I. Introduction

Canadian maritime law operates within a distinct legal sphere developed and shaped by common law, statute, and the Canadian Constitution. Compared to other areas of Canadian law, maritime law often presents unique challenges to those unfamiliar with its highly specialized nature.3 Where product liability claims have a maritime aspect or are fully part of the maritime context, legal professionals must have a strong understanding of Canadian maritime law to spot the relevant issues and assess them properly. In this article, the authors provide a high-level overview of Canadian maritime law as it relates to product liability and provide practical insights for commencing or defending these proceedings in Canada. In addition, the authors highlight how changes in the technological landscape may impact product liability claims in the Canadian maritime context.

II. What is Canadian Maritime Law?

Canadian maritime law is a single body of federal law that governs maritime and admiralty disputes. It is established in the Federal Courts Act ("FCA") under s. 2, which describes its substantive content, and s. 22, which vests jurisdiction over maritime matters within the Federal Court and the provincial Superior Courts. Generally, where it is found to apply to a dispute, Canadian maritime law governs and not provincial laws and/or statutes.4

Historically, Canadian maritime law stemmed from the English Admiralty Courts, which exercised jurisdiction over "wet" matters or things done at sea. Typically, these have included contracts and torts committed at sea, collisions, salvage and rescue operations, acts of mariners etc. However, once Canada obtained the rights to self-govern under the Statute of Westminster, 1931 and the subsequent modern Federal Courts Act, the scope of Canadian maritime law and jurisdiction expanded beyond what it had been before.

Today, Canadian maritime law governs and deals with all claims in respect to maritime and admiralty matters, subject only to the defined scope of the federal government's jurisdiction over navigation and shipping matters under s. 91(10) of the Constitution Act, 1867. 5 Because it is a separate body of law, its substantive content draws from statutory and non-statutory sources of law, including the common law; national statutes; international statutes and agreements; and specialized rules and principles of admiralty. 6

III. Does Canadian Maritime Law Apply to this Claim?

The first question a product liability lawyer must answer is whether Canadian maritime law applies to the claim. Generally, where a claim can be characterized as being so "integrally connected with maritime matters", Canadian maritime law will apply. To assess this, the Supreme Court of Canada in ITO-Int'l Terminal Operators v Miida Electronics, developed a three part test to determine whether a claim falls under the federal court's jurisdiction over maritime matters.7

First, the subject matter of the claim, or its "pith and substance", must concern a matter in respect of which there is a statutory grant of jurisdiction by the federal Parliament. This is can be satisfied by showing a claim falls under s. 22 of the FCA or other federal legislation that grants jurisdiction to the Federal Court. The absence of a statutory grant is fatal to a finding of jurisdiction in the Federal Court.

Second, there must be an existing body of federal law that is essential to the disposition of the claim and which "nourishes" the statutory grant of jurisdiction as defined in s. 2 of the FCA. In other words, there must be a body of federal law in common law or statute that is capable of resolving the issues.8

Lastly, the law on which the case is based must be "a law of Canada" as expressed under s. 101 of the Constitution Act, 1867. That is to say, the claim must fall under a federal head of power over Shipping and Navigation under s. 91(10) of the Constitution Act.9

However, as will be discussed later in this article, when applied, there are interesting interactions between the second and third parts of the test. As Madam Justice Wilson foreshadowed in Roberts v Canada:

... the second element, as I understand it, requires a general body of federal law covering the area of the dispute... . No difficulty arises in meeting the third element of the test if the dispute is to be determined on the basis of an existing federal statute. As will be seen, problems can, however, arise if the law of Canada which is relied on is not federal legislation but so-called "federal common law" or if federal law is not exclusively applicable to the issue in dispute.10

An Example

An example of how maritime jurisdiction may apply to a product liability claim is Bow Valley Husky (Bermuda) Ltd. v. St. John Shipbuilding Ltd., [1997] 3 SCR 1210 [Bow Valley]. Bow Valley was a product liability claim in negligence related to a heat-tracing system installed on an oil rig. The heat-tracing system was unsuited for its intended use and after an electrical fault occurred, the oil rig caught on fire. The companies that had contracted for oilrigs' use sued the contractor responsible for constructing the rig and the manufacturer of the heat-tracing system in both contract and tort. Among the various issues was whether the plaintiff's claim was barred on the basis of contributory negligence. If maritime law applied, any contributory negligence on the plaintiff's part would bar recover to damages. However, if provincial law applied, the plaintiff could claim for damages despite being found contributorily negligent.

