ARTICLE 1904
BINATIONAL PANEL REVIEW PURSUANT TO THE
NORTH AMERICAN FREE TRADE AGREEMENT

DECISION OF THE PANEL

ON REVIEW OF THE CANADIAN INTERNATIONAL
TRADE TRIBUNAL ORDER OF OCTOBER 16, 1998

APPEARANCES:

The Complainants

Mr. Darrel H. Pearson and Mr. Jeffery D. Jenkins on behalf of Cello Products Inc. and Bow Metallics Inc.

In Opposition to the Complainants:

Mr. Lawrence L. Herman on behalf of Mueller Industries, Inc. and Streamline Copper & Brass Ltd.
Mr. Riyaz Dattu on behalf of Nibco Inc.

On Behalf of the Canadian International Trade Tribunal:

Mr. Gerry H. Stobo and Ms. Tamra A. Alexander on behalf of the Canadian International Trade Tribunal

 TABLE OF CONTENTS
 

I.	Introduction
II.	Standard of review
III.	Issue One
	Did the Canadian International Trade Tribunal err in finding that Streamline Copper & Brass Ltd. was part of, and should not be excluded from, the domestic industry for purposes of the review inquiry?
IV.	Issue Two
	Did the Canadian International Trade Tribunal err by failing to establish a quantum of materiality in conducting its causation analysis?
V.	Issue Three
	Did the Canadian International Trade Tribunal err in the Request for Information process by misapprehending the nature of its statutory authority, by pre-judging the relevance of information requested by Cello Products Inc. and Bow Metallics Inc., and by restricting the threshold of admissibility to a new clearly of relevance standard?
VI.	Conclusion
	Appendices
	TABLE 1A	Cello Request to Nibco
	TABLE 1B	Bow’s Request to Nibco
	TABLE 1C	Cello Request to Streamline and Mueller
	TABLE 2	Comparison of Denied RFI Requests with Notice of Matters Arising

I. INTRODUCTION

This Panel was convened pursuant to Article 1904 of the North American Free Trade Agreement (“NAFTA”) in response to a Complaint filed with the Canadian Secretariat on December 21, 1998 by Canadian domestic manufacturers Cello Products Inc. (“Cello”) and Bow Metallics Inc. (“Bow”) (the “Complainants”). The Complaint related to an order of the Canadian International Trade Tribunal (the “CITT”) made on October 16, 1998 in Review No. RR-97-008 rescinding its finding of October 18, 1993 in Inquiry No. NQ-93-001 concerning certain solder joint pressure pipe fittings and solder joint drainage, waste and vent pipe fittings, made of cast copper alloy, wrought copper alloy or wrought copper, originating in or exported from the United States of America and produced by or on behalf of Elkhart Products Corporation, Elkhart, Indiana, Nibco Inc., Elkhart, Indiana, and Mueller Industries, Inc., Wichita, Kansas, their successors and assigns. 

In Inquiry No. NQ-93-001, the CITT had found that dumping in Canada of the subject goods, with some exceptions, had caused, was causing and was likely to cause material injury to the production in Canada of like goods. In its 1998 review of that finding in Review No. RR-97-008 made under subsection 76(2) of the Special Import Measures Act (“SIMA”), the CITT found that there was a likelihood of resumed dumping, but that such dumping was not likely to cause material injury to the Canadian industry, and rescinded the finding in Inquiry No. NQ-93-001 by its order of October 16, 1998 made pursuant to subsection 76(4) of SIMA. 

In accordance with a prescribed timetable, briefs were filed on behalf of the Complainants, Cello and Bow, and on behalf of Mueller Industries Inc. (“Mueller”) and Streamline Copper & Brass Ltd. (“Streamline”) and on behalf of the CITT. The Complainants filed a reply brief. Counsel for Nibco Inc. (“Nibco”) did not file a brief. 

Counsel for the Complainants submitted on appeal that in Review No. RR-97-008, the CITT had committed errors of jurisdiction, failed to follow principles of natural justice and erred in law and fact. They requested that the finding of no likelihood of material injury to the domestic industry be set aside and replaced with a finding of likelihood of material injury, or alternatively, that the matter be remanded to the CITT with directions that it make a finding of likelihood of material injury. They also submitted that Streamline should be excluded from the domestic industry in the CITT’s analysis. Counsel for Mueller, Streamline and the CITT countered that the Panel should uphold the CITT’s decision.

Counsel for the Complainants had argued before the CITT that Streamline, a Canadian manufacturer and affiliate of Mueller, should not be included as part of the Canadian domestic industry. The CITT rejected this submission and, in its order, found that Streamline was part of and should not be excluded from the domestic industry. Counsel for the Complainants submit that the CITT was in error in so doing. Counsel for Mueller, Streamline and the CITT support the CITT’s decision.

