Appeal court won't rule on tribunal's jurisdiction over Shared Services contracts

The Federal Court of Appeal has opted not to settle the question of whether a trade tribunal may hear and resolve disputes involving pricey government contracts covered by national security exceptions.

In its decision, the appeal court dismissed the federal government's application for judicial review due to the fact there was no opposing party.

The government's technology support agency, Shared Services Canada, had asked the judges to review a ruling by the Canadian International Trade Tribunal (CITT) on a $430-million contract for a new supercomputer for Environment Canada.

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Hewlett-Packard lost its bid for that contract and made the case before the tribunal that Shared Services had wrongly and arbitrarily invoked a national security exception on the contract to disqualify it.

National security exceptions exempt the government from trade rules that require bidders be treated equally and allow it to set conditions, such as that equipment be made in certain countries or that data must be stored or processed in Canada.

While the CITT upheld the government's decision to award the contract to IBM, it slammed the government for its overuse of such exceptions.

Question of jurisdiction

Shared Services had argued the tribunal has no jurisdiction to hear complaints on contracts covered by the omnibus national security exception, which was implemented in 2012.

Technically, Hewlett-Packard was the respondent in the case before the Federal Court of Appeal but it had no interest in pursuing a technical question of tribunal jurisdiction. That left the CITT in the unusual position of intervening in the case on its own behalf.

Ultimately, the appeal court wanted none of it.

"If there are other occasions to raise this issue, there should be a case where there is an opposing party, other than the CITT," wrote Justice Wyman Webb.

Sonja Pavic practices international trade law with Osler in Toronto. She told CBC News her firm and its clients need clarity on the scope of the national security exception, in order to more effectively navigate the government's procurement process.

"Government bodies such as [Shared Services Canada], that apply the national security exclusion, could provide guidance on the criteria or rules that they use, or this issue may come before the courts again — as the Federal Court of Appeal invited," she said.

"And in that case, it could be the courts who provide guidance on the parameters of the exception."

For its part, a spokesperson for Shared Services Canada said that, given the appeal court did not address the legal question, its position remains unchanged.

"SSC views procurements subject to the national security exception as outside the jurisdiction of the Canadian International Trade Tribunal," it said in an email to CBC News.