newfoundland's claim to offshore mineral resources: an overview of the legal issues

Canadian Public Policy

Newfoundland's Claim to Offshore Mineral Resources: An Overview of the Legal IssuesAuthor(s): Joseph ArvaySource: Canadian Public Policy / Analyse de Politiques, Vol. 5, No. 1 (Winter, 1979), pp. 32-44Published by: University of Toronto Press on behalf of Canadian Public PolicyStable URL: http://www.jstor.org/stable/3549727 .

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Newfoundland's Claim to Offshore Mineral Resources: An Overview of the Legal Issues

JOSEPH ARVAY/Faculty of Law, University of Windsor

Although many political disputes are settled at the bargaining table many also proceed to court when a satisfactory solution can not be arrived at. However, the decision of the court is rarely the last word. Rather, it provides the successful party - be it the provincial or federal government - with potent leverage to be employed when the dispute is brought back to the political bargaining table where it must finally be resolved. This would seem to be the course mapped out for Newfoundland and the federal government in its dispute over the natural resources lying beneath the sea off the coast of Newfoundland.

This is not the first time this issue will have been brought before the courts. In 1967 the Supreme Court of Canada held that it was Canada (the federal government) rather than Brit- ish Columbia that had ownership of and jurisdiction over the land (including its natural re-

sources) beneath the territorial sea and comprising the continental shelf off the west coast of Canada. After the BC Offshore Minerals decision1 the Prime Minister was reported to have said that the decision was 'on the basis of principles that would appear to be substantially applicable to the east coast as well as the west coast' (Lewis and Thompson, 1960).

This, however, was probably more a political comment than a legal conclusion. As will become apparent, the legality of Newfoundland's claim is complex with each side producing cogent and compelling reasons for a judicial decision in its favour.

The purpose of this essay is to provide an overview of the legal issues involved in this dis-

pute. A more detailed understanding can be gleaned by reference to a number of articles that have already been written on this very topic.2 Needless to say my task has been made lighter by these earlier efforts and I draw heavily on their research in presenting this overview.

II

The BC Offshore Minerals case was decided on a Reference. Instead of a plaintiff suing a de- fendant to resolve a real dispute between them, the Governor in Council referred the question of ownership and jurisdiction over the offshore areas to the Supreme Court of Canada

1 Reference Re Ownership of Off-Shore Mineral Rights, (1968), 65 D.L.R. (2d) 353. 2 See e.g., Head (1968), Martin (1975:note 2), Ippolito (1976), Swan (1976), Kovach (1975).

CANADIAN PUBLIC POLICY - ANALYSE DE POLITIQUES, V:1 winter/hiver 1979 Printed in Canada/Imprime au Canada

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Offshore mineral resources / 33

for its opinion. One theoretical consequence of this procedure is that the court's decision is not binding on anyone, not even British Columbia. It is simply an advisory opinion. How- ever, being a decision of Canada's highest court it is of very persuasive authority and will be afforded great deference, if not reverence, by any lower court deciding a case involving iden- tical or similar facts. Indeed the. Supreme Court of Canada would be very slow to reverse itself were a similar case to find its way before it. Although the Supreme Court of Canada can refuse to follow one of its previous decisions, the number of times it has done so in its over one hundred year history can be counted on one hand. Hence the success of Newfoundland's claim lies in being able to distinguish Newfoundland's situation from that of British Columbia. Failing that, Newfoundland would be faced with the difficult, if not impossible task, of per- suading the Court that the principles of law applied in BC Offshore Minerals were wrong.

The Court treated separately the claims over the land of the territorial seas and that of the continental shelf. However, in the final analysis the court's reasons were similar in concluding that jurisdiction over and ownership of both resided with the federal government. The Court proceeded first with the issue of ownership or proprietory rights. If BC could establish that the territorial sea and/or the continental shelf were within its boundaries just prior to its entry into Confederation in 1871, then by the terms of the British North America Act this property would remain that of BC. If this land was the property of BC then the BC Legisla- ture would have jurisdiction to legislate in relation to its management and sale pursuant to s. 92(5) of the BNA Act. If this property was not within the confines of the province then the provincial legislature would have no jurisdiction over it because a provincial legislature can not legislate outside of the province. However, even if the territorial sea and continental shelf were held to be within the boundaries of a province Parliament would still retain some legislative authority over such territory. Parliament passes many laws applicable to the resi- dents of a province when the matter of such legislation comes within the many classes of subjects allocated to Parliament by the BNA Act. The criminal law is one obvious example. Hence even if the coastal province had the proprietary rights to the natural resources in the offshore and legislative jurisdiction in relation to its management and sale, the federal legislature would retain the right to enact paramount laws dealing with navigation, shipping, fisheries and defence in that area, to cite but a few examples.

