Canada: A Canadian Perspective On Global Investigations Around The World

General context, key principles and hot topics

1 Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects.

Unifor, Canada's largest private sector union, conducted an independent investigation in response to its recent kickback scandal. In March 2022, Unifor's president, Jerry Dias, resigned after it was revealed that he accepted a C$50,000 payment from a covid-19 test kit supplier for encouraging union members to purchase its products. The investigation found that the undisclosed supplier made at least C$1.2 million in revenues from Dias' marketing test kit sales.

It has been alleged that Dias tried to cover up the affair by attempting to pay off his assistant and putting pressure on his fellow bureaucrats to maintain their silence.

According to Unifor, Dias refused to be interviewed as part of the investigation because of health problems and, as a result, the independent investigator's findings were made without the benefit of his evidence.

Later in March 2022, the Unifor National Executive Board determined that the former president breached the Code of Ethics and Democratic Practices of the Unifor Constitution. This decision was based on the independent investigation report that determined on a balance of probabilities that Dias had breached his obligations. The next step for Unifor will be a hearing before the National Executive Board, where Dias will have the opportunity to present arguments in his defence. Dias' lawyer has questioned the integrity of the independent investigation and expressed concerns about the circulation of confidential material.

The Toronto Police Service's financial crimes unit has started its own investigation. This is still in its preliminary stages and it is unclear when and whether any findings regarding Dias and Unifor will be made.

2 Outline the legal framework for corporate liability in your country.

Organisations, including corporations and partnerships, can be found liable for negligence-based offences and for offences that require the prosecution to prove fault other than negligence. For organisations, the physical act that constitutes the offence may be committed by a 'representative' (defined as 'a director, partner, employee, member, agent, or contractor of the organization'). However, the required mental state, or fault element (whether based on negligence or otherwise), is based on the conduct or intentions of a senior officer of the organisation. A 'senior officer' is defined in the Criminal Code of Canada as 'a representative who plays an important role in the establishment of an organization's policies or is responsible for managing an important aspect of the organization's activities and, in the case of a body corporate, includes a director, its chief executive officer and its chief financial officer'.

For negligence-based criminal offences, the senior officer must be one who is responsible for the relevant aspect of the organisation's activities, and the senior officers must have departed markedly from the standard of care reasonably expected in the circumstances to prevent a representative from being a party to the offence.

For other fault-based criminal offences, the organisation will be liable if, with the intent at least in part to benefit the organisation, one of its senior officers (1) acted within the scope of their authority and was a party to the offence, (2) had the required mental state and acted within the scope of their authority to direct another representative of the organisation to engage in the wrongful conduct, or (3) knowing that a representative is, or is about to be, a party to the offence, fails to take all reasonable measures to stop that representative from doing so.

For other forms of liability, including under common law, Canadian courts generally apply the identification doctrine, which creates an identity between the corporation and its 'directing mind'. The analysis of who is a directing mind is very fact-dependent, but is generally understood as the person who is the corporation's alter ego in the sense that they have the ability to set policy rather than only having authority to manage. If the wrongdoer is the directing mind and acts within the scope of their authority, by design or as a means of benefiting the company, then that conduct will be attributable to the company, but for certain narrow exceptions (e.g., if the conduct was in fraud of the organisation).

There are also a number of strict and absolute liability offences, governed by federal and provincial laws, in respect of which a corporation can be prosecuted, but which do not require proof of intent.

3 Which law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies or protocols relating to the prosecution of corporations?

The law enforcement authorities that most often engage with corporations in Canada include: the Competition Bureau, which enforces the Competition Act; the Royal Canadian Mounted Police (RCMP), which investigates a variety of criminal activities, including domestic and transnational corruption, multi-jurisdictional terrorist financing and money laundering offences under the Canadian Criminal Code, and conducts other sensitive or international investigations; provincial securities regulators; and other federal and provincial regulatory authorities.

4 What grounds must the authorities have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?

There is no specific suspicion threshold that must be met. To take certain steps in an investigation (e.g., compelling the disclosure of documents belonging to the target of the investigation or a third party), authorities must generally have a reasonable basis for believing that a criminal offence has been committed.

Securities regulators are an exception to this requirement because there is no statutory or legal threshold that a regulator is required to meet before issuing summonses, which have the power of a court order, compelling documents, information or testimony from corporations (and individuals).

5 How can the lawfulness or scope of a notice or subpoena from an authority be challenged in your country?

An appearance notice or subpoena are tools used under the Criminal Code to compel an individual to answer a criminal charge or to compel an individual to attend and give evidence at trial, respectively. Law enforcement authorities may obtain search warrants, subject to having reasonable and probable grounds to believe a crime has been committed and that evidence relevant to that crime is at the location to be searched.

Provincial securities regulators have the authority to issue a summons to compel the production of documents or to require an individual's attendance at interviews to compel testimony. The most common challenges to such summons are premised on jurisdictional grounds through an application to a court to quash the summons.

6 Does your country make use of co-operative agreements giving immunity or leniency to individuals who assist or co-operate with authorities?

Canadian courts, legislatures, government agencies and regulators (including at the provincial level) have recognised that co-operating with authorities can be rewarded with leniency when it comes to sentencing and requests for immunity.

The Director of Public Prosecutions (DPP) has the authority to grant immunity from prosecution. In determining whether to do so, Crown counsel consider a number of factors, including the seriousness of the offence, the reliability of the person, the reliability of the anticipated evidence, whether the person has fully and candidly disclosed their involvement in criminal activity, the importance of the person's co-operation, the nature and extent of the person's involvement in the offence, whether a reduced sentence would serve the public interest better than immunity, the person's history of co-operation, and whether the public interest would be better served by prosecution.

The Canadian Competition Bureau (in co-operation with the DPP) offers immunity for the first to report cartel activity and co-operate with any investigation.

7 What are the top priorities for your country's law enforcement authorities?

The authority exercised by law enforcement agencies varies by jurisdiction, subject matter and, in some instances, level of government. In 2021, the RCMP, Canada's federal law enforcement agency, announced the following operational priorities: (1) serious and organised crime; (2) national security; (3) reducing youth involvement in crime; (4) contributing to safer and healthier indigenous communities; and (5) fostering economic integrity. Provincial securities regulators are increasingly focusing on cryptocurrency assets and firms as fintech and other market innovations expand.

8 To what extent do law enforcement authorities in your jurisdiction place importance on a corporation having an effective compliance programme? What guidance exists (in the form of official guidance, speeches or case law) on what makes an effective compliance programme?

Canadian law enforcement authorities generally encourage corporations to have effective compliance programmes and, in some circumstances, will evaluate a corporation's compliance programme when determining whether to grant leniency. In 2018, Canada introduced a remediation agreements regime with the stated goal of 'contribut[ing] to respect for the law by imposing an obligation on the organization to put in place corrective measures and promote a compliance culture' (Criminal Code, section 715.31(c)). In determining whether a remediation agreement is in the public interest, prosecutors will consider, among other factors, whether the organisation has taken measures to prevent the commission of similar offences. Remediation agreements may require organisations to establish, implement or enhance their compliance measures and internal controls.

In addition, access to voluntary disclosure programmes, such as that offered by the Canada Border Services Agency, requires an applicant to explain, to the enforcement authority's satisfaction, how the applicant will ensure that there will be no recurrence of non-compliance in the future.

The Financial Transactions and Reports Analysis Centre of Canada also regularly issues guidance and other resources on compliance with Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLFTA) and its regulations. Such guidance and regulations include both generally applicable principles for anti-money laundering and anti-terrorism financing compliance, and sector-specific guidance for industries subject to the PCMLTFA and its regulations.

National securities dealer regulatory agencies also issue reports, guidance and bulletins focusing on member compliance. For example, the Mutual Fund Dealers Association and the Investment Industry Regulatory Organization of Canada (IIROC) publish regular reports (and in the case of IIROC, annual reports), in which they report on members' compliance. Provincial securities regulators, including the Ontario Securities Commission, also issue annual reports that include the results of compliance reviews and outline suggested best practices for those governed by securities legislation in the respective province.

The Canadian Competition Bureau encourages corporate compliance programmes, and its leniency programme recommends fine reductions for companies with effective compliance programmes.

