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Newsletter > November 2011

In this issue:
1. Firm and Industry News
2. Five Recent Decisions of Interest
a) Defence of Inevitable Accident
b) License of Vessel is Clear Evidence of Title
c) Application for Arbitration Denied – Brought Late
d) Airline Subject to $100 Damages for Delay in Flight
e) IATA Agent was a Trustee for Air India
3. Canadian Court Upholds Montreal Convention
4. The Chilling Future of Shipbuilding in Canada

The three masted schooner Empire Sandy at the Harbour Front in Toronto for the January 2017 newsletter.

1. Firm and Industry News

  • December 2nd, Montreal: Grunt Club Annual Dinner
  • December 3-7, Hawaii: Joint Meeting U.S. Maritime Law Association, Canadian Maritime Law Association, Maritime Law Association of Australia and New Zealand
  • January 13th, 2012, Toronto: Fernandes Hearn LLP Annual Maritime and Transportation Conference
  • January 14-15, 2012, New Orleans: Conference of Freight Counsel
  • January 20th, 2012, Chicago: Transportation Lawyers Association Chicago Regional Seminar
  • January 20th, 2012, Toronto: Marine Club Annual Dinner
  • February 8-9, 2012, Miami: Trucking Industry Defence Association Advanced Seminar
  • April 19 – 22, 2012, Athens: Institute of Air & Space Law Conference on Aviation Law and Insurance
  • May 23 & 24, 2012, Banff Springs: Semi-Annual Meeting Canadian Board of Marine Underwriters

    Rui Fernandes and Martin Abadi will be in the Federal Court of Appeal on December 13th, 2011 responding to the appeal and pursuing the cross appeal of the decision of Justice Heneghan in Buhlman v. Buckley, 2011 FC 73. [The decision is reported in our July 2011 newsletter]

    Gordon Hearn and Christopher Afonso were recently successful in resisting a motion for summary judgment brought by an opponent in an Ontario Superior Court proceeding. The dispute concerns issues arising from a cross-border logistics and distribution arrangement. Ruling that there were “numerous genuine issues requiring a trial” the matter will now proceed to trial.

    James Lea recently appeared on a motion for summary judgment in the Ontario Superior Court on behalf of an insurer of a fleet of trucks. At issue was the interesting question – cited as “novel” by the Court – as to whether insurers can effectively remove specific drivers from coverage by notice to the placing broker or whether notice is required to be provided to the insured fleet operator. The Court ruled that a trial was necessary to resolve the issue.



A) Defence of Inevitable Accident

Wolverine Motor Works Shipyard LLC v. Canadian Naval Memorial Trust [2011] N.S.S.C. 308 (CanLII).

The de-commissioned war-time Corvette “Sackville” was moored to its berth next to the Maritime Museum of the Atlantic. The “Sackville” had no power (i.e., it was a “dead ship”). The sailing / motor vessel “Larinda” was tied up next to the “Sackville.” At the height of Hurricane Juan, the “Sackville’s” lines either parted or paid out allowing it to strike the “Larinda”, holing it and causing it to sink. After being raised, the “Larinda” was sold for salvage. The owners of the “Larinda” sued for its almost total loss. The question for the court was whether the Trust took all reasonable measures in the circumstances to secure the “Sackville” in anticipation of the hurricane. The court held that the claimant failed to prove that the mooring arrangement used to secure the “Sackville” was inadequate. The defendant took all reasonable and necessary precautions in the face of the pending hurricane and hence was not negligent.

Interestingly, the Trust had rested its defence on the doctrine of “inevitable accident.” The Trust’s position was that it was aware of the approach of Juan and did everything it could to secure the “Sackville” but her moorings broke nevertheless at the height of the storm.

The court never did directly state that the defence of inevitable accident applied. It did so implicitly by concluding:

“It is clear that the defendant, as the institution in charge of Sackville, owed the plaintiff a duty of care when the two vessels were moored alongside one another (and vice versa). I am not convinced that the Trust personnel failed to meet their duty of care, however. I find the statement of the law from the Star of the Isles to be helpful… In order to establish the defence of “inevitable accident,” the defendant must show that there is “no evidence against him of want of diligence or want of skill and positive evidence in his favour to show that he has exercised both diligence and skill in the discharge of his duties.”