The court looked to the common law rather than international law in deciding the proprietory issue. The choice of law was easily made in the BC case. The rights afforded under international law go only to sovereign states. Colonies are not sovereign states. Indeed in a federal system, with a few rare exceptions, it is the national government rather than the

provinces or individual states which is recognized as the state under international law and thus the sole recipient of the rights created by international law. Since BC was a mere colony of the British Empire prior to 1871 it could only rely on the principles of the common law

(the law evolving through centuries of judicial decisions) to establish its claim. The common law was not unequivocal. There were some earlier decisions which one could

cite as authority for the proposition that the coastal colony had jurisdiction over its territorial sea.3 However the Supreme Court of Canada chose to ignore or distinguish such decisions in favour of those that denied the colonial claims. Although British Columbia's western boundary was described by British legislation as being the Pacific Ocean, the Supreme Court of

3 See e.g., The Newfoundland Supreme Court decision of Anglo-American Telegraph Co. v. Direct United States Cable Co. (1875) 6 Nfid. L.R. 28 per Chief Justice Hoyles at 33. The decision was affirmed on somewhat different grounds, albeit less favourable to Newfoundland's case, by the Judicial Committee of the Privy Council, (1888) 7 Nfld. L.R. 321 (hereinafter referred to as the Conception Bay case). See also Rex v. Burt (1932), 5 M.P.R. 112.



34 / Joseph Arvay

Canada relied on the 1876 case of R. v. Keyn (1876-77, 2 Ex.D. 63) to hold that the colonial boundary ended at the low water mark of the Pacific Ocean. R. v. Keyn arose out of a collision by a foreign vessel with that of a British ship in Britain's territorial seas with the resultant loss of lives. The captain of the foreign vessel was indicted for manslaughter and tried in an English criminal court. The accused contested the jurisdiction of the court claim- ing that it only had jurisdiction for crimes committed within England. The claim was successful as the Court of Crown Cases Reserved held that the realm of England in so far as the common law is concerned ends at the low water mark. The court conceded that international law recognized Britain as having sovereignty in its territorial sea but international law does not become part of the state's domestic law unless specifically enacted by Parliament. More- over, although the admiralty courts of England had jurisdiction for acts committed on the sea, it did so only where the accused was a British natural.

The decision was very controversial and in fact the court itself was divided seven to six. After the decision Parliament reacted by passing the Territorial Waters Jurisdiction Act of 18 78 (41 & 42, Vict., c. 73) which asserted that

...the rightful jurisdiction of Her Majesty ... extends and has always extended over the open seas adjacent to the coasts of the United Kingdom and of all other parts of Her Majesty's dominions. (emphasis added)

Although this legislation may have been regarded 'as a legislative repudiation of the reasoning of the Keyn majority' (Ippolito, 1976: note 3 at 143) the Supreme Court of Canada instead interpreted it as simply closing the gap in the jurisdiction of the Admiralty Court.

If Newfoundland is to be judged by the common law rather than international law then it appears likely that its claim to the territorial sea and continental shelf will follow the same fate as that of British Columbia. However, there is one possible way in which Newfoundland might succeed where BC failed notwithstanding its reliance on the common law. In the BC Offshore Minerals case the Supreme Court of Canada concluded as follows:

... in our opinion in 1871 the Province of British Columbia did not have ownership or property in the territorial sea and that the Province has not, since entering Confederation, acquired such ownership or property. We are not disputing the proposition that while British Columbia was a Crown Colony the British Crown might have conferred upon the Governor or Legislature of the Colony rights to which the British Crown was entitled under international law but the historical record of the Colony does not disclose any such action. (Note 1 at 367.)

Newfoundland did not acquire the territorial sea or the continental shelf after her entry into Confederation in 1949 but an argument might be made that prior to 1949 Britain bestowed on Newfoundland jurisdiction over and possibly proprietary rights in her territorial sea. Unlike BC, Newfoundland exercised considerable control over the offshore waters. It passed legislation providing for the granting of licences to mine under the sea and legislation which regulated the catch of lobster and oysters. More importantly it enacted hovering legislation and customs legislation which empowered colonial officers to board foreign vessels in Newfoundland's territorial waters.

However the mere exercise of jurisdiction over the territorial sea may not be sufficient to establish a proprietary claim. Although such legislation would have the implicit approval of Britain which could have disallowed it, such passive acquiesence may not satisfy the Supreme Court of Canada's requirements. In the BC Offshore Minerals case the court had to consider a decision arising out of Newfoundland although ultimately decided by the Judicial Committee




of the Privy Council. The Conception Bay case (note 4) upheld the right of Newfoundland to exercise its jurisdiction in waters that were arguably offshore and not inland. The Supreme Court of Canada chose to distinguish the decision on the basis that

the Imperial Legislature conferred upon the Legislature of Newfoundland the right to legislate with regard to Conception Bay as part of the territory of Newfoundland. This is the ratio of the case and it does not

carry with it any general delegation by the British Crown over the territorial sea surrounding Newfound-

land. (note 1 at 368)

