B.C. appeals court: Virtual presence enough to enforce production order

By Justin Ling January 17, 201817 January 2018

B.C. appeals court: Virtual presence enough to enforce production order

Since the Supreme Court passed down its decision last June in Equustek, lawyers have been waiting with baited breath to see just how broad an interpretation the new internet regime will receive from the courts. Global tech companies, including Google, hoped to see the Canadian — and even American — tribunals rein in the ability of our courts to order companies to take actions beyond our jurisdictional borders.

A recent B.C. appellate decision suggests that Equustek isn’t going to be relegated to a tiny corner of Canadian law. It is very much the standard.

What happened with Equustek? Ever last year’s Supreme Court ruling in Equustek that Canadian courts have jurisdiction to make orders for foreign-based internet companies that carry on business in Canada, there have been concerns about the practical implications.

Equustek was a peculiar case: A rival company was illegally peddling Equustek’s commercial wares in part because it was searchable through Google. The Supreme Court upheld an order requiring Google to remove those search results entirely.

Undeterred, Google fought enforcement of the top court’s decision. And a California court sided with the search giant, pointing to the American Communications Decency Act, which, generally, absolves companies from the contents of third-party websites they may link to.

“The Canadian order would eliminate Section 230 immunity for service providers that link to third-party websites,” the California court wrote. “By forcing intermediaries to remove links to third-party material, the Canadian order undermines the policy goals of Section 230 and threatens free speech on the global internet.”

Given that the California court has effectively prevented enforcement of the Supreme Court action, it’s unclear where the Canadian company will go next.

The Criminal Code: Since Equustek was a civil case, it’s unclear how the ruling would apply to criminal cases remained to be seen.

The B.C. case revolves around the online classified giant Craigslist, which is based in the U.S. but has dozens of sites for communities across Canada. The RCMP filed a production order to obtain details around a specific post, including the name and address of the poster.

A trial judge rejected the production order, and the comparison to Equustek, on two grounds: Unlike Google, Craigslist has no Canadian office to speak of; and being a criminal matter, Criminal Code processes must be followed.

The trial judge pointed out that the RCMP had the option in this case to pursue a Mutual Legal Assistance Treaty request (more commonly known as an MLAT.)

But the appeals court saw things differently. It concluded that the existence of an MLAT — itself just a tool to obtain documents through foreign legal structures — does not diminish the authority of Canadian courts in issuing production orders. The court therefore dispensed with the idea that forcing a foreign company to comply with an order would run afoul of territorial sovereignty.

“The location of the documents is irrelevant to the essence of the order. What matters in terms of the invasion of privacy is the disclosure or production of the documents rather than access to them where they are stored,” the justices wrote. “The impact on the privacy interest is not specific to a place and the existence of that interest has no direct relevance to whether the order has an extraterritorial reach.”

What’s more, the judges added, given how often data can be moved or segmented through servers world-wide, Canadian courts need to be able to issue orders requiring the production of the data — not just territorial-specific orders targeting just one of the countries where servers may be located.

So what does it all mean? David Fraser, partner at McInnes Cooper with a focus on privacy law, says the B.C. Court of Appeal decision will have a pretty clear impact in the long run: “Non-Canadian companies will likely see more production orders from Canadian courts.”

Since questions of jurisdiction in these sorts of cases has, generally, fallen to whether or not the company at the receiving end of the production order has a “real and substantial connection” to Canada, there has been a lot of work done to figure out exactly what that connection entails.

Fraser suggests that this case might be the first step to delivering some real clarity.

“The court’s conclusion that the distinction between a virtual-only presence and a ‘physical’ presence is effectively a distinction without a difference could carry implications far beyond the availability of production orders,” he writes. “Whether its reasoning vis-a-vis an internet-based company’s ‘presence’ in Canada will have application to, for example, tax laws, remains to be seen.”

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