Securitizing Canadian Federalism: The Supreme Court of Canada and the Proposed Canadian Securities Reform Act

Abstract

The pending Canadian Supreme Court decision on the constitutionality of the Canadian Securities Reform Act (CSRA) promises to greatly clarify or maddeningly muddle the division of powers between Canada’s provinces and federal government. Yet, two characteristics of the Court should be emphasized. The Court has avoided drawing bright lines regarding the federal government’s commerce power and weighs political factors in defining provincial and federal authorities. Furthermore, this analysis highlights the benefits of not subjecting the CRSA to a full commerce analysis. If the Court faithfully applies the General Motors test it will either (1) lay down a firm rule permitting a mandatory federal securities regulator that may be politically impossible to implement or (2) murky the rules regarding the federal government’s commerce powers. But a third option exists: the Court can justify the CSRA without forcing a definitive answer on whether a federal securities regulation would trump provincial law through the Peace, Order and Good Governance clause. While this may not satisfy supporters of bright-line rules when it comes to Canadian federalism, such an approach seems to follow proclivities of the Court and reflect Canada’s historical approach to federalism.