The CITT’s Statement of Reasons, in finding that future dumping would not likely cause material injury to the Canadian industry, considered many factors, including market and competitive conditions, prices ands price trends. (See Section IV below). However, it did not quantify the degree to which U.S. producers would be expected to dump subject goods if the existing order were lifted. The Complainants submit that failure to do so constituted reversible error. 

Pursuant to the practice of the CITT and guidelines issued by it during Review No. RR-97-008, the parties submitted to other parties a number of requests for information. The CITT, in its notice to the parties of the practice it intended to follow with respect to such requests, reserved the right to disallow requests not considered appropriate. By a letter to the parties dated June 26, 1998, the CITT disallowed some requests for information by Cello to Mueller, Streamline and Nibco. Counsel for the Complainants submitted on application for review that the CITT was in error in disallowing their requests for information. Counsel for Mueller, Streamline and the CITT supported the CITT’s decision. Counsel for Nibco made no separate submission but expressed agreement with the submissions of counsel for the CITT.

This Binational Panel was convened to review the CITT’s decision. A hearing was held on February 8, 2000 in Ottawa, Ontario, Canada, in the presence of all members of the Panel and counsel for all parties.

The Complainants’ brief, after submissions on the standard of review to be applied in reviewing a decision of the CITT pursuant to Article 1904 of the NAFTA, raised two substantive issues and one procedural issue, as follows:

Issue No. 1 Did the CITT err in finding that Streamline was part of, and should not be excluded from, the domestic industry for purposes of the review inquiry?

Issue No. 2. Did the CITT err by failing to establish a quantum of materiality in conducting its causation analysis?

Issue No. 3: Did the CITT err in the request for information process by misapprehending the nature of its statutory authority, by pre-judging the relevance of information requested by Cello and Bow, and by restricting the threshold of admissibility to a new clearly of relevance standard?

Complainants submit that the answer to the questions in all three issues should be in the affirmative. Mueller, Streamline and the CITT submit that the answers should be in the negative.

All of these issues were thoroughly addressed at the hearing by counsel for Complainants, Mueller and Streamline and the CITT.

[ Return to the Table of Contents ]

II. STANDARD OF REVIEW

A. Position of Counsel 

1. Substantive grounds of review

In both their written and oral submissions, counsel for the Complainants put in issue the standard of review to be applied by this Panel in reviewing the decision of the CITT. They conceded on the two substantive grounds of challenge that the standard of review was one of patent unreasonableness, this currently being the most deferential basis for scrutiny of tribunal and agency decision-making under Canadian judicial review law. However, they also urged that that standard of review required the Panel to probe beneath the reasons provided by the CITT for its decision. It necessitated an assessment of the allegations made in light of an in-depth examination of the contents of the administrative record.

While agreeing with the position of counsel for the complainants on the standard of review to be applied to the substantive issues, counsel for both the respondent companies and the CITT argued that the specific substantive allegations did not require the Panel to probe the administrative record in depth. Rather, both these issues could and should be reviewed simply on the basis of the written reasons provided by the CITT. Counsel for the respondent companies also claimed that, even if the standard was not that of patent unreasonableness, he was nonetheless prepared to argue that the decisions of the CITT on the two substantive issues were neither unreasonable nor even incorrect, these being the other two principal standards of scrutiny under Canadian judicial review law. 

2. Procedural grounds of review

In contrast to their position on the substantive grounds of review, counsel for the Complainants contended that the Panel should adjudicate on a correctness basis their assertions of a breach of the rules of natural justice or procedural fairness arising out of the CITT’s conduct of the Request for Information (“RFI”) or pre-hearing discovery process. This was opposed by counsel for both the respondent companies and the CITT. They argued that, in assessing any complaints over the way in which the CITT had conducted the RFI process, the Panel was obliged to accord the CITT some considerable measure of deference.

B. The Relevant Law
1. General
a. The legislative regime

Article 1904(3) of Chapter 19 of the North American Free Trade Agreement, incorporated into Canadian law by the North American Free Trade Agreement Implementation Act, S.C. 1993, c.44, provides:

The panel shall apply the standard of review set out in Annex 1911 and the general legal principles that a court of the importing country Party would apply to a review of a determination of the competent investigating authority.

Annex 1911 to Chapter 19 of NAFTA goes on to provide that standard of review means the following standards, as may be amended from time to time by the relevant Party:

(a) in the case of Canada, the grounds set out in subsection 18.1(4) of the Federal Court Act, as amended, with respect to all final determinations.