In addition, since the contract between the plaintiff and the builder of the oil rig contained a limitation of liability clause, another relevant issue was whether such clauses were enforceable under Canadian maritime law.

Applying the "integrally connected" test, the Supreme Court determined that the claims were governed by Canadian maritime law because the product liability issues were "clearly dominated by marine considerations"11 According to the Supreme Court:

... The rig was not only a drifting platform, but a navigable vessel. As Cameron J.A. put it at pp. 133- 34, the rig "is capable of self-propulsion; even when drilling, is vulnerable to the perils of the sea; is not attached permanently to the ocean floor and, can travel world wide to drill for oil". Alternatively, even if the rig is not a navigable vessel, the tort claim arising from the fire would still be a maritime matter since the main purpose of the Bow Drill III was activity in navigable waters. The operation of the rig's heat trace system was hazardous because the GFCB system that was installed was not appropriate in the ungrounded marine context. The claims against the defendants for failure to warn included allegations that the defendants knew about the special marine material requirements such as non-combustibility or flame retardancy...

After finding Canadian maritime law applied to the dispute, the Supreme Court made two substantive points. First, under Canadian maritime law, limitation of liability clauses, like the one between the plaintiff and the builder, were enforceable. Second, although the Supreme Court recognized that under Canadian maritime law, contributory negligence normally barred recovery, the Supreme Court made an "incremental change" to the common law. Relying on the "modern view of fairness and justice", various academics, and foreign international law sources from the United States, Australia, and England, the Supreme Court ruled that contributory negligence should no longer act as a complete bar for recovery under Canadian maritime law.

Consequently, although the Court found that the plaintiff was contributorily negligent, the Court allowed the plaintiff's claim to proceed against the manufacturer and builder. However, since the builder had an enforceable limitation of liability clause that was interpreted to exclude liability for "defects", the builder was not found liable for the plaintiff's damages.

Notwithstanding Bow Valley, where an "integral connection" to shipping and navigation was sufficient to establish jurisdiction under Canadian maritime law, in other cases, more may be required.

In Desgagnes Transport Inc. v Wartsila Canada Inc. [Wartsila], the Supreme Court of Canada considered circumstances where a shipping company purchased a reconditioned crankshaft from a supplier to replace its original crankshaft, which was damaged in an accident. The parties entered into a contract containing a six-month warranty clause and a provision that limited the supplier's liability to 50,000 euros. The contract also provided that the laws of Quebec would govern the contract. After the six-month warranty expired, the ship's main engine suffered a major failure and the shipping company sued the supplier for defective engine parts. At issue was whether Canadian maritime law governed the claim or the Civil Code of Quebec did. If Canadian maritime law applied, the limitation of liability clause In Desgagnes Transport Inc. v Wartsila Canada Inc. [Wartsila], the Supreme Court of Canada considered circumstances where a shipping company purchased a reconditioned crankshaft from a supplier to replace its original crankshaft, which was damaged in an accident. The parties entered into a contract containing a six-month warranty clause and a provision that limited the supplier's liability to 50,000 euros. The contract also provided that the laws of Quebec would govern the contract. After the six-month warranty expired, the ship's main engine suffered a major failure and the shipping company sued the supplier for defective engine parts. At issue was whether Canadian maritime law governed the claim or the Civil Code of Quebec did. If Canadian maritime law applied, the limitation of liability clause would be enforced, however, if the Civil Code of Quebec applied, the supplier would not be able to limit its liability by the terms of the contract. 

After characterizing and determining the "pith and substance" of the claim as a sale of engine parts for a commercial vessel, the Supreme Court held that the claim was sufficiently and integrally connected to navigation and shipping matters under s. 91(10) of the Constitution Act.12 However, the Supreme Court also found that the Civil Code of Quebec applied to the claim. This therefore presented a double aspect where the subject matter of the claim could be regulated by both a provincial power and federal power.

