverge from the accepted interpretation of a treaty, would clearly not amount to state practice in the application of the treaty. That being said, state parties to a treaty are presumed to respect its terms, and it is therefore to be assumed that they consider their own legislation to be compatible with the limits set out in the treaties that they have signed: Report of the International Law Commission, supra, at pp. 14, 47. The absence of any adverse reactions by other treaty signatories will also be revealing of their views on the proper interpretation of a treaty and of the conformity of any given state practice with such treaty: Report of the International Law Commission, supra, at p. 79 and the jurisprudence cited at footnote 430 on that page; Yasseen, supra, at p. 49; Gardiner, supra, at p. 267.

[168] In the case at bar, the evidence shows that 73 out of the 135 state parties to the Montreal Convention have established a local regime requiring standardized compensation for air passengers in the case of cancellation, denial of boarding and/or delay. While these regimes show some variations in the modalities of their particular scheme, they all share common features in terms of their overall structure, their territorial application, the nature of their compensation, and the conditions under which air carriers can exclude their liability. This is strong evidence that these states interpret the Montreal Convention as allowing this kind of compensation scheme. As mentioned above, this understanding is bolstered by the absence of any evidence to the effect that these regimes have been challenged by other state parties to the Montreal Convention. As Richard Gardiner wrote in his Treaty Interpretation, supra, at p. 265, “[t]o find agreement on meaning from practice may require examining a combination of action by one or more states with subsequent responsive action or inaction by others”. There is also no evidence that State parties which do not have a regime of standardized compensation objected to the application of these regimes to their citizens or to airlines registered in their country.

[169] The fundamental flaw with the appellants’ argument is that they postulate the very proposition that must be established. They claim that the regimes providing standardized compensation for air passengers in case of cancellation, denial of boarding and/or delay, are incompatible with the Montreal Convention and therefore cannot constitute state practice. Yet, this interpretation of the Convention and its exclusivity principle as excluding any parallel regime of standardized compensation of the type enacted by Regulation 261/2004 and the Regulation is precisely what is at stake in this case. In other words, the appellants’ argument is circular. State practice is an aid to arrive at the proper interpretation of the Montreal Convention, similar to text, context and purpose; one does not first construe the Convention in the abstract to then determine if the text, context and practice fit that interpretation. To do otherwise and to exclude from consideration state practice that does not coincide with one’s preferred interpretation of a legal instrument would be inimical to general principles of statutory construction and would turn Article 31 of the Vienna Convention on its head.

[170] For all of the foregoing reasons, I am therefore of the view that state practice confirms that standardized compensation for the inconvenience resulting from flight cancellation, denial of boarding and/or delay is compatible with and can operate alongside the individual damages prescribed by the Montreal Convention. The jurisprudence of the ECJ and Regulation 261/2004 constitute the law in Europe, and the criticism of scholars (including those of the two professors who have filed expert reports on behalf of the appellants) does not supersede state practice when it comes to interpreting an international treaty.

B. Are any of sections 5-8, 10(3), 11(3)-(5), 12(2)-(4), 13-18, 23 or 24 of the Regulations ultra vires the CTA insofar as they apply to international service because of an impermissible extraterritorial application?

[171] The appellants submit that the Regulations have impermissible extraterritorial effects that violate the territorial sovereignty of foreign states. Respect for the territorial sovereignty of foreign states is a well established principle of customary international law, and as such it is binding on Canada: Hape at para. 46; R. v. Terry, 1996 CanLII 199 (SCC), [1996] 2 S.C.R. 207 at para. 16 [Terry]; The Case of the S.S. “Lotus” (1927) P.C.I.J. (Ser. A) No. 10, at p. 18 [Lotus]. This principle is further reflected by the 1944 Chicago Convention, to which Canada is a party. Article 1 of the Chicago Convention states that “[t]he contracting States recognize that every State has complete and exclusive sovereignty over the airspace above its territory”. As a result, section 86.11 of the CTA must be interpreted in a manner that respects this obligation; yet, the appellants claim, several provisions of the Regulations attempt to regulate the conduct of foreign air carriers while they are located in the territories of foreign states, thereby rendering them ultra vires the regulation-making authority granted by Parliament. At the hearing, the appellants clarified that they have no issue with flights coming in or departing from Canada; their extraterritoriality argument is limited to flights operating entirely outside of Canada and connecting two foreign states. They have also amended the order sought to reflect the narrower scope of their argument.

