Editor’s Note: This post was written as a preview of an upcoming Supreme Court of Canada decision for the Fantasy Courts website and newsletter.

Hi, here’s what you need to know about the Supreme Court of Canada this week in 5 minutes.

Latest News

  1. 🚒 The SCC will release its judgment in Eurobank Ergasias S.A. v. Bombardier inc. on Friday, April 5, 2024. At issue in this international commercial law case are the obligations of banks under a letter of credit and when they can refuse payment on the basis of fraud.
  2. 🏦 On March 28, 2024, the SCC released Dickson v. Vuntut Gwitchin First Nation, 2024 SCC 10. The Court dismissed the appeal and cross-appeal, with the majority ruling that the Charter applies a self‑governing Indigenous community, but the application of s. 15(1) here is shielded by s. 25. Therefore, the residency requirement for council members is upheld.
  3. 🔮 Even though it was a split decision (4:2;1), 87% correctly predicted the result.

Head over to Fantasy Courts to lock in your predictions for this week’s decision, or read more about the cases below.

Cases to Predict: Letters of Credit

Appeal by leave from Eurobank Ergasias c. Bombardier inc., 2022 QCCA 802

SCC factums and webcast

What Happened?

Background: The respondent Bombardier inc. entered into a procurement contract with a branch of the Greek government for ten firefighting amphibious aircraft for $252 million. Bombardier also entered into an offset contract in which it agreed to subcontract work to Greek suppliers. It further agreed to pay up to 10% of the contract as liquidated damages if it didn’t fulfill the offset contract. The liquidated damages were secured by a letter of guarantee in favour of the Greek government issued by a Greek bank, eventually replaced by the appellant Eurobank. Eurobank then became the beneficiary of a letter of counter-guarantee issued by the respondent National Bank of Canada.

Bombardier wasn’t able to fulfil the offset contract and the matter went to arbitration with Bombardier arguing the contract was contrary to EU law. The Greek government told the arbitration panel it would not seek payment under the letter of guarantee until the proceedings were complete. It changed its mind and sought immediate payment from Eurobank for $14 million. Eurobank initially refused, but eventually paid after the Greek government ordered it to pay under the threat of severe consequences. National Bank, however, refused to pay Eurobank under the letter of counter-guarantee on the basis the Greek government’s actions amounted to fraud. Bombardier was eventually fully successful in the arbitration.

Trial: When National Bank refused payment to Eurobank under the letter of counter-guarantee, Eurobank sought recovery through Quebec courts. The Superior Court of Quebec confirmed its jurisdiction and rejected Eurobank’s demand for payment under the letter of counter-guarantee on the basis of the fraud exception. It held that the letter of counter-guarantee was unenforceable. The court also ordered the Greek government to comply with the ICC Arbitral Tribunal Final Award.

Appeal: The Quebec Court of Appeal confirmed the trial court decision, except to strike out that part of the trial judgment ordering the Greek government to comply with the ICC Arbitral Tribunal Final Award.

What Was Argued at the SCC?

Appellant: Eurobank argued that the Court of Appeal decision undermines the autonomous nature of letters of credit. The Greek Courts had jurisdiction and held that the Greek bank had an obligation to honour the letters of guarantee. The Quebec courts were wrong in concluding that Eurobank had committed fraud by respecting decisions of the Greek Courts.

Respondent: The Greek government argued its conduct was not fraudulent and the Quebec courts should have respected the Greek Courts’ decisions in that regard. National Bank argued that the Quebec courts had jurisdiction and did not err in concluding that the letter of counter-guarantee was not enforceable.

What Else Should You Know Before Making a Prediction?

I think the SCC has some sympathy here for the appellant Eurobank who seems to have been stuck between a rock and a hard place. It knew the Greek government’s conduct was fraudulent, but if it didn’t pay, its business was at risk. I think the appeal will largely turn on the extent to which the Greek Courts are found to have jurisdiction here or not. If they did, then their decision that there was no fraud ought to be respected. I’m leaning towards appeal allowed.

Previous Prediction: Self-governing First Nations

On March 28, 2024, the SCC released its decision in Dickson v. Vuntut Gwitchin First Nation, 2024 SCC 10.

Held (4:2:1): Appeal and cross-appeal dismissed. Majority ruled that the Charter applies to self-governing First Nation. Residency requirement for council members does not infringe s. 15(1) because it is protected by s. 25.

Key Points:

  • The Charter applies to a self-governing First Nation where it is a government by nature pursuant to s. 32(1). Section 32(1) explicitly contemplates that the Charter applies to other entities, including those that are controlled by government or that perform truly governmental functions.
  • The purpose of s. 25 is to uphold certain collective rights and freedoms of Indigenous peoples when those collective rights conflict with an individual’s Charter rights. Section 25 allows for the assertion of individual Charter rights except where they conflict with Aboriginal rights, treaty rights, or “other rights or freedoms” that are shown to protect Indigenous difference.
  • The residency requirement in this case protects Indigenous difference. The appellant’s s. 15(1) claim abrogates or derogates from this right, with which it is in irreconcilable conflict. As a result, pursuant to s. 25, the s. 15(1) claim cannot be given effect.

Predictions: 87% of players correctly predicted that the appeal would be dismissed.

-Tom Slade

Thanks for reading. If you liked today’s brief, we’d love for you to share it with a friend or you can sign up to receive it as an email: https://mailchi.mp/37b20ffd0198/fantasycourts