The court went on to say:

… Of the measure of diligence and skill demanded in particular circumstances, where a technical qualification such as seamanship is in question, it is for qualified experts to advise. It is not open to the pursuer, through the medium of argument addressed to Judges, to suggest that any particular action or non?action on the part of the defender in such affairs as seamanship may be assessed by such Judges as evidencing a failure in seamanship or a failure in diligence. Such an argument must be supported by expert evidence or have the assent of a nautical assessor.

[64] The defendant’s representatives were cognizant of the approaching hurricane, and turned their mind to preparing for it. The personnel in charge of Sackville were experienced seamen who monitored Sackville (and the moorings) in the days and hours before the hurricane. Sackville’s moorings were designed with heavy weather in mind, since Sackville was a deadship without a full crew and without working machinery or propulsion systems. As such, the failure to put out additional lines in anticipation of the hurricane was not in itself a failure of duty. There is no evidence that the lines were in poor condition and the LOC report and Mr. Simpson, in his evidence, suggested that the lines broke due to sudden shock rather than chafing. Nor is it reasonable to suggest that Sackville ought to have been moved to the dockyard at the last minute. Hurricane Juan was a storm of unforeseen intensity, and I am satisfied that Sackville’s keepers could not have anticipated the severity of the combined forces of wind, tide, surge and waves that the ship would be exposed to.”

B) License of Vessel is Clear Evidence of Title

Carlson v. Carlson [2011] BCPC 228 (Canlii)

This case was about who was the true owner of the vessel “Diablo”. The vessel was, at the time of the hearing, in the possession of the defendant, who had a licence for it issued to her by Transport Canada. The claimant was the father of the defendant’s deceased husband, and claimed that he had at all times been and remained the owner of the vessel. The claimant purchased the vessel from its manufacturer. The issue was whether or not the claimant gave the vessel to the defendant’s deceased husband, the claimant’s son.

The court reviewed the evidence that was available (some of it hearsay and some of it circumstantial) about the purchase of the vessel, the oral testimony by the father that he had not gifted the vessel to his son but simply allowed the license to be issued in the son’s name, details of the use of the vessel by the son and father, and details of payments for repairs by the father. The father stated that the license was issued in the son’s name because the claimant was often absent on business, his son was more likely to be operating the vessel, and the claimant thought that it would be easier if his son was ever stopped or inspected by the authorities if the vessel were licensed in his name.

The court reviewed the Small Vessel Regulations under the Canada Shipping Act, as they existed in 2002 and stated, “although the vessel license is not determinative of title, it is clear evidence of title.”

The court concluded that the vessel belonged to the son. Determinative of the issue was that the license was in the son’s sole name.

C) Application for Arbitration Denied – Brought Late

Star Tropical Import & Export Limited v. International Project Management Consortium Ltd., 2011 ONSC 4005 (CanLII)

This case related to contracts entered into in Canada concerning two shipments of sugar from Brazil to a port in Ghana. The contracts were negotiated in Canada between two Canadian companies having offices in southern Ontario. The plaintiff was located in Brampton. The defendant company had an office located in Scarborough. The first contract related to 12,500 metric tons of white refined sugar, which contract was entered into in November of 2006. A second contract relating to 8,250 metric tons of sugar was entered into on April 17, 2007. Problems developed with respect to both contracts. In October of 2007, the plaintiff commenced the action in Toronto against the defendant company and its chief executive officer, the defendant Paul Arun Singh. More than three years later, an application was brought before the court by the defendants seeking a stay of the action, in order to permit an arbitration to take place, in accordance with arbitration clauses in each contract. The plaintiff company resisted the application and sought to have the action determined by the Superior Court of Justice in Ontario.

The court examined whether the arbitration clauses triggered an international arbitration. It looked at Ontario’s International Commercial Arbitration Act (the “ICCA”), which applies to disputes falling within the purview of that statute. The court also looked at the Ontario Arbitration Act, 1991, which relates to any arbitration not subject to the ICCA.

