Business is becoming increasingly global as companies establish operations in various countries throughout the world. As profitable as this strategy may be, expansion is not without its difficulties. Where an employer is a subsidiary or branch of a larger foreign corporation, for instance, there may be issues regarding conflicting laws and regulations. For example, where a parent company is expected to abide by one set of laws in the United States, but adherence to those laws may be viewed as discriminatory in Canada, what is the appropriate course of action for a Canadian subsidiary or branch?

On July 23, 2015, the Supreme Court of Canada (“SCC”) released its decision in Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Bombardier Inc. The case was the SCC’s first opportunity to consider alleged discrimination based on foreign laws.

While the SCC ultimately determined that Bombardier had not discriminated against the complainant – a pilot who was denied admission into one of Bombardier’s training centres – it provided guidance and caution to employers and service providers who might feel compelled to abide by the decisions of foreign authorities.

Background

In Bombardier, a discrimination claim was filed against Bombardier Inc. before Quebec’s Commission des droits de la personne et des droits de la jeunesse (the “Human Rights Tribunal”). The complainant, Mr. Latif, was a Canadian citizen of Pakistani origin who held U.S. and Canadian pilot’s licenses. Mr. Latif accepted a position with ACASS Canada Ltd. as the pilot of a Bombardier aircraft, which required him to undertake additional training. Mr. Latif initially applied for training under his U.S. license at Bombardier’s training centre in Dallas. At the time, the U.S. government required all pilots who were not U.S. citizens to seek additional security authorization before obtaining training under a U.S. pilot’s license. The U.S. Department of Justice (“DOJ”) refused to provide their approval for Mr. Latif’s training. Not wanting to lose his contract with his employer, Mr. Latif applied to Bombardier for training in Montreal under his Canadian license and was denied admission to the program on the basis of the negative response from the U.S. government. Mr. Latif argued that this denial amounted to discrimination on the basis of race, since the DOJ had engaged in racial profiling and Bombardier had followed the decision.

The Previous Decisions

Although the Human Rights Tribunal was sympathetic to Bombardier’s concerns regarding Canada’s aviation security, it noted that there was no Canadian government standard that would have prevented Mr. Latif from obtaining training under a Canadian license. In the Human Rights Tribunal’s opinion, the U.S. regulations were discriminatory, such that Bombardier’s adherence to them was also prima facie discriminatory.

The Human Rights Tribunal ultimately ordered Bombardier to pay damages. More controversially, Bombardier was ordered to cease applying or considering the standards and decisions of U.S. authorities in “national security” matters when dealing with applications for training under Canadian pilot’s licenses.

The Quebec Court of Appeal (“QCCA”) unanimously overturned the Human Rights Tribunal’s decision on the basis that there was no clear link between the prohibited ground of nationality and Bombardier’s refusal. Since the evidence did not support a finding that U.S. authorities had discriminated against Mr. Latif, there was no basis to conclude that Bombardier had acted in a discriminatory manner by relying on the government’s response.

The QCCA also took issue with the Human Rights Tribunal’s order that Bombardier cease relying upon the standards and decisions of U.S. authorities. The QCCA determined that the Human Rights Tribunal did not have jurisdiction to issue the order. The Human Rights Tribunal’s jurisdiction, according to the QCCA, was limited to what was necessary and reasonable to rectify the specific problem before it. Since Mr. Latif had already obtained the required training by the time that his complaint was heard by the Human Rights Tribunal, the order was unnecessary.

The SCC Decision

The SCC agreed with Bombardier and the QCCA that there was no evidence of discrimination against Mr. Latif. Under Quebec’s Charter of human rights and freedoms (the “Charter”), similar to the Canadian Charter of Rights and Freedoms, Mr. Latif was required to demonstrate prove three things in order to establish prima facie discrimination by Bombardier:

1. that there was a distinction, exclusion or preference;
2. that the differential treatment was based on a prohibited ground of discrimination; and
3. that the treatment negatively affected his ability to enjoy some human right or freedom.

If Mr. Latif had been able to establish prima facie discrimination, Bombardier would have been required to provide some legitimate justification for its decision. However, Mr. Latif was unable to do so. Because Bombardier’s decision was based solely on the DOJ’s refusal to issue him a security clearance, the SCC required evidence that the DOJ’s conduct was discriminatory. The evidence of racial profiling presented in the case was circumstantial and, although it may have provided some social context of discrimination, it was not sufficiently related to Mr. Latif’s situation. Without being able to establish that it was more probable than not that discrimination had occurred – referred to as a “balance of probabilities” – Mr. Latif’s claim could not succeed.

The SCC also concluded that, if the Human Rights Tribunal had been right about the discrimination, it had a broad power to issue orders to prevent discrimination against others, such as its order that Bombardier cease applying U.S. “national security” standards and decisions. However, such orders must have a connection to the dispute at hand, be supported by evidence, and be appropriate in the circumstances.

Long-Term Implications and Lingering Questions

The SCC took the opportunity to issue a warning to other multinational companies who might find themselves caught in a conflict between foreign and Canadian laws: Blind compliance with discriminatory foreign laws has consequences. Where a foreign law or decision is demonstrated to be prima facie discriminatory, the company will be expected to justify its adherence or risk facing liability under Canadian law.

To the extent that companies have subsidiaries or branches operating in close relationships throughout the world, the Bombardier decision provides both comfort and confusion. Because the SCC concluded that there was no evidence to support Mr. Latif’s claim, it did not comment on the type of justification that Bombardier might have relied upon on. For instance, if Bombardier had contacted government agencies or legal counsel to confirm that the U.S. standards applied to Canadian licenses, would that due diligence have been enough? What if Bombardier had simply confirmed that its parent company would lose its U.S. training license by allowing Mr. Latif to train in Canada under any circumstance? To what extent can an economic “trickle effect” from a foreign parent to a Canadian subsidiary, branch or affiliate justify differential treatment? For now, the answers to these questions, and related ones, remain unclear.