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Arbitrating a fiction: Canadian federalism and the Nova Scotia/Newfoundland and Labrador boundary dispute.

Abstract: The offshore area between Nova Scotia and Newfoundland and Labrador and the natural resources that it holds have recently been the subject of dispute between the two provinces. Constitutionally, jurisdiction for offshore resources belongs to the federal government. Control over development and revenues has been shared with the provinces through joint management accords. In order to deal with the dispute over where the offshore boundary between the two provinces lies, the accords provide for arbitration by a tribunal reporting to the federal minister of natural resources. That tribunal has now completed its work. This article analyses the tribunal, its terms of reference, and its findings, and concludes that the tribunal process was flawed. There are reasons to doubt the appropriateness of its role, the method by which it made its decision, and the legality of its findings. Ultimately, the tribunal's process perpetuates the myth that what is being discussed are genuine boundaries between the provinces. The boundary is, in that regard, a fiction. In fact, the process is simply apportioning federal resources between two provinces. The tribunal cloaks a political decision in legal garb. The minister of natural resources is able to avoid political responsibility for making a decision by relying on a pseudo-judicial body for technical recommendations. As in many of the other practices that have come to dominate intergovernmental relations in Canada, the accountability of governments is lost in the process.

Sommaire: La zone cotiere entre la Nouvelle-Ecosse, Terre-Neuve et le Labrador ainsi que les ressources naturelles qu'elle comporte ont recemment fait l'objet de conflits entre les deux provinces. Conformement ala constitution, les ressources en mer sont du ressort du gouvernement federal. Le controlde la mise en valeur et des revenus a ete partage avec les provinces par le biais d'accords de gestion conjoints. Ces accords prevoient l'arbitrage par un tribunal relevant du ministre federal des Ressources naturelles pour traiter les conflits concernant la frontiere au large des cotes entre les deux provinces. Ce tribunal a maintenant termine son travail. Le present article offre une analyse de ce tribunal, de son mandat, et de ses conclusions, et releve que le processus du tribunal etait defectueux. Il existe des raisons de douter du caractere adequat de son role, de la methode par laquelle il a pris sa decision et de la legalite de ses conclusions. Enfin, le processus du tribunal perpetue le mythe selon lequel l'enjeu des discussions porte sur les veritables frontieres entre les provinces. La frontiere est, a cet egard, de la fiction. En fait, le processus repartit tout simplement les ressources federales entre deux provinces. Le tribunal masque une decision politique sous un deguisement juridique. Le ministre des Ressources naturelles arrive a eviter la responsabilite politique d'une decision en comptant sur un organe pseudo-juridique pour presenter des recommandations techniques. Comme cela est le cas dans de nombreuses pratiques qui dominent aujourd'hui les relations intergouvernementales au Canada, l'imputabilite des gouvernements se perd dans le processus.

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The allocation and control of Canada's offshore natural resources is a flashpoint in intergovernmental relations. Constitutionally, jurisdiction for offshore resources resides with the federal government. Political realities have nevertheless compelled the federal government to share that jurisdiction with determined provinces. Having wrestled some control from Ottawa, Nova Scotia and Newfoundland and Labrador have just emerged from a relatively acrimonious dispute over claims to the Laurentian sub-basin, a sizeable area of the Atlantic between northern Cape Breton and southwestern Newfoundland. This article examines the role of the arbitration tribunal set up to referee this dispute. While the tribunal's work may seem relatively insignificant to most Canadians, it represents a disturbing turn in the practise of contemporary Canadian federalism and intergovernmental relations.

The dispute over the Laurentian sub-basin was referred to an arbitration tribunal by the federal minister of natural resources under the provisions of the two implementation accords (1) that presently govern federal-provincial management of the Atlantic offshore. The arbitration tribunal was chaired by former Supreme Court Justice Gerard La Forest, who was joined on the panel by two experts in the law of borders and boundary delimitation. The tribunal received memorials from the parties and held hearings, with arguments presented by counsel for each of the two provinces. While the tribunal enjoyed much of the paraphernalia of a legal process, the relevant acts and the terms of reference under which the tribunal operated set out a method of resolution that is more in keeping with political than legal norms. The process followed by the tribunal, which has now completed its work, bears all the attributes of a results-oriented political process rather than of a traditional adjudicative one.

