Table of Contents

1. General Nature and Purpose of Regulatory Agencies

2. Regulatory Agencies Impacting Businesses

3. Consultations with Aboriginal Peoples

1. General Nature and Purpose of Regulatory Agencies

Administrative agencies and tribunals are established by legislation, from which they acquire their jurisdiction and authority. The procedures of each tribunal vary as much as their areas of responsibility and expertise, but in general all agencies are required to comply with the principles of natural justice and procedural fairness. As such, parties affected by the decision of an agency or tribunal must be given an opportunity to be heard, either orally or in writing.

The Supreme Court has established two standards of review when a court looks at administrative decisions: “reasonableness” and “correctness.” The standard of review of an administrative decision will presumptively be reasonableness, where the reviewing courts must start with the reasons offered in the decision under review. There are two exceptions where the standard will not be reasonableness:

1. Where the legislature has expressed an intention for correctness review to apply, by either explicitly stating this or providing a statutory right of appeal, or
2. Where the rule of law requires a correctness standard of review. This includes constitutional questions, general questions of law of central importance to the legal system as a whole and questions on the jurisdictional boundaries between tribunals.

Where there is a statutory appeal from an administrative decision, questions of law are automatically reviewed on a correctness standard. When applying the correctness standard, appellate courts do not owe any deference to the administrative decision-maker of decisions they consider to be incorrect. Questions of fact or mixed fact and law are reviewed for palpable and overriding error. The Supreme Court in Mason v. Canada (Citizenship and Immigration) recently emphasized the importance of the interpretive presumption that statutes conform with international law. 

2. Regulatory Agencies Impacting Businesses

2.1 Competition Tribunal

Certain non-criminal conduct regulated by Canada’s Competition Act is reviewable by the Competition Tribunal (Tribunal). Members of the Tribunal include judges and persons with expertise in economics, business and law. They are appointed by the Government of Canada to hear and decide applications under Parts VII.1 and VIII of the Competition Act.

Reviewable practices are not considered criminal and not prohibited unless they are made subject to an order of the Tribunal that is specific to the conduct and party. Matters reviewable by the Tribunal include refusal to deal, exclusive dealing, tied selling, market restriction, abuse of dominant position, price maintenance and certain other “anti-competitive” acts. The Tribunal can order a person to do or cease doing a particular act in the future if it finds, on the balance of probabilities, that such a person has engaged in the reviewable activity. The Tribunal cannot impose a penalty for most reviewable practices, but it can impose administrative monetary penalties under the abuse of dominance and certain deceptive-marketing-practices provisions.

In most cases, complaints are brought to the Tribunal by the Commissioner of Competition, who is appointed by the federal government to administer the Competition Act. However, private individuals and corporations have the right to seek permission from the Tribunal to bring complaints directly to the Tribunal with regard to six limited areas: exclusive dealing, tied selling, refusal to deal, price maintenance, market restriction and abuse of dominant position.

With respect to mergers, if the Commissioner concludes that a merger transaction or proposed merger transaction is likely to prevent or lessen competition substantially, the Commissioner may challenge the transaction before the Tribunal. The Tribunal has broad authority to dissolve a completed merger, order a purchaser to dispose of all or some assets or shares, or preclude the parties from proceeding with all or part of a proposed merger if it finds, on the balance of probabilities, that the merger is likely to prevent or lessen competition substantially in a relevant market. In determining whether to issue such an order, the Tribunal is directed to consider several factors. These include the extent of foreign competition, whether the business being purchased has failed or is likely to fail, the extent to which acceptable substitutes are available, barriers to entry, whether effective competition would remain, whether a vigorous and effective competitor would be removed, the nature of change and innovation in a relevant market, and any other factor relevant to competition.

2.2 Securities Commissions in Canada

The provinces are largely responsible for the regulation of capital markets. Accordingly, each province has established laws, regulations, rules and policies concerning the governance of the capital markets. Uniformly throughout Canada, each province has established a securities commission to regulate and enforce securities laws. Fortunately, the various securities commissions have, in large measure, adopted harmonious approaches regarding how capital markets are governed.

In accordance with its empowering legislation, each provincial securities commission is responsible for the administration of its province’s Securities Act and obligated to perform all of the duties assigned to the securities commission pursuant to that Securities Act. These duties entail administrative functions, rule-making and policy-making functions and, significantly, investigation and enforcement functions that are substantially similar across the provinces.

