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Scalia: A Supporter of Canadian Regulatory Sovereignty?

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The recent death of the long-serving U.S. Supreme Court Justice Antonin Scalia has generated a lot of Canadian commentary critiquing his "originalist" or "textualist" approach to constitutional interpretation and hostility to the use of foreign judicial decisions in U.S. court judgements. Some commentators, including former Canadian Supreme Court Justices have publicly celebrated the fact that they were not influenced by Scalia's adherence to a strict construction of the original intent or plain meaning in their interpretation of the text of the Canadian Constitution.

I want to suggest that this is too narrow a metric to judge the importance of Scalia's decisions and dissents to Canada. The first time that I had the chance to see Justice Scalia in action was in 1993 in the oral arguments in the highly contentious international antitrust case, Hartford Fire Insurance Co. v. California.

Viewed from today's more recent perspective where national competition, tax, securities and banking authorities cooperate in enforcing their respective laws, it is perhaps hard to recall just how explosive issues of the extraterritorial application of U.S. laws were in the Canada-U.S. bilateral relationship. Concern over U.S. courts asserting jurisdiction over an international uranium cartel involving Canadian "national champions" in the 1970s and 1980s led, in part, to Parliament passing the Foreign Extraterritorial Measures Act in 1984.

The issue in the Hartford case was whether foreign insurance companies who conspired to fix reinsurance rates could be prosecuted in U.S. courts for effects in the U.S. Even though the insurance companies principally concerned were British, the Canadian Government was so concerned about the extraterritorial reach of the U.S. antitrust laws that it filed an amicus curiae brief in the Supreme Court. And through the good offices of Canada's U.S. counsel in the case, I was able to obtain a hot ticket to the oral arguments.

On the issue of extraterritoriality, Scalia, writing in dissent, was squarely in the corner of Canada and the Government of the United Kingdom and the foreign insurance companies. The majority held that no "true conflict" counseling non-application of U.S law exists unless compliance with United States law would constitute a violation of another country's law.
Writing, in dissent, Scalia, called this a:

"... breathtakingly broad proposition, which contradicts the many cases discussed earlier, will bring the Sherman Act and other laws into sharp and unnecessary conflict with the legitimate interests of other countries--particularly our closest trading partners."

Scalia argued that U.S. statutes should be interpreted as respecting "international comity" unless the Congress was clear that foreign conduct was to be reached by the statute. He emphasized that:

"The activity relevant to the counts at issue here took place primarily in the United Kingdom, and the defendants in these counts are British corporations and British subjects having their principal place of business or residence outside the United States. Great Britain has established a comprehensive regulatory scheme governing the London reinsurance markets, and clearly has a heavy 'interest in regulating the activity'".

And more, Scalia was unmoved by the fact that some of the British corporations were subsidiaries of American corporations. He scolded the lower courts for "piercing the corporate veil" to get at those foreign subsidiaries.

While Scalia was in the minority in Hartford, in a another contentious later international antitrust case in which Canada filed an amicus curiae brief in 2004, Hoffmann-La Roche Ltd. v. Empagran S.A., involving a price-fixing conspiracy among multinational pharmaceutical countries, his "liberal" colleague, Justice Stphen Breyer, writing for the Court adopted Scalia's approach. Breyer concluded that:

"Where foreign anticompetitive conduct plays a significant role and where foreign injury is independent of domestic effects, Congress might have hoped that America's antitrust laws, so fundamental a component of our own economic system, would commend themselves to other nations as well. But, if America's antitrust policies could not win their own way in the international marketplace for such ideas, Congress, we must assume, would not have tried to impose them, in an act of legal imperialism, through legislative fiat."

Neither Hartford, nor the field of antitrust were aberrations for Scalia. He adopted the same approach in an earlier concurring judgement in 1991 in the Arabian American Oil Company (ARAMCO) case where discrimination in Saudi Arabia was alleged by a former ARAMCO employee. More recently, in 2009, Scalia wrote the decision for the Court in Morrison v. National Australia Bank Ltd. a case involving the extraterritorial application of U.S. securities laws to transactions conducted traded on the Australian Stock Exchange and on other foreign securities exchanges, but not on any exchange in the United States. Citing ARAMCO, Scalia emphasized that:

"... unless there is the affirmative intention of the Congress clearly expressed to give a statute extraterritorial effect, (the Court) must presume it is primarily concerned with domestic conditions."

And here is the rub. Scalia's respect for international comity which respects the jurisdiction of foreign countries such as Canada is rooted in his textualist approach to statutory interpretation. Writing in Morrison, he drove this point home:

"The results of judicial-speculation-made-law -- divining what Congress would have wanted if it had thought of the situation before the court -- demonstrate the wisdom of the presumption against extraterritoriality. Rather than guess anew in each case, we apply the presumption in all cases, preserving a stable background against which Congress can legislate with predictable effects."

So while it may be tempting for some Canadian commentators to dance on the grave of a recently departed conservative jurist, it is worth pausing and reflecting on the fact that on the international comity so important to successive Canadian governments, Scalia's textualism arguably led him more often to be found on our side and leading his more liberal colleagues to our side.

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