Applying a constitutional analysis to resolve the issue, the Supreme Court held that contractual issues surrounding the sale of marine engine parts were not at "the core" of navigation and shipping.13 Furthermore, since the Civil Code of Quebec was a validly legislated statute, and the relevant Canadian maritime law was non-statutory in nature, the Supreme Court held that the applicable maritime laws could not be paramount to the Civil Code of Quebec.14 As a result, provincial laws governed the dispute.

Given the different approaches depending on the nature and subject-matter of the claim, lawyers should always be cognizant of constitutional issues and tread carefully when there are potential provincial statutes that could govern the claim. Notwithstanding the fact that the issue of maritime jurisdiction is determined on a case-by-case basis and depends on the characterization and nature of the claim, the following are examples of claims that have been held to be subject to Canadian maritime law:

  1. enforcement of a concluded contract for the sale of a ship by delivery and execution of a bill of sale15;
  2. recovery of losses arising from latent defects in machinery installed on a ship16;
  3. debt owing on a contract of sale for goods delivered by ship17;
  4. recovery of losses for damages caused by gas wells installed in a lake18;
  5. loss arising from the post-discharge theft of cargo from a marine terminal19;
  6. relating to a contract for stevedoring services20;
  7. based on a contract of maritime insurance21;
  8. damages arising from defective oil drums unsuitable for ocean voyage22; and
  9. claims arising out of injuries and death resulting from boating accidents23.

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Footnotes

3. Ordon Estate, [1998] 3 S.C.R. 437 [Ordon Estate]; QNS Paper v Chartwell Shipping, [1989] 2 SCR 683.

4. Ordon Estate, supra at paras 92-93.

5. Ordon Estate, supra at para 71.

6 Ordon Estate, supra at para 75.

7. ITO-Int'l Terminal Operators v Midda Electronics, [1986] 1 S.C.R. 752 [ITO].

8. Canadian Transit Company v Windsor (Corporation of the City), 2015 FCA 88 at paras 38-39.

9. ITO-International Terminal Operators v Miida Electronics, 1986 1 SCR 752 [ITO]; Elroumi v Shenzhen Top China IMP & EXP Co. et al, 2019 FCA 281.

10. Roberts v Canada, p1989] 1 S.C.R. 322 at p. 330.

11. Bow Valley Husky (Bermuda) Ltd. v. St. John. Shipbuilding Ltd., [1997] 3 SCR 1210 [Bow Valley] at para 85.

12. The Supreme Court of Canada outlined a non-exhaustive list of factors to consider when assessing whether a claim sufficiently and integrally connected to a head of power under the constitution: (i) the spatial relationship between the non-maritime and maritime elements of the matter at issue; (ii) the functional relationship between those elements, which involves consideration of, inter alia, whether the activity or good implicates seaworthiness, or, more generally, transportation by water; (iii) the temporal relationship between those elements; (iv) the context surrounding the relationship of the parties to the dispute; (v) the practical importance or necessity of legal uniformity; (vi) the fact that the matter implicates standards, principles and practices that are specific to the maritime context or informed by maritime considerations; (vii) the historical connection with English maritime law; and (viii) relevant precedents at para 56.

13. Wartsila, supra at para 92-94.

14. Wartsila, supra at para 103.

15. Antares Shipping Corporation v. The Ship "Capricorn" et al, [1980] 1 SCR 553 [Antares].

16. Wire Rope Industries of Canada (1966) Ltd. v. BC Marine Shipbuilders Ltd. et al., [1981] 1 SCR 363 [Wire Rope].

17. Monk Corp. v. Island Fertilizers Ltd., [1991] 1 SCR 779 [Monk].

18. Ontario (Attorney General) v. Pembina Exploration Canada Ltd., [1989] 1 SCR 206

19. ITO, supra.

20. QNS Paper v. Chartwell Shipping, [1989] 2 SCR 683 [QNS Paper].

21. Zavarovalna Skupnost, (Insurance Community Triglav Ltd.) v. Terrasses Jewellers Inc., [1983] 1 SCR 283 [Triglav].

22. Pakistan National Shipping Corp. v Canada, 1997 CanLII 6339 [Pakistan].

23. Ryan Estate, 2013 SCC 44.

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