Sovereign Immunity Upheld

Written on January 17, 2014.

In June 2013 we commented on the Ontario Superior Court decision in Bombardier Inc. v AS Estonian Air, 2013 ONSC 3039. http://www.pmlaw.com/?p=796

Justice Morgan of the Ontario Superior Court of Justice upheld the immunity from suit enjoyed by the Republic of Estonia by virtue of Canada’s State Immunity Act.

That decision was appealed to the Ontario Court of Appeal which upheld the lower court decision on January 17, 2014.  http://www.ontariocourts.on.ca/decisions/2014/2014ONCA0041.htm

The plaintiff had sought to invoke the commercial activity exception to Sovereign immunity in order to ground jurisidction for a claim against the Republic of Estonia, involving AS Estonian Air.

The Court of Appeal observed that the analysis involved a merits based approach and that evidence was necessary to decide the issue. The Court observed that the motions judge held:

“… that the Republic’s activities were restricted to oversight as shareholder and to the furtherance of governmental objectives. He also found, at para. 83, that with one insignificant exception, all of the evidence before him demonstrated that “there was no involvement by the government and no political interference with [the Airline’s] management in reaching its decision” to cease negotiations with the appellant and to buy aircraft from a competitor.”

As such the motion’s judge found that “the Republic’s activities were sovereign in both purpose and nature and did not cross the line into the management sphere.” The decision of the motion’s judge was based on the evidence and entitled to deference.

In the result the action is permanently stayed against the Republic of Estonia.