[172] The starting point of any analysis on the limits of state jurisdiction is the decision of the Supreme Court in Hape. At issue in that case was whether the Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 could apply extraterritorially to prevent searches and seizures by Canadian police officers in foreign jurisdictions, and thus exclude evidence that had been so collected. Examining the principle of territoriality, the Court explained that international law - particularly the customary principle of state equality - sets the limits of state jurisdiction, while domestic law determines “how and to what extent a state will assert its jurisdiction within those limits” (Hape at para. 59). The primary basis upon which a state can assert jurisdiction is territoriality: as a result of its territorial sovereignty, a state has full authority to exercise prescriptive, enforcement and adjudicative jurisdiction over all matters arising and people found within its borders.

[173] As the Court noted, jurisdiction is not an issue when a dispute is wholly contained within the territory of one state. Claims for jurisdiction can arise on grounds other than territoriality, however, and nationality is the most frequent of these other grounds. The interplay between territoriality and other principles justifying jurisdiction are central to the issue of whether extraterritorial exercise of jurisdiction is permissible. While states may have valid concurrent claims to jurisdiction, the exercise of one state’s jurisdiction cannot infringe on the sovereignty of other states. In the event of concurrent claims, “comity dictates that a state ought to assume jurisdiction only if it has a real and substantial link to the event” (Hape at para. 62).

[174] The Court went on to add, relying on the decision of the Permanent Court of International Justice in Lotus, that extraterritorial jurisdiction is governed by international law, and not by the laws of individual states. Comity is not necessarily offended by extraterritorial prescriptive jurisdiction or even where a state’s courts assume jurisdiction over a dispute that occurred abroad, but enforcement by a state of its laws within the territory of another state is more problematic absent the consent of the other state: Hape at para. 65; Terry at para. 15.

[175] There is no doubt that Parliament has the authority to make laws having extraterritorial effects. This has been explicitly recognized by section 3 of the Statute of Westminster, 1931 (U.K.), 22 Geo.5, c. 4, and Canada has exercised that power on several occasions especially in criminal legislation (see, for ex., the Crimes Against Humanity and War Crimes Act, S.C. 2000, c. 24, which addressed crimes of “universal jurisdiction”). These statutes, however, do not authorize Canada to enforce their prohibitions in a foreign state’s territory. Although the Supreme Court recognized Parliament’s authority to pass legislation that would regulate the conduct of non-Canadians outside of the country (Hape at para. 68), these laws cannot be enforced in another country without the consent of the host state because it would violate international law and the comity of nations.

[176] Although Parliament clearly has the plenary authority to enact legislation that applies extraterritorially, it must do so through clear words or by necessary implication; otherwise, Parliament is presumed not to intend to do so: Society of Composers, Authors and Music Publishers of Canada v. Canadian Association of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427 at para. 54.

[177] How do these principles apply in the context of the present appeal? The appellants challenge a number of provisions of the Regulations as offending the principle of territoriality, on the basis that they seek to regulate the conduct of foreign carriers while located in foreign states. More particularly, they claim that various sections of the Regulations seek to regulate the conduct of foreign air carriers while located in foreign states in respect of:

• the terms and conditions of carriage and the requirement to provide information by foreign air carriers outside of Canada (ss. 5, 6 and 24);
• the display of notices at airports located outside of Canada by foreign air carriers (s. 7);
• tarmac delays occurring at airports outside Canada in respect of the flights of foreign air carriers (s. 8);
• standards of treatment of and assistance to passengers and liability of foreign air carriers in relation to delayed or cancelled flights departing from airports outside Canada, and denial of boarding on such flights (ss. 10(3), 11(3), 11(4), 11(5), 12(2), 12(3), 12(4), 13, 14, 15, 16, 17, 18, 19 and 20);
• the assignment of seats by foreign carriers on flights departing from airports outside of Canada (s. 22); and
• loss or damage to baggage in the charge of foreign carriers occurring outside of Canada (s. 23).