Hence one commentator has concluded:

In view of the emphasis which the Canadian Supreme Court placed upon Imperial legislative approval of

Newfoundland's claim with respect to Conception Bay, it is unlikely that Newfoundland will be exempted from the Keyn requirement. (Ippolito, 1976:143)

III

Although Newfoundland may fail if the relevant law is only the common law, a different result might obtain if Newfoundland can rely on international law to resolve the dispute. As stated earlier this option was not open to BC because of its colonial status prior to its entry into Confederation. But the historical and political record of Newfoundland differs signifi- cantly in that regard. If Newfoundland can establish that it was an independent sovereign state prior to union with Canada then a strong argument lies that Newfoundland has now ownership of and jurisdiction over its territorial sea and continental shelf.

After the Supreme Court concluded that these offshore lands were not within the boundary of British Columbia it was still left with the task of determining which if any state could claim such control. The Court conceded that in 1871 these lands (or at least the territorial sea, the continental shelf not yet a legal issue) were within the jurisdiction of the United

Kingdom. This was a right recognized by international law not the common law which according to Keyn delineated Britain's coastal boundary at the low water mark. As Canada was not yet a sovereign state in 1871 it could not benefit from the rights afforded by international law. However the Supreme Court of Canada said that Canada acquired its sovereignty 'between its separate signing of the Treaty of Versailles in 1919 and the Statute of Westminster 1931' (note 1 at 375). Therefore by 1931 the rights over the territorial sea off the western coast of Canada once claimed by the United Kingdom were transferred to Canada. Similarly the court concluded that new jurisdictional rights available under international law would now be available to Canada. In this way it was Canada not the UK and certainly not BC, that acquired rights over the continental shelf which rights were not recognized in international law until 1942 at the earliest. Having determined that the territorial sea and continental shelf were within the property of Canada the court then concluded that Parliament had legislative jurisdiction over such territory for four different and alternate reasons. An appraisal of these four reasons will be deferred until the claim of Newfoundland as international actor is discussed.

Just as the Statute of Westminster of 1931 (22 George v, c.4 (UK)) formalized or legal- ized Canada's legislative independence from Britain and her consequent recognition as a sovereign state, the same must be said with respect to Newfoundland. The Statute of West- minster was enacted by the British Parliament as a result of resolutions emanating from the Imperial Conference of 1926. One of those resolutions declared that dominions



36 / Joseph Arvay

... are autonomous communities within the British Empire, equal in status, in no way subordinate one to another in any respect of their domestic or external affairs, though united by a common allegiance to the Crown, and freely associated as members of the British Commonwealth of Nations. (Quoted in

Ippolito, 1976: note 3 at 153).

But the statute of Westminster was directed not only to the Dominions of Canada, New Zealand, Australia, South Africa and the Irish Free State but also included the Dominion of Newfoundland. The essence of the Statute of Westminster was to enable these Dominions to enact laws contrary to Imperial Legislation which had previously applied to the colonies and to prevent the British Parliament from legislating with respect to the Dominions without their consent. The Act also declared that the Dominions had full power to make laws having extra-territorial operation.

One fact however reduces the significance of the Statute of Westminster in so far as New- foundland is concerned. The operative portions of the Statute of Westminster were not to apply to Newfoundland (as well as New Zealand and Australia) until the Parliaments of those Dominions specifically adopted them. Newfoundland never did adopt those provisions and this is pointed to as a factor detracting from Newfoundland's claim to sovereignty. The importance of this fact will largely depend on the court's predisposition to Newfoundland's claim generally. A court could attach little or no significance to this factor pointing out that Newfoundland freely chose not to adopt those provisions and emphasizing the importance of Newfoundland's recognition by the United Kingdom and the international community as having the rights of a sovereign state. It could also point to the fact that the Dominion of Canada was not given complete legislative independence by the Statute of Westminster since it continued to prevent Canada from amending that most important British statute, the BNA Act, and yet Canada was still recognized as a sovereign state. Moreover during this period Newfoundland's Dominion status

was evidenced not only by the passage of legislation creating a Department of External Affairs, providing for a national flag and altering the title of Colonial Secretary to Secretary of State but also by the nature of its inter-imperial relations which included entering into commercial 'treaties' with the United Kingdom and the other Dominions, including Canada, and maintaining a High Commissioner in London. (Martin, 1975:39).

Newfoundland however faces a much more serious obstacle. Even if the courts are prepared to accept that Newfoundland was a sovereign state in 1931 it may be that Newfoundland lost her sovereign status prior to her entry into Confederation. During the 1930s Newfoundland found itself in a desperate financial situation. In return for financial assistance, Newfoundland surrendered her right of self-government to Britain which in turn appointed a Commission to

govern the country closely under Britain's supervision. Cabot Martin, legal advisor to New- foundland's Minister of Mines and Energy, vigorously argues that this was merely a financial- administrative arrangement (Martin, 1975:40). He points out that Newfoundland's form of self-government was merely suspended, albeit for an unfixed period of time, rather than re- voked. He reminds us that there is a presumption against the giving up of sovereignty and therefore the new arrangement should be interpreted restrictively in Newfoundland's favour. He suggests that what occurred was more akin to a 'change in government' rather than the 'succession of sovereign states.'

