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The CANDU Court Case

A Chronology of Events

November 1996

On November 6, 1996, the federal cabinet met in a hastily arranged evening session to make changes to the Canadian Environmental Assessment Act (CEAA). Public interest groups and independent observers have characterized the changes to the Act as an effort to rush through the sale of two CANDU 6 nuclear reactors to China without first undertaking a comprehensive environmental assessment. The changes to the Act hold the potential to be wide ranging in their impact, as they would release the federal government from an obligation to undertake comprehensive environmental assessments on future overseas projects.

In the months and years leading up to November 1996, the Sierra Club and other public interest groups had voiced numerous concerns about the continued construction and export of CANDU reactors. These concerns, as they related to the sale of CANDU reactors to China, included the planned disbursement of $1.5 billion in public monies by the government of Canada (described as a “loan guarantee” to China), China’s abysmal environmental and human rights record, the disposition of nuclear waste produced by CANDU reactors (particularly given China’s precedent of dumping nuclear waste in Tibet), and China’s sale of nuclear technology to nations with clandestine nuclear weapons programs.

The regulations enacted on November 6th were given the force of law on November 7th without the usual regulatory procedure of a sixty day public comment period. They were not made available for public review in the Canada Gazette or any other listing of regulations until November 27, 1996 - one day after contracts for sale of the CANDU reactors were signed in Shanghai.

On November 26th, the day of the signing of the CANDU sales agreements, Sierra Club Canada announced that it would challenge the government’s actions in court if the decision to amend the CEAA regulations was not reversed. The Sierra Club has indicated, in public forums and in correspondence to members of cabinet that at the time the federal government made changes to the act it was already under a duty to undertake a comprehensive environmental assessment in connection with the CANDU project. This obligation was not retroactively altered by the government’s last minute amendments.

December 1996

In a response to Sierra Club Canada on December 21, 1996, Minister for International Trade, Arthur Eggleton put forward the position that there was no legal requirement to conduct a preliminary environmental screening or comprehensive study in connection with the CANDU sale. The federal government’s response left the Sierra Club with no recourse but the courts.

January 1997

On January 20, 1997 Sierra Club Canada filed an Application for Judicial Review with the Federal Court of Canada - Trial Division. The Application, which named the federal Ministers of Finance, International Trade, Foreign Affairs and the Attorney General of Canada as Respondents, included a supporting affidavit and exhibits from Sierra Club of Canada Executive Director, Elizabeth May (note: the text of this documentation is available for review on Sierra Club Canada web site.

The Sierra Club’s Application for Judicial Review seeks to ensure that an environmental assessment is conducted in connection with the over $1.5 billion in public financing of CANDU reactors to China. In essence, the basis of the Sierra Club’s case is that in approving the expenditure of $1.5 billion in “loan guarantees” prior to November 1996, the Ministers of Finance and International Trade invoked provisions of the Canadian Environmental Assessment Act (CEAA), and thereby are under an obligation to undertake a “comprehensive” environmental assessment on the sale of CANDU reactors to China. A principal purpose of the November 1996 changes to the CEAA regulations was to eliminate requirements for preliminary screenings or “comprehensive” assessments on federally funded overseas projects.

February - March 1997

In their responding affidavits, federal government officials claimed that the loan and loan guarantee transactions emanated from the Export Development Corporation and did not involve any federal cabinet minister. As a result, they argued, application of the CEAA was not triggered by the approval of the $1.5 billion in loan guarantees.

Additionally, the federal government objected to providing virtually all of the documents requested by the Sierra Club in its filing. The Sierra Club requested key documents relating to the nature of the project, the financing and sale of the reactors to China, and the involvement of the Minister of Foreign Affairs and International Trade and the Minister of Finance. Amongst documents that the federal government refused to provide are agreements, contracts, and financial arrangements between Canada and the Chinese authorities, including the Chinese Nuclear Agency.

In refusing to provide documents the federal government invoked a number of defenses, including ignorance (ie. government departments never saw or reviewed the agreements, contracts, and financial arrangements), confidentiality (release of the documents would be contrary to the national interest, potentially jeopardizing the competitiveness of future Canadian nuclear reactor sales), irrelevance to the case at hand, solicitor-client privilege and Cabinet secrecy.

April 1997

On April 15, 1997, the Sierra Club’s motion to force the federal government to provide the documentation requested was argued before the Federal Court in Montreal.

May 1997

On May 23, the Federal Court issued its decision on the Sierra Club’s motion to have the federal government release the requested materials. The Court’s ruling states that the applicant’s “Revised Request for Material” falls outside the scope of the rules that would apply to the Sierra Club’s Application for Judicial Review. The decision provided a thirty day period for submission of a new “Revised Request for Material” .