[178] First of all, I fail to see how Article 1 of the Chicago Convention can be of any help to the appellants. This Convention has not been incorporated into domestic law: Aerlinte Eirann Teoranta v. Canada (Minister of Transport), 1990 CanLII 8110 (FCA), 68 D.L.R. (4th) 220 at para. 19. Moreover, it is not readily apparent how the Regulations infringe foreign states’ sovereignty over the airspace above their territories. They impose obligations on carriers with respect to information provided at service desks and self-service terminals, on printed tickets and at airport gates, as well as compensatory obligations relating to delayed and cancelled flights, and denied boarding. Strictly speaking, none of these obligations affect how air carriers operate in flight, that is, in a particular jurisdiction’s airspace, nor do they purport to affect or alter another state’s airspace. At most, they manifest themselves while carriers operate on the ground in a foreign territory, or on the territory as opposed to above the territory of a foreign jurisdiction. I therefore see no interference with Article 1 of the Chicago Convention.

[179] It is clear from the language of section 86.11 that Parliament intended the forthcoming regulations to apply beyond its borders. Subsection 86.11(1) required the Agency to make regulations in relation to “flights to, from and within Canada, including connecting flights” (emphasis added). Indeed, the CTA expressly recognized the potential overlap between the Regulations and other compensation regimes at subsection 86.11(3) by providing that passengers could not receive compensation under the Regulations “if that person has already received compensation for the same event under a different passenger rights regime than the one provided for under this Act”.

[180] The Agency presents another compelling argument that Parliament intended the Regulations to have extraterritorial effect. The premise of that argument is that section 86.11 of the CTA cannot be read down to exclude jurisdiction over foreign carriers and international itineraries when the overall scheme of the CTA applies explicit prescriptions and requirements to international carriage and foreign carriers. Section 57 of the CTA requires that any person operating an “air service” in Canada have a licence issued by the Agency. An “air service” is either domestic or international (s. 55), and the Agency grants three types of licences–domestic, scheduled international and non-scheduled international–to Canadians and non-Canadians alike (ss. 69(2) and (3), and s. 73(1) of the CTA). Interestingly, the Minister may issue binding directions to the Agency when it exercises its powers or performs its duties if it is in the interest of international comity or reciprocity to do so (para. 76(1)(c)), which is another indication that the CTA may have extraterritorial effects. In short, it is clear from the overall scheme of the CTA that the Agency’s licensing scheme was intended to capture Canadian and non-Canadian carriers for international services and to provide the Agency with powers to impose restrictions on their terms and conditions of service.

[181] Pursuant to paragraph 86(1)(h) of the CTA, the Agency is also given the authority to make regulations “respecting traffic and tariffs, fares, rates, charges and terms and conditions of carriage for international service”. Part V, Division II of the Air Transportation Regulations sets out carriers’ obligations and the Agency’s jurisdiction over terms and conditions of carriage for international service. Prior to the coming into force of the Regulations, the content of the terms and conditions of carriage contained in air carriers’ tariffs was determined by the carriers themselves; the Air Transportation Regulations only prescribed the topics that carriers had to address in their terms and conditions (para. 122(c)). Yet the Agency was empowered to review these terms and conditions to ensure that they ware clear, just and reasonable (s. 111(1)). Moreover, the decision of this Court in Lukács v. Canada (Canadian Transportation Agency), 2015 FCA 269, made it very clear that the Agency has jurisdiction over flights to and from Canada and can examine a foreign carrier’s tariff from the perspective of events taking place outside Canadian borders and on flights that are subject to regulations in a foreign jurisdiction.

