One of the first Canadian digital-era laws was the Uniform Electronic Commerce Act, a model law created by the Uniform Law Conference of Canada in the late 1990s. The ULCC brings together officials from federal, provincial, and territorial governments to work on model laws that can be implemented in a similar manner across all Canadian jurisdictions.
While a federal e-commerce law may have been preferable, the constitutional division of powers meant that it fell to the provinces to enact those laws.
The provinces took the lead on e-commerce legislation in the late 1990s, but over the past decade it has been the federal government that has led on most other digital rules, including privacy legislation, the anti-spam statute, and proposed digital copyright reform. Those efforts are now in constitutional limbo following the Supreme Court of Canada's recent ruling that plans to create a single securities regulator are unconstitutional.
The December securities regulator decision concluded that the national approach to securities regulation stretches the federal trade and commerce clause too far into provincial jurisdiction. The court ruled that most of the securities regulatory activities deal with day-to-day contractual regulation within the provinces and that "these matters remain essentially provincial concerns falling within property and civil rights in the provinces and are not related to trade as a whole."
The repercussions of that decision may be felt far beyond just securities regulation. For example, federal privacy law may now be particularly vulnerable to challenge since it relies on the same trade and commerce provision.
Questions from the beginning
There have been questions about the constitutionality of PIPEDA, Canada's private sector privacy law, since its inception. Quebec launched a constitutional challenge in 2003, pointing to its longstanding provincial privacy statute and the constitutional limitations on a federal privacy statute. The Quebec challenge has remained dormant for many years, but State Farm Insurance revived the issue in a privacy case in 2010.
The Supreme Court decision seems likely to stoke the fires for a constitutional challenge, particularly given the Privacy Commissioner's call for stronger enforcement powers. Indeed, the prospect of a challenge may hamper the Commissioner's enforcement efforts as companies reluctant to comply with Commissioner findings may opt to challenge the validity of the legislation instead.
PIPEDA is not the only digital law placed at risk by the Supreme Court decision. Anti-spam legislation, which is still awaiting final regulations before taking effect, may face similar questions since it too relies heavily on the trade and commerce clause.
The decision also places the spotlight on the constitutional questions that have dogged Bill C-11, the copyright reform bill. Those questions do not arise from the trade and commerce clause, but rather involve similar questions about whether the digital lock rules move too far away from conventional copyright law (a federal power) by encroaching into provincial jurisdiction over property and civil rights.
Red flags in government's own review
The government's own analysis of the bill obtained under the Access to Information Act confirms that the digital lock rules envision potential violations of copyright even when there is no copyright infringement. By removing the link to actual copyright infringement (breach of the digital lock rules may occur without a copyright infringement and without regard for traditional copyright defences), the law ventures into the provincial domain over property and civil rights.
The Supreme Court decision throws a monkey wrench into more than just plans to create a single securities regulator. It may also hamper the development of a single national digital legal strategy. This suggests a need to rethink the digital lock rules, and engage the provinces on digital legal issues sooner rather than later.
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