June 1997

In early June, the Sierra Club submitted a new “Revised Request for Material”. To date, the federal government has failed to release documentation which the Sierra Club considers relevant to the case.

November 1997

The Department of Justice, in a cabinet document leaked in November, advised the federal government that “its case is not strong and that the Federal Court may well rule in favour of the Sierra Club.”

April 1998

In April 1998, documentation requested by Sierra Club Canada still had not been released by the federal government. On the eve of cross-examination of government officials by lawyers for the Sierra Club, Atomic Energy of Canada Limited filed a motion in connection with the case. In an apparent last minute effort to ensure that construction of Canadian nuclear reactors in China is not affected by an environmental assessment, AECL applied to the Federal Court of Canada to add it as a respondent to the Sierra Club’s Application for Judicial Review. The AECL motion, which was heard on April 28, 1998, came fifteen months after Sierra Club Canada filed its Application for Judicial Review.

The AECL motion came in the wake of a statement made in February 1998 by federal Minister of Natural Resources, Ralph Goodale, that construction of CANDU reactors at Qinshan, China, was 10% completed. In follow-up to this statement, Sierra Club Canada wrote to the Ministers of Finance and International Trade requesting that they expedite the hearing of the case.

On April 29, 1998, the Federal Court of Canada dismissed AECL’s motion. The Sierra Club had argued that AECL should not be a Party to the case, as it centres on the question of whether federal cabinet ministers triggered provisions of the CEAA by approving release of $1.5 billion in public monies. AECL's lawyers indicated that they would appeal the Federal Court decision.

May 1998

Following dismissal of AECL’s April motion, the Federal Court agreed to a subsequent AECL motion for standing as an "Intervener" in the case, as opposed to a “Party” (Sierra Club Canada and Ministers of the Government of Canada are Parties to the case). In being accorded Intervener status, AECL was also given many of the "rights" of a Party. Following the Federal Court ruling, lawyers for AECL filed motions which sought to remove documents put on the record by the Sierra Club sixteen months earlier.

June 1998

In June, as part of the process preceding a hearing in the Federal Court of Canada, lawyers for Sierra Club Canada cross-examined government officials who had previously provided affidavits in connection with the case.

On June 25th, the Federal Court ruled against an AECL motion to “strike out” Sierra Club Canada’s original application for judicial review. AECL had argued that Sierra Club Canada was not “directly affected” by the failure of the government to undertake a comprehensive environmental assessment in connection with the CANDU China sale and therefore should not be permitted ‘standing’ (the right to proceed with the case). AECL appealed the decision.

November 1998

Motions by AECL to strike out affidavits filed by Sierra Club Canada were dismissed by the Federal Court (in one instance, the court chose to strike out some sections of an affidavit, but found the affidavit as a whole to be relevant to the application).

December 1998

On December 2, 1998, the Federal Court dismissed AECL’s appeal of the June 25th ruling on Standing. In rejecting AECL’s appeal the Federal Court decision found that AECL’s “theory of public interest” was “too narrow”. The decision noted that “the rule of law should be concerned to ensure that the legality of governmental inaction is as subject to challenge in the courts as are allegations of over-reaching by public officials.”

May - June 1999

In late May, lawyers for AECL proposed that certain documents be placed on the court record under a confidentiality order. AECL also proposed that the confidentiality order itself be treated as confidential. In essence, AECL sought to file confidential documents but keep the fact that it was filing such documents secret. Sierra Club Canada objected to both proposals on the grounds that Canadian courts generally, and the Federal Court of Canada, in particular, are under a ‘constitutional imperative’ to be open public courts.

On June 8, 1999 the Federal Court ruled that AECL’s motion to file confidential documents could be brought forward (and be ruled on at a later date), but denied their request to keep the motion secret. The Federal Court found that, “while the need for confidentiality occasionally creates an exception to the principle of open justice, it is an exception which should be crafted as narrowly as possible. In particular, there is no compelling reason why the public should not know what it is not allowed to know. These directions will form part of the public file.”

October - December 1999

On October 26, 1999 the Federal Court - Trial Division dismissed AECL’s motion for a confidentiality order stating that the court was, “not satisfied that the need for confidentiality exceeds the public interest in open justice.”

The Court stated that, “The issue of Canada’s role as a vendor of nuclear technology is one of significant public interest, with animated positions being taken on both sides of the question. The burden of justifying a confidentiality order in such circumstances is very onerous. While the documents contain sensitive information, nothing has been shown to me which would suggest that it is the sensitive information which would be of interest to the Court. AECL has the option of expunging the sensitive material from the documents which it proposes to file.” Following the October 26th ruling, AECL appealed the dismissal of its motion.

On December 3, 1999, following a comment period for parties in the case, the Federal Court - Trial Division ruled that the reasons for the October 26th ruling should be placed on the public file.