[182] With the advent of the Regulations, it is not only the topics that carriers have to address in their terms and conditions that are set out but also the substance of their tariffs. In fact, many of the provisions impugned in this appeal cover topics that carriers were required to address in their international tariffs before the Regulations came into effect. The only difference is that the Agency no longer has to review individual carrier provisions for clarity or reasonableness if they reflect the Regulations. Carriers were, and continue to be, subject to section 116 of the Air Transportation Regulations, which requires them to keep their tariff at each business office and to prominently display a sign indicating that the tariff is available for public inspection. They were and continue to be subject to section 116.1 of the Air Transportation Regulations, which requires carriers selling or offering international services on their website to display their tariff on that site and prominently post a notice to that effect. The Agency also continues to have jurisdiction to review complaints that carriers are not applying the terms and conditions contained in their tariff, and to order corrective measures (including compensation) if that is the case. In short, nothing has changed with respect to the jurisdiction of the Agency to review the terms and conditions of carriage set out in tariffs for international services provided by both Canadian and non-Canadian carriers. The only difference is that the terms and conditions on many topics are now set out by the Regulations, instead of being left to each carrier.

[183] The overall scheme governing air transportation under the CTA and the Air Transportation Regulations, and the way they have been applied and interpreted since their enactment, therefore supports the view that Parliament’s intent was to give the Regulations extraterritorial reach. Moreover, the extraterritorial reach of the Regulations does not contravene the principles of international law governing state sovereignty and territoriality. As pointed out by the Attorney General, the Regulations do not purport to allow for their enforcement on foreign soil, nor to authorize investigation in a foreign country for non-compliance occurring in that country. Quite to the contrary, the Regulations provide that affected passengers may claim the respective compensation directly with the air carrier. Given the deeming provision in the CTA, the Regulations’ obligations form part of each carrier’s tariff, that is, of the contractual bargain it makes with its passengers. Enforcement takes place in Canada, and as previously mentioned, enforcement of laws on the State’s own territory for events occurring outside its territory is permitted as long as there is an objective link with the country: Lotus; Michael Akehurst, “Jurisdiction in International Law” (1972-1973) 46 Brit Y B Int’L 145.

[184] It is clear that a flight departing from or arriving on Canadian soil, whether operated by a Canadian or a foreign carrier, has a sufficient connection to this country to ground an exercise of its jurisdiction. This connection arises from the permission granted to the carrier by the CTA to operate in Canada, and from the tariff which the airline has agreed to prepare and follow. At the hearing, there was some discussion about the notion of “connecting flight”. There is no definition of that expression, either in the CTA, in the Regulations or in the Air Transportation Regulations. I would not venture to propose a comprehensive definition of a connecting flight, and would certainly not want to turn this appeal into a declaratory judgment. For the purposes of this appeal, I think it is sufficient to say that the Regulations will apply only to the extent that a clear link can be established between Canada and “persons, property and acts outside [its] territory”, to use the language of the Lotus case (at p. 19). For example, and without expressing any definitive views on the subject, I fail to see how the Regulations could apply to the passenger (even if Canadian) of a flight operated by a non-Canadian carrier connecting country A and country B and stopping in country B, even if that same flight was also a connecting flight for some passengers subsequently flying from country B to Canada. On the other hand, it would appear that flight segments between two points outside Canada would be covered by the Regulations for those passengers who use these flights to connect to flights to or from Canada. There are obviously a number of potential permutations in this example, relating to the nationality of the passenger and of the carrier and to the flight itself, and it would be hazardous to propose a solution in the abstract for each and every possible situation. Each case turns on its own facts, and it will be for the Agency to determine whether its jurisdiction has been engaged in any given case.

C. Is the Direction intra vires of the authority of the Minister under subsection 86.11(2) of the CTA?

[185] The appellants’ final argument is that the Minister’s Direction requiring the Agency to make regulations in respect of tarmac delays of three hours or less, exceeds the power that he has been granted under subsection 86.11(2). Pursuant to that subsection, the Minister is authorized to issue directions to the Agency to make a regulation respecting any of the carrier’s obligations towards passengers that are not listed in paragraph (1)(a) to (f). One of the obligations that the Agency is explicitly empowered to regulate relates to tarmac delays of more than three hours. In the appellants’ view, the Direction constitutes an impermissible attempt to amend the CTA and seeks to modify Parliament’s intent by purporting to remove an explicit and clear legislative limit to the regulatory powers granted by Parliament to the Agency. In other words, the Direction transformed an express statutory power to regulate tarmac delays of more than three hours into a power to regulate tarmac delays of any length whatsoever, and should therefore be held ultra vires the CTA. By the same logic, section 8 of the Regulations which imposes obligations regarding tarmac delays of any duration on air carriers should also be held ultra vires the regulation-making authority of the Agency under section 86.11 of the CTA.