Section 18.1(4) of the Federal Court Act, R.S.C. 1985 (as amended by S.C. 1990, c.8) specifies that tribunals and agencies coming within the ambit of that Act are subject to review on the following grounds:

(a) acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction;

(b) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe;

(c) erred in law in making a decision or order, whether or not that error of law appeared on the face of the record;

(d) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard to the evidence before it;

(e) acted, or failed to act, by reason of fraud or perjured evidence; or

(f) acted in any other way that was contrary to law.

b. Standard of review

Notwithstanding that the provisions of section 18.1(4) when read literally might suggest that the appropriate standard of review under each of those provisions is a standard of correctness, the Supreme Court of Canada and the Federal Court have almost invariably read the terms of this provision (and its predecessor) as subject to the general Canadian common law principles of judicial review. To the extent that Article 1904(3) of NAFTA requires this Panel to apply the “general legal principles” which a Canadian court would deploy in reviewing a decision of the CITT, we too are required to give effect to those common law principles. 

Under those common law principles of judicial review, there is a varying level of intensity in the degree of judicial scrutiny of the determinations of all forms of statutory and prerogative decision-makers. The appropriate standard for intervention depends on a “pragmatic and functional” approach to the nature of the tribunal and its statutory mandate, and ranges from “correctness” review at one of end of the spectrum, through unreasonableness review, to patent unreasonableness review at the other end.

A typical example of this line of precedent is provided by the judgment of the Supreme Court of Canada in National Corn Growers Association v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324, cited and relied upon by the Complainants. In National Corn Growers, the Court was concerned with a judicial review application brought under the Federal Court Act against a decision of the predecessor of the CITT, the Canadian Import Tribunal made (as here) under the Special Import Measures Act, S.C. 1984, c.25. The Supreme Court accepted that, in conducting judicial review of the decisions of an expert tribunal such as the Canadian Import Tribunal determining questions within its jurisdiction and protected by a form of privative clause, it should intervene only in situations where the tribunal had made a patently unreasonable determination on a matter of either law or fact. Only in the domain of rare but truly jurisdiction-limiting provisions would the standard of judicial review be that of correctness. In the course of so doing, the Court (at pp.1369-70) acknowledged explicitly that it was placing a gloss on the “quite broad” grounds of judicial review then provided for in the relevant provision of the Federal Court Act.

As already noted, the Complainants do not contest that the two substantive issues in contention in these proceedings are matters within the jurisdiction of the CITT and, therefore, in relation to those issues, the only questions that really need to be asked are, first, whether the standard of judicial review to be applied by the Panel is now in any way different from that accepted by the Supreme Court of Canada in National Corn Growers, and, secondly, if there has been no change, what precisely patent unreasonableness review of those two matters involves.

2. Determination of substantive questions
a. The appropriate standard

At the time that National Corn Growers was decided, section 76(1) of the SIMA contained a privative clause to the effect that “every order of the Tribunal is final and conclusive.” In rendering the majority judgment in that case, Gonthier J. made specific reference (at p.1370) to the terms of that section in justification of a deferential standard of judicial review:

In this particular case, s.76 of SIMA provides that the CITT’s decision, with certain limited exceptions, is final and conclusive. Given this provision, this Court, therefore, will only interfere with the CITT’s ruling if it acted outside the scope of its mandate by reason of its conclusions being patently unreasonable.

However, that provision was amended effective as of January 1, 1994 and the privative wording removed, so that section 76(1) now reads:

76. (1) Subject to subsection 61(3) and Part I.1 or II, an application for judicial review of an order or finding of the CITT under this Act may be made to the Federal Court of Appeal on any of the grounds set out in subsection 18.1(4) of the Federal Court Act.

Given the context of that change, amendments to the SIMA in the wake of Canada’s entry into the NAFTA, questions were inevitably raised as to whether this change had as its objective more intensive judicial and Panel scrutiny of the merits of determinations made in trade disputes by the CITT. While this question has yet to come before the Supreme Court of Canada, the Federal Court of Appeal has for the most part rejected this argument and continued to apply a patent unreasonableness test to the review of determinations of the CITT of matters within its jurisdiction. 

In Canadian Pasta Manufacturers’ Association v. Aurora Importing & Distributing Ltd. (1997), 208 N.R. 329 (F.C.A.), the Court noted (at p.332) that

...the other factors which point towards a need for judicial deference, most particularly the scheme of the statute, the subject matter of the inquiry and the specialized and expert nature of the Tribunal, are still in place.

[ Return to the Table of Contents ]

Continue on to b. applying patent unreasonableness