On April 18, 2024, the Quebec Court of Appeal ruled on the division of constitutional jurisdiction in labour relations matters in Procureur général du Québec v. SGS Canada inc. SGS Canada Inc. (“SGS”) was represented by Claudia Desjardins Bélisle and Philippe Larochelle of Miller Thomson.
Case history: ALT and Superior Court decisions
In 2019, Claudia Desjardins Bélisle and Isabella Gallo represented SGS, a world leader in inspection, control, and certification, in a petition for certification filed by the CSN under the Quebec Labour Code. The petition sought to certify the CSN as the bargaining agent for inspectors in SGS’s grain division, who work primarily in grain terminals at the ports along the St. Lawrence River. These inspectors perform quality control on grain for grain terminal operators and grain buyers before ship loading.
Before the Administrative Labour Tribunal (“ALT”), SGS raised a plea of declinatory exception, arguing that the ALT had no jurisdiction to rule on the petition for certification, since grain inspectors fell under federal jurisdiction and were therefore subject to the Canada Labour Code. In fact, grain terminals are works declared to the advantage of Canada under the Canada Grain Act.
The Attorney General of Quebec (“AGQ”) intervened in the file to argue that the inspectors fell under provincial jurisdiction in the area of labour relations.
The ALT ruled that the employees of SGS’s grain division were subject to federal jurisdiction, but only derivatively. It held that since SGS did not operate any grain terminals, its inspectors providing services to SGS customers could not fall under direct federal jurisdiction. Nevertheless, the ALT held that the grain inspectors were sufficiently integrated into a federal undertaking in a derivative manner, since their activities were integrated into six port terminals along the St. Lawrence River, including the Montreal grain terminal, which is the largest customer of SGS’s grain division in Quebec.
The AGQ filed an application for judicial review of the decision rendered by the ALT. The Superior Court dismissed the application for judicial review, ruling that SGS’s grain division inspectors were sufficiently integrated with the Montreal port grain terminal to fall under derivative federal jurisdiction.
Following the Superior Court decision, the AGQ applied for permission to appeal, which was granted.
Court of Appeal Decision
On January 29, 2024, Claudia Desjardins Bélisle and Philippe Larochelle pleaded before the Quebec Court of Appeal on behalf of SGS. The judgment was rendered on April 18, 2024.
The Court of Appeal dismissed the AGQ’s appeal. However, contrary to the ALT and the Superior Court, it held that the grain inspectors fall under direct federal jurisdiction, as claimed by SGS.
First, the Court of Appeal ruled that SGS’s grain inspectors in Quebec form a sufficiently distinct and autonomous group to be distinguished from the rest of SGS’s activities for the purposes of constitutional qualification.
On the argument of direct federal jurisdiction, the Court of Appeal held that federal jurisdiction over works declared to be for the advantage of Canada under the Canada Grain Act derives not only from paragraph 92(10)(c) of the Constitution Act, 1867, which allows the Federal Parliament to declare a work to be for the advantage of Canada, but also under federal jurisdiction relating to the regulation of traffic and commerce, navigation and ships, and weights and measures.
The Court also stated that the federal jurisdiction over labour relations extends to the control of employees who are necessary and essential to the operation of grain terminals, regardless of the identity of any of the employers involved in the operation of the work declared to be for the advantage of Canada.
The Court concluded that the activities of grain inspectors are fully integrated with the port terminals along the St. Lawrence River. These activities form part of the essential content of the composite federal jurisdiction over grain, and are necessary and essential to the operation of works declared to be for the advantage of Canada. In addition, the activities of grain inspectors are necessary and essential to achieving the purpose of the Canada Grain Act, including the efficiency of interprovincial and international grain trade.
On the argument of derivative federal jurisdiction, the Court of Appeal found that even if the grain inspectors were not subject to direct federal jurisdiction, the Court would have found that the inspectors were subject to derivative federal jurisdiction, being sufficiently integrated into a single principal federal undertaking, namely the Viterra company operating the Montreal port terminal.
This is a landmark decision dealing with the law applicable to issues regarding the division of constitutional jurisdiction in labour relations, particularly in the context of employees working on works declared to be to Canada’s advantage.
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