The court looked at section 3 of the ICCA which states:

(3) An arbitration is international if:
(a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or
(b) one of the following places is situated outside the State in which the parties have their places of business:
(i) the place of arbitration if determined in, or pursuant to, the arbitration agreement,
(ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected; or
(c) the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country. [Emphasis added by the court]

Based upon the review of the facts in this case, the court was satisfied that the disputes concerning both contracts in this action were not subject to the ICCA but rather the Arbitration Act 1991.

The court then looked at s. 7 of the Arbitration Act 1991 which provides:

7.(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding.

(2) However, the court may refuse to stay the proceeding in any of the following cases:
1. A party entered into the arbitration agreement while under a legal incapacity.
2. The arbitration agreement is invalid.
3. The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.
4. The motion was brought with undue delay.
5. The matter is a proper one for default or summary judgment.
[Emphasis added by the court]

The court refused to stay the litigation for a number of reasons including the involvement of a defendant, who was not a party to any arbitration agreement; the terms of the earlier orders extending time and restoring the plaintiff’s action; the delay by the defendants in bringing this motion and the failure to seek to promptly exercise any possible parallel rights to launch an arbitration, notwithstanding the existing litigation.

D) Airline Subject to $100 Damages for Delay in Flight

Monast c. Sunwing Airlines Inc., [2011] QCCQ 8565 (CanLII)

The claimant Paul Monast claimed the sum of $425 and for various expenses incurred as a result of a delay in a vacation flight to Santiago from Montreal. The flight was to leave at 9 a.m. It left at 9:45 p.m. the same day.

Mr. Monast paid $745 + $240 taxes for his flight and hotel for a stay of two weeks. Sunwing Airlines operates charter flights that are subject to change as prescribed in the contract.

The plaintiff claimed the sum of $395 representing the loss of a day’s holiday, and the repayment of the $30 paid for the reservation of a seat, which specific seat he never obtained.

The court held that this was a case of a consumer contract governed by the provisions of the Quebec Civil Code and Law on Consumer Protection Act (RSQ c. P-40.1) requiring a carrier to fulfill its contractual obligations, unless there was proof of force majeure or a fortuitous event.

The court concluded that the defendant had not proven a case of force majeure or unforeseeable circumstances that delayed the flight. There was a reference on the invoice “The Flight schedules are always subject to change violated Article 10 of the Consumer Protection Act (RSQ c. P-40.1) which prohibits clauses that exempts merchants from contractual obligations.

The court, found, however, that the claim was exaggerated, given that the applicant had paid $715 for 14 nights. The court arbitrarily fixed at the sum of $100 damages to the plaintiff Paul Monast, which also included $30 in reimbursement for seat reservations

The court ordered the defendant Sunwing Airlines Inc. to pay the plaintiff the sum of $100 with interest at the legal rate as of January 11, 2010, with each party bearing its own costs.

E) IATA Agent Was a Trustee for Air India

Richards v. Air India Ltd., 2011 BCSC 1171 (CanLII).

The plaintiff, Ceylinco Investments Ltd., operating as Chalais Travel & Tours, carried on a travel agency business from approximately 2002 until May 2008. The plaintiff, Wesley Richards, was the sole shareholder of Ceylinco. Ceylinco was approved by the International Air Transport Association (“IATA”) as an accredited agency in April 2002. On April 8, 2002, Ceylinco entered into an IATA Passenger Sales Agency Agreement (the “agency agreement”). IATA is an international association comprised of airline companies. Pursuant to its terms, the agency agreement governed the relationship between Ceylinco and all of the member airlines of IATA. At all relevant times, Air India Ltd. was an IATA member airline. Ceylinco’s travel agency business was almost exclusively limited to providing services for individuals traveling to India. As a result, most of the airline tickets sold by Ceylinco were for flights on Air India and connector airlines.

This action arose from a dispute between Air India and Ceylinco over certain tickets issued by Ceylinco for Air India flights. Air India said that Ceylinco failed to pay for 62 tickets, with a value of $117,791.17, which tickets were used for flights by passengers (the “Disputed Tickets”).

