BINATIONAL PANEL REVIEW PURSUANT TO THE
NORTH AMERICAN FREE TRADE AGREEMENT
|In the Matter of:
|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, theirs
successors and assigns
DECISION OF THE PANEL
ON REVIEW OF THE CANADIAN INTERNATIONAL
TRADE TRIBUNAL ORDER OF OCTOBER 16, 1998
|April 3, 2000
||D. Michael Kaye, Esq. (Chair)
Prof. Jeffery C. Atik
Jane C. Luxton, Esq.
E. Neil McKelvey, O.C., Q.C.
Prof. David J. Mullan
||February 8, 2000,
Ottawa, Ontario, Canada
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
||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?
||Did the Canadian International Trade
Tribunal err by failing to establish a quantum of materiality in
conducting its causation analysis?
||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?
||Cello Request to Nibco
||Bow’s Request to Nibco
||Cello Request to Streamline and Mueller
||Comparison of Denied RFI Requests with Notice of Matters Arising
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
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
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
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
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
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
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
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
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
(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),  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
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
In Canadian Pasta Manufacturers’ Association v. Aurora Importing &
Distributing Ltd. (1997), 208 N.R. 329 (F.C.A.), the Court noted (at
...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
More recently, in Canada (Attorney General) v. Symtron Systems Inc.,
 2 F.C. 514, Linden J.A. accepted that the standard of judicial
review of matters within the jurisdiction of the CITT was that of patent
unreasonableness. In so doing, he reiterated that the standard of
correctness was restricted to situations where the CITT was “making a
decision regarding its own jurisdiction.”
Subsequently, a majority of the Panel in Certain Hot-Rolled Carbon Steel
Plate Originating in or Exported from Mexico (Decision of Panel on
Standard of Review and Demand Order) (May 19, 1999), CDA-97-1904-02 (NAFTA
Ch. 19 Panel) accepted that Symtron Systems stated the Canadian law
accurately. In doing so, the majority panelists emphasized that, while
there is no longer a privative clause, under SIMA such matters still
originate by way of an application for judicial review rather than
statutory appeal. This was seen as highly significant in the application
of a patent unreasonableness rather than an unreasonableness standard.
This judicial response to the removal of the privative clause from section
76(1) of the Act also has the support of the Supreme Court of Canada to
the extent that that Court has now accepted that the presence or absence
of a privative clause is but one factor among others which under a “pragmatic
and functional” approach goes towards determining the appropriate
standard of review: Canada (Director of Investigation and Research,
Competition Act) v. Southam Inc.,  1 S.C.R. 748.
All of this serves to indicate that on issues that are not truly
jurisdictional, the standard to be applied to rulings of the CITT remains
that of “patent unreasonableness.” Indeed, all of this seems to have
been accepted by the parties to these proceedings and, in particular, by
the concession of the Complainants. We therefore conclude that in terms of
the directive contained in Article 1904(3) of Chapter 19 of the NAFTA, we
should apply the patent unreasonableness standard of review in assessing
the two substantive issues raised by the complaining companies.
[ Return to the Table of
Continue on to b. applying