[186] Prior to Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 [Dunsmuir], the analytical framework for the judicial review of delegated legislation was firmly established, and rested on the ultra vires doctrine. When the validity of delegated legislation was challenged, reviewing courts interpreted the statutory grant of authority to determine whether, correctly interpreted, it fell within or outside its ambit. This was essentially an exercise of statutory interpretation, with no deference to the delegate’s interpretation.

[187] In the years following Dunsmuir, some confusion arose in the highest court on this issue, no doubt because that decision was focused on the judicial review of decisions of adjudicative tribunals and not on delegated legislation. In some cases, the Court applied the judicial review framework (see Catalyst Paper Corp. v. North Cowichan (District), 2012 SCC 2, [2012] 1 S.C.R. 5; Green v. Law Society of Manitoba, 2017 SCC 20, [2017] 1 S.C.R. 360; West Fraser Mills Ltd. v. British Columbia (Workers’ Compensation Appeal Tribunal), 2018 SCC 22, [2018] 1 S.C.R. 635), whereas in other cases the Court reverted to the vires analysis (see for example, Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), 2013 SCC 64, [2013] 3 S.C.R. 810 [Katz]; Canadian National Railway Co. v. Canada (Attorney General), 2014 SCC 40, [2014] 2 S.C.R. 135 at para. 51; Donald Brown & John Evans, Judicial Review of Administrative Action in Canada (Toronto: Thomson Reuters Canada Ltd., 2022), Chap. 2021, at section 2021:5(ii)(3)).

[188] Unfortunately, Vavilov did not bring much clarity to that confusion. Because the Supreme Court purported to adopt the reasonableness standard as the default standard of review to all administrative actions, most intermediate appeal courts adopted the view that delegated legislation would henceforth be reviewed against that standard: see, for example, 1193652 B.C. Ltd. v. New Westminster (City), 2021 BCCA 176 at paras. 48-59; Portnov v. Canada (Attorney General), 2021 FCA 171; Canadian Association of Refugee Lawyers v. Canada (Citizenship and Immigration), 2020 FCA 196 [2021] 1 F.C.R. 271; Paul Daly, “Regulations and Reasonableness Review” (January 29, 2021), online (blog): Administrative Law Matters <https://www.administrativelawmatters.com/blog/2021/01/29/regulations-and-reasonableness-review/and the cases cited therein>.

[189] This approach, however, has not been followed unanimously: see, for example, Hudson’s Bay Company ULC v. Ontario (Attorney General), 2020 ONSC 8046, 154 O.R. (3d) 103; Friends of Simcoe Forest Inc. v. Minister of Municipal Affairs and Housing, 2021 ONSC 3813 at para. 25. Indeed, the reasonableness standard review is fraught with difficulties, not the least of which is that it assumes the body or person that has been granted the power to adopt delegated legislation has also been vested with the power to decide questions of law and to determine the proper interpretation of the habilitating statute; yet, this is obviously not always the case: see John M. Evans, “Reviewing Delegated Legislation After Vavilov: Vires or Reasonableness?” (2021) 34:1 Can. J. Admin. L.& P. 1.

[190] More recently, the Supreme Court has brought grist to the mill of those who support the view that the Vavilov judicial review framework does not apply to delegated legislation. In References re Greenhouse Gas Pollution Pricing Act, 2021 SCC 11, 455 D.L.R. (4th) 1 [Ref re Greenhouse Gas], the Court reviewed the validity of the regulations at issue on the basis of its own interpretation of the enabling statute, without expressing any deference to Cabinet on the interpretative issue. It is true that the majority (in contrast to the dissenting opinion of Rowe J.) made no mention of the ultra vires doctrine, but neither did it refer to Vavilov nor to reasonableness review. On the contrary, the majority took it upon itself to interpret the scope of the regulation-making powers found in the Greenhouse Gas Pollution Pricing Act, S.C. 2018, c. 12. While this is clearly not the last word on the subject, it signals at the very least that the issue is far from settled.