The Attorney-General of Britain however provided a different perspective. He said:

The effect of the 1933 act (by which the Commission of Government was created) both as a matter of




law and as a matter of the less tangible conventional doctrine, was that sovereign equality was at least

suspended for the time being, and for the time being - that is to say, during the period in which the

1933 statute was in operation - neither the Statute of Westminster nor the conventional doctrine of

sovereign equality had any possible application to Newfoundland.

The true position in law ... after the 1933 statute had been passed, was that the United Kingdom Parliament enjoyed complete Sovereignty, unfettered sovereignty, over Newfoundland and that New-

foundland, although in name a Dominion, was in fact a Colony. (462 Parl. Deb. H.C., (5th sec.) 1265, 1266 (1949) quoted in Ippolito, 1976 note 3 at 160 fn. 136).

Joseph T. Ippolito, another writer in this field, offers somewhat of a more balanced approach. He states:

After the suspension of self-government, Newfoundland remained a de jure dominion, even though in

fact it had been reduced to the status of a mere colony. It is questionable whether Newfoundland re-

tained sufficient sovereignty at this point so as to enjoy the inherent rights of coastal states to control

offshore resources. On the one hand, Newfoundland could not have been termed a state under inter-

national law, since it did not control its own foreign relations. But on the other hand, no state can be

absolutely independent, for any exercise of the treaty power creates a restraint upon sovereign preroga- tive. The House of Lords in Duff Development Co. v. Kelantan Government interpreted quite literally the doctrine that a state might by treaty bargain away some of its powers and still retain its sovereignty. The Lords sustained the ruler of Kelantan's claim of sovereign immunity despite the cession by Kelantan to

Great Britain by treaty of all powers with respect to foreign affairs and internal administration, with the

exception of matters relating to the Mohammedan religion and Malay custom. Newfoundland might

similarly have retained some degree of sovereignty when it ceded to Britain its right of self-government, even though its internal as well as external affairs were managed by a Crown-appointed government.

(Ippolito, 1976: note 3, 156-157)4

Ippolito then surveys the history of Newfoundland's foreign relations during the period of the Commission government. Although the Commission would not be regarded as a 'government of the people ... since it was appointed by Great Britain' (Ippolito, 1976:15 7), he documents several instances in which this Newfoundland government did exercise some sovereignty by entering into various treaties and international agreements (Ippolito: 157 notes 117 & 118). However he also points out that during this period Britain treated Newfound- land as a mere colony, one example of which was an agreement between Britain and the United States 'under which Britain granted the United States a ninety-nine year lease in New- foundland lands in order to build airbases.' (Ippolito: 15 8)

Newfoundland's former system of self-government and hence de facto Dominion status was never actually restored. Although the idea was discussed and contemplated, the people of Newfoundland in a national referendum opted instead for union with Canada. However one of the terms of that union, Term 7 provided that the Constitution of Newfoundland as it existed just prior to the period in which Newfoundland surrendered her right to self-government be 'revived at the date of union ...'5 Cabot Martin makes a convincing case on behalf of Newfoundland. He states that the

Newfoundland negotiations in 1948 obviously anticipated that if Newfoundland went directly from government by Governor and Commission to a province within the Canadian Confederation, constitutional

4 On the issue of sovereignty generally see O'Connell (1970: 283-285). See also Mazer (1977-78). 5 Schedule of Terms of Union Newfoundland with Canada, British North America Act of 1949, 12 & 13

Geo. 6, c. 22.



38 / Joseph Arvay

questions might arise, and Newfoundland's rights obtained as a Dominion might be questioned. Thus, Term 7 of the Terms of Union expressly revived Newfoundland's pre-1934 constitution prior to the Terms of Union taking effect. (Martin; 1975:41)

Ippolito accepts the legitimacy of such an argument but also offers an alternate interpreta- tion to Term 7 as serving 'only to specify which legal document was to serve as the Consti- tution of the new Province.' (Ippolito, 1976:161)

If Newfoundland is recognized as a sovereign state at the time of its entry into Confedera- tion then, at that time it would have all the rights afforded such states by international law. Not only would it have jurisdiction over the land beneath the territorial sea but would also have the exclusive right to explore and exploit the natural resources of the continental shelf. Al- though the Geneva Convention on the continental shelf was not signed until 195 8, the Inter- national Court of Justice in 1969 confirmed that a coastal state has an inherent right over its continental shelf which exists 'ipso facto and ab initio by virtue of its sovereignty over the land.' (North Sea Continental Shelf Cases (1969) 1.C.J.3 at 23) Hence in 1949 Newfound- land had such rights notwithstanding the absence of any formal declaration to that effect.

