Reference re Pan‑Canadian Securities Regulation 2018 SCC 48

Breakdown of the Decision:

• Unanimous Decision: The Court (Chief Justice Wagner and Justices Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe, and Martin in agreement)

Case Background:

• Issue: The constitutionality of a proposed Pan-Canadian securities regulation system. Canada lacks a national securities regulator, resulting in each province and territory having its own regulatory framework. The federal government, believing a single regulator is crucial for the economy, sought a cooperative approach.
• Previous Decision: In 2011, the Supreme Court ruled that Parliament alone could not create a national regulator without overstepping provincial powers. A cooperative approach between federal, provincial, and territorial governments was suggested as a constitutional alternative.

Proposed Cooperative System:

• The proposal included a “draft law” for federal Parliament, a “model law” for provincial and territorial legislatures, and the creation of a national securities regulator.
• An agreement between executive branches (Prime Minister, Premiers, and their cabinets) set out the system.

Concerns and Reference to Court:

• Quebec, Alberta, and Manitoba raised concerns about the proposal.
• In 2015, Quebec asked its Court of Appeal two questions:
  1. Is the proposed Cooperative System constitutional?
  2. Does the draft federal law overstep federal trade and commerce powers?
• The Quebec Court of Appeal answered no to both questions.

Supreme Court’s Findings:

1. Constitutionality of the Cooperative System:
   • The Cooperative System does not violate parliamentary sovereignty. Provincial and territorial legislatures are free to accept or reject the model law and any subsequent changes.
   • The “Council of Ministers” involved in the system does not have legislative power; it only approves changes, maintaining legislative sovereignty.
2. Draft Federal Law and Federal Powers:
   • The draft federal law fits within Parliament’s general trade and commerce powers. It addresses systemic risks to Canada’s economy, a truly national issue.
   • The law is carefully designed to complement provincial and territorial laws without infringing on their roles in securities regulation.
3. Delegation of Power:
   • The federal government can delegate regulation-making powers to other entities, including provincial groups. This delegation does not undermine federal authority as Parliament retains the ability to revoke these powers.

Conclusion:

• The Supreme Court affirmed that the proposed Cooperative System is constitutional. However, participation in the system is a policy decision for each province and territory.
• The ruling supports a unified approach to securities regulation in Canada while respecting the constitutional division of powers between federal and provincial governments.