This article reviews the historical background to the dispute, analyses the arbitration procedure in detail, and raises a number of objections to the role of the arbitration tribunal and the standards it employed. The article then discusses the larger political dispute and the appropriateness of using the tribunal for its resolution. We argue that the legal status of the tribunal's two decisions is very doubtful. More fundamentally, we contend that the present process is an uncomfortable fiction that pits provincial governments against each other in an adversarial process, in order to solve a dilemma that lies entirely within the rubric of the federal government. At issue, in the public eye, is the boundary between the two provinces. We propose that this is a constitutional fiction that does not bear up under analysis. Indeed, the process is more revealing about the increasingly murky boundaries between the political and legal realms in Canadian federalism than any physical boundaries separating provinces in the North Atlantic.

Historical background

Conflict between Canada's two levels of government over the ownership and management of natural resources has been a backdrop to federal-provincial relations since Confederation. When Canada's Constitution was overhauled in the 1982 patriation process, the only changes to the division of powers were to those provisions dealing with the ownership of nonrenewable natural resources. That change was a direct result of western Canada's vehement objections to federal energy policies of the 1970s. The 1982 changes responded to that political demand by giving control over onshore resources to the provinces. These changes did not extend to the equally politicized offshore.

Jurisdiction over offshore resources was contested in three references to the Supreme Court of Canada; one in 1967, one in 1983 and the last in 1984. (2) Together, these cases affirm the general principle that offshore areas and the natural resources they contain come within the legislative jurisdiction of the federal Parliament. In Reference Re: Offshore Mineral Rights of British Columbia, a unanimous Supreme Court found that the provinces gave up any claims to their offshore upon joining Confederation. Furthermore, the court held that the "peace, order and good government" clause in Section 91 of the Constitution Act, 1867 gives the federal government control over the offshore region. Using the test first enunciated by Viscount Simon in the Canada Temperance Federation case and applied by the Supreme Court in Johannesson v. West St. Paul, (3) the court found that offshore mineral resources are a matter of concern to Canada as a whole and that the boundary of a province ends at the low-tide line. Considering the potential sensitivities of the subject, the language of the 1967 reference is unfailingly blunt:

The sovereign state which has the property in the bed of the territorial sea adjacent to British Columbia is Canada. At no time has British Columbia, either as a colony or a province, had property in these lands. It is the sovereign state of Canada that has the right, as between Canada and British Columbia, to explore and exploit these lands, and Canada has the exclusive legislative jurisdiction in respect of them either under s. 91(1)(a) of the British North America Actor under the residual power in s. 91. British Columbia has no legislative jurisdiction since the lands in question are outside its boundaries. (4)

Most of the coastal provinces objected to the federal government referring the question to the Supreme Court and were obviously disappointed with this uncompromising result.

All through the 1970s and early 1980s, the Trudeau government fell back on the British Columbia decision in resisting the mounting political pressure to transfer offshore areas to the provinces. As far as the prime minister was concerned the matter had been settled in the courts. In response to a telegram from Nova Scotia Premier Gerald Regan asserting the rights of the eastern provinces to control offshore resources, Trudeau declined an offer to negotiate, stating that the "ownership and the extent of provincial territory, as well as the location of provincial boundaries are matters of law. The only way they can be properly settled, if the provinces definitely wish to contest them, is in the Supreme Court." (5) Trudeau refused to negotiate amendments that would turn offshore resources over to provincial ownership and control in the run-up to the patriation of the Constitution in 1982. The federal government nevertheless offered to pool the revenues from offshore development for the benefit of the affected provinces until such time as they reached "have" status for the purposes of equalization. Nova Scotia agreed to such a deal in 1982, negotiating an accord that gave the province the revenue from offshore development without relinquishing federal control.

The only judicial caveat to the rulings in favour of the federal government is found in the decision of the Supreme Court in Reference Re: Strait of Georgia. In that case, the court held that the statute establishing the colony of British Columbia explicitly included the inland offshore within the boundaries of the province. This does not affect the status quo, however, and merely reflects the specific terms under which British Columbia entered Confederation. As Peter Hogg writes, the "only exceptions" to the general rule "are 'inland waters,' such as harbours, bays, estuaries and other waters lying "between the jaws of the land'; these waters are within the province. The territorial sea and the high sea beyond (over the continental shelf) are outside the territory of the province. The coastal provinces therefore lack either ownership of the seabed (with its minerals) or legislative authority over the territorial sea and the continental shelf." (6) This reading of the constitutional rule is borne out by the decision of the Supreme Court in the remaining case in the offshore trilogy, Reference Re: Continental Shelf Offshore Newfoundland.