Cyber-related issues

9 Does your country regulate cybersecurity? Describe the approach of local law enforcement authorities to cybersecurity-related failings.

Federal and provincial privacy legislation regulates the collection, use and disclosure of personal information by organisations in the course of commercial activities. This legislation also imposes obligations on commercial organisations regarding the collection, use and disclosure of personal information (e.g., valid consent, limiting the collection, use and disclosure for appropriate purposes, and reporting breaches of security safeguards).

In enforcing the obligations under the privacy legislation, the privacy authorities have regard to guidelines issued by their respective offices on reasonable practices, industry standards and accepted frameworks for cybersecurity risk management. These guidelines cover key topics such as categories of sensitive information requiring heightened safeguards, required disclosure to obtain valid consent, safeguards, permanent destruction of information, outsourcing requirements and assessment of whether a breach gives rise to reporting and notification obligations.

The Office of the Superintendent of Financial Institutions (OSFI), which regulates federally regulated financial institutions (FRFIs), has issued guidelines to establish its expectations in respect of technology and cyber risk management for FRFIs. The OSFI guidelines include specific direction regarding governance and risk management, technology operations and resilience and cybersecurity. Further, pursuant to an OSFI advisory, FRFIs are required to report cybersecurity incidents within 24 hours based on a relatively broad definition of a 'reportable incident'. A failure to report may result in increased regulatory oversight.

In June 2022, the federal government introduced Bill C-26, An Act respecting cyber security, amending the Telecommunications Act and making consequential amendments to other Acts. The proposed legislation includes a framework for the protection of critical cyber systems of services and systems that are deemed vital to national security or public safety, such as financial institutions, utilities and telecommunications.

10 Does your country regulate cybercrime? What is the approach of law enforcement authorities in your country to cybercrime?

Canada regulates cybercrime through the following sections of the Criminal Code:

• Section 342.1 – Everyone is guilty of an offence who fraudulently obtains any computer service, or intercepts any function of a computer system, or uses a computer system to commit an offence under section 430 (referenced immediately below).
• Section 430 – Everyone commits mischief who wilfully obstructs, interrupts or interferes with the lawful use, enjoyment or operation of property. Everyone commits mischief who wilfully destroys or alters computer data; renders computer data meaningless, useless or ineffective; obstructs, interrupts or interferes with the lawful use of computer data; or obstructs, interrupts or interferes with a person in the lawful use of computer data or denies access to computer data to a person who is entitled to access it.

The National Cybercrime Coordination Centre coordinates cybercrime investigation in Canada and works with international partners (e.g., Interpol) to combat cybercrime incidents.

Cross-border issues and foreign authorities

11 Does local criminal law have general extraterritorial effect? To the extent that extraterritorial effect is limited to specific offences, give details.

Generally, Canadian criminal enforcement jurisdiction is territorially limited and does not have extraterritorial effect (see, e.g., Criminal Code, section 6(2)) unless expressly provided by statute (see, e.g., various offences set out in the subsections to section 7 of the Criminal Code, which deem certain acts or omissions committed outside Canada to have been committed within Canada). Canada exercises its territorial jurisdiction to the extent that there is a 'real and substantial link' between the offence and Canada (R v. Libman [1985] 2 SCR 178).

Canada exercises nationality-based jurisdiction in respect of certain offences. For example, under the Corruption of Foreign Public Officials Act, any act or omission committed outside Canada that would constitute an offence under the Act is deemed to have been committed in Canada if the person committing the act or omission is a Canadian citizen, a permanent resident, or a public body, corporation, society, company, firm or partnership that is incorporated, formed or otherwise organised under Canadian laws.

12 Describe the principal challenges that arise in your country in cross-border investigations, and explain whether and how such challenges depend on the other countries involved.

Evidence gathering and information sharing are among the principle challenges arising out of cross-border investigations in Canada. Canada does have mechanisms under the Mutual Legal Assistance in Criminal Matters Act (MLA Act) to allow the government to obtain court orders on behalf of countries that are parties to mutual legal assistance agreements with Canada. To grant such an order, a Canadian court must be satisfied that two conditions are met: (1) an offence has been committed; and (2) the evidence being requested will be found in Canada. Demonstrating dual criminality (i.e., that the offence is an offence under Canadian law) is generally not required (unless it is required by the treaty under which the request is made).

Strong legal protections apply in Canada to most communications between lawyers and their clients, subject to limited exceptions. These protections apply to confidential communications directly related to seeking, formulating or giving legal advice (legal advice privilege), and communications or documents created for the purpose of current or anticipated litigation (litigation privilege). These types of records cannot be compelled under the MLA Act.

Countries that do not have mutual legal assistance agreements with Canada may nonetheless obtain assistance under the Canada Evidence Act, or provincial equivalents, if a Canadian court orders the enforcement of letters rogatory or letters of request.

13 Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another? Is there anything analogous in your jurisdiction to the 'anti-piling on' policy as exists in the United States (the Policy on Coordination of Corporate Resolution Penalties) to prevent multiple authorities seeking to penalise companies for the same conduct?

In cases in which a defendant has been convicted in another jurisdiction of a similar offence, Canadian courts will generally assess the elements and factual nexus of the offence to determine whether the foreign offence and the Canadian offence are sufficiently close. Where they are, in some instances similar principles will apply to limit the criminal exposure of a defendant convicted in another jurisdiction.

There is no Canadian policy that is the equivalent of the US 'anti-piling on' policy.

14 Are 'global' settlements common in your country? What are the practical considerations?

No.

15 What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?

The decisions of foreign enforcement authorities typically will have little weight on decisions made by Canadian authorities in response to allegations. The fact of a conviction in another jurisdiction and ties to Canada may have a bearing in some instances on whether or not a regulatory authority commences an investigation or prosecution. For example, provincial securities regulators faced with an issuer who has already been sanctioned in a jurisdiction such as the United States may opt not to dedicate significant resources towards an investigation and enforcement proceedings where few Canadian investors are alleged to have been harmed or where the regulator feels appropriate sanctions and recourse have resulted from that investigation.

Economic sanctions enforcement

16 Describe your country's sanctions programme and any recent sanctions imposed by your jurisdiction.

Canada maintains economic sanctions under the following laws: the United Nations Act, the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law). Two other statutes also establish restrictions on economic dealings with certain persons or entities: the Freezing Assets of Corrupt Foreign Officials Act and the Criminal Code.

Sanctions laws generally prohibit certain types of interactions with specified countries, entities or persons. Canada has established lists of individuals and entities with whom specified dealings are prohibited ('restricted party lists') through regulations, including country-specific regulations, promulgated under Canadian sanctions laws. Sanctions laws may also impose reporting or enhanced due diligence obligations, particularly on entities such as financial institutions.

For Canadian sanctions laws to apply, there must be a Canadian jurisdictional nexus to the transaction. Canadian sanctions laws commonly constrain the activities of any person in Canada or any Canadian outside Canada. The definition of 'Canadian' generally includes individual citizens and corporations incorporated or continued by or under the laws of Canada or a Canadian province.

In 2022, Canada has been particularly active in imposing wide-ranging sanctions on Russia and Russian persons in response to Russia's military actions in Ukraine. These sanctions include, among other things, various restrictions on trade and financial trans­actions with listed persons, Russia and certain territories in Ukraine, restrictions on access to Canadian waters, and a ban on providing certain services to certain Russian industries.

17 What is your country's approach to sanctions enforcement? Has there been an increase in sanctions enforcement activity in recent years, for example?

Canadian sanctions are generally administered by Global Affairs Canada and investigated and enforced in conjunction with the Royal Canadian Mounted Police, the Canadian Security Intelligence Service and the Canada Border Services Agency. There has been a marked increase in sanctions enforcement in Canada, particularly following the expansion of sanctions against Russia in 2022.

18 Do the authorities responsible for sanctions compliance and enforcement in your country co-operate with their counterparts in other countries for the purposes of enforcement?

Yes.

19 Has your country enacted any blocking legislation in relation to the sanctions measures of third countries? Describe how such legislation operates.

Yes. The Foreign Extraterritorial Measures Act (FEMA) prohibits Canadians (individuals and organisations) from complying with certain extraterritorial foreign laws that Canada considers to infringe Canadian sovereignty. Under the FEMA, the Attorney General of Canada may issue orders to block or counteract the effects of these foreign laws.

