alleged that the Republic of Estonia induced Estonian Air to breach
its contract with Bombardier, intentionally interfering with its
economic relations. Bombardier therefore sought to bring the
Republic before the courts of Ontario by invoking the
"commercial activity" exception as described in s. 5 of
the Federal State Immunity Act, RSC 1985, c S-18 (the
The commercial activity exception
provides that a foreign state is not immune from the jurisdiction
of Canadian courts "in any proceedings that relate to any
commercial activity of the foreign state." "Commercial
activity" is defined as "any particular transaction, act
or conduct or any regular course of conduct that by reason of its
nature is of a commercial character."
Held: A party seeking
to invoke the commercial activity exception in the Act must provide
an evidentiary record that permits the court to determine that the
foreign state engaged in commercial activity and that the
proceedings relate to that activity. Although that analysis does
not require a determination of the underlying merit of the cause of
action, it is a merits-based analysis of the evidence supporting or
refuting the assertion that the court has jurisdiction based on the
Based on the evidentiary record, the
court held that the Republic's activities were restricted to
oversight as shareholder and to the furtherance of governmental
objectives. It had no involvement in the management, governance or
commercial activities of Estonian Air and that the decision to end
negotiations with Bombardier was made by the airline and not the
Republic. Although the Republic owned over 90 percent of the shares
of the airline, this did not establish that it was engaged in
commercial activity. The Republic's activities were sovereign
in both purpose and nature, and therefore Bombardier's claim
The editor wishes to acknowledge the valuable
contributions of Elka Dadmand to this case note.
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