In order to protect itself against potential losses, Air India required its agents to designate it as the beneficiary on an irrevocable standby Letter of Credit. The amount of the Letter of Credit required by Air India varied depending on the nature of the authority given to the agent by Air India. On November 1, 2007, Ceylinco entered into an agreement (the “net fares agreement”) that required it to provide a $100,000 Letter of Credit (the “LOC”) for the benefit of Air India. The LOC was provided by the State Bank of India. When Ceylinco did not respond to Air India’s requests for payment for the Disputed Tickets, Air India negotiated the LOC. Air India counterclaimed for the additional $17,791.17, which it said Ceylinco still owed for unpaid tickets.

The court heard the testimony of Wesley Richards and of Shyam Sundar, Air India’s regional finance manager. Where there was a discrepancy of evidence between the two, the court preferred the evidence of the Air India witness. The court also reviewed the terms of the agency agreement and the net fares agreement.

The court concluded that Ceylinco was a trustee for Air India in respect of monies received by Ceylinco for the sale of airline tickets. At all relevant times Ceylinco was bound by the terms of the agency agreement and required to follow the procedures in the IATA agent’s handbook. None of the provisions of the agency agreement or resolutions in the handbook restricted the time period within which Air India could advance its claims for breach of trust. Those claims were brought well within the limitation periods in British Columbia. Ceylinco failed to pay for all of the Disputed Tickets. Ceylinco failed to account for the sales of tickets and was in breach of trust for failure to pay for the Disputed Tickets. It acted dishonestly when it issued tickets and purported to void those tickets without cancelling the reservations and retaining the tickets. Mr. Richards, although a stranger to the trust, was found personally liable for providing knowing assistance to Ceylinco in its breaches of trust. Air India was entitled to retain the $100,000 received when it negotiated the LOC. In addition, it was entitled to recover the balance owing of $17,791.71 from Ceylinco and Mr. Richards.

Rui Fernandes


3. Canadian Court Upholds The Montreal Convention In The Face Of Conflicting Local Rules

Ms. Rita Lemieux was embarking on an international flight leaving from Stanfield International Airport in Halifax. It was August 11, 2005 and the weather reports showed a storm was coming in. The plane was being boarded directly from the airport’s tarmac when Ms. Lemieux slipped and was allegedly injured.

Ms. Lemieux brought a suit against the airport and the air carrier, Air Canada, for the injuries she claimed she suffered that day (*1). However, Ms. Lemieux commenced her lawsuit five and a half years after the incident. Air Canada brought a preliminary motion to dismiss Ms. Lemieux’s case in the opening stages of the action on the basis of time-bar.

Air Canada argued that the terms of the current international convention governing air travel, commonly referred to as the Montreal Convention (*2), meant that Ms. Lemieux must commence her suit within 2 years of the incident. Therefore, Air Canada argued, Ms. Lemieux’s action was “time-barred” and could be dismissed without the need for a trial. In other words, Air Canada sought to prevent Ms. Lemieux’s action from ever “getting off the ground”.

Ms. Lemieux countered that the local court did not have to strictly apply the terms of the Montreal Convention. Ms. Lemieux reasoned that the local laws in Nova Scotia allowed the court to ignore any limitation period as long as the court thought it was fair and equitable to do so.

In fact, Ms. Lemieux argued that Air Canada was, in a sense, out of time to raise the time-bar defence. The Limitation of Actions Act allows potential defendants to bring an application to the court for an order to declare a potential claimant’s action “time-barred”, but, if the potential defendant does not do this, then the court retains the right to ignore any “time-bar” defence, if the court feels it would be fair and equitable to do so. There was no dispute that Air Canada failed to get a preemptive order barring Ms. Lemieux’s claim. Ms. Lemieux reasoned, therefore, that given her injuries and her circumstances, it would fair and equitable to allow her action to continue.