The securities commission of each province is given substantial authority to enforce that province’s securities laws. That authority includes the ability to investigate any matter the securities commission may consider expedient for the due administration of securities laws or the regulation of each province’s capital markets, or to assist in the due administration of the securities laws or the regulation of the capital markets in other jurisdictions.

The investigation authority allows persons appointed by the securities commission to investigate or inquire into the affairs of any person or company. This includes the right to examine persons, documents or things for which the investigation is ordered. The person undertaking the investigation has extensive power, including the authority to summon and enforce the attendance of any person and compel that person to testify under oath or otherwise. Under British Columbia’s recently amended Securities Act, property of third parties may be seized by the provincial securities commission and third-party landlords and recordkeepers may be compelled to cooperate with an investigation. Based on the results of an investigation, securities commissions are given the concomitant authority to conduct administrative or regulatory hearings before a quasi-judicial tribunal composed of appointed commissioners. Recent amendments also empower British Columbia’s securities commission to impose consequences on parties that fail to comply with summons or demand to provide information, without requiring the commission to obtain an order from the court to do so, as was previously the case.

In addition to its administrative hearing capacity, the securities commission is empowered to bring quasi-criminal prosecutions under provincial offence legislation. There are three types of quasi-criminal offences:

1. General offences, such as making an untrue statement to the securities commission
2. Offences by directors and/or officers, such as acquiescing in the securities commission of a general offence
3. Insider trading and/or tipping offences. Anyone found to have committed an offence of this type can be held liable for a maximum fine of C$5-million and/or a maximum prison term of five years

In British Columbia, charges may be laid by the provincial government under the Offence Act and heard in a provincial court.

Securities commission investigations or hearings tend to focus on the securities commission’s principal purpose, which is enforcing requirements for timely, accurate and sufficient disclosure of information to the capital markets by capital markets participants. Other purposes include investigations and enforcement proceedings to restrict or discourage fraudulent and unfair market practices and procedures and maintain high standards of fitness and business conduct to ensure honest and responsible conduct by market participants. Accordingly, a securities commission may conduct hearings into issues such as market manipulation, continuous and accurate disclosure obligations, and insider-trading violations.

Securities commission decisions are subject to appeal. Such appeals may be taken to the courts, which act in a supervisory capacity over the securities commissions’ decisions. Historically, judicial intervention regarding securities commission decisions has been restrained.

Securities commissions have appellate authority over “self-regulatory organizations,” such as the Investment Industry Regulatory Organization of Canada, the Mutual Fund Dealers Association of Canada and other industry watchdogs that have specific regulatory jurisdiction over capital markets participants. The appellate authority of the securities commissions is expressed broadly, but by convention, it is as restrained as the appellate authority exercised by the courts over the securities commissions themselves.

The federal government and certain of the provinces signed a memorandum of agreement in September 2014 to formalize the terms and conditions of a new proposed cooperative capital markets regulatory system (Cooperative System) in Canada. Under the Cooperative System, a single regulator, the Capital Markets Authority, would receive delegated powers from the federal government and the governments of Ontario, British Columbia, Saskatchewan, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Nova Scotia, and Yukon to administer the proposed federal Capital Markets Stability Act. The act would be adopted by all participating provinces and territories in the Cooperative System to replace their respective current Securities Acts. The purpose of the Cooperative System will be to regulate capital markets in a way that fosters more efficient and globally competitive capital markets, provide increased investor protection, integrate diverse perspectives, strengthen the identification and management of national systemic risk, and enable Canada to play a more empowered role internationally. In 2017, the Quebec Court of Appeal ruled that the proposed Cooperative System was unconstitutional. However, this decision was appealed to the Supreme Court of Canada, and in the fall of 2018, it unanimously held that the Cooperative System was constitutional. Notwithstanding the Supreme Court of Canada decision, the Cooperative System has yet to be implemented. In April 2019, Nova Scotia agreed to join the Cooperative System and signed the memorandum of agreement. Due to the effects of COVID-19 and the provinces’ focus on their response to COVID-19, work towards implementing the Cooperative System paused effective March 31, 2021. Although work towards the Cooperative System may resume at any time, no further steps have been taken as of the time of this publication in March 2024.

2.3 Environmental Protection Agencies

Government agencies or departments charged with the administration of Canada’s environmental protection laws and regulations are empowered to investigate and prosecute breaches of the law and issue a variety of orders and directives that require legal compliance or expensive environmental remedial action.

