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State Immunity Act Considered
Published in the July 2010 issue of Litigation Notes - View Article
The Ontario Superior Court of Justice rules that a libel action against Guyana’s Minister of Agriculture and a state-owned sugar producer is not barred by the State Immunity Act.
Demerara Sugar has been produced since the 1800’s in Guyana, although sugar calling itself Demerara is now produced in other countries including Mauritius, Barbados, India and Malawi.
Guyana’s largest sugar producer is Guyana Sugar Corporation Inc. (“Guysuco”), a company wholly owned by the government of Guyana. Guysuco is Guyana’s largest employer and its largest foreign exchange earner. Its revenue accounts for between 11% and 13% of Guyana’s GDP.
Prior to 2003 Guysuco marketed its sugar in unlabelled 50 kg bags primarily within the Caribbean region. In April of 2003, it launched its own brand of sugar for the retail trade, which it called “Demerara Gold”.
Lionel Bedessee came to Canada from Guyana in 1971. Under the name Bedessee Imports Ltd., he began selling foods from the Caribbean, which were relatively scarce in Canada at the time. In 1977 he started a retail store on Queen Street West in Toronto and ultimately expanded to a 46,000 square foot warehouse and manufacturing facility. In 1985, he incorporated Bedessee Imports Inc. which carries on business out of a warehouse in Brooklyn, New York and a wholesale outlet in Florida. Since at least 1984 the Bedessee companies (collectively “Bedessee”) have been selling a sugar product known as Demerara Gold and another known as Guyanese Pride. Both contain sugar originating from Mauritius and not from Guyana.
In October of 2003 Guysuco wrote to Bedessee inviting it to submit an application for distributorship of Guysuco’s Demerara Gold. Bedessee declined, advising that Demerara Gold was a trademark of Bedessee and that Guysuco would be unable to market its product under that name in Canada or the United States. Both parties immediately applied to register the trademark and each opposed the other’s application. Guysuco ultimately abandoned its application.
In 2009, Guysuco embarked on an aggressive marketing campaign aimed in particular at Guyanese expatriates in North America. Mr. Robert Persaud, Guyana’s Minister of Agriculture, made a number of statements suggesting that Guyanese in North America were being duped into purchasing sugar made in Mauritius which was being passed off as Guyanese sugar. These statements indicated that Bedessee “has a reputation of dishonest marketing in branding and packaging its products to deceive the West Indians residing in North America”. Bedessee commenced a libel action against Guysuco and Mr. Persaud in Ontario.
The Defendants moved to dismiss or permanently stay the action, relying on the State Immunity Act (“Act”), which provides that a foreign state is immune from the jurisdiction of any court in Canada. The Plaintiffs relied on exceptions in the Act and in particular that contained in section 5 which provides that a foreign state is not immune from the jurisdiction of a court in any proceedings that relate to any commercial activity of the foreign state and section 6 which provides that there is no immunity in respect of damage to or loss of property that occurs in Canada.
Justice Strathy reviewed the common law antecedents of the State Immunity Act, as summarized by Lord Wilberforce in the House of Lords case of I Congreso Del Partido:
“Historically, nation states enjoyed an absolute immunity from adjudication by foreign courts. Under international law, it was accepted that sovereign states should not be ‘embarrassed’ by subjection to the control of a foreign judiciary. Over time, however, as governments increasingly entered into the commercial arena, the doctrine of absolute immunity was viewed as an unfair shield for commercial traders operating under the umbrella of state ownership or control. The common law responded by developing a new theory of restrictive immunity. Under this approach, courts extended immunity only to acts jure imperii [public acts], and not to acts jure gestionis [private acts].
In order for the exception to apply it is necessary to investigate the fundamental nature of the activities entered into by the foreign power. If they are essentially commercial in nature then the exception will apply.”
In this case Justice Strathy found that the public statements made by Minister Persaud were “directly related to the commercial activity carried on by Guysuco. The statements were directed at activities undertaken by a commercial competitor and had to do with the protection of Guysuco’s brand – a plainly commercial activity”. The motion to stay or dismiss the action was dismissed.
Bedessee Imports Ltd. v. Guyana Sugar Corporation, Inc., 2010 ONSC 3388 (CanLII)