The parties agreed that the Montreal Convention applied. The only question was whether Nova Scotia’s Limitation of Actions Act could modify the Montreal Convention by importing its rule that time-bars could be ignored where there was no preemptive order and where it could be fair to do so. Or, as the judge put it, “Does the Convention oust local law?” (*3) The court’s answer: an emphatic “no”:

The Montreal Convention is a complete Code on the subject of airline liability and the plaintiff has not brought her action within the two year limitation period set out in the Convention. That provision is a substantive one and ousts the jurisdiction of domestic courts in Nova Scotia (and elsewhere) to apply their own law to the limitation period. [*4]

The court reviewed the existing judgments in Canada and around the world, and found a consistent pattern in upholding the terms of the Montreal Convention in the face of contrary local rules. As stated by the House of Lords (the “Supreme Court” of England), the reason for that pattern is international consistency and stability in the air transportation sector:

To permit exceptions, whereby a passenger could sue outwith the Convention for losses sustained in the course of international carriage by air, would distort the whole system, even in cases for which the Convention did not create any liability on the part of the carrier. Thus the purpose is to ensure that, in all questions relating to the carrier’s liability, it is the provisions of the Convention which apply and that the passenger does not have access to any other remedies, whether under the common law or otherwise, which may be available within the particular country where he chooses to raise his action. (*5)

Ms. Lemieux provided examples of cases in Nova Scotia where courts found it fair and reasonable to extend the limitation period, but did not provide any air transportation cases on point. Ms. Lemieux did point to an extension of a limitation period in a railway case, but the court found that case inapplicable. (It was not stated as a reason, but, unlike the Carriage by Air Act, Canadian railway legislation is not, in substance, the importation of an international treaty, and so the need for international conformity does not exist in that context).

The judge ultimately rejected Ms. Lemieux’s arguments and reasoned that the Montreal Convention‘s terms had to stand on their own. It would be an impermissible encroachment on an international system for the court to ignore or modify any of the terms of the Montreal Convention:

“It would be entirely contrary to that purpose to allow different limitation periods to be set by domestic law of all the states, provinces, counties, etc., in each country which is a signatory. That would result in a lack of harmony and unity in the application of the Convention which it was designed to create.” (*6)

As a result, Ms. Lemieux’s case was dismissed.

Chris Afonso

*1 Lemieux v. Halifax International Airport Authority, 2011 NSSC 396 (CanLII) (“Lemieux”)
*2 The full title of the Montreal Convention is the Convention for the Unification of Certain Rules for International Carriage by Air, and is ratified into Canadian law by the Carriage by Air Act, R.S.C., 1985, c. C-26.
*3 Lemieux at para. 7
*4 Lemieux at para. 24
*5 Lemieux at para. 15, citing Sidhu and others v. British Airways, [1997] AC 430 at 447
*6 Lemieux at para. 22



It is a curious feature of our times that we are able to state unequivocally that the future of the Canadian shipbuilding industry is cold, bleak and barren, while, at the same time, the shipbuilding industry triumphantly celebrates the start of a period of massive economic productivity that is forecasted to continue for more than twenty years.

The non sequitur above has a simple explanation: the Arctic.

The National Shipbuilding Procurement Strategy Contracts

On October 19, 2011, the Secretariat of the National Shipbuilding Procurement Strategy (“NSPS”) announced the result of the Request for Proposals to rebuild the fleets of the Royal Canadian Navy and the Canadian Coast Guard, which represents the largest procurement sourcing arrangement in Canadian history. (*1)

Irving Shipbuilding Inc., the Nova Scotia-based operation that has built over 80% of Canada’s current surface combat fleet, was selected to build the combat vessel work package (21 vessels). Seaspan Marine Corporation, which owns and operates Vancouver Shipyards Co. Ltd., was selected to build the non-combat vessel work package (7 vessels). The total value of both packages is $33 billion and will span 20 to 30 years. (*2)

Not yet awarded, the NSPS process includes small ship construction (116 vessels) of an estimated value of $2 billion, which will be set aside for competitive procurement amongst Canadian shipyards other than the yards selected to build the larger vessels. Additionally, regular maintenance and repair, valued at $500 million annually, will be open to all shipyards through normal procurement processes. (*3)

It is still too early to know exactly how many jobs will be created and when and where they will be located because the designs for the ships are yet to be finalized and the contracts are yet to be put in place with the shipyards, which will require the use of a significant number of sub-contractors. (*4) Moreover, despite the fact that a considerable portion of the large shipbuilding will be done by the two selected yards noted above, it is estimated that over half of the value of the shipbuilding contracts could flow to the broader marine industry. According to the NSPS website: (*5)

The distribution of work is likely to include other shipyards as well as firms in related industries that manufacture equipment used on the ships or that provide services essential to the project. Many of these undoubtedly will be small and medium-sized enterprises […] outside of the regions where the two selected yards are located.