With respect to enforcement activities, the most common tool available to environmental agencies is the prosecution of an offence before the lower courts that deal with regulatory non-criminal offences. While some provincial and federal agencies have recently been granted the authority to issue administrative penalties that do not involve judicial processes, this enforcement tool is rarely used because the available penalties are relatively minor. Individuals and corporations prosecuted before the courts are subject to maximum fines that, in the case of corporations, can run in the millions of dollars. Individuals, including corporate officers and directors, may be sentenced to prison from one to five years.

It is not necessary for the prosecuting agency to establish an intention to violate the environmental law in question, as with true criminal offences. However, an accused is entitled to be acquitted of a regulatory charge if the accused can demonstrate that the offending event occurred notwithstanding their diligent efforts to comply with the relevant law. This is the “due diligence” defence that is an important part of Canadian regulatory or “quasi-criminal” law. Due diligence has led to the development of environmental management and compliance systems by persons involved in activities that can adversely affect the environment.

Government agencies are granted discretionary powers to regulate activities by way of orders, directives and permits. Therefore, environmental protection laws typically include rights of appeal to an independent or quasi-independent tribunal. In addition, environmental protection or assessment laws also include public-hearing requirements for significant projects, such as hazardous-waste disposal facilities and large-scale industrial or natural-resource projects, to ensure that both the environmental merits of the project and public concerns are addressed before the project is undertaken.

Environmental appeals or hearings can arise when agencies impose onerous terms and conditions in air, sewage or waste management and disposal permits, or when they simply refuse to issue a permit. Appeals are also typically available when an environmental agency imposes an administrative penalty or issues an order that requires a person to take investigatory or remedial action. In some cases, these statutory appeals end up in court or are brought to the executive level of government.

In keeping with the general principles that a tribunal should not be bound by precedent and should be allowed to develop its own particular expertise to deal with the issues that come before it, the procedures utilized by the various environmental protection tribunals vary. Accordingly, strict judge-made rules of evidence rarely apply and efforts are made to accommodate ordinary citizens participating in the hearing process, especially those before environmental tribunals as public participation is seen as an important part of environmental protection.

An environmental impact assessment is typically triggered when a major industrial project requires a government permit. It often generates widespread local and regional public concerns regarding the potential impact of the project on the natural and social environment. The intent of the process is to not only require the proponent to demonstrate that it has assessed all of the potential environmental impacts and taken steps to mitigate them, but also demonstrate that the public has been consulted and given an opportunity to voice concerns. If the initial public consultation process is unsuccessful in managing such public concerns, then a public hearing may be required to provide a more comprehensive public airing. Often the process is political in nature, as some tribunals only have the power to report on the hearing to a senior government official and make recommendations.

Historically, administrative hearings with respect to appeals from environmental licensing and permit decisions or environmental remediation orders have been less contentious. Recently, however, Canadian environmental agencies have become more aggressive in these areas. As a result, in many parts of the country there has been a proliferation of appeals to environmental tribunals questioning the wisdom of environmental authorities in exercising their powers. Attempts to address historical soil and groundwater contamination have been particularly contentious, resulting in protracted appeals to environmental protection tribunals and, ultimately, the courts. In many cases, past owners, occupiers and senior corporate officers and directors have been named in environmental orders, whether or not there is any evidence that they failed to follow the laws applicable at the time or had any direct involvement in causing the subject pollution or contamination.

2.4 Energy Boards and Commissions

There are several statutes at both the federal and provincial levels that govern Canada’s energy sector. In many cases, these statutes provide for ongoing regulation by federal or provincial agencies and tribunals.

In 2019, the National Energy Board was replaced by the Canada Energy Regulator to reflect Canadians’ priorities in areas such as greater certainty, more transparency, enhanced public participation and an expanded role for Aboriginal Peoples.

The Canada Energy Regulator is an independent federal regulatory agency that regulates the interprovincial and international aspects of the energy industry, including:

• The construction and operation of interprovincial and international pipelines that transport commodities including, but not limited to, oil and natural gas.
• Pipeline traffic, tolls and tariffs.
• The construction and operation of international and designated interprovincial power lines.
• The export and import of natural gas, oil and electricity.

Power lines and pipelines that are completely within the borders of one province are usually regulated by that province's regulatory agency. Both federal and provincial energy boards typically review the economic and technical feasibility and the environmental and socio-economic impact of proposed projects.

