Steen v. Islamic Republic of Iran (Ont. C.A.): A Silver Lining in the State Immunity Playbook?

The Court of Appeal for Ontario has again reinforced state immunity for torture and human rights abuses in Steen v. Islamic Republic of Iran, 2013 ONCA 30 (Ont. C.A.), aff’g   2011 ONSC 6464 (CanLII (Ont. S.C.J.). (“Steen“).

In Steen, the appellants appealed from a judgment granting a motion to dismiss their claim for enforcement of two American judgments against the respondents, Islamic Republic of Iran, Iranian Ministry of Information and Security, and Iranian Revolutionary Guard. The motion judge granted the respondents’ motion on the basis that the State Immunity Act, R.S.C. 1985, c. S-18 (the “SIA”), barred the appellants’ enforcement claim. The cross-appeal concerned the motion judge’s decision to award costs against the respondents even though they were successful on the motion.

Briefly, between 1982 and 1988, Iran directed the kidnapping and detention of 18 American citizens in Beirut, Lebanon, for ransom, including Alann Steen and David Jacobson, both of whom were detained in inhumane conditions and subjected to mental and physical abuse. Alann Steen and his wife, Virginia Steen, sued the respondents in the United States District Court for the District of Columbia for damages arising out of his captivity. The respondents failed to appear appear and the court awarded a judgment of US$342,750,000 against them. David Jacobsen’s children, Eric, Paul and Diane, and his sister, Doris Fisher, sued the respondents in the same court for damages arising out of David Jacobson’s captivity. David Jacobsen had sued on his own behalf and successfully collected on a judgment of US$9,000,000 (see: Cicippio v. Islamic Republic of Iran, 18 F. Supp. (2d) 62 (D.D.C. 1998), as such, he was not a party to this action. The respondents again failed to appear and  the court awarded a judgment totalling US$6,400,000 against the respondents.

The unsatisfied US judgments led the appellants to commencement an enforcement action in Ontario. The respondents moved successfully before Corrick, J. under rule 21.01(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, who dismissed this action on the basis that they were immune from the jurisdiction of any court in Canada pursuant to s. 3(1) of the SIA, which reads: “Except as provided by this Act, a foreign state is immune from the jurisdiction of any court in Canada.”

On appeal, Armstrong J.A. (Winkler C.J.O., and Watt JJ.A. concurring) of the Court of Appeal for Ontario dismissed both the appeal and cross-appeal.

Of interest is Justice Armstrong’s discussion of the enactment of the “Justice for Victims of Terrorism Act” (discussed previously in my post: Access To Justice for Victims of International Terrorism) and the mootness and ripeness of the appeal:

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

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

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

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

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

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

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

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

It strikes me that rather than pursue the appeal, the appellants could have simply amended their pleading to add the JVTA.

In any event, on the issue of the ‘commercial activity’ exception under s.5 of the SIA, Armstrong J.A. agreed with the motion judge and held:

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

The Court of Appeal declined the appellants’ invitation to reverse its previous holding in Bouzari v. Iran (2004), 71 O.R. (3d) 675 and instead create a common law exception to state immunity; an issue left open by the Supreme Court of Canada in  Kuwait Airways Corp. v. Iraq, 2010 SCC 40, [2010] 2 S.C.R. 571.(see my previous post: Rough Landing: Supreme Court of Canada ejects Iraq’s State Immunity Defence: Kuwait Airways Corp v. Iraq).

 The learned justice notes,

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

[27]       Indeed, after this appeal was argued, the Quebec Court of Appeal in Islamic Republic of Iran v. Hashemi, 2012 QCCA 1449, expressed its agreement with the above analysis in Bouzari. Morissette J.A., writing for the court, held at para. 42:

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

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

With respect to he jus cogens norm under customary international law, Justice Armstrong relies upon the Quebec Court of Appeal decision in Islamic Republic of Iran v. Hashemi, 2012 QCCA 1449 (see my posts: Quebec Court of Appeal Upholds State Immunity for Torture and The Gloaming of International Human Rights in Canada?). Armstrong J.A. concludes:

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

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

If there is any silver lining in the Court of Appeal’s playbook on state immunity, it is the dismissal of the respondents’ cross-appeal on the cost award of $70,000, due to the respondents’ provocative pre-litigation conduct (2011 ONSC 6464 (CanLII (Ont. S.C.J.).per Corrick J. at para. 56-62) and the Court of Appeal’s parting words:

[43]       I would dismiss the appeal without prejudice to the appellants’ right to take the appropriate steps to have their judgments recognized by the Superior Court pursuant to the new legislative regime under the JVTA and the SIA referred to above….

I suppose we have to wait and see what the Supremes have to say…

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