Newfoundland renewed the challenge to the jurisdiction of the federal government in 1983, when it referred the question of ownership of offshore resources to its own Court of Appeal. The federal government pre-empted this move by submitting a similar reference directly to the Supreme Court of Canada. Again the Supreme Court found in favour of the federal government, although on narrower grounds than it had in 1967. The court continued to hold that the offshore areas belonged in the "peace, order and good government" basket but limited the scope of federal powers. In this new formulation, the offshore fell to the federal government by virtue of the residual power and was no longer a matter of national concern or interest. The decision was unanimous, however, and equally unequivocal. According to the Supreme Court, the Province of Newfoundland had no right to explore or exploit the natural resources of the continental shelf on its own. Nor did it have the legislative authority to make laws in that regard.

The character of all three Supreme Court judgements is distinctly judicial. Faced with an adversarial conflict, the court provided a definitive answer on the basis of a relatively straightforward constitutional analysis. This kind of answer is in the public interest, since it clearly demarcates the rights of the parties and upholds the supremacy of the Constitution. It is constitutional principle and precedent that drives these decisions, rather than the politics of the issues or the preferences of the parties. The bench in the British Columbia decision held that the boundaries of a province can only be altered or extended under Section 3 of the then British North America Act, 1871. (7) A formal amendment procedure naturally takes precedence over the convenience of the parties, and under these rulings, ad hoc political alterations of provincial territories are at least implicitly unconstitutional.

This view also makes political sense, since governments should be prevented from altering fundamental constitutional arrangements, such as boundaries or ownership and control of territory, without a full public airing of the issue. The Constitution assigns jurisdiction not just for the protection of governments. As the Supreme Court held unanimously in A.G. Nova Scotia v. A.G. Canada, often referred to as the "interdelegation case,"

The constitution of Canada does not belong either to Parliament, or to the Legislatures; it belongs to the country and it is there that the citizens of the country will find the protection of the rights to which they are entitled. ... The country is entitled to insist that legislation adopted under section 91 should be passed exclusively by the Parliament of Canada in the same way that the people of each Province are entitled to insist that legislation concerning the matters enumerated in section 92 should come exclusively from their respective Legislatures. In each case the Members elected to Parliament or to the Legislatures are the only ones entrusted with the power and the duty to legislate concerning the subjects exclusively distributed by the constitutional Act to each of them. (8)

The failure to respect the instructions of the Constitution on these kinds of matters undermines the obligatory principles of accountability and consistency that rest at the heart of the division of powers.

The Newfoundland government managed to reverse much of its loss in the Supreme Court by negotiating an accord of its own. Brian Mulroney took a much less combative approach to the question of offshore resources than did his Liberal predecessors. The Newfoundland Canada Atlantic Implementation Accord, which was negotiated by his Conservative government, gave Newfoundland greater control over the resources in the offshore and essentially repaired the loss of the Offshore Reference. (9) The agreement gave Newfoundland the right to collect royalties and participate on an equal basis in the management of the resources through the Canada-Newfoundland Offshore Petroleum Board. This was a more favourable management agreement than the one that Nova Scotia had negotiated with the Trudeau government. As a result, the Nova Scotia agreement was renegotiated in the late 1980s so that the province's offshore would be jointly managed under the same terms as those enjoyed by Newfoundland.

Each of the accords defines an area of the offshore that will be managed by the joint boards. These areas have been routinely treated as the offshore areas of the relevant provinces, but in strict constitutional law they are not part of the provinces. The Supreme Court has made it clear that Nova Scotia and Newfoundland and Labrador have no boundary past the low-tide mark of their shores. It is true that the notion of borders may provide a convenient metaphor in discussing the dispute over the revenues from the offshore area lying between the two provinces. However, the relevant offshore areas lie outside the territory and jurisdiction of the provinces. The issue before the arbitration tribunal related to territory that comes exclusively within the jurisdiction of the federal government

The legal status of the tribunal

Ralph Goodale, then minister of natural resources, established the La Forest tribunal on 31 May 2000. The use of a tribunal is provided for in the Implementation Accords, which anticipated disputes over the extent of the relevant offshore areas. (10) Article 3 of the tribunal's terms of reference set out a two-phase process, in which it was directed to 1) determine whether Nova Scotia and Newfoundland and Labrador had already agreed to "the line" dividing their "respective offshore areas"; and 2) "in the absence of any agreement," to determine how the line should be drawn. At the end of the first phase of the process, in May 2001, the tribunal held that the provinces had not previously agreed to any line. In the second phase, it set out the principles that should be followed in demarcating the two areas and essentially drew the basic line.