[191] That being said, and whether we assess the validity of the Direction and of section 8 of the Regulations through the lens of the reasonableness standard of review or through the more exacting prism of the ultra vires doctrine, the result would be the same. For the appellants to succeed with their argument that subsection 86.11(2) of the CTA does not encompass the power to issue the Direction (and section 8 of the Regulations) because it relates to matters covered at paragraph 86.11(1)(f), they would have to show either that the Direction: 1) is irrelevant, extraneous or completely unrelated to the statutory purpose (Katz at para. 28; Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231, 1994 CanLII 115 (SCC) at p. 280), or 2) rests on an unreasonable interpretation of subsection 86.11(2). If the Direction (and section 8 of the CTA) satisfies the more exacting ultra vires framework, it will obviously meet the less stringent reasonableness standard of review analysis.

[192] I agree with the Attorney General that the language of subsection 86.11(2) is quite broad, and that limiting the Minister’s ability to issue directions to matters not covered in paragraphs 86.11(1)(a) to (f) as suggested by the appellants would be inimical to the ordinary meaning of the words used by Parliament in subsection 86.11(2). The Minister is granted the power to issue directions to the Agency with respect to “any of the carrier’s other obligations”. These terms are quite broad, and there is no indication that they were meant to limit the discretion of the Minister to those matters that are strictly speaking extraneous and unrelated to those listed in subsection 86.11(1).

[193] The Direction and section 8 of the Regulations are not only consistent with the wording of subsection 86.11(2) of the CTA, but also with the context and purpose of the CTA as a whole. In its summary, the Transportation Modernization Act states that it “amends the [CTA] to make regulations establishing a new air passenger rights regime ...”. The intent was clearly to provide better protection to air passengers, and it is in that spirit that Parliament compelled the Agency to make regulations regarding passengers’ rights and carriers’ obligations on specific matters. It is certainly not inconsistent or unrelated to that statutory purpose, let alone unreasonable, to interpret the list of matters found at subsection 86.11(1) as the baseline of carriers’ obligations towards passengers, rather than the upper limit. The fact that the delegation of power created by subsection 86.11(2) may be extensive and that the discretion conferred on the Minister may be broad is no obstacle to its validity: see Ref re Greenhouse Gas at paras. 85-88. In sum, I have not been convinced that the Minister has exceeded the scope and limits of his power under subsection 86.11(2) of the CTA. As a result, both the Direction and section 8 of the Regulations are valid.

VI. Conclusion

[194] For all of the above reasons, I am of the view that his appeal should be dismissed, except with respect to subsection 23(2) of the Regulations which I find ultra vires of the CTA. Costs should be granted to the respondents.

“Yves de Montigny”

“I agree.

J.D. Denis Pelletier J.A.”

“I agree.

George R. Locke J.A.”

ANNEX

 

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:	A-311-19
STYLE OF CAUSE:	INTERNATIONAL AIR TRANSPORT ASSOCIATION et al. v. CANADIAN TRANSPORTATION AGENCY et al.
PLACE OF HEARING:		Ottawa, Ontario
DATE OF HEARING:		April 6 and 7, 2022
REASONS FOR JUDGMENT BY:		DE MONTIGNY J.A.
CONCURRED IN BY:		PELLETIER J.A. LOCKE J.A.
DATED:		december 6, 2022

APPEARANCES:

Pierre Bienvenu, Ad. E. Clay Hunter	For The Appellants
Barbara Cuber	FOR THE RESPONDENT CANADIAN TRANSPORTATION AGENCY
Bernard Letarte Lindy Rouillard-Labbé Sara Gauthier	FOR THE RESPONDENT ATTORNEY GENERAL OF CANADA
Dr. Gábor Lukács	For The Intervener (on their own behalf) by video conference

SOLICITORS OF RECORD:

Norton Rose Fulbright Canada LLP Montreal Quebec Paterson MacDougall LLP Toronto, Ontario	For The Appellants
Canadian Transportation Agency Gatineau, Quebec	For The respondent canadian transportation agency
A. François Daigle Deputy Attorney General of Canada	for the respondent the attorney general of canada