To date, the US Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (known as the Helms-Burton Act) is the only foreign law that has been specifically designated under FEMA. Title III of the Helms-Burton Act permits US nationals to seek damages in US courts from any person who 'traffics' in property that was expropriated by the Cuban government on or after 1 January 1959, and in relation to which the US nationals have a claim. Under FEMA, no judgment issued under the Helms-Burton Act can be recognised or enforced in Canada, and countersuits may be filed in Canadian courts to recover any amount obtained under judgment, including expenses, as a result of the US lawsuit.

Notably, the Foreign Extraterritorial Measure (United States) Order 1992 (the Blocking Order) was issued to block the application in Canada of the US embargo against Cuba. Under the FEMA, Canadian companies and their directors, officers, managers and employees in positions of authority, are prohibited from complying with the US embargo. Moreover, Canadian companies and their directors and officers have an obligation to notify the Attorney General of Canada if they receive from a person in a position to direct or influence the policies of the Canadian corporation in Canada any of a wide variety of communications relating to US extraterritorial measures in respect of the Cuba embargo.

20 To the extent that your country has enacted any sanctions blocking legislation, how is compliance enforced by local authorities in practice?

The Blocking Order issued under the FEMA mandates a self-reporting regime. Canadian companies and directors and officers of Canadian companies must notify the Attorney General of Canada of any foreign directives, instructions, intimations of policy or other communications they may receive from someone in a position to direct or influence the policies of the Canadian corporation in Canada. Violations of an order issued under the FEMA are punishable by fines, imprisonment, or both, with penalties (if convicted on indictment) reaching a maximum of C$1.5 million for corporations. Individual penalties, if convicted on indictment, include fines up to C$150,000 or imprisonment for up to five years, or both.

Before an internal investigation

21 How do allegations of misconduct most often come to light in companies in your country?

Allegations of misconduct may come to light through various means, including internal audits and compliance reviews, media or social media reports, due diligence during mergers and acquisitions, and whistleblower reports. Allegations of misconduct can also be triggered by complaints to external agencies (e.g., human rights commissions, privacy commissions, occupational health and safety) or through litigation (both threats of litigation and commencement of litigation).

Anonymous concerns or complaints (through internal incident reporting channels or whistleblower mechanisms) may cause practical issues, as anonymity can impede the ability of an organisation to obtain sufficient particulars and identify witnesses as part of any resulting investigation. Delays in the reporting of allegations of misconduct or delays in the organisation becoming aware of allegations of misconduct can affect any investigation, as documents (or access to documents) may be lost, employees or other witnesses who could provide information may no longer be accessible, and those witnesses who are available may not recall the events as clearly as they would if the allegations had been raised earlier.

Information gathering

22 Does your country have a data protection regime?

Yes. The Protection of Personal Information and Electronic Documents Act (PIPEDA) applies to every organisation in respect of personal information that (1) the organisation collects, uses or discloses in the course of commercial activities, or (2) is about an employee of, or an applicant for employment with, the organisation and that the organisation collects, uses or discloses in connection with the operation of a 'federal work, undertaking or business'. A 'federal work, undertaking or business' means any work, undertaking or business that is within the legislative authority of Parliament (e.g., banks or airlines).

For certain provinces, the privacy laws have been deemed 'substantially similar' to PIPEDA and, depending on the circumstances, the provincial privacy law may apply instead of PIPEDA. Generally, a provincial privacy law that has been deemed substantially similar to PIPEDA will apply to the collection, use and disclosure of personal information that occurs within that province. However, PIPEDA will apply to transactions involving personal information transferred across borders and to federal works, undertakings or businesses.

It is possible that both PIPEDA and the privacy laws of one or more provinces may apply concurrently to an organisation in respect of its collection, use and disclosure of personal information.

23 To the extent not dealt with above at question 9, how is the data protection regime enforced?

The data protection regime is enforced through complaints to The Privacy Commissioner filed by an individual and investigations by The Privacy Commissioner further to a complaint. The Privacy Commissioner will make recommendations following an investigation and can apply to the Federal Court of Canada regarding a complaint, and the Court can order an organisation to correct its practices and award damages to the complainant.

24 Are there any data protection issues that cause particular concern in internal investigations in your country?

There is heightened attention to several data protection issues, including the collection and use of geolocation data and biometric data (collected via facial recognition tools) by organisations and the use of artificial intelligence (specifically regarding concerns that the increasing reliance on the digital economy brings increasing privacy and data protection issues).

25 Does your country regulate or otherwise restrict the interception of employees' communications? What are its features and how is the regime enforced?

PIPEDA applies only to the collection, use and disclosure of employee information in connection with the operation of a 'federal work, undertaking or business' (as defined in question 22). Under PIPEDA, an organisation may collect personal information about employees of a federal work, undertaking or business in circumstances where (among other reasons) it was produced by the individual in the course of their employment, business or profession and the collection is consistent with the purposes for which the information was produced. There is no provision in PIPEDA that has direct application to the interception of employees' communications.

Certain provinces have privacy legislation that applies to the collection, use and disclosure of employees' personal information. Generally, an organisation may collect personal information about an individual without consent if (among other reasons) the information is collected solely for the purpose of establishing and managing the employment relationship. The collection of information must also be reasonable for the intended purpose and the employee should receive notification that the information is being collected and for what purpose.

The federal and provincial privacy legislation is enforced by privacy commissioners. Some courts have recognised a common law right that supports an action for intrusion upon seclusion (see, e.g., Jones v. Tsige, 2012 ONCA 32).

Dawn raids and search warrants

26 Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress a company has if those limits are exceeded.

Search warrants are a feature of law enforcement in Canada.

Generally, search warrants are issued only when there are reasonable grounds to believe that the search will yield evidence that an offence was committed. Affidavit evidence establishing the requisite grounds must be included in an application for a search warrant, and the affiant has an obligation to make full, fair and frank disclosure of all material facts. A valid and properly drafted search warrant must identify the offence in respect of which a search is authorised. The search warrant must also identify the place to be searched, the date and time of the search, and the items being sought.

If the requisite grounds for the search are not met or the search warrant's parameters are exceeded, the search will generally be considered unreasonable. Unreasonable searches are contrary to section 8 of the Canadian Charter of Rights and Freedoms (the Charter), which provides that '[e]veryone has the right to be secure against unreasonable search or seizure'.

An application to quash a search warrant can be brought after a search is executed. Seized items may be returned if the application to quash is successful. Alternatively, evidence obtained from an unlawful search may be excluded from being used in criminal proceedings.

27 How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?

A search warrant cannot be validly issued or executed for the purpose of seizing documents or other records (including electronic data) that are understood by law enforcement to be protected by a valid privilege claim. In addition, the target of a search warrant or their legal counsel may make a claim of privilege over documents or records during the course of the resulting search.

Documents that are responsive to a warrant but over which privilege is claimed may be sealed in an envelope and given over to the custody of the court or an independent third party designated by the court. Investigating authorities and defence counsel may then negotiate a review process for the privileged documents. In the case of electronic data, an independent forensic computer examiner may be appointed by the court to help to protect the attorney–client privilege. Independent forensic computer examiners should conduct all comprehensive electronic searches of potentially privileged electronic devices subject to the search warrant. This allows an individual without a conflict of interest to review the seized or imaged electronic data.

The court may also appoint a 'referee' to assist with the execution of a search. This would generally occur if legal counsel is an investigation target, if legal counsel faces a conflict of interest, or if the target of the search does not have legal counsel.

28 Under what circumstances may an individual's testimony be compelled in your country? What consequences flow from such compelled testimony? Are there any privileges that would prevent an individual or company from providing testimony?

Under the Criminal Code, every person with relevant evidence has a duty and a right to testify unless there is an exception available that precludes them from being compelled as a witness. In addition, the Canada Evidence Act, at section 5(1), provides: 'No witness shall be excused from answering any question on the ground that the answer to the question may tend to criminate him, or may tend to establish his liability to a civil proceeding at the instance of the Crown or of any person.'