Although an arbitration process may be more open to the formulation of policy than a trial, the idea that the tribunal was meant to be nothing more than a political and advisory body is unconvincing. (11) The tribunal had a legal rather than a political character. It shared many of the features of the courts, including a distinguished jurist as its chair, the filing of "memorials," and formal legal submissions. Its relatively strict terms of reference, the nature of the arguments advanced by the parties, and even the judicial flair of its rulings lend credence to such a view. However, there is a jurisdictional flaw at the heart of the tribunal's mandate that renders its decisions of doubtful legal force. In spite of the tribunal's legal character, the Implementation Accords and the terms of reference raise policy issues that require the exercise of political judgement rather than the application of legal principles. There are limits to any adjudicative process, and the distribution of federal revenues from the development of resources in the Laurentian sub-basin raises political questions that stand well outside the reach of legal principles.

The arbitration process raises at least two questions of justiciability. One is merely whether the questions referred to the tribunal under the settlement provisions of the accords are "political questions." If so, it would follow as a constitutional matter that a legislatively accountable executive must decide them. This is apparent in the fact that the Implementation Accords give the federal minister the responsibility to decide how the revenue from offshore resources will be distributed. This is a decision reserved for the minister: a judicial or quasi-judicial body cannot make it. A cynical viewer might contend that the tribunal provided a convenient means of shifting the moral responsibility for such a decision onto another party, in order to distance the minister from any decision in the matter. This suggestion is reinforced by the dynamics of the arbitration process, which obscured the fact that it is the minister and the federal government alone who are responsible for distributing the revenue from offshore resources.

The second question of justiciability raises a legal rather than a political issue. This comes from the mandate of the tribunal, which was directed to apply the international law in determining where the line between the two offshore areas should be drawn. Article 3.1 of the terms of reference states the following: "The Tribunal shall determine the line dividing the respective offshore areas of the Province of Newfoundland and Labrador and the Province of Nova Scotia, as if the parties were states subject to the same rights and obligations as the Government of Canada at all relevant times." The problem is that international legal principles have no obvious application to the provinces. From a domestic perspective, this is nothing more than a fiction, which implicitly contravenes the constitutional order within Confederation. The second question of justiciability is accordingly whether the minister has put an issue before the tribunal that can be answered by a domestic legal body. Both questions of justiciability raise additional questions about the nature and competence of the tribunal.

There is a political questions doctrine in American law that holds that the courts should not try questions that have been left to the determination of other branches of government under the constitution. (12) This comes from the belief that certain decisions in the area of public policy should only be made by institutions that are directly accountable to the people. Although there is an element of political legitimacy in the exercise of legal authority, judicial institutions have no democratic mandate. Judges are therefore not in a position to decide the kinds of policy issues that come before the legislative arm of government. As Lorne Sossin writes, the premise of the political questions doctrine "is simple. Certain disputes are either 'purely' political or designated as such by statute, and must be resolved, if at all, through the political process. ... These will typically involve moral, strategic, ideological, historical or policy considerations that are not susceptible to resolution through the adversarial presentation of evidence or the judicial process." (13) Sossin's reference to statutory designation is significant in the instance of the arbitration panel, since the accords give the federal minister the exclusive authority to decide where the line demarcating the relevant offshore areas should be drawn. It could hardly be otherwise, since the authority to collect and disperse the revenues generated by the sale of federally owned resources lies solely within the responsibilities of the federal Parliament.

The Supreme Court of Canada chose not to adopt the American formulation of the political questions doctrine in Operation Dismantle v. The Queen. (14) The Canadian courts have nevertheless recognized that certain questions are not amenable to legal scrutiny. In Reference re Canada Assistance Plan (B.C.), for example, Justice Sopinka wrote that a court considering a question of justiciability "must determine whether the question is purely political in nature and should, therefore, be determined in another forum or whether it has a sufficient legal component to warrant the intervention of the judicial branch." (15) The courts have no authority to decide political controversies, which come within the ambit of the legislative process. The matter may be more problematic in the instance of the arbitration tribunal, since it did not enjoy the powers of a court. This does not alter the legal character of the tribunal, however, and the fundamental principle applies.