In addition, utility companies that supply electricity and natural-gas services within a province are usually regulated by that province’s regulatory agency, such as the Alberta Utilities Commission, the British Columbia Utilities Commission, the Ontario Energy Board and Quebec’s Régie de l'énergie. The mandates of the various agencies vary from province to province and depend on how electricity and natural gas utility services are regulated. In general, the boards are responsible for making decisions regarding complaints and issuing approvals of the distribution and transmission rates charged by the various utility companies that they regulate. They may also regulate marketers of gas and electricity commodities, although they typically do not fix the prices of the commodities being sold.

Most of these agencies operate in a manner similar to a civil court. Their powers include swearing in and examining witnesses, as well as taking evidence. The agencies hold public hearings in which applicants and interested parties can participate. These hearings can be conducted either orally or in writing. Decisions can generally be appealed to a court, although the court will usually defer to the agency’s factual findings and industry expertise and review primarily for errors of law or jurisdiction.

2.5 Canadian International Trade Tribunal

The Canadian International Trade Tribunal (CITT) is the federal administrative tribunal. It is a quasi-judicial body that carries out statutory responsibilities independently of the government. The CITT has rules and procedures like those of a court of law, but they are not as strict or formal, and the proceedings are typically much shorter in length. The CITT’s mission is to support a fair and open trade system. 

2.5.1 Bid Protest Tribunal for Procurement Matters

The CITT acts as the “bid protest” tribunal for federal government procurement matters when a bidder considers the procurement or the treatment of its bid to have been unfair. Complaints made to the CITT must be submitted within 10 business days of the date on which the complainant becomes aware of the flaw in the procurement process. The CITT almost invariably proceeds by way of written submissions from the complainant and the government. It issues its ruling promptly, typically within three months.

If the complaint is upheld, the CITT can make one of several orders, including an order that (1) a new procurement take place, (2) the bids be re-evaluated, (3) the contract be awarded to the complainant, (4) the designated contract be terminated, or (5) damages be awarded based on the complainant’s lost profit.

The CITT members have considerable experience with federal government procurement policy and law. Accordingly, the CITT’s decisions are given significant weight by the Federal Court of Appeal and are not easily overturned by the court.

The CITT may have concurrent jurisdiction with the Federal Court to hear a procurement dispute between the bidder and the federal government. However, if the dispute is simply or primarily about whether the procurement violated a trade agreement, the Federal Court can refuse to hear the dispute on the grounds that it should have been pursued by way of a complaint to the CITT. If no trade agreement applies to the procurement, the CITT does not have jurisdiction, and the dispute must be brought before the Federal Court.

2.5.2 Dumping and Subsidizing

International trade agreements and Canadian legislation allow the Canada Border Services Agency (CBSA) to impose duties on imported goods when Canadian producers are adversely affected by unfair international competition. These measures apply where the imported goods are sold at a price lower than in the home market or lower than the cost of production (dumping) and receive benefits from certain types of government grants or other assistance (subsidizing), and if the dumping or subsidization causes “material injury” to Canada’s domestic industry for the like goods.

The CBSA is responsible for determining whether dumping and/or subsidizing occurred. It makes both a preliminary and then a final determination of dumping and/or subsidization. The CITT’s role in the process is to determine whether the dumping and/or subsidizing has caused material injury or retardation to a domestic industry or is threatening to do so. The CITT holds a preliminary injury inquiry exclusively by written submissions to determine whether the complaint filed with the CBSA provides a reasonable indication of injury. If the CITT makes a negative determination, then the entire investigation is terminated. If the CITT makes a positive determination, then the CBSA proceeds to its own preliminary determination and, at that point, the CITT initiates a formal injury inquiry. If the CITT makes a finding of material injury, the CBSA continues to impose anti-dumping or countervailing duties on the dumped or subsidized imports.

Parties to a bid protest or dumping case have the right to appeal CITT decisions to the federal courts and, potentially, the Supreme Court of Canada. In certain cases involving U.S. or Mexican interests, CITT decisions involving dumping or subsidizing allegations may be reviewed by a binational panel under the provisions of the United States-Mexico-Canada Agreement (USMCA).

2.5.3 Appeals and Other Matters

The CITT’s mandate includes hearing appeals of CBSA decisions made under the Customs Act and the Special Import Measures Act and Minister of National Revenue decisions under the Excise Tax Act. In the case of CBSA decisions made under the Customs Act, the CITT hears appeals of decisions on tariff classification, valuation and country of origin issues. The CITT’s own rules of procedure govern such appeals. Typically, appeals to the CITT are heard by three-member panels, but in some cases, a single member may hear the appeal.

