Canada: Does The Canadian International Trade Tribunal Review Intra-Canada Government Procurement Disputes Under The Canadian Free Trade Agreement?

Last Updated: July 8 2017
Article by Cyndee Todgham Cherniak

It looks like the Canadian International Trade Tribunal ("CITT") has not yet been selected by the Federal Government of Canada or any province or territory as the reviewing authority under Chapter Five of the Canadian Free Trade Agreement (Canada's new and improved internal trade agreement).  The Canadian Free Trade Agreement quietly entered into effect on July 1, 2017, replacing the Agreement on Internal Trade ("AIT"). The Canadian Government's " website" states:

"The Canadian Free Trade Agreement (CFTA) enters into force on July 1, 2017. The CFTA replaces the Agreement on Internal Trade (AIT), which has been in place since 1995, and will apply to the federal government as well as all provinces and territories. The CFTA will apply to all procurements commenced on or after July 1, 2017, while the AIT will continue to apply to all procurements commenced before July 1, 2017."

Under Chapter 5 of the AIT (Article 514), the CITT had authority to consider certain federal government procurement bid challenges.  The CITT did not review provincial and territorial government procurement cases. The CITT developed procedures for federal government procurement bid challenges (which remain in effect in respect of NAFTA and other free trade agreements).  The CITT heard and decided many cases filed under the purview of the AIT.

Where do things stand now that the Canadian Free Trade Agreement applies? Article 518(1) of the new Canadian Free Trade Agreement provides that:

"Each Party shall provide a timely, effective, transparent, and non-discriminatory administrative or judicial review procedure through which a Canadian supplier may challenge:

(a) a breach of the Chapter; or
(b) if the supplier does not have a right to challenge directly a breach of this Chapter under the laws of a Party, a failure to comply with a Party's measures implementing this Chapter, arising in the context of a covered procurement, in which the supplier has, or has had, an interest."

Article 513(2) of the new Canadian Free Trade Agreement requires:

"Each Party shall establish or designate at least one impartial administrative or judicial authority that is independent of its procuring entities to receive and review a challenge by a supplier."

However, to date, the Canadian International Trade Tribunal Act has not been amended to grant the CITT authority to hear Canadian Free Trade Agreement government procurement bid challenges.  The CITT has not posted anything about the Canadian Free Trade Agreement on its web-site – yet.  As a result, it is not clear whether bidders on federal government contracts currently have a dispute settlement mechanism available (where NAFTA or another FTA does not cover the procurement).

Since each province and territory must determine their own government procurement review procedures, it will be necessary to look at the processes at the sub-national level.  Many provinces have not yet published the government procurement review procedures.  The best guess would be that judicial reviews may be filed with the provincial courts and that the Canadian Free Trade Agreement would be the rule book.  That being said, there are important provisions in the Canadian Free Trade Agreement that both the CITT (if given the authority) and provincial courts must be aware of.

Article 513(2) of the new Canadian Free Trade Agreement requires that decisions be made within no more than 135 days (which is a rather short period of time):

"If a Party uses an administrative review procedure, findings shall be issued to the supplier within 90 days after the filing of its complaint unless an extension of time is warranted due to extenuating circumstances, in which case the findings will be issued within 135 days after the filing of the complaint."

No further extensions may be granted, for example, when production of government documents is not forthcoming.  How this time limitation will be addressed is something to watch carefully.

Article 513(5) of the new Canadian Free Trade Agreement requires that the federal government and each province and territory must allow no less than 10 days to prepare the complaint under their dispute settlement procedures:

"Each supplier shall be allowed a sufficient period of time to prepare and submit a challenge, which in no case shall be less than ten days from the time when the basis of the challenge became known or reasonably should have become known to the supplier."

Currently, the time restriction is 10 days. However, Article 513(4) of the Canadian Free Trade Agreement provides for consultations after there has been a breach:

"In the event of a complaint by a supplier alleging that there has been a breach or failure as referred to in paragraph 1, the procuring entity and the supplier shall seek to resolve the complaint through consultations. The procuring entity shall accord impartial and timely consideration to the complaint in a manner that is not prejudicial to the supplier's participation in ongoing or future procurement or its right to seek corrective measures under the administrative or judicial review procedure."

Presumably, this consultation process will be before the complaint is filed rather than running concurrently with the 135 day dispute settlement process.

Finally, Article 513(9)(b) limits the costs award to bid preparation costs and/or complaint costs.  A complainant cannot be awarded lost opportunity costs.  This limitation on the damages that may be awarded may significantly reduce the number of government procurement complaints filed under the Canadian Free Trade Agreement.

There are any other provisions in Article 513 and Chapter 5 of the Canadian Free Trade Agreement that are applicable.  This is what the Parties have agreed to.  Let's see if they will implement the processes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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