Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Compliance with U.S. ITARs Can Cause Legal Problems for Canadian Companies

Some Canadian companies in the defense industry are finding themselves in a catch-22 situation.  If they comply with the U.S. ITARs and restrict access of employees with certain nationalities to certain areas of the premises and information of the company, then the employees are taking the company to the provincial human rights tribunals.  If the Canadian company does not comply with the U.S ITARs, they cannot obtain U.S. business and may be committing an offence under U.S. law (if there is a connection to a U.S.-based company).

In July 2007, General Motors Defense (GMD) settled a case that was filed by some of its non-North American workers with the Ontario Human Rights Commission on the basis that they were subjected to discrimination based on nationality. GMD was a division of General Motors of Canada Limited (“GMCL”), which manufactured military vehicles for various governments, including that of the United States prior to selling its operation to General Dynamics Land Systems Canada Corporation.

In order to produce these vehicles, GMD received material and data that was exported from the United States. The ITARs state that no person who holds a citizenship other than Canadian or American can have access to certain information, unless a security clearance has been obtained from the U.S. State Department. Six unionized employees of the Canadian company who are dual Canadian citizens or landed immigrants and hold citizenships from countries other than Canada or the United States filed complaints with the Ontario Human Rights Commission. The complainants alleged that GMCL called them and other workers to a meeting, where it told them that they were being sent home with pay for reasons relating to their citizenship. The complainants say that GMCL did not apply for security clearances on their behalf. The unionized employees were later returned to work but subjected to new restrictions in terms of access to information required to do their job, or provided alternative assignments.

The terms of settlement with the Ontario Human Rights Commission included monetary remedies and an undertaking that the successor to GMD would continue with its practice of making all reasonable efforts to secure such lawful permission as may be obtained to minimize any differential treatment for such employees.

There are similar cases before the Quebec Human Rights Commission.  Pierre Marios, a member of the Quebec Human Rights Commission wrote to Prime Minister Harper and Quebec Premier Jean Charest in July 2007 stating his opinion that the effect of the U.S. ITARs were unacceptable and discriminatory. 

As a result of these problems, Foreign Affairs Minister Maxime Bernier will raise the issue of Canadian dual citizens and the effect of the ITARs with U.S. Secretary of State Rice when they meet today. 

Canadians cannot expect that the issue will be resolved quickly.  Canadian businesses need to develop strategies to deal with these problems.  Please contact Canadian legal counsel (such as Cyndee Todgham Cherniak, Michael Flavell, Geoffrey Kubrick or Martin Masse of Lang Michener LLP) to develop risk management solutions.

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