Between the two major contracts ($33 billion); the not yet awarded small ship construction contract ($2 billion); and the regular maintenance and repair work ($500 million annually), shipbuilding and its related industries share unprecedented optimism as they look forward to decades of productivity and growth. The byproducts of the investments should include, amongst other things, significant improvements to existing shipbuilding infrastructure and the development of a larger, better-trained workforce. It is foreseeable that related sectors, such as the steel industry, marine equipment, technology manufacturers, and the commercial shipping industry, will benefit from the massive investment

Naturally, with the Government of Canada investing more than $30 billion of its taxpayers’ dollars during these difficult economic times, the obvious question to ask is “why?”

The Canada First Defence Strategy

The Canada First Defence Strategy (“CFDS”) is the military recruitment and improvement strategy of the Canadian government to improve the overall effectiveness of the Canadian Forces. The strategy aims to enforce Arctic sovereignty alongside the Royal Canadian Mounted Police and the Coast Guard. In the words of National Defence and Canadian Forces: (*6)

Starting in 2006, the Government of Canada began laying the foundation for a more integrated, adaptive and capable force by recognizing that the military is a vital national institution essential to the security and prosperity of Canada and by making initial but significant investments to address critical gaps in personnel and equipment. The Canada First Defence Strategy translates this vision of a first-class, modern military into a comprehensive 20-year investment plan.

In Canada’s Arctic region, changing weather patterns are altering the environment, making it more accessible to sea traffic and economic activity. Retreating ice cover has opened the way for increased shipping, tourism and resource exploration, and new transportation routes are being considered, including the Northwest Passage. (*7) While this promises a substantial economic benefit for Canada, it also has “important implications for Canadian sovereignty and security and a potential requirement for additional military support.” (*8)

Simply put, the Arctic represents a new frontier with the potential for enormous development and, ultimately, may be the future of Canada’s continued success. As the Arctic’s importance grows, Canada’s claim to the vast, relatively unpopulated area (for reference, Canada’s Arctic territory is greater in size than India) will encounter greater and more frequent challenges. In early response, it appears that the Canadian government has adopted an Arctic sovereignty strategy, via the CFDS, that can be described in a single word: presence.

The National Shipbuilding Procurement Strategy represents an important step in the Canadian government’s implementation of the CDFS and, to that end, Canada’s Arctic presence. The combat package awarded to Irving Shipbuilding Inc. includes the Royal Canadian Navy’s Arctic Offshore Patrol ships and the Canadian Surface Combatants ships. The non-combat package awarded to Seaspan Marine Corporation includes the Navy’s joint support ships, the Canadian Coast Guard’s offshore science vessels and the new polar icebreaker. (*9) In fact, the Arctic Offshore Patrol Ships and the Science Vessels, including the polar icebreaker, are scheduled to be the first ships to enter production. (*10)

The Arctic Offshore patrol, icebreaking ships will conduct armed surveillance in Canada’s waters, including in the Arctic and will also provide icebreaking services to others. (*11) The centrepiece of Canada’s northern strategy will be the construction of the Coast Guard science ship, the CCGS John G. Diefenbaker flagship polar icebreaker. Once it’s completed in 2017, the polar icebreaker CCGS John G. Diefenbaker will be the largest, most powerful vessel Canada has ever owned. (*12) Regarding its capabilities: (*13)

The new icebreaker will provide the Canadian Coast Guard with increased coverage in the Canadian Arctic and adjacent waters and will be able to operate during three seasons in the Arctic, over a larger area and in more difficult ice conditions than is currently possible.

Once these ships are completed, the Government of Canada will have a vastly expanded capacity to exert presence and, thereby, sovereignty over our Arctic territory.

Arctic Shipping

With increased Arctic activity and expanding Arctic trade routes, it is only natural that private/commercial activity will increase in the area. Commercial parties should be aware that Arctic shipping in Canada is governed by several pieces of legislation. Principally these are the Arctic Waters Pollution Prevention Act, the Canada Shipping Act 2001, the Marine Liability Act, the Marine Transportation Security Act, the Coasting Trade Act, and the Canada Labour Code as well as their respective regulations. (*14) These acts were created to “enhance safety and to protect life, health, property and the marine environment.” (*15)

For example, ships must be designed, built, and equipped to resist ice loads and to handle Arctic weather and operating conditions. Canadian construction standards for ice class ships are found in the Arctic Shipping Pollution Prevention Regulations, under which is the responsibility of ship builders and owners to ensure that their ships are built to proper standards. (*16)

Arctic ship owners, as well as any other party with commercial or legal interests in Arctic shipping, be it insurers, shippers, operators, or otherwise, should familiarize themselves with the legislation and potential legal issues thereunder as this massive area of economic opportunity continues to open up with the Government of Canada and its new Arctic fleet boldly clearing the path for private enterprise into this frontier of possibility.

James Lea


*1 “Results of the National Shipbuilding Procurement Strategy” Government of Canada News Centre website (October 19, 2011): http://news.gc.ca/web/article-eng.do?mthd=tp&crtr.page=1&nid=629989.
*2 Ibid; “Irving Shipbuilding Stands Ready to Build Canada’s Next Generation Federal Combat Fleet”, Irving Shipbuilding Inc. News Release website (October 19, 2011): http://www.irvingshipbuilding.com/irving-shipbuilding-news.aspx#October19
*3 “National Shipbuilding Procurement Strategy – Storyline,” Public Works and Government Services Canada website (October 19, 2011): supra, note 1.
*4 “Backgrounder: NSPS – Economic Benefits”, Public Works and Government Services Canada website (September 26, 2011):
*5 Ibid.
*6 “Canada First Defence Strategy – Introduction,” National Defence and the Canadian Forces website (August 5, 2011):
*7 “Canada First Defence Strategy – Strategic Environment,” National Defence and the Canadian Forces website (August 5, 2011):
*8 Ibid.
*9 Supra, note 1.
*10 Ibid.
*11 “NSPS – The Ships to be Built” Public Works and Government Services Canada website (September 19, 2011): (“NSPS Ships”); “The CCGS John G. Diefenbaker National Icebreaker Project” Fisheries and Oceans Canada (October 7, 2011): (“CCGS Diefenbaker”).
*12 CCGS Diefenbaker, Ibid.
*13 CCGS Diefenbaker, supra, note 11.
*14 Arctic Waters Pollution Prevention Act (R.S., 1985, c. A-12); Canada Shipping Act 2001, (S.C. 2001, c. 26); Marine Liability Act, (S.C. 2001, c. 6);
Marine Transportation Security Act, (S.C. 1994, c. 40); Coasting Trading Act, (S.C. 1992, c. 31); Canada Labour Code, (R.S.C., 1985, c. L-2); and THE regulations thereunder each act.
*15 “Arctic Shipping” Transport Canada website (August 19, 2010): http://www.tc.gc.ca/eng/marinesafety/debs-arctic-menu-303.htm.
*16 Ibid; Arctic Shipping Pollution Prevention Regulations (C.R.C., c. 353).

This newsletter is published to keep our clients and friends informed of new and important legal developments. It is intended for information purposes only and does not constitute legal advice. You should not act or fail to act on anything based on any of the material contained herein without first consulting with a lawyer. The reading, sending or receiving of information from or via the newsletter does not create a lawyer-client relationship. Unless otherwise noted, all content on this newsletter (the “Content”) including images, illustrations, designs, icons, photographs, and written and other materials are copyrights, trade-marks and/or other intellectual properties owned, controlled or licensed by Fernandes Hearn LLP. The Content may not be otherwise used, reproduced, broadcast, published,or retransmitted without the prior written permission of Fernandes Hearn LLP.

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