Federal Court of Appeal clarifies who has standing to file complaint under AIT
In a decision released on May 22, 2008 (Attorney General of Canada v. Northrop Grumman Overseas Services Corp.) (with Letourneau J. dissenting), the Federal Court of Appeal clarified who has standing to file a complaint under the Agreement on Internal Trade to the CITT.
In a complaint by Northrop Overseas, the CITT had held that a company need not show it is a "Canadian supplier" in order to be eligible to complain under the AIT. The Attorney General sought judicial review of this ruling.
In the above decision the Court overruled the CITT and held that, in order to make a CITT complaint under the AIT, a vendor must demonstrate that it has "a sufficient presence in Canada to enable it to effectuate its obligations under the procurement contract from inside Canada". This is taken to mean that the supplier must demonstrate that it has a permanent establishment in Canada.
This does not mean that the goods being supplied cannot originate from outside Canada; however, they must be supplied to the Government by a supplier who has a permanent establishment here. This could be done, e.g., by an agreement between a parent and subsidiary under which the goods created by the foreign parent are delivered to the government through the auspices of the Canadian subsidiary.
In this case, the goods were manufactured by the US parent, Northrop Overseas, who have a Canadian subsidiary, Northrop Canada. However, Northrop Canada did not act as the bidder and there was no contract between the two Northrop entities to supply the goods through the auspices of Northrop Canada. The Court thus referred back to the CITT the question whether Northrop Overseas itself qualifies as a "Canadian supplier".
Letourneau J. dissented. He reasoned that the French language version of the AIT did not create an obligation to have an establishment in Canada, what was relevant was whether the contract was concluded in Canada. He also reasoned that the definition of "potential supplier" in the CITT Act did not import a requirement to be "Canadian". Finally he concluded it was unfair to deprive Northrop Overseas of the right to complain to the CITT, since the alternative of judicial review was more limited and time consuming.