2.6 Labour Relations Boards

Most labour relations boards are composed of impartial labour relations experts and representatives of both labour and management. When adjudicating, the board decides matters as either a three-person panel — generally, the chair/alternate chair/vice-chair and two members, one from each of the employer and employee constituencies — or simply the chair, alternate chair or a vice-chair sitting alone.

Labour relations boards are responsible for the following matters:

• Certifying and decertifying trade unions as employee bargaining agents
• Processing and resolving, by settlement or adjudication, unfair labour practice complaints, as well as employees’ duty of fair representation complaints against their unions
• Issuing declarations and directions with respect to unlawful strikes and lockouts and, in some circumstances, unlawful picketing
• Issuing successor and related employer declarations in the event of a sale of business or other corporate transaction
• In some jurisdictions and certain circumstances, arbitrating grievances arising under collective agreements
• Providing direction with respect to inter-union or jurisdictional disputes over the assignment of work

Labour relations statutes may also charge labour relations boards with additional responsibilities, such as inquiring into complaints that an employee has been disciplined for exercising rights under occupational health and safety legislation, directing the settlement of a first collective agreement through arbitration, enforcing public sector employment legislation, reviewing the findings of employment standards officers regarding alleged breaches of employment standards legislation, and hearing appeals of orders issued by inspectors regarding health and safety legislation violations.

Labour relations boards also provide field or administrative services that are designed to facilitate the settlement of disputes and enable employers, trade unions and employees to tailor solutions to their needs. Most labour relations boards have officers responsible for attempting to mediate and resolve disputes after an application to the board has been filed and conduct and assist with board-supervised votes, such as certification votes or final offer votes.

If a matter cannot be resolved informally through a board’s field services department, the board will conduct a formal hearing into an application and issue a written decision. Labour relations boards hold full adjudicative hearings in which the parties are required to present evidence and make legal arguments. Labour relations board orders are made enforceable by either the exercise of powers of the judiciary or board prosecutions.

Decisions of labour relations boards are protected from court intervention by privative clauses in the labour relations statutes that typically provide that the decisions of a board are final and binding on the parties. However, a party to a labour relations board proceeding may still seek to overturn a board decision by applying to the court for judicial review. Board decisions will generally be reviewed on a reasonableness standard. A court will set aside a board’s decision if the board has violated the principles of natural justice or procedural fairness.

3. Consultations with Aboriginal Peoples

For the purposes of the duty to consult, Crown conduct includes a decision by a government agency, cabinet minister or administrative body with the authority to issue a licence, permit or other authorization to non-governmental project proponents. As a result, Aboriginal rights are often engaged in the context of regulatory approvals for resource extraction or infrastructure projects, such as those that require approval of the Canada Energy Regulator. The law and practice informing the respective roles of the government, the regulatory agency or tribunal and the project proponents in consulting with Aboriginal Peoples in the regulatory approval process continues to evolve. 

The Supreme Court of Canada has determined that the Crown may rely on the regulatory process to partially or completely fulfil its duty to consult, so long as the agency’s statutory duties and powers enable it to do what the duty requires in the particular circumstance. As the Crown is still bound by its duty, this may require supplementary action on behalf of the Crown to provide for additional avenues of meaningful consultation and accommodation before a project is approved. The Canada Energy Regulator approval process itself can trigger the duty to consult. Ultimately, Crown consultation has to be appropriate and adequate, and any decision affecting Aboriginal or treaty rights must be made in accordance with the duty to consult. 

The extent of Aboriginal consultation required depends on the context, including the strength of the Aboriginal Peoples’ claim to the right asserted and the potential adversity of the proposed project. For example, the government or regulatory agency may be required to accommodate Aboriginal interests by placing environmental protection conditions on the project approval or requiring the project proponents to demonstrate how the project can benefit Aboriginal Peoples. When the Crown fails to adequately fulfil its obligation to consult or, if necessary, accommodate, the affected Aboriginal Peoples can seek judicial review of the government or regulatory body’s decision. Depending on the type of decision at issue, judicial review must be commenced in a provincial superior court or in Federal Court. Typically, an application for judicial review must be filed within 30 to 60 days following the date of the decision.