Overview
On April 29, 2016, the Supreme Court of Canada (the Court) issued a much-anticipated decision in World Bank Group v. Wallace,[1] overturning an Ontario Superior Court of Justice order for production and affirming immunities held by the Integrity Vice Presidency (INT) of the World Bank Group (the Bank) applying to both Bank records and personnel. The central issue in the case was whether, in Respondent’s challenge to the basis of a wiretap authorization, the Court could compel the Bank to produce certain internal documents and require INT investigators to testify before the Court. The case raised important due process concerns and represented a frontal challenge to the Bank’s jealously guarded privileges and immunities, and had the potential to threaten future cooperation between the Bank and national enforcement agencies. As the Bank has become more aggressive in pursuing fraud and corruption in recent years, referrals by INT to national authorities for investigation and prosecution at the national level have increased, compounding the risks faced by companies from a Bank investigation.
World Bank Immunities
At issue in the case were certain immunities granted to the Bank under the Articles of Agreement for the International Bank of Reconstruction and Development (IBRD) and the International Development Association (IDA).[2] The Articles of Agreement for both the IBRD and the IDA provide that:
- “The archives of the Association shall be inviolable;”[3] and
- “All Governors, Executive Directors, Alternates, officers and employees of the Association (i) shall be immune from legal process with respect to acts performed by them in their official capacity except when the Association waives this immunity.”[4]
History of the Case
The case arose out of allegations of corruption in a Bank-financed contract for the Padma Multipurpose Bridge in Bangladesh. The Canadian firm SNC-Lavalin Inc. bid on a contract to supervise construction of the bridge, and four individuals allegedly conspired to bribe Bangladeshi officials in order to win the contract. These individuals included three former SNC-Lavalin employees (Kevin Wallace, Ramesh Shah, and Mohammad Ismail) and one representative of a Bangladeshi official (Zulfiquar Bhuiyan, allegedly a representative of Bangladeshi official Abul Chowdhury). After receiving information from tipsters and investigating allegations relating to the contract, INT shared some information obtained during the course of its investigation with the Royal Canadian Mounted Police (RCMP). The RCMP subsequently relied upon this information to obtain wiretap authorizations for the accused individuals, and jointly charged each respondent under Canada’s Corruption of Foreign Public Officials Act.[5]
The respondents challenged the wiretap authorizations under Canadian law and sought a third party production order to compel the production of certain INT records, as well as testimony from INT investigators. The application for production was approved by the Ontario Superior Court of Justice, and the Bank (supported by the Crown and several other intervenors)[6] appealed to overturn the order. The issues on appeal were (1) whether the Bank could be subject to a production order by a Canadian court, in light of the immunities granted to it in the Articles of Agreement; and (2) if so, whether the documents sought were relevant under Canadian law. This alert focuses exclusively on the first issue.
Highlights of the Decision
In setting aside the lower court’s production order, the Court utilized established rules of treaty interpretation set forth in the Vienna Convention on the Law of Treatiesto make sense of the IBRD and IDA Articles of Agreement, looking at the Agreements “in accordance with the ordinary meaning of the treaty terms and in light of their purpose and object.”[7] The Court examined the two key articles of each Agreement as laid out above - sections 5 and 8 of Article VII of the IBRD Articles of Agreement and sections 5 and 8 of Article VIII of the IDA Articles of Agreement - on the Immunity of Archives and the Immunities and Privileges of Officers and Employees.
At the outset, the Court found that INT, although operating as an independent investigative arm, fits within the World Bank Group’s overall structure (and indeed, that the Articles of Agreement provide INTs legal foundation) and that INT therefore benefits from the same immunities granted to other World Bank Group entities. The Court further noted that section 3 of IBRD and IDA Articles VII and VIII, which states that “[a]ctions may be brought against the [IBRD or IDA] only in a court of competent jurisdiction” did not permit the Court to compel document production in the current case. Explaining that section 3 allows IBRD and IDA creditors to have access to courts, the Court found that a request for document production was “not the kind of action contemplated” by section 3.[8]
Next, the Court turned to whether the immunities granted to the Bank were “functional,” that is, whether the immunities in question applied only once they have been demonstrated to be necessary for the Bank to carry out its mission. Absent an express condition of necessity in the articles themselves, however, the Court determined that no justification of necessity was required to invoke immunity. The Bank’s immunity was therefore “absolute” rather than subject to a case-by-case determination on functional necessity.
Perhaps most importantly, the Court also examined the scope of both immunities, as well as whether the Bank had implicitly waived immunity by providing some documents to the RCMP. In interpreting immunity of the Bank’s records as laid out in section 5 of Articles VII and VIII of the Articles of Agreement, the Court took an expansive view of the terms “archive” and “inviolable,” holding that the terms encompassed and shielded “the entire collection of stored documents of the IBRD and the IDA from both search and seizure and from compelled production.”[9] In particular, the Court noted that definitions of “inviolability” connote “freedom from any act of interference.”[10] Furthermore, the Court held that section 5, unlike section 8, is not subject to waiver, express or implied.
In examining the scope of personnel immunity as laid out in section 8 of Articles VII and VIII of the Articles of Agreement, the Court determined that INT investigators clearly fell within the scope of officers and employees that were subject to legal process immunity (having provided information to the RCMP in their official capacity). The more difficult question considered by the Court was whether the Bank had implicitly waived this immunity by sharing some information with the RCMP. Upholding a broad view of the Bank’s immunities, the Court found that “the object and purpose of the treaty favour an express waiver requirement,” and that the protections granted by section 8 could not be waived implicitly.[11] The purpose for according immunity to the Bank, according to the Court, was to shield the organization from harassment or interference by member states. As such, the Court reasoned that permitting implied waivers would subject the Bank to open questions in national court proceedings in every member state. This could significantly impede the Bank’s operations, particularly where legal inconsistencies between jurisdictions could create divergent results. Furthermore, such a waiver could also “have a chilling effect on collaboration with domestic law enforcement.”[12]
Practical Implications
The case provides an expansive view of the Bank’s immunities, protecting and fostering cooperation between INT and national enforcement agencies. However the case raises important due process concerns for future respondents, and other jurisdictions may weigh these concerns differently than the Canadian Supreme Court (in US courts, for example, constitutional issues may arise if material provided by INT is used as direct evidence). Among other things, the ruling may create a lack of accountability for referrals which can give rise to costly national investigations or proceedings.[13] In our view, it would have been better to recognize a qualified immunity, dependent on good faith, on the part of Bank officials and a clear waiver rule when INT deliberately shares information with a member state. While the Bank and its personnel may be above national laws, when they purposefully seek to trigger national action they put themselves into a different arena, just as they do when they purposefully go to the financial markets to raise money for their operations.
As a practical matter, it is too early to tell whether the Bank will face similar challenges in other jurisdictions (as well as the degree of deference other jurisdictions will afford the Canadian precedent). What we can predict with certainty is that the Bank and its sister institutions will continue to guard their privileges and immunities zealously. We can also predict that INT’s referrals will be encouraged by this holding.
For further information, please contact members of Steptoe’s FCPA/Anti-Corruption practice.
[1] World Bank Group v. Wallace, 2016 SCC 15 (Can.).
[2] These Articles of Agreement were implemented into Canadian law by two Orders in Council and approved by Parliament through the Bretton Woods and Related Agreements Act,R.S.C. 1985, c. B-7 (Can.).
[3] Section 5 of the IBRD Articles of Agreement, Article VII and the IDA Articles of Agreement, Article VIII.
[4] Section 8 of the IBRD Articles of Agreement, Article VII and the IDA Articles of Agreement, Article VIII.
[5] Corruption of Foreign Officials Act, S.C. 1998, c. 34 (Can.).
[6] Intervenors arguing for more expansive immunity protections included the Bank included Transparency International Canada Inc., Transparency International, the European Bank for Reconstruction and Development, the Organisation for Economic Co-operation and Development, the African Development Bank Group, the Asian Development Bank, the Inter-American Development Bank, and the Nordic Investment Bank. Intervenors arguing that the Court should recognize implied immunity included the British Columbia Civil Liberties Association and the Criminal Lawyer’s Association (Ontario).
[7] World Bank Group v. Wallace, 2016 SCC 15, para. 47 (Can.).
[8] Id. at para. 55.
[9] Id. at para. 67.
[10] Id. at para. 80.
[11] Id. at para. 90.
[12] Id. at para. 94.
[13] Such a rule could encourage greater accountability on the part of national authorities as well. In Wallace, for example, the RCMP agent leading the investigation “made no handwritten notes of his work” and lost his electronic documents due to a computer error. Id. at paras. 104-111. INT’s production of documents could therefore have informed the Court as to the basis of the agent’s affidavit for the wiretap application.
