Court Finds “Virtual Presence” Enough for Cross-Border Production Order
Published:
January 12, 2018
Author(s):
Whether a provincial court will grant police a “production order” under the Criminal Code of Canada requiring a non-Canadian company to produce any of its records has, to date, depended on the province in which police seek it. Some courts refuse an order where the company is wholly outside of Canada; some require an address in Canada for service to grant the order; and others grant the order, apparently unconcerned about the company’s Canadian “presence”. That could however change with the B.C. Court of Appeal’s January 9, 2018, decision in British Columbia (Attorney General) v. Brecknell. The Court’s decision that Craigslist is “present” in B.C. and can be subject to a Criminal Code production order issued from its provincial court might lead to greater national uniformity – and more exposure to foreign companies doing only virtual business in Canada:
The Legal Trend. The decision lines up with the Supreme Court of Canada’s increasing awareness of the Internet’s inherently global nature, willingness to take jurisdiction in cases that cross borders, and readiness to apply existing legal principles to online business – all as illustrated in the Court’s June 2017 decisions in Google Inc. v. Equustek Solutions Inc. and Douez v. Facebook, Inc. There’s every reason to believe this trend is here to stay – and foreign companies doing business in Canada, even if only virtually, should be prepared for the increased legal exposure it entails.
Broader Implications. The Court’s conclusion that the distinction between a virtual-only presence and a “physical” presence is effectively a distinction without a difference could carry implications far beyond the availability of production orders. Whether its reasoning vis-a-vis an internet-based company’s “presence” in Canada will have application to, for example, tax laws, remains to be seen.
More Production Orders & More Content. Non-Canadian companies will likely see more production orders from Canadian courts. Canadian courts will more willingly assume jurisdiction over companies where the only contacts with Canada are virtual (i.e. over the internet), and more readily available to police to obtain production orders against such companies – no matter where they are “physically” present. And this route is much preferred by police compared to proceeding under mutual legal assistance procedures. In addition to more Canadian production orders against internet companies, more of those orders will likely be for “content”, not just identifying information and metadata. And this decision will likely lead Canadian police to conclude that compliance is no longer a question of voluntariness: many internet companies “voluntarily” comply with Canadian orders for non-content data but require Mutual Legal Assistance Treaties (MLAT) processes for content such as email and other communications.
In 2016, the Royal Canadian Mounted Police (R.C.M.P.) applied to the B.C. Provincial Court for a production order requiring Craigslist to produce certain information about one of its users. In particular, R.C.M.P. sought the user’s name or physical address, its email address, the IP address assigned to the user when the post was created, the phone numbers used to verify the user account, the dates and times the post was created post and the record of the posting. The court refused on the basis Craigslist had only a “virtual presence in B.C.” The R.C.M.P. appealed and on January 9, 2018, the B.C. Court of Appeal agreed: Craigslist is “present” in the province of B.C. and police can obtain a production order naming it, even though it has no “physical” presence in Canada or an address in Canada to effect service:
Virtual Presence = Physical Presence. Under Canadian law, a Canadian court has jurisdiction where there is a “real and substantial connection” between Canada (or a Canadian province) and the activity in issue. There’s no “bright line” rule, but courts have consistently decided that actively doing business over the internet with residents of a particular Canadian province is enough to create that connection. This in turn gives the court jurisdiction over the specific subject matter and parties (a.k.a “in personam” jurisdiction), a proposition about which the Supreme Court of Canada most recently pronounced in its June 2017 decision in Google v. Equustek Solutions Inc. Here, the Court of Appeal interpreted the Criminal Code provisions as limiting courts’ ability to issue a production order “…only against a person in Canada”, making the question whether Craigslist – a U.S. company with no physical presence in Canada – is “a person in Canada” for this purpose. The Court concluded the distinction between a virtual-only presence and a “physical” presence is effectively a distinction without a difference (at para. 40):
“… [I]n the Internet era it is formalistic and artificial to draw a distinction between physical and virtual presence. Corporate persons … can exist in more than one place at the same time. … I do not think anything turns on whether the corporate person in the jurisdiction has a physical or only a virtual presence. To draw on and rely on such a distinction would defeat the purpose of the legislation and ignore the realities of modern day electronic commerce…”
The Test is Canadian Presence – not Canadian Possession. The Court was clear that the test for a production order is only the presence of the recipient – and not the information sought to be produced – in Canada. Once the Court of Appeal concluded Craigslist was “a person in Canada”, the test was met (at para. 39):
“In the first instance, the [Criminal Code] section, properly interpreted, stipulates only that the person subject to the order must be a person in the jurisdiction. In my view, Craigslist is such a person. Second, the person must be a person who has possession or control of a document. The section says nothing expressly about where that possession or control exists. Indeed, it may not even be sensible to pose the question in terms of the location of control. A person either does or does not have possession of a document. The question is one of control, not where the control is exercised. In this case, Craigslist has possession or control of the relevant records and the provision requires nothing further. In other words, there is nothing in the section that requires the person in the jurisdiction to be a custodian of the documents in the jurisdiction. In my view, it is sufficient that the person is present within the jurisdiction. I do not think that there is anything extraterritorial in such an interpretation. To conclude that Craigslist is a person within the jurisdiction who has possession or control of documents does not give the section an impermissibly extraterritorial interpretation.”
No Other Barriers. The Court of Appeal rejected the argument that a production order against a foreign company effectively intrudes into another country’s sovereignty, essentially deputizing a non-Canadian company to carry out a search in a foreign country that Canadian police could never carry out themselves. The Court concluded the weight of U.S. legal authority doesn’t treat subpoenas in this manner, noting it appears instead to recognize the U.S. validity of subpoenas directed to persons in the U.S. over whom there is personal jurisdiction to disclose documents in the U.S. even where they must be obtained from outside the U.S. The Court also considered – and rejected – the arguments that enforcement difficulties or the existence of Mutual Legal Assistance Treaties (MLAT) militate against the use of production orders in cases like this.
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