Importantly, however, section 11(c) of the Charter provides the right against self-incriminating testimony, which ensures that an accused person has the choice of whether to testify (rather than an obligation). Section 11(c) acts in conjunction with section 13 of the Charter, which provides for a right against the admission of self-incriminating evidence in other subsequent proceedings. Similarly, the Canada Evidence Act, under section 5(2) provides that, if a witness objects to a question on the ground that the answer may tend to incriminate the witness, or may tend to establish their liability in a civil proceeding:

Whistleblowing and employee rights

29 Describe the whistleblowing framework in your country. What financial incentive schemes exist for whistleblowers? What legal protections are in place for whistleblowers?

Whistleblower protections have been enacted as part of the Criminal Code. Section 425.1 of the Code prohibits employers from threatening or taking disciplinary action – including termination of employment – against employees to deter that individual from reporting an offence.

Protections for federal government employees are provided under the Public Servants Disclosure Protection Act, which prohibits reprisal if employees come forward. A number of provinces have enacted similar legislation to protect public sector employees.

Protections also exist under the Competition Act. Section 66.1 of the Act requires the Commissioner of Competition to keep confidential the identity of any whistleblower and section 66.2 prohibits any employer from taking reprisals against a whistleblower or any employee that refuses to contravene the Competition Act.

Securities regulators in several provinces have also introduced whistleblower programmes, although only the Ontario programme offers financial incentives to whistleblowers (up to C$5 million).

Whistleblowing policies and mechanisms can exist within private organisations. There are statutes in place for those employed by public entities (see, e.g., the Public Interest Disclosure (Whistleblower Protection) Act, SA 2012, Chapter P-39.5). Breaches of whistleblower legislation can result in, among other things, administrative penalties and extensive remedies to a complainant who has suffered a reprisal.

30 What rights does local employment law confer on employees whose conduct is within the scope of an investigation? Is there any distinction between officers and directors of the company for these purposes?

There is no obligation for an employer to conduct a particular type of investigation and the subject employee (or respondent) has limited procedural rights at common law. Heightened procedural rights may be imported through policy, agreement (including a collective agreement) and legislation.

Although the procedural rights afforded to the respondent employee may be limited, the employer has an obligation to conduct a fair and reasonable investigation. An improper or faulty investigation may undermine the findings of an investigation – along with any disciplinary actions taken as a result – and create litigation risk. There has been a recognition of the importance of providing the subject of the investigation (the respondent) with a reasonable opportunity to respond to the allegations.

Moreover, confidentiality protections can be engaged such that the circumstances giving rise to the investigation are not to be disclosed except to the extent that the disclosure is necessary to investigate the allegations, take corrective actions, inform the parties of the investigation's findings, or as required by law.

Generally, the rights afforded to the subject of a workplace investigation do not vary for directors or officers.

31 Do employees' rights under local employment law differ if a person is deemed to have engaged in misconduct? Are there disciplinary or other steps that a company must take when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation?

The starting position is that the respondent employee's rights do not differ if there is deemed to have been misconduct. The obligation to conduct a fair and reasonable workplace investigation into the allegations with reference to the civil standard of proof remains the same. Even in those instances in which the allegations could have a criminal aspect, the civil burden of proof remains on a balance of probabilities and there is no shifting standard (F.H. v. McDougall, 2008 SCC 53). There are no disciplinary steps that must be taken when an employee is suspected of misconduct. However, depending on the nature of the allegations and the concomitant circumstances, an employer may need to consider placing an investigated employee on leave while the investigation proceeds; for example, if there are safety issues or organisational risks.

32 Can an employee be dismissed for refusing to participate in an internal investigation?

When asked to participate in a workplace investigation, employees are expected to do so in an honest and forthright manner. If an employee refuses to participate in an investigation, absent a supportable reason (e.g., in the case of an illness or disability that precludes participation), then this may lead to disciplinary consequences. Nevertheless, the mere fact that an employee refused to participate in an investigation may not justify dismissal. A contextual analysis is necessary and the imposition of disciplinary action must be a reasonable and proportionate response to any misconduct. To bolster disciplinary action, an employer should provide clear directions to the employee about their participation in the investigation and that a failure to follow those directions in relation to the investigation will result in discipline up to and including dismissal.

Commencing an internal investigation

33 Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?

Investigations should be structured to maintain privilege where possible. In Canada, there is no mandated practice for commencing or conducting an internal investigation. The resort to and process of an internal investigation will typically depend on the nature and extent of the potential misconduct to be investigated.

Best practices tend to involve designing and structuring an internal investigation prior to conducting it, often by developing a proposed work plan that sets out the investigation's subject matter and scope, as well as the authority for the investigation, the reporting structure and whether legal advice is being sought. A document outlining the investigatory scope or mandate is good practice, and should generally be prepared by in-house or external counsel. A document detailing the scope or mandate can not only help to focus the internal investigation but can also be used with the implementation of a privilege protocol. Scope can be revisited during the course of an internal investigation in the event that investigative findings dictate an expansion (e.g., if findings suggest larger organisational issues that require investigation). Internal investigations are iterative processes by nature and generally involve the direction of in-house counsel and sometimes external counsel.

34 If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?

The company should take steps to preserve any relevant evidence (e.g., by putting a litigation hold in place). The company may wish to consider a parallel investigation. Potential witnesses – both internal and external – should be identified and consideration should be given to whether co-operation agreements are necessary. The issue of whether a special committee of the board should be formed should also be considered, and is indicated when other (usually non-independent) board members are potentially conflicted, or when special committee members have particular expertise (e.g., members of an audit committee or corporate governance committee).

A company's reporting requirements will be dictated by policy or fiduciary obligations and may also be informed by statute. Public companies must also be mindful of continuous disclosure obligations. When misconduct is identified, conclusions and any resulting report should be escalated appropriately within the company (to management and, depending on the severity of the conduct, to the board or special committee).

It is also common that in-house counsel are involved in or have knowledge of an internal investigation. In-house counsel may have their own professional obligations relating to the reporting of misconduct to management, the board of directors or others. In-house counsel should remain involved during any remedial action or any further internal investigation to preserve privilege where needed and to better implement risk mitigation strategies.

35 What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?

A company served with a preservation or production order or demand should generally comply promptly with the demand or order (after seeking legal advice). As best practice, individuals tasked with responding should consider all potential custodians of responsive information and should implement litigation holds and notices to specific custodians where permitted. If compliance with the terms of a demand or order in the prescribed time is not possible, the company may apply to the court or regulator to vary or revoke the order. In some instances, including in cases involving a preservation order issued pursuant to the Criminal Code, timelines may apply for such an application. This may assist the company in obtaining more time to comply with a demand or order if it is otherwise unreasonable in the current circumstances. It can also prevent the production of documents that would result in the disclosure of privileged documents or records. Consideration should be given to whether detailed privilege logs will be required (provincial securities regulators typically require production of detailed privilege logs).

36 At what point must a company in your country publicly disclose the existence of an internal investigation or contact from a law enforcement authority?

Several factors guide whether a company must publicly disclose an internal or external investigation of corporate misconduct or illegal conduct. These factors include the existence of regulatory requirements, whether the company is publicly traded or privately held, the company's business activities and the type of misconduct or illegal conduct in question.

Public companies have disclosure obligations under securities law with respect to material information. Whether specific information about potential misconduct or illegal conduct rises to the level of materiality depends on several qualitative and quantitative factors. Sectors such as financial services, consumer health and safety, and government procurement are subject to greater legal or contractual obligations to make disclosures.

Even if disclosure is not required, it may be prudent to disclose misconduct early on to preserve the company's reputation with consumers or contractual parties, particularly if the information is likely to be disclosed at some time in any event. Failure to disclose, or delayed disclosure, may also result in reputational damage, regulatory action or costly litigation.

37 How are internal investigations viewed by local enforcement bodies in your country?

Generally, Canadian enforcement agencies encourage companies to self-report or voluntarily disclose corporate misconduct or the existence of an internal investigation. In 2018, Canada introduced remediation agreements under the Criminal Code, whereby accused companies may self-report illegal conduct and arrive at an agreement with the prosecuting authority for a stay of charges in exchange for compliance with certain terms. In June 2022, the Quebec Superior Court upheld the first-ever draft remediation agreement submitted for court approval.

Attorney–client privilege

38 Can the attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?

Subject to certain exceptions, the attorney–client privilege and litigation privilege may be claimed over aspects of internal investigations in Canada. The attorney–client privilege generally protects communications that were created for the dominant purpose of providing legal advice. Litigation privilege can be attached to documents that were created in anticipation of or in response to litigation. Certain exceptions apply to these general protections; for example, the attorney–client privilege cannot be used as a general shield to production of relevant documents.