The first task assigned to the tribunal was to decide whether there was a binding agreement between the provincial ministers. This question is substantively empty. For one thing, the significance of the tribunal's findings remains unclear. The accords give the federal minister the power to "unilaterally" delineate the territory that will be designated as the provincial offshore areas. (16) As the tribunal acknowledges in its initial decision, "In the present case, no question of remedies arises. The Tribunal is asked to determine the existence of a valid agreement, leaving to the Federal Minister the question of the exercise of powers under the Accord legislation." (17) But the idea of a valid agreement means little or nothing, unless it identifies some set of properties that binds the parties. And there is nothing, legally or politically, that can be described as binding in the set of circumstances that confronted the tribunal.

The decision on how to distribute the control over development and revenues is a political decision, which remains solely with the minister. The federal minister was not bound by the supposed "agreement" between the provincial premiers, nor was the minister obliged to follow the wishes of the parties. There is something fundamentally flawed in the idea that the tribunal can determine whether there is a valid agreement. The case law does not contain any obvious precedents for the situation envisaged in the terms of reference, but analogies are relatively easy to come by. One can imagine a situation in which a court is asked to determine whether the beneficiaries under a will have agreed to a certain disposition of assets. This is the wrong question, legally. It is the intention of the testator that determines how the assets will be dispersed, and the agreement of the beneficiaries is irrelevant.

The second task of the tribunal is set out in articles 3 and 6 of its terms of reference. Article 6 states that the tribunal is to decide "how" the line between the two offshore areas shall be determined. Article 3 goes further, however, and states that the tribunal shall "determine the line dividing the respective offshore areas of the Province of Newfoundland and Labrador and the Province of Nova Scotia." (18) This runs headlong into the case law governing the exercise of a minister's discretion. In Cook v. Alberta, for example, the applicants argued that the minister had delegated his decision on an application for a lease of public lands to an appeal committee. As Justice Veit put it, "discretion is an attribute which cannot be delegated. Where legislation requires the Minister, personally, to exercise his discretion, the Minister cannot bind or fetter his discretion by delegating his authority to an Appeal Committee. Indeed, in a democracy, accountability of ministers of state is achieved by making them personally responsible for the exercise of their personal discretion." (19) This explains the stipulation in the accords that the minister will "unilaterally" decide where the line will be drawn. The spirit of the arbitration scheme runs the other way, however, and the provision has all the appearances of a defence, which shields the minister from allegations that he improperly delegated his authority to the arbitration panel.

We say this because the raison d'etre of the tribunal is hard to discern. Whatever view one takes of the arbitration process between Nova Scotia and Newfoundland and Labrador, the legal reality is that the parties have been seeking the demarcation of a line that can only be drawn by the minister and the federal government. It is not so much, as the tribunal suggests, that the panel cannot award a remedy. It is that the remedy lies completely in the hands of the minister, who has the entire responsibility for deciding where the line should be drawn. The minister cannot delegate this authority to the provinces or the tribunal and has a distinct obligation to exercise an independent judgement in the matter.

The second question of justiciability is far more specific. Article 3.1 of the tribunal's terms of reference states that the tribunal shall apply "the principles of international law governing maritime boundary delimitation" in determining where the line between the offshore areas of Nova Scotia and Newfoundland and Labrador should be drawn. In so doing, the tribunal is directed to treat the parties before it "as if they were states subject to the same rights and obligations as the Government of Canada at all relevant times." The international law is to be applied "with such modification as the circumstances require." (20) This raises additional issues. There is no precedent for treating provinces as sovereign states within a domestic context. It is one thing to adopt and make use of the principles of international law in resolving disputes between the provinces. It is another thing to grant the provinces the status of sovereign states, even hypothetically, as if they exist independently of the relationships and responsibilities set out in the Canadian Constitution. This is perhaps in keeping with the sympathies of Justice La Forest, who predicted the merger of international and domestic law long before the Supreme Court's recent forays into the area. (21)

The decision of the tribunal in the first phase

The second question of justiciability was raised by the Government of Newfoundland and Labrador, which argued in the tribunal's words that "there is something inherently fallacious in applying international law" to me questions before the tribunal. (22) The tribunal nevertheless set itself an international task in the first phase of the arbitration process:

On the assumption (which Newfoundland and Labrador denied) that the applicable law for this purpose is international law, the Parties agreed that the question for the Tribunal to determine is the following. If the two provinces had at all relevant times been independent states, would their offshore boundary have been "resolved" by an agreement binding upon them under international law, i.e., by a treaty? (23)

As the tribunal acknowledged, this was inherently problematic:

The Tribunal accepts that there are difficulties in applying the international law of maritime boundary delimitation to the question of whether provincial premiers have entered into a binding agreement. International law, identified as applicable in the Accords and in the implementing legislation, did not govern and was not thought of as governing the transactions on which Nova Scotia relies, and its retrospective application to those transactions is not straightforward. (24)

One would have thought that prudence militates against such an inquiry, which is not open to the usual modes of inquiry. The law fares better with certainties.

It is notable that there is a common law rule against trying hypothetical issues. The rule is a product of the historical caution of the common law courts, which only deal with legal issues when the concrete circumstances of a case require them to do so. (25) This adds considerably to the rigour of the law and avoids the mischief of speculation. The tribunal seems to acknowledge the significance of this concern in its initial decision, where it writes, "If a binding inter-provincial agreement had been reached in 1964 or 1972, its proper law would not have been international law and the inquiry the Tribunal has to carry out is to that extent hypothetical." (26) The tribunal is silent on the common law rule, however, and side-steps the issue in reviewing the history of the relations between Nova Scotia and Newfoundland and Labrador. There is nothing in the decision to blunt the force of the objection raised by Newfoundland and Labrador, which remains sound, and it may be too forgiving to state that the tribunal has proceeded on the basis of a legal fiction. The fiction is more in the nature of a mistake, an error of law, which is probably open to review. (27)

The tribunal's response to any objection to the use of the international law is merely to assert the minister's authority:

The applicable law is specified in the legislation. The effect of these provisions is that the Tribunal is authorized to decide the boundary dispute in accordance with the principles of international law governing maritime boundary delimitation, and the Federal Minister is authorized to give effect to that decision. The sole consequence of doing so will be to change, or further specify, the limits of the offshore area in the Schedules to the Acts. (28)

In other words, the federal government can draw the demarcation line where it chooses, in accordance with whatever principles it feels are appropriate. But this is misleading. The fact that the minister and the federal government have the discretion to set the boundary limits does not mean that they can set the limits arbitrarily, without regard for the legal and constitutional constraints on the respective parties. There is no free-hand in a constitutional democracy.

The tribunal's terms of reference treat the dispute between Nova Scotia and Newfoundland and Labrador as a dispute between states. This is an invention. Legally, even the idea of a dispute disguises the reality of the situation, which is merely that the minister has an obligation to decide where the demarcation line should be drawn. For whatever reason, the arbitration tribunal glosses over the fact that neither the provinces nor the tribunal are proper parties to the decision: "There does not appear to be any constitutional or other obstacle to the Canadian Parliament authorizing changes to the schedule of a federal Act in accordance with legal criteria specified in legislation, even if those criteria were not applicable as such at the time of the provincial transactions which are at the source of the dispute." (29) The instincts of most tribunals probably run in favour of jurisdiction. But this takes the matter too far--the federal government is entitled to choose the principles that will apply in any dispute regarding the offshore, but only within the limits of the constitutional order. The federal government has no authority to ask a tribunal to disregard the domestic law in deciding a dispute.

The decision of the tribunal in the second phase

The second decision from the tribunal begins by reviewing the findings in the first phase and sets out the position of the parties in delimiting the necessary boundary. The two provinces agreed that the "fundamental norm" of customary international law should apply and that this required the application of equitable principles. (30) This has a more substantive significance than the words suggest, since there is nothing in the domestic law that requires the federal government to divide the revenues from the offshore equally between the provinces. The two provinces interpreted the "fundamental norm" differently, however, and Nova Scotia at least implicitly rejected the international standard in arguing that domestic considerations should take priority in dividing the relevant area. (31) As the tribunal put it,

Nova Scotia placed great emphasis on its view of the basis of the Parties' title to the offshore. This was to be found exclusively in the Accord Acts, which implement a Canadian negotiated settlement to provincial offshore claims. Nova Scotia stressed ... that the Accord Acts do "not purport to attribute offshore areas to the provinces, still less to change provincial boundaries." The legislation simply gives the provinces a share in the administration of and revenue from certain areas of an undivided Canadian continental shelf. (32)

Nova Scotia went on to argue that there was an estoppel by conduct, which would hold the parties to the arrangement that they had reached in negotiating the accords and managing the relevant area. The decision from the tribunal raises some questions as to the sincerity of this argument, which would work to the advantage of the province.

The practical significance of Nova Scotia's argument was that it would bring in political and equitable criteria, which would not require the tribunal to follow "any natural prolongation of coasts": "The fundamental norm, as formulated by Nova Scotia, required that delimitation was to be effected by the application of equitable principles, taking into account all the relevant circumstances." (33) This would require the tribunal to consider "what the provinces were able to negotiate with the federal government," rather than the geographic criteria contemplated by the international law. It is interesting from a political and sociological perspective that none of the parties to the dispute seemed willing to acknowledge that this line of argument calls into question the use of the international law before the tribunal.

Rather than acknowledge the constitutional fragility of its task, the tribunal held that it was "entirely appropriate" to apply the international law principles of delimitation in demarcating the two offshore areas. The tribunal apparently found support for its position in the fact that these principles have been "applied for analogous purposes in the United States." (34) This is a reference to the Coastal Energy Impact Program, which was introduced by the government of the United States in the 1970s to provide federal funding for states with significant resource development off their coastlines. The rationale behind the program was that certain costs and burdens would inevitably be borne by the states adjacent to the area that is being developed. These expenses should be recompensed. Since the amount of the available funding was dependent on the size of the "adjacent" offshore area, it was necessary to delimit the seaward "boundaries" of the relevant states. (35)

The tribunal overstates the American analogy, however. The American courts have looked to constitutional rather than international standards in deciding legal controversies regarding the seaward boundaries of individual states. (36) In point of fact, the Coastal Energy Impact Program fits much better into the kind of analysis presented by Nova Scotia. This is because the American program dealt explicitly with the distribution of federal funds rather than with the creation of fictitious borders. It is true that international law was consulted by those who recommended the American delimitations, and the Coastal Energy Impact Program raises some of the general issues that arose in the Canadian case. (37) In both cases, the choice between an international and a domestic standard raises the policy question of whether geographic features or socio-economic factors should decide these matters. (38) Should a rule like equidistance, for example, give way to social and political considerations, which are more compelling in a domestic context? The legalities of these kinds of issues have never been properly considered, in Canada or the United States.

The tribunal responded to the arguments from Nova Scotia by falling back onto its terms of reference. The tribunal found that it was required, under article 3.1, "to effect its determination as if the Parties were states, with all the attributes of states, including territorial sovereignty and exclusive sovereign rights." (39) For the purposes of the arbitration, the provinces stood in the place of Canada and were subject to the same rights and obligations under international law. The tribunal held, in the same paragraph, that this "puts no difficulty or obstacle of any kind in the way of the delimitation exercise. Rather, it is what makes the exercise possible." The obvious response to this is compelling and straightforward. While the geographical considerations reflected in the international law may have made the prospect of dividing the offshore less daunting, this is precisely because it avoids the more difficult social and political issues in the case. The equanimity of the tribunal in this regard is remarkable. The international law was never designed to serve the purposes of the domestic law, and there are many reasons to believe that it is unsuitable for such a task.

There is much, on the other hand, that seems to place the mandate of the tribunal firmly within the domestic law. Neither the federal government nor the provinces are entitled to contract out of the constitutional order. While federalism shares some of the features of the international state system, every federal system has unique arrangements governing the division of powers and the status of subsidiary governments. And while the principle of equality generally applies to relations between provincial governments in Canada, there are exceptions. The provinces entered Confederation on differing terms and by way of different legal instruments. There are even areas where provinces differ in jurisdiction. (40) Some provinces receive equalization payments from the federal government and others do not. This takes us into other concerns, which seem more related to employment, investment and historical scarcities than to any claim to a title in the offshore or its resources.

There is a separate issue with respect to the competence of the tribunal. Although legal approaches are evolving, there is still the question of whether the La Forest tribunal had the capacity to apply the international law. The same kind of issue was raised in Reference Re Secession of Quebec, where the Supreme Court was asked whether the international law gave "the National Assembly, legislature or government of Quebec the right to effect the secession of Quebec from Canada unilaterally." There was a "concern," as the court put it, that the latter question was beyond the competence of a domestic court, since it required the court to apply international rather than domestic law. (41) The court dismissed this concern, suggesting that a domestic legal body has the right to apply the international law when it is "necessary" to do so. (42) There is accordingly the question of whether the federal government had the authority to direct the tribunal to apply international law instead of the domestic law, without a demonstrated need to do so. The answer is almost certainly no, since there is nothing in the circumstances of the arbitration that required a legal body to go beyond domestic sources.

There is a good argument that the tribunal exceeded the implicit mandate of a domestic legal body and did not have the authority to decide the issue before it. This is in keeping with the contention that the tribunal was asked to decide a political issue, which cannot be put before an adjudicative body. There is another possibility, however, which is that the arbitration tribunal was performing an advisory or political function and should not be characterized as a legal body. Although the differences between the trial process and arbitration are sufficient to lend some credence to this argument, the argument that the tribunal was meant to be nothing more than a political and advisory body seems unconvincing. (43) If nothing else, the formality of the tribunal process, the nature of the submissions by the parties, and even the character of the tribunal's reasoning suggest otherwise.

There is nevertheless an open question why the federal government would ask an advisory panel to apply the international law to the process. The answer appears to lie in the results. The arbitration raises sensitive political issues, which could easily lead to charges that the federal government favoured one province over the other. The federal government responded to such a possibility, intentionally or unintentionally, by designing the process in a way that protected it from any allegations that it treated the provinces unequally. This can be seen in the tribunal's first decision, where it sets out the major principles of international maritime law. (44) These principles are twofold. In the first instance, the line demarcating a disputed boundary is to be drawn on the basis of the agreement of the parties. This principle has its origins in the idea that states are sovereign. This is a convenient principle politically since it would mean that the delimiting line was drawn on the basis that the two provinces agreed to it. The second principle is equidistance. This principle only applies when it is impossible to draw the line by agreement, but has similar advantages, since it prevents either province from claiming that the federal government has favoured the other. This equality strategy served the ends of all the parties and was enough to avoid any real debate about the substantive principles or the process that was used to determine where the line should be drawn.

The tribunal and cooperative federalism

The reality is that the process before the tribunal allows political leaders, particularly those representing the federal government, to avoid their constitutional responsibilities. If it is necessary to alter the borders of Nova Scotia and Newfoundland and Labrador in order to settle the dispute, there is nothing to prevent the federal and provincial legislatures from doing so under the provisions in the Constitution Act, 1871 or Section 43 of the Constitution Act, 1982. Those provisions allow for the changing of provincial boundaries, but only after introducing resolutions in the legislatures of the affected provinces and the federal Parliament. There is an element of duplicity in the position taken by the federal government. The reality is that the boundaries of Nova Scotia and Newfoundland and Labrador would have to be redrawn to give control of the offshore to the provinces. No federal government, however generous about the offshore, has begun such a process. If such a process were to be initiated, other coastal provinces would presumably demand their share of the offshore resources as well. (45) The accords and arbitration procedure do not contemplate such prominent alterations to Confederation and will merely slice the federal pie in a new way.

The federal government has nevertheless been able to use the accord legislation to absolve itself of any political responsibility for the outcome of this conflict. The role that previous federal governments have assigned to provinces in the offshore, despite the constitutional obstacles, is essentially a gift. This has not attracted public attention, in spite of the fact that the Supreme Court has held that the offshore is the preserve of the federal government under the strict lines of the Constitution. Nova Scotia and Newfoundland and Labrador are comfortable pursuing their claims as a boundary dispute because that language supports their long-held contention, despite definitive rulings to the contrary, that they are the rightful owners and developers of the offshore. That may be a fiction that the provincial governments are keen on perpetuating, but it does not help ordinary Canadians, including those in Atlantic Canada, who disagree with the decisions that either level of government has made in the control of offshore resources. Who, they can only wonder, is accountable for such decisions?

The federal minister of natural resources has a ready-made defence against any government or citizen who is unhappy with the boundary limits set by the present process. It is to rely on the decision of the tribunal. The tribunal has already set out its own defence, in relying on its terms of reference and the impartial application of the international law. As we have already argued, however, the legal garb of the tribunal fails to hide the fact that political decisions are being made with the help of an incomplete but carefully chosen set of legal principles. The public accountability of the minister has been filtered and diluted through layers of legal and political machinery. The line of demarcation drawn by the tribunal, despite appearances to the contrary, is a political division of offshore resources and the economic