January 2000

The timeframe for hearing Sierra Club Canada’s Application for Judicial review was provisionally identified as the fall of 2000 (Note: This date was later moved back to April 2001).

In a January 21, 2000 ‘Reasons for Order’ of the Federal Court dealing with procedural issues of the AECL appeal as well as other matters brought forward by the Sierra Club, the continued delay in hearing the Sierra Club’s Application was commented on. It was noted that subsection 18.4(1) of the Federal Court Act specifies that such applications, “shall be heard and determined without delay and in a summary way.”

The Reasons for Order went on to state, “Whatever the reasons for the long delay here, it cannot reasonably be said that either the Court or counsel has heeded the injunction of the subsection. It seems to me exceedingly difficult to argue that a proceeding in which there have been more than 12 interlocutory motions before Prothonotaries and Motions Judges, and an appeal, is a proceeding that is being dealt with in a summary way or, that an interval of almost four years between commencement and final disposition at first instance can be characterized as one that is being dealt with ‘without delay’.”

March - May 2000

A Federal Court of Appeal hearing on AECL’s appeal (of the October 26, 1999 dismissal of its confidentiality motion in the Federal Court - Trial Division), as well as other matters, took place before a panel of three judges in Ottawa on March 28, 2000. In contesting the AECL appeal, the Sierra Club argued that matters of public interest should not be superceded by commercial interests. Two months later, on May 15, 2000 the court issued its judgement. A majority ruling dismissed AECL’s appeal on confidentiality. One of the three judges dissented.

The dissenting judge in his reasons wrote, “in addressing the question one should not lose sight of the fact that the public interest in preserving open court proceedings is no more compelling than the public interest in preserving the right of a litigant to a fair trial. In some cases, a court will find that financial harm is not a sufficient justification for closing the courtroom doors. I do not believe that this is one of those cases.”

The majority, in their reasons, found that “great weight” can be attached, “to the principle of openness in the circumstances of this case to every aspect of the proceedings, including the documentary evidence.”

The majority opinion also stated, “The Motions Judge”, (in the Federal Court - Trial Division) did not commit, “a reversible error when he offered AECL the opportunity to file an edited version of the confidential documents: this was well within his discretion to fashion an order that balanced the competing interests. Protestations by AECL of unworkability are premature in the absence of evidence that an attempt has been made with the assistance of the judge if necessary to operationalize this aspect of the order.”

January 2001

Following the March 2000 decision of the Federal Court of Appeal, a hearing date for the main case was set for April 2001. However, AECL continued its campaign to delay the hearing, while construction continued on the two Qinshan reactors, which are expected to be complete in February 2003 and February 2004 respectively.

AECL scored a success when the Supreme Court of Canada granted leave on January 18, 2001 to appeal on the question of confidentiality of AECL’s Chinese “environmental assessment” documents — despite the fact that AECL had already lost its motion in two prior attempts before the Federal Court of Canada and the Federal Court of Appeal to keep the Chinese documents secret. This delayed the date of the main hearing indefinitely.

February 2001

In an attempt to speed up the process, Sierra Club of Canada applied to the Chief Justice of the Supreme Court to expedite AECL's appeal, so that it would be heard in June 2001 instead of late 2001.

March 2001

On March 23, 2001, Chief Justice McLachlin of the Supreme Court of Canada dismissed Sierra Club’s motion to expedite AECL’s appeal.

November 2001

AECL’s appeal - to reverse the decisions of two lower courts on the question of confidentiality of Chinese “environmental assessment” documents - was heard before the Supreme Court of Canada on November 6, 2001.

April 2002

On April 26, 2002, the Supreme Court of Canada issued its decision granting Atomic Energy of Canada Ltd. (AECL) the right to file Chinese “environmental assessment” documents under a confidentiality order that precludes public access.

AECL had lost its original motion and subsequent appeal because the Federal Court of Canada found that materials placed before the Court in this case are a matter of public interest and therefore should be open to public review. The Supreme Court of Canada rejected this, favouring arguments of commercial confidentiality over those of the public interest. The decision also awarded significant costs to AECL, which Sierra Club Canada will be required to pay.

Having dealt with all outstanding motions put forward by AECL, the case can finally move to a hearing in the Federal Court of Canada. However, costs in the case are a factor for SCC. Should the case move forward, the hearing will consider the issue of whether federal Cabinet ministers acted in contravention of the Canadian Environmental Assessment Act when approving $1.5 billion of public money to facilitate the sale of CANDU reactors to China.


In 2003, with the main arguments in the case still to be heard in the Federal Court of Canada, SCC was placed in a position where it had little choice but to drop the case. SCC Executive Director, Elizabeth May, has written an article about the decision to drop the case which
appears here.

As of August 2003

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