Companies seeking to invoke the attorney–client or litigation privilege should consider engaging external legal counsel to strengthen assertions of privilege, and should limit access to documents over which privilege may ultimately be asserted. Confidential communications with the company's external counsel are generally protected by the attorney–client privilege. However, if documents or communications are widely disseminated, assertions of privilege may be overturned. Although communications with in-house counsel may also be afforded such protections, challenges to such assertions may follow where questions are raised about the capacity in which the in-house counsel was acting at the time of the communication. As best practice, documents should be clearly labelled as 'attorney–client privileged' or 'litigation privileged'. Work-product should be labelled 'created at the request of counsel'.

39 Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?

Communications between a solicitor and a client made for the dominant purpose of seeking or receiving legal advice (in circumstances where the client intended the communication to be confidential) will generally be protected by the attorney–client privilege (Solosky v. The Queen [1980] 1 SCR 821 at 835, 837; Pritchard v. Ontario (Human Rights Commission) [2004] 1 SCR 809 at Paragraph 15). Corporations invoking such a privilege cannot be compelled to divulge communications, absent a finding that the corporation has waived the privilege. Although this protection was once limited to communications exchanged in connection with litigation, the Supreme Court of Canada has extended the privilege to cover all consultations for legal advice (Solosky v. The Queen [1980] 1 SCR 821 at 834; Pritchard v. Ontario (Human Rights Commission) [2004] 1 SCR 809 at Paragraph 15).

Although corporations as legal entities may be beneficiaries of the attorney–client and litigation privilege, corporations must act through the individuals that manage them (i.e., their officers and directors). Legal advice provided by a solicitor to a client and protected by the attorney–client privilege does not lose that protection when one officer or employee of the client passes that advice on to another. The privilege itself is owned by the corporation, and thus courts have held that former directors cannot assert or waive the attorney–client privilege on behalf of a corporation (Adam Dodek, Solicitor-Client Privilege (Markham: LexisNexis Canada, 2014) at 410). The privilege must be asserted or waived by management or the current directors acting in the corporation's interests.

40 Does the attorney–client privilege apply equally to in-house and external counsel in your country?

The attorney–client privilege applies equally to in-house and external counsel in Canada, provided in-house counsel are acting in their legal capacity in making the communication.

41 Does the attorney–client privilege apply equally to advice sought from foreign lawyers in relation to investigations in your country?

The attorney–client privilege applies to advice provided by lawyers licensed in any Canadian jurisdiction. In certain circumstances, Canadian courts have found that attorney–client privilege also applies to advice provided by licensed foreign lawyers (Hartz Canada Inc v. Colgate-Palmolive Co, 1988 OJ No. 663). However, to assert the attorney–client privilege, there must be an expectation that communication is confidential and the main purpose is to obtain legal advice.

42 To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?

Although the experience has varied historically, today Canadian enforcement authorities do not generally request waiver of privileged communications. Nevertheless, some exceptions may apply. Parties who choose to participate in immunity and leniency programmes may be required to waive privilege over certain materials. In R v. Nestle Canada Inc, 2015 ONSC 810, the court ordered Hershey, who had entered the Competition Bureau's leniency programme, Cadbury, who had entered the immunity programme, and their respective counsel, to produce any factual information in their possession or control. The only exception was redactions for legal advice. Shortly afterwards, the Crown stayed the charges. This raises the possibility that participation in programmes, such as the immunity or leniency programme, may require parties to produce information gathered in an internal investigation that the parties may otherwise have considered to be privileged.

43 Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?

Generally, once privilege has been waived, it cannot be asserted in another proceeding.

However, Canadian courts have recognised instances where a client's waiver of privilege will be limited to the specific circumstances for which the waiver occurred. In such instances, the information formerly released can once again be protected by privilege notwithstanding the previous waiver of privilege for a limited purpose. This form of limited waiver of privilege has been recognised in instances where privileged information was disclosed as required by statute, to aid a criminal investigation or proceeding, and to a more limited extent to co-operate with regulatory investigations.

Companies are cautioned that selective (partial) waiver of privilege may unintentionally result in a wider waiver, typically referred to as subject-matter waiver.

44 If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?

The disclosure of materials to a third-party entity will typically indicate a waiver of privilege. It is not clear whether this general rule applies to cross-border issues. The answer may differ based on the context and whether the disclosure was voluntary. To mitigate such uncertainty, it is advisable to include certain reservations before disclosing information, such that its disclosure to a foreign authority does not constitute a waiver of the privilege, which may shield it in its home jurisdiction. Further, it is best practice to expressly indicate that such a disclosure is being made under constraint and without waiving the self-incrimination principle, although these measures are certainly not foolproof.

45 Do common interest privileges exist as concepts in your country? What are the requirements and scope?

Common interest privilege operates as an exception to rules regarding the waiver of privilege. Generally, sharing privileged information constitutes a waiver of that privilege. Common interest privilege provides an exception to this rule in circumstances where parties share a common interest that was established before the information in question is shared, provided that the legal advice sought to be protected is relevant to the claim of both parties seeking the common interest protection.

46 Can privilege be claimed over the assistance given by third parties to lawyers?

Litigation privilege covers any third-party communications created for the dominant purpose of litigation, provided that the communications are relevant to the litigation and do not predate any investigation or contemplated litigation.

The attorney–client privilege may extend to communications with third parties, such as accountants, psychiatrists and investigators. Determining whether communications involving a third party are protected by the attorney–client privilege requires an analysis of the third party's relationship with the client and the solicitor.

For the attorney–client privilege to apply, the third party must play an integral role in the operation of the attorney–client relationship (General Accident Assurance Co v. Chrusz [1999] O.J. No. 3291 at Paragraph 125). The Canadian courts have recognised certain roles as integral, including third parties acting as channels of communication, such as translators or messengers, and third parties whose expertise is necessary for the solicitor to accurately assess the legal significance of information, such as an expert or forensic accountant (Redhead Equipment Ltd v. Canada (Attorney General), 2016 SKCA 115 at Paragraph 45; Smith v. Jones (1999) 132 C.C.C. (3d)). Solicitor privilege will not be granted if the third party's only purpose is to gather information or to act on legal instructions from the solicitor.

Witness interviews

47 Does your country permit the interviewing of witnesses as part of an internal investigation?

Yes, witness interviews are a common and integral part of internal investigations in Canada.

48 Can a company claim the attorney–client privilege over internal witness interviews or attorney reports?

Both the attorney–client privilege and litigation privilege may attach to communications produced in an internal investigation.

Litigation privilege covers any reports or communications created for the purpose of preparing for an existing or anticipated litigation. To determine whether litigation privilege applies, Canadian courts have applied a two-part test: (1) whether litigation was in reasonable prospect at the time the material was produced; and (2) whether litigation was the dominant purpose for the production (Mamaca (Litigation Guardian of) v. Coseco Insurance Co (2007), 56 C.C.L.I (4th) at Paragraphs 16, 17). Litigation privilege ends once the litigation has concluded.

Whether a lawyer's report is protected by the attorney–client privilege depends on the nature of the lawyer's role in the internal investigation. A report will be protected by the attorney–client privilege when all the following elements are met: (1) the communication is between a lawyer and a client; (2) the communication is intended to be confidential; and (3) the communication is for the purpose of giving or receiving legal advice. Facts are not protected by privilege in Canada. Therefore, if the lawyer was retained only to investigate and collect information, the report may not be protected by the attorney–client privilege.

49 When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?

When conducting a witness interview of an employee, an employer is not bound to any particular course of action relating to an investigation, although actions may be informed by workplace policies and statutory requirements, provided the investigation is 'fair and adequate'.

In all instances of interviews conducted in the course of an internal investigation, best practice requires that interviewees be cautioned with an Upjohn warning, making clear that (1) the privilege that attaches to the interview belongs solely to and is controlled by the company, and (2) the company may choose to waiver privilege and disclose information provided by a witness or employee to a government agency or other third party (Alan Gardner, 'Internal Investigations' in Barry J Reiter, et al., Directors' Duties in Canada (LexisNexis Canada)).

50 How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?

There are no requirements that a corporation must hire an external interviewer. However, whoever is selected must be impartial and equipped to conduct the interview. Relevant documents may be put to the witness.

An internal interview will typically involve the following:

• an introduction by the investigator should explain who the investigator is and who the investigator is representing. The introduction should also detail the purpose of the investigation, and provide any necessary cautions (or an Upjohn), including in relation to confidentiality and the importance of honesty;
• the witness should be advised if the interview is being recorded by the investigator (for which the witness's consent should be obtained) and the investigator should caution the witness that they are not permitted to record the interview;
• the investigator will review the allegations and relevant facts with the witness;
• the witness may be shown relevant and material documents and should be provided with the opportunity to comment on those documents at some stage of the investigation;
• the witness may be asked if there are any other witnesses or sources of information that the investigator should consult or review as part of the investigation; and
• the witness will be advised of the process going forward and reminded of obligations of confidentiality and the prohibition against reprisal.

Employees who are the target of an investigation have an inherent right to receive independent legal representation prior or during interviews (Lincoln Caylor and Nathan Shaheen, 'Canadian Corporate Criminal Liability' (Bennett Jones LLP, March 2019)). If an employee has retained counsel, they cannot be interviewed without the express consent of their lawyer and, usually, their lawyer is present during the interview. Employees who are not the target of the investigations do not have a right to receive independent legal representation during their interviews. Although not an inherent right, non-respondent employees may request the presence of their own external counsel for an interview. The employee cannot involve legal counsel to impede the process. In a unionised workplace, an employer may be required to notify the union and a union representative may be present for a unionised employee's interview as part of an internal investigation.

Reporting to the authorities

51 Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?

Generally, there are limited circumstances under which reporting misconduct to law enforcement authorities is mandatory. For example, it is not mandatory to report criminal violations of the Competition Act to authorities, although failure to report a known crime could constitute the offence of counselling under section 22 of the Criminal Code.

In certain contexts (e.g., financial services, consumer health and safety, and government procurement), there may be statutory obligations to report certain types of misconduct to law enforcement or regulatory authorities. Mandatory disclosures are also required, for example, in the context of certain Canadian sanctions regulations, albeit commonly with protections from liability for disclosures made in good faith.

52 In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?

Decisions as to whether and when to disclose the existence and findings of an investigation to law enforcement or a regulator will be influenced by the particular circumstances of the case, including the stage and findings of an investigation or report of wrongdoing, the likelihood that improper or illegal conduct has occurred and the steps recommended and taken in remediation.

In some cases, it may be advisable and in the best interests of the company to make disclosure pre-emptively, such as where the underlying misconduct is likely to come to the attention of the enforcement authority, or where credit for co-operation may follow. Likewise, pre-emptive disclosure could be advisable in circumstances in which an investigation did not disclose wrongdoing. In such cases, the enforcement authority may accept the findings of the investigation, if it believes a proper investigation was conducted and appropriate remedial measures were adopted. Pre-emptive disclosure can also provide the company with an opportunity to present the results of the investigation in a way that may be more favourably viewed by the enforcement authority. Before reporting, however, the existence and waiver of privilege should always be discussed with counsel.

In certain circumstances, a publicly traded corporation may be required under securities laws to disclose the existence of an investigation or the results thereof (or both). Disclosure of matters to regulators or to the public should be done in consultation with counsel, and the scope of the disclosure should be considered carefully.

The Ontario Securities Commission has established a formal credit for co-operation, as has the Canadian Competition Bureau for offences under the Competition Act. Certain other agencies have also given credit in the past for co-operation or self-disclosure, or in some instances have declined prosecution.

As an alternative to traditional prosecutions, Canada introduced remediation agreements in 2018. Thus far, only one such agreement has been announced, for SNC-Lavalin in relation to various criminal charges, including fraud. Under such agreements and subject to court approval, the Attorney General of Canada can stay the charges against an accused organisation in return for the organisation undertaking specified actions, including admitting responsibility, co-operating, paying a penalty or making restitution, establishing certain compliance measures, or being subject to the oversight of an independent monitor, among other things.

The Canadian Competition Bureau offers complete immunity from prosecution for the first party to report a criminal violation of the Competition Act and co-operate with the Bureau's investigation. It offers significantly reduced fines to later parties who report their involvement in a criminal offence, agree to plead guilty and agree to co-operate with the investigation. Depending on the circumstances, these benefits can be significant and can weigh in favour of self-reporting the misconduct. However, these benefits have to be weighed against the cost of co-operation, which can be extensive, and the cost of civil litigation, including class actions, which often follow antitrust investigations or guilty pleas.

Because many international antitrust enforcement agencies offer similar amnesty and leniency programmes, self-reporting can also be an attractive prospect in jurisdictions outside Canada, although it comes with similar drawbacks.

53 What are the practical steps needed to self-report to law enforcement in your country?

To self-report to the Canadian Competition Bureau, a party's Canadian lawyer will call the Bureau on a no-names basis to request a 'marker' (effectively a place in line) concerning a specific offence. The lawyer will not disclose the potential applicant's name but will have to describe at a high level the section of the Competition Act that is engaged, the time period and the industry or product. The Bureau will advise whether immunity would be available (meaning that the person is the first to report the alleged misconduct) or, if not, what place in line the person would have (subsequent co-operating parties usually receive lower fine discounts). If the applicant decides to accept the 'marker', the lawyer must disclose the applicant's identity. The Bureau requires applicants to proffer information to the Bureau about the alleged misconduct within 30 days of obtaining a marker. This information is usually collected by the applicant's counsel through an internal investigation and provided orally to the Bureau by counsel. The proffer itself is not evidence but a summary of the evidence that the applicant could provide if granted immunity or leniency. If the Bureau is satisfied that the applicant has proffered information about an offence and it wishes to investigate further, it will recommend to the Public Prosecution Service of Canada that the applicant receive immunity or leniency as applicable. The applicant will then negotiate an agreement for the grant of interim immunity or a plea agreement. After completing those agreements, the applicant will provide its full co-operation to the Bureau. This often includes producing all relevant documents and making key employees available for depositions and for trial testimony, if necessary.

A number of Canadian regulators and enforcement authorities provide guidance with respect to self-reporting or voluntary disclosure procedures (see, e.g., Ontario Securities Commission, Staff Notice 15-702; and Canada Border Services Agency, Memorandum D-11-6-4 'Relief of Interest and/or Penalties Including Voluntary Disclosure'). Generally, companies wishing to invoke self-reporting procedures are required to be comprehensive in their disclosure. A failure to do so may result in ineligibility. In addition to ensuring disclosure is comprehensive, consideration should also be given to waiver of privilege, including with respect to the results of any internal investigations that have been conducted.

Responding to the authorities

54 In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?

Canadian regulators and law enforcement authorities are often receptive to early resolution discussions following the issuance of a notice or subpoena. In circumstances in which a company has conducted an internal investigation (particularly where remedial action has followed), such discussions are relatively commonplace, particularly if the company has information that militates against the continuation of a prosecution.

The Canadian Competition Bureau does not typically engage in a dialogue with targets of a criminal investigation before executing a search warrant. In practice, its criminal investigations are highly confidential. In contrast, the Bureau will provide a draft of order seeking the production of documents under section 11 of the Competition Act. It usually obtains such orders in its civil investigations rather than its criminal ones. Targets of section 11 orders can provide feedback to the Bureau, which the Bureau may incorporate into its draft. In any event, the target's feedback is provided to the judge who issues the order. How the judge considers the feedback varies from case to case.

55 Are ongoing authority investigations subject to challenge before the courts?

The Commissioner of Competition's decision to investigate or not to investigate a matter is not subject to judicial review. Extreme examples of investigatory or prosecutorial misconduct could be the subject of a subsequent civil action alleging malicious prosecution, but these are exceedingly rare.

Ongoing investigations may be challenged before the Federal Court or provincial courts through the judicial review process, but typically only in instances in which the investigating body lacks the legal authority to conduct the investigation at issue.

56 In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?

Attention should be paid at the outset of any investigation to the jurisdictions in question. For example, a number of regulatory bodies, such as provincial securities regulators, are empowered to take coordinated action.

Whether to produce the same document set in different jurisdictions should always be assessed case by case. Given the greater liability companies may face in larger jurisdictions, such as the United States and the European Union, it is often important to ensure that any production in Canada does not include information or documents not already produced in those larger jurisdictions, as authorities in those jurisdictions may be able to obtain the documents from Canadian enforcement agencies through treaty requests. Similarly, alignment in information and document production is critical if the applicant has granted a waiver allowing enforcement agencies to discuss the applicant's information (and sometimes to exchange documents).

57 If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for and produce material in other countries to satisfy the request? What are the difficulties in that regard?

Yes. A production order would require the company to provide all records under its control. For example, an order under section 11 of the Competition Act requires the production of documents and information in the control of the target wherever located and can include an order requiring production of documents from the target's affiliates whether the affiliate is located in Canada or outside of Canada.

Difficulties can arise if other countries have blocking statutes that prohibit the production of documents to Canadian litigants or authorities. Issues can also arise where the production order requires a Canadian subsidiary to produce documents that are in the possession of its foreign parent since the subsidiary has no legal authority to require such production from its parent. Further, companies producing documents to Canadian authorities should be mindful of mutual assistance treaties that may allow non-Canadian law enforcement agencies to obtain documents that are in the hands of Canadian authorities.

58 Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?

Yes. Canadian law enforcement authorities commonly share information with partner agencies in other countries. Canada is a party to several mutual legal assistance treaties, which enable the enforcement agencies of treaty partners to request information as provided for by the applicable treaties. In Canada, the federal Department of Justice is responsible for managing formal requests for mutual legal assistance through its International Assistance Group.

In the context of an immunity or leniency application in multiple jurisdictions, the Canadian Competition Bureau will often ask the applicant to waive the confidentiality protections of the Competition Act and the relevant immunity or leniency programme to enable the Bureau to discuss the matter with the agencies from which the applicant has also sought immunity or leniency.

Provincial securities regulators across the country have entered into memoranda of understanding with the US Securities and Exchange Commission that permit the sharing of information in response to requests in certain circumstances, and in some instances may also obtain and share information with other law enforcement agencies. For example, the Ontario Securities Commission also partners with the Royal Canadian Mounted Police's Integrated Market Enforcement Team, a specialist unit that focuses on capital markets fraud (among other things).

59 Do law enforcement authorities in your country have any confidentiality obligations in relation to information received during an investigation or onward disclosure and use of that information by third parties?

Yes. Generally, confidentiality obligations apply, and disclosure is limited to the party facing potential criminal or regulatory prosecution. However, broader disclosure may be permitted in some circumstances, including depending on the source of the information, and Canadian courts may otherwise order disclosure in appropriate circumstances. Interested parties may bring what is commonly known as a Wagg motion, which is a means of seeking production of a file from law enforcement when there are difficulties with so doing.

Section 29 of the Competition Act prohibits the Canadian Competition Bureau from disclosing information regarding its investigation unless the information is being disclosed to another Canadian enforcement agency or is necessary for the administration or enforcement of the Act.

60 How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?

The risk of violating the laws of another country is one that Canadian law enforcement and Canadian courts may take seriously, depending on the circumstances. Faced with a request that would violate the laws of another country, a company could move before a Canadian court to seek to limit or quash the request in light of those laws. Doing so is likely to require evidence of the laws of the other country, and that those laws are likely to be violated. At the same time, obtaining legal advice from that other country, including on the question of whether steps should be taken before the courts of that other country, is probably advisable for a company facing such a request from Canadian law enforcement.

The advice would vary according to the circumstances. For example, in the context of a Competition Bureau inquiry, possibilities include engaging with the Bureau to narrow the scope of the request voluntarily, moving to vary the scope of the order requiring production, or refusing to comply with those portions of the order that would require the client to violate the foreign law. In the latter circumstance, the client would rely on section 65 of the Competition Act and argue that it had 'good and sufficient cause' not to comply with the section 11 production order.

61 Does your country have secrecy or blocking statutes? What related issues arise from compliance with a notice or subpoena?

Canada does not currently have a secrecy or blocking statute.

Under the Foreign Extraterritorial Measures Act, the Attorney General may issue orders prohibiting the disclosure or identification of records in Canada or in the possession of a Canadian citizen or resident to a foreign tribunal if the Attorney General is of the view that the foreign tribunal is exercising or will exercise its jurisdiction in a manner that is likely to adversely affect significant Canadian interests in relation to trade or commerce or that infringes on Canadian sovereignty.

62 What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?

Generally, protections are afforded to information that is both compelled and produced voluntarily. However, compelled information is more likely to be protected from disclosure and its use in any enforcement proceeding may be more susceptible to challenge. In either case, information held by Canadian authorities is unlikely to be produced for use in another proceeding or otherwise without an order of a Canadian court or regulatory tribunal.

Section 29 of the Competition Act prohibits the Canadian Competition Bureau from disclosing information regarding its investigation regardless of whether that information was provided voluntarily or was compelled. The material is not usually discoverable in the hands of the Bureau, although a court can compel its disclosure.

Prosecution and penalties

63 What types of penalties may companies or their directors, officers or employees face for misconduct in your country?

Canadian companies may be subject to fines, debarment, disgorgement and restitution orders, as well as probationary orders restricting actions. Individual directors, officers and employees may also face fines, probationary and disgorgement orders, in addition to being subject to a risk of imprisonment in the event of misconduct.

64 Where there is a risk of a corporate's suspension, debarment or other restrictions on continuing business in your country, what options or restrictions apply to a corporate wanting to settle in another country?

Public Works and Government Services Canada (PWGSC) administers Canada's Integrity Regime, which permits the suspension and debarment of suppliers to the government of goods and services if they have been charged with or convicted of certain offences in Canada or abroad. Designated offences include corruption, price-fixing, bid rigging and fraud, among others. According to its Ineligibility and Suspension Policy, the PWGSC will consider the following to determine whether the foreign offence is similar to a designated offence:

• in the case of a conviction, whether the court acted within its jurisdiction;
• whether the supplier was afforded the right to appear during the court's proceedings or to submit to the court's jurisdiction;
• whether the court's decision was obtained by fraud; or
• whether the supplier was entitled to present to the court every defence that the supplier would have been entitled to present had the proceeding been tried in Canada.

If the conditions above are met and the PWGSC determines that a supplier has, in the past three years, been convicted of an offence in a jurisdiction other than Canada that is similar to any of the domestic offences identified in the policy, the supplier may be suspended for up to 10 years (reducible to five years if the company enters into an administrative agreement with the PWGSC).

Certain provinces also maintain their own suspension and debarment programmes.

65 What do the authorities in your country take into account when fixing penalties?

The overarching principle applied to sentencing in Canada is one of proportionality. Sentences and penalties are required to be proportionate to the degree of responsibility of those culpable in misconduct and the gravity of the offence. Many other mitigating and aggravating factors may be applied at the sentencing or penalty phase of criminal or regulatory sanctions, depending on the trier of fact and the applicable legislative scheme. The common law also recognises certain mitigating and aggravating factors. Many regulators, including securities regulators, will consider factors such as co-operation, self-disclosure and whether a resolution was reached early on or prior to a hearing on the merits, at the penalty phase of a hearing or settlement approval process. Consideration is also typically given to whether or not the company or its directors, officers, employees and other individuals implicated in the wrongdoing have made restitution or have otherwise taken steps to remediate or mitigate wrongdoing.

Resolution and settlements short of trial

66 Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?

Yes. In Canada, deferred prosecution agreements are available for certain offences (e.g., various corruption and fraud offences) through arrangements called remediation agreements, authorised under section 715.3 of the Criminal Code.

Remediation agreements are only available when the prosecutor is of the opinion that there is a reasonable prospect of conviction, the offence does not cause serious harm (e.g., bodily harm or death, or threat to national defence or security, or committed in association with criminal organisations or terrorist groups) and that negotiating the agreement is in the public interest. In addition, the Attorney General must consent to the negotiation of the agreement. Once a remediation agreement has been negotiated, it is subject to judicial oversight and must be approved by a court order.

The main advantage of remediation agreements is that they provide an efficient alternative to trials, which can be costly and lengthy, and promote a culture of self-reporting. The main disadvantage of these arrangements is that they may be viewed as insufficiently promoting individual accountability.

Remediation agreements are a relatively new mechanism and, to date, only one remediation agreement has been approved in Canada. It was entered into by SNC-Lavalin to resolve allegations relating to the contract obtained by the company for the restoration of the Jacques Cartier Bridge in Montreal.

67 Does your jurisdiction provide for reporting restrictions or anonymity for corporates that have entered into non-prosecution agreements or deferred prosecution agreements until the conclusion of criminal proceedings in relation to connected individuals to ensure fairness in those proceedings?

Yes, section 715.42 of the Criminal Code provides that the remediation agreement will be published once approved by the court. That said, the court may decide not to publish the remediation agreement, in whole or in part, if it is satisfied that non-publication is necessary for the proper administration of justice.

The Criminal Code specifies several factors that the court must consider when deciding whether non-publication is in the public interest. For example, the court will consider society's interests in encouraging the reporting of offences, whether it is necessary to protect the identity of both victims (or, for example, whistleblowers), as well as whether publishing the agreement will impede any current investigation or prosecution with a view to promoting fairness in those proceedings.

68 Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?

There are numerous considerations, but fundamental considerations include the following:

• The Canadian court system is presumptively public, meaning that information filed in court, such as remediation agreements, guilty pleas and statements of admission, will be publicly available.
• The Canadian criminal justice system contains a strong presumption of innocence and many protections for accused individuals. The Crown must prove guilt beyond a reasonable doubt. This high burden means that companies may resist charges more successfully in Canada than in other jurisdictions where the same conduct might be evaluated on a different standard.
• Public admissions of criminal wrongdoing can lead to costly private actions, including class actions.

69 To what extent do law enforcement authorities in your country use external corporate compliance monitors as an enforcement tool?

The Canadian Competition Bureau sometimes insists on external corporate compliance monitors when an organisation has admitted a violation of the Competition Act. In other instances, it is satisfied if the party implements an effective compliance programme.

The new remediation agreement regime under the Criminal Code contemplates that a remediation agreement may require the appointment of an independent monitor (with the prosecutor's approval), an obligation to co-operate with the monitor and an obligation to pay the monitor's costs.

Provincial securities regulators have in the past implemented provisions requiring continuing compliance monitoring as part of settlement agreements, and securities commissions have made similar orders when corporations have been found to have breached the Securities Act.

70 Are parallel private actions allowed? May private plaintiffs gain access to the authorities' files?

Private litigation, and in particular class action litigation, following admitted violations of the Competition Act or the Securities Act is commonplace. These regulators do not volunteer their files to private litigants, although plaintiffs have, on occasion, gained access to portions of investigative materials through the courts, where doing so would no longer jeopardise the authority's investigation. However, a more common method of gathering information provided to a regulator is to require the disclosure of information from defendants through the litigation discovery process.

Publicity and reputational issues

71 Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.

Criminal investigations are generally subject to limited publicity, unless law enforcement authorities determine that there is an investigative or public interest objective to be served. Records for applications relating to investigations, such as the judicial authorisation of search warrants or wire-tap authorisations, may be sealed, subject to applications otherwise.

Canada has an open court principle that presumes public access to all court proceedings and freedom of the press to report on proceedings. There are limited circumstances where there is a statutory publication ban (e.g., withholding the name of the accused if under the age of majority), but the court may also exercise its discretion to order a publication ban in exceptional circumstances.

72 What steps do you take to manage corporate communications in your country? Is it common for companies to use a public relations firm to manage a corporate crisis in your country?

It is common for companies to use public relations or crisis management firms. Commonly legal counsel will review any corporate communications prior to release as such communications may be admitted as evidence in court proceedings.

73 How is publicity managed when there are ongoing related proceedings?

Companies may choose to make communications, or may choose not to comment on matters before the courts. Commonly, legal counsel will review any corporate communications prior to release as such communications may be admitted as evidence in court proceedings.

Duty to the market

74 Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?

Generally, no. In fact, depending on the counterparty to the settlement, this may be prohibited. For example, settlement agreements with most provincial securities regulators must be approved by local securities commissions, often in in-camera hearings, before they are effective. Disclosure is prohibited until approval and accompanying orders permitting disclosure have been obtained. In any event, immediate disclosure of a settlement agreement would be mandatory only where it is determined that the facts and circumstances in question constitute a material change for the company.

Environmental, social and corporate governance (ESG)

75 Does your country regulate ESG matters?

Canada does not regulate ESG matters as such, but adopts a subject matter-based approach.

For example, under the Extractive Sector Transparency Measures Act, organisations that are involved in the commercial development of oil, gas or minerals in Canada or elsewhere must publicly disclose annually certain types of payments over C$100,000 that are made to governments in Canada and abroad.

76 Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address ESG matters?

Specific regulatory and legislative changes relating to ESG matters are occurring across a number of areas. The following are examples.

The Canadian Securities Administrators has published the proposed National Instrument 51-107 – Disclosure of Climate-related Matters for comment. If adopted, the proposed new rules specify mandatory information that certain reporting issuers will be required to disclose, including information about the reporting issuer's governance practices relating to climate-related risks and opportunities.

In recent years, there have been several efforts to introduce legislation relating to the prevention of forced labour and child labour by increasing transparency in supply chains. Of these, Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff, is most likely to pass into law, albeit with further amendments to be proposed by the government. The Bill passed its second reading in the House of Commons and was referred to the Standing Committee on Foreign Affairs and International Development for study. If passed as currently drafted, the Act would impose reporting obligations on certain entities that directly or indirectly (i.e., via an entity controlled by it) produce, sell or distribute goods in Canada or import into Canada goods produced outside Canada. Those entities would be required to report annually to the minister on the steps they have taken during the previous financial year to prevent and reduce the risk of forced labour or child labour at any stage of production in their supply chains.

In addition, we also expect greater regulation relating to taxonomy, a focus on bio­diversity and an increasing number of regulatory bodies either imposing or recommending certain ESG-related disclosures.

77 Has there been an increase in ESG-related litigation, investigations or enforcement activity in recent years in your country?

There has been a notable increase in ESG-related litigation and regulatory actions, which have emerged through civil suits, class actions, shareholder activism or related actions, and regulatory investigation and related enforcement. The underlying causes of action being litigated to date have focused on, among other causes of action, misrepresentation, inadequate or misleading disclosure, and breach of directors' duties. For example:

• Keurig Canada reached an agreement with the Competition Bureau that required Keurig Canada to pay a C$3 million penalty to resolve concerns about false or misleading environmental claims made to consumers about the recyclability of its single-use Keurig K-Cup pods;
• The Ontario Securities Commission and the British Columbia Securities Commission performed, and continue to perform, reviews of registrants identified as participants in ESG investing for greenwashing claims; and
• environmental non-governmental organisations are currently bringing together resources to launch a class action that would target certain oil and gas producers for the costs relating to climate change.

There has also been and will continue to be litigation, investigation and enforcement activity in the context of indigenous rights, environmental assessments, human rights and occupational health and safety matters.

Anticipated developments

78 Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address corporate misconduct?

In June 2022, the Commission of Inquiry into Money Laundering in British Columbia led by Justice Austin Cullen released its long-anticipated report (the Cullen Commission Report). Although the Report focused primarily on the province of British Columbia, its findings and recommendations – which address significant shortfalls in the current Canadian anti-money laundering regime – are broadly applicable across Canada, and are anticipated to prompt material changes in the Canada-wide fight against money laundering and other forms of corporate misconduct, particularly since much of the most relevant legislation falls within the federal government's jurisdiction.

The Cullen Commission Report also follows a series of announcements by the federal and provincial governments to tackle issues of corporate misconduct. Most recently, the federal government's 2022 budget announced efforts to implement a publicly accessible corporate beneficial ownership registry by 2023, and various provincial governments have announced similar initiatives. Currently, beneficial ownership is not publicly available in Canada and often cannot be discerned even through more detailed investigation. In addition, funding has been announced for the creation of the Canadian Financial Crimes Agency, which is intended to be tasked with responding quickly to complex and fast-moving cases of financial crime.

Footnote

1. Sabrina A Bandali, Emrys Davis, Alan P Gardner, Laura Inglis, Amanda C McLachlan, Ruth E Promislow and Nathan J Shaheen are partners at Bennett Jones LLP.

Originally published by Global Investigations Review.