The question the courts will confront for the first time will be the effect of this pre- Confederation sovereignty of a province after it has entered Confederation. Term 37 of the Terms of Union essentially ensures that the land, mines and minerals 'belonging to New- foundland' at the time it entered Confederation will remain the property of the Province of Newfoundland (Supra note 22). Does international law vest the coastal state with a proprietary right or is it simply a jurisdictional right? It would appear that the Supreme Court of Canada would be precluded from denying that proprietary right in light of the fact that it recognized its existence for Canada on Canada's western offshore waters.

Could the Supreme Court deny the relevance of international law in resolving the New- foundland-Ottawa dispute? Again it would seem estopped from doing so because of the BC Offshore Minerals decision. However, there is some recent authority to support what would appear to be an inconsistent stance. The High Court of Australia in the 1975 decision of New South Wales v. Commonwealth (1975) 8 A.L.R. 1:17 held that the individual states have no

rights to the offshore mineral resources. In this regard the decision is in accord with the BC Offshore Minerals decision. However a passage in the decision by Chief Justice Barwick may be of even more relevance to Newfoundland. The Chief Justice said:

A consequence of creation of the Commonwealth under the Constitution and the grant of the power with

respect to external affairs was, in my opinion, to vest in the Commonwealth any proprietary rights and

legislative power which the colonies might have had in or in relation to the territorial sea, sea-bed and air-

space and continental shelf and incline. Proprietary rights and legislative powers in these matters of international concern would then coalesce and unite in the nation.. That, in my opinion, was the intendment of the Constitution. It is far easier to conclude that the Act of the Imperial Parliament setting up the

federal Constitution intended to vest such matters of international consequence in the new Commonwealth, withdrawing them from the former colonies, than it was to decide that when an American state, already an independent nation in possession of international rights, entered the Union, these rights became vested in the United States. Yet that is received doctrine in the United States expressed in decisions which have

recently been affirmed: (citing California, Texas, Louisiana and Maine). The Supreme Court's reasons were applicable to the circumstances of the states originally entering the Union. These were then independent nation states. Yet without so clear an indication as the grant of the power with respect to external affairs, those states did not retain any rights or legislative power over the territorial sea, subsoil, etc. Later entrants to the Union, coming in on an 'equal footing,' were in the same situation.




This result conforms, in my opinion, to an essential feature of a federation, namely, that it is the nation and not the integers of the federation which must have the power to protect and control as a national function the area of the marginal seas, the sea-bed and airspace and the continental shelf and incline

(1975) 8 A.L.R.: 16-17 cited in Swan (1976: note 3, 569).

This passage is even more significant in light of the fact that it was based on the Chief Jus- tice's appreciation of what the Supreme Court of Canada did in the BC Offshore Minerals case. He regarded the conclusion of the Supreme Court of Canada in that case as depending 'in no small degree upon the fact of Canada's independent nationhood and its recognition as such by the nations of the world' (1975) 8 A.L.R. 1 at 17. In a recent article, a commentator on this decision criticizes Barwick C.J. for exaggerating the significance of Canada's international personality to the outcome of the BC Offshore Minerals decision (Swan, 1976: 570). It thus becomes important to look at that aspect of the decision.

Once the Supreme Court of Canada concluded that the territorial sea and continental shelf were outside the boundary of BC and were the property of Canada it then proceeded to the further conclusion that Parliament had legislative jurisdiction over that property. It came to this latter conclusion on the bases of four alternate grounds. Two of these grounds were quite correct. Firstly, section 91(1 A) vests with Parliament exclusive jurisdiction in relation to federal public property and the offshore area was held to be federal property.

Secondly the court held that this was an appropriate use of Parliament's residual power. Since the offshore lands were not within the boundary of any province, and since a province cannot legislate extra-territorially the court concluded that therefore Parliament must possess such legislative power. In Canada, unlike Australia and the United States, the federal legislature holds a residual power whereas the provincial legislatives are limited to legislating in relation to specifically allocated classes of subjects. This conclusion was therefore also correct.

Before commenting upon the third and fourth ground it should be noted that where a court provides alternate reasons for its decision the fact that one of those grounds proves sub- sequently to be wrong does not affect the validity of the decision as long as there remains at least one valid ground upon which to base the decision. However the reasons provided in any decision are critical in determining how far the case can be relied upon as a precedent for future litigation. Where a case is decided on a very narrow point it is less likely to be as relevant in future litigation as a case based on sweeping generalizations. Whereas the first two grounds can be limited to British Columbia, grounds three and four are applicable to any coastal province. They are as well much more controversial.

The third ground lies in the following sentence of the Supreme Court's judgment:'The mineral resources of the lands underlying the territorial sea are of concern to Canada as a whole and go beyond local or provincial concern or interests.' (Swan, 1976:376).

Some may regard this as simply an elaboration of Parliament's residual power which finds its source in Parliament's plenary power to make laws for the Peace, Order and Good Govern- ment of Canada.6 But it is arguably much more. If the land in question fell outside of the boundary of BC then why should it matter that the mineral resources underlying these lands be of national or local concern? It is submitted that this is relevant only when the subject matter is potentially or at least possibly within provincial jurisdiction. If the court intended this conclusion to follow from its prior finding that the territorial sea and continental shelf were outside the provincial boundary, then this passage is simply wrong. Hence this statement only makes sense on the assumption that the area in question fell within the province. But if

6 This would seem to be the manner in which Ivan Head interpreted it. See Head (1968:note 3 at 146).



40 / Joseph Arvay

that is the case then BC not Canada has the proprietary rights although Canada may have paramount legislative jurisdiction. As this inconsistency can not be reconciled, that statement would probably be relegated to the status of obiter dicta, meaning that it was simply an aside and not the articulation of any rule for which the case is authority. However this obiter may assume greater importance when Newfoundland's case reaches the court. Assuming the court finds the territorial sea and continental shelf part of the lands belonging to Newfoundland, this would not necessarily settle the jurisdictional issue. One possible and indeed the most obvious arrangement would have the province assuming primary jurisdiction over the management and sale (including lease) of the land and its natural resources pursuant to s. 92(5) of the BNA Act. The province would then have the important role in regulating the time and method of exploring and exploiting those natural resources. Parliament would retain its right to enact laws dealing with navigation, shipping, fisheries and defence. Any conflict with a federal and provincial law would be resolved in favour of Parliament.

However the passage of the Court characterizing mineral resources as a matter of national concern foreshadows the possibility of a much more drastic course. When a matter is charac- terized as being by its inherent nature a matter of national concern Parliament can assume

jurisdiction over it. Such areas as aeronautics, atomic energy and the national capital are some

examples recognized as matters of national concern by the courts.

Although Newfoundland would retain its proprietary rights and hence the right to demand

royalties for the use or exploitation of her property, Parliament, however, could assume the critical legislative power to control the exploration and exploitation of that property. What- ever legislative power the province would have by virtue of s. 92(5) of the BNA Act would be subordinate to Parliament's legislative power. Indeed if Newfoundland's actions as the property owner interfered with the federal government's plans in developing the offshore areas, Parliament could (arguably) expropriate the provincial property and theoretically, albeit not

likely, could do so without compensation to Newfoundland.7 Many would argue that the natural resources lying beneath the sea are of national import-

ance. Yet it is doubtful that they would or should be accorded such significance within the constitution. Inflation too, one would think, was a matter of national concern and yet the

Supreme Court of Canada refused to so characterize it so as to bring it permanently within Parliament's list of powers. Speaking for the plurality in the Anti-Inflation Act Reference (1976:68 D.L.R. (3d) 452 (S.C.C.)) Beetz J. said of inflation:

It is an aggregate of several subjects some of which form a substantial part of provincial jurisdication. It is

totally lacking in specificity. It is so pervasive that it knows no bounds. Its recognition as a federal head of

power would render most provincial powers nugatory. (Id: at 524)

Natural resources should probably be even more readily rejected by the court as a candidate for this national concern doctrine. It is not simply an aggregate of provincial concerns but it itself has always been regarded as a matter within the exclusive concern of the provinces. That is not to say that a matter once only of local or provincial concern cannot attain di- mensions of national concern but compelling reasons would have to be demonstrated before the subject matter would take the leap from the provincial sphere into the federal. Nor would it be rational to distinguish between natural resources lying beneath the sea and those found inland. Oil is of the same importance regardless of its source. To single out natural resources

7 For a discussion of the constitutional issues revolving around expropriation see La Forest (1969:150, 153).




lying beneath the sea but within provincial boundaries (assuming that claim is successful) as being of national concern would discriminate unfairly against the maritime provinces whose land is often barren and who look primarily to the sea for their livelihood and prosperity.

The fourth ground ruled on by the court suggests why the court might choose to treat natural resources beneath the sea differently from natural resources found inland even if the natural resources beneath the sea are held to be within the confines of a coastal province. It was this fourth ground to which Barwick C.J. attached so much importance in the New South Wales decision. This ground is revealed in two separate paragraphs of the court's judgment:

Moreover the rights in the territorial sea arise by international law and depend upon recognition by other

sovereign states. Legislative jurisdiction in relation to the lands in question belongs to Canada which is a

sovereign State recognized by international law and thus able to enter into arrangements with other States

respecting the rights in the territorial sea. (note 1 at 376)

Further on when speaking of the continental shelf, this theme is developed:

Canada is the sovereign State which will be recognized by international law as having the rights stated in the Convention of 1958 and it is Canada, not the Province of British Columbia, that will have to answer the claims of other members of the international community for breach of the obligations and responsi- bilities imposed by the convention. (380)

Ivan Head has described these passages in general, and the former in particular, as being

so shocking in their impact, so far-reaching in their consequences and so totally out of keeping with the

tone of the opinions to that point that one can only assume that the Court was not cognizant of what it

Head was critical of this aspect of the decision not only because it was unnecessary for the court's conclusion but that it dramatically affected the then state of division of powers in the Constitution. According to traditional constitutional doctrine as laid down in the Labour Conventions case (A.-G. Canada v. A.G. Ont. (1937) A.C. 326) the federal executive has the sole power to enter into treaties and international agreements on behalf of Canada, but these treaties do not become part of the law of Canada until they are adopted and implemented by the appropriate legislature. The 'appropriate legislature' - provincial or federal - depends upon the matter of the treaty. When the matter (the essence or pith and substance of the treaty) is one that comes within the classes of subjects allocated to the provinces then it is the provincial legislature which must implement the treaty before it is a law binding on Canadians. Similarly if the matter comes within the federal legislature's scope of powers then the appropriate legislature is Parliament. Hence a treaty concerning the definition and punish- ment of the crime of terrorism would be implemented, if at all, by Parliament. But a treaty respecting conditions in the labour market, education, hospitals (to name but a few) could only be implemented by the provinces.

But in the BC Offshore Minerals case the Supreme Court of Canada ignores the distinction between treaty making and treaty implementation. The Court seemed to reason that if Canada was to enter into treaties on the continental shelf it must therefore have the right to legislate to implement those treaties, and hence Parliament was given jurisdiction over the offshore territory. Head stated that the Court erred



42 / Joseph Arvay

because it failed to appreciate that 'the Crown in right of Canada' vis-a-vis other nation-states in the inter-

national community is a different legal entity from 'the Crown in right of Canada' vis-a-vis the provinces in the federal community. This is a sophisticated distinction but one basic to any federal state. (Head,

1968:155)

Although criticism exists for the Supreme Court's approach there would also seem to be considerable support for it. The Labour Conventions case from which the Supreme Court de- parted was criticized by such eminent jurists as Ivan Rand (Rand, 1960) (former justice of the Supreme Court of Canada) and Lord Wright (Wright, 1955) who actually sat on the Privy Council during the Labour Conventions case. Moreover, in another recent decision MacDonald v. Vapour Canada Ltd. (1976) 66 D.L.R. (3d) 1 at 24, the Supreme Court of Canada sug- gested that the Labour Conventions case should be reconsidered.

As a question of politics or even policy it may appear to some that Parliament should be given legislative jurisdiction in relation to any matter that is the subject of international agreement. Although our constitution should be flexible enough to accommodate the needs of the country the fact remains that ours is a federal constitution and federalism ought to remain the paramount consideration in constitutional adjudication. In a unitary state this problem would simply not arise. But the price of simplicity comes high and in Canada vest- ing such power with Parliament would constitute a severe encroachment on provincial auto- nomy and the right of provincial diversity. Moreover it is no indictment of federalism merely because Parliament is prevented from unilaterally legislating on a matter which was the sub-

ject of a treaty when the essence of that treaty was otherwise within provincial jurisdiction. What federalism often requires is co-operation and negotiation between the national and provincial governments. Indeed it would be preferable to see the provinces assume an even greater role in the negotiation and making of treaties where the subject matter is otherwise within provincial jurisdiction. (See e.g. Atkey, 1970) Their input at this stage will save the federal government from the potential embarrassment of not being able to implement that which it had agreed with the international community. Moreover embarrassment is deserving where the federal government promises another country something which it cannot legally deliver. Some may find it unsettling that the federal government should be so hamstrung in its international dealings. But it would seem to be even more unsettling and indeed subversive of our constitutional order, to say on the one hand that Parliament cannot legislate in areas entrusted to the provincial legislation by the BNA Act but on the other hand it can do so when the subject matter of the law was the subject matter of an international treaty. Treaty- making would suddenly become very attractive to the federal government. If there are particular areas now entrusted to provincial jurisdiction which ought to be transferred to the federal arena then the better way (albeit slower) is by constitutional amendment. It is more precise and changes only that which needs changing. If the Supreme Court of Canada over- rules the Labour Conventions case (thus giving Parliament this vast new power) it will be a classic case of burning the house to roast the pig.

I can now summarize the range and variety of possible ways in which a law suit between Ottawa and Newfoundland might be resolved: (1) Newfoundland's sovereignty prior to Confederation may not be established in which

case only the common law will apply and she will be in exactly the same position as British Columbia with both proprietary rights and legislative power going to Ottawa.

This is subject to the possible finding that the Imperial Crown bestowed upon the Colony of Newfoundland in express enough terms jurisdiction or proprietary rights over all or any part of her offshore regions.




(2) If Newfoundland's sovereignty prior to Union is established (or if the court is convinced that the Imperial Crown granted Newfoundland jurisdiction and or property rights in the offshore region) then (a) Newfoundland, rather than Canada would possess the property and jurisdictional

rights to the area in question. Parliament would retain the right to legislate in such areas as navigation, shipping, fisheries and defence and such laws would be paramount over any conflicting provincial laws concerning the management and sale of the offshore lands.

Such a favourable decision to Newfoundland would probably be a victory unique to Newfoundland. The decision would not turn on Newfoundland's geographical position as it does on its unusual historical and political position in Canada. It is therefore unlikely that this decision would be a significant precedent in so far as other coastal or maritime provinces are concerned unless of course they can liken their position to that of Newfoundland. An analysis of the legal claims of the other coastal provinces was beyond the scope of this article.

(O R) (b) Newfoundland would retain the property rights to the offshore land but plenary

jurisdiction over such property would lie with Parliament on the bases of (i) the national concern doctrine under Parliament's power to make laws for the

Peace, Order and Good Government of Canada or (ii) on the basis of a new treaty power which would also trace its source to the

POGG power. (O R) (c) The court might regard Newfoundland's pre-Confederation sovereign status as ir-

relevant and conclude that jurisdiction over and ownership of the offshore lands lies with Canada. This conclusion would be the most difficult to rationalize from a legal perspective.

Nothing has been said of the policy factors involved in the dispute over control of offshore mineral resources. This is not to deny their importance. (See Martin, 1975:43-61) Rather it should illustrate that our courts rarely consider such policy factors as relevant in constitutional litigation. In a recent case dealing with jurisdiction over the Georgia Strait the Chief Justice of the British Columbia Supreme Court prefaced his judgment with the following caution:

It is appropriate to emphasize that in considering the question raised on this reference the court is not

concerned with political or economic aspects. No such matters were raised or indeed could be raised by the question referred, which is concerned solely with the legal position ... (Reference Re. Ownership of the Bed of the Strait of Georgia and Related Areas, (1976) 1 B.C.L.R. 97 at 98)

Although policy factors may not serve an overt role in constitutional decision-making, it would be naive to believe that their role is non-existent. The judge must justify his conlusion on the basis of some rule or principle of law but either the creation of those rules or the choice of one over another is often dictated by the result desired. The values of the judge and those of society cannot but help influence his decision.

However if the Supreme Court is prepared to entertain arguments as to whether offshore minerals are of such national concern so as to justify federal jurisdiction under its Peace, Order and Good Government clause, then these economic and social factors become highly relevant



44 / Joseph Arvay

and indeed admissible evidence. What is or is not a matter of national concern is primarily a question of fact although it is also somewhat of a legal question. The value and acceptability of the Supreme Court's decision on this point will largely depend on the input it receives on these non-legal matters. It is here that the court and the lawyer must look to the social scientists for their valuable expertise.

RE FERENCES

Atkey, R. (1970) 'Provincial Transnational Activity: An Approach to a Current Issue in Canadian Federalism?' Ontario Advisory Committee on Confederation, Background Papers and Reports 11: 153.

Head, Ivan (1968) 'The Canadian Offshore Minerals Reference. The Application of Inter- national Law to a Federal Constitution,' University of Toronto Law Journal, 18:131.

Ippolito, Joseph T. (1976) 'Newfoundland and The Continental Shelf: From Coal to Oil and Gas,' Columbia Journal of Transnational Law, 15:13 8.

Kovach, A. J. (1975) 'An Assessment of the Merits of Newfoundland's Claim to Offshore Mineral Resources,' Chitty 's Law Journal, 23:18.

La Forest, Gerard V. (1969) National Resources and Public Property Under the Canadian Constitution (Toronto: University of Toronto Press)

Lewis, D. and A. Thompson (1960) Canadian Oil and Gas Part 1, Section IV, at 29B cited in Cabot Martin (1975)

Martin, Cabot (1975) 'Newfoundland's Case on Offshore Minerals: A Brief Outline,' Ottawa Law Review, 7:35.

Mazer, B. (1977-78) 'Sovereignty and Canada: An Examination of Canadian Sovereignty from a Legal Perspective,' Saskatchewan Law Review, 42:1.

O'Connell, D. D. (1970) International Law (London: Stevens) Rand, I. (1960) 'Some Aspects of Canadian Constitutionalism,' Canadian Bar Review, 38:

135.

Swan, George Steven (1976) 'The Newfoundland Offshore Claims: Interface of Constitu- tional Federalism and International Law,' McGill Law Journal, 22:541.

Wright, Lord (1955) 'Tributes to the Late Right Hon. Sir Lyman Poore Duff, Chief Justice of Canada,' Canadian Bar Review, 33:1123.



newfoundland's claim to offshore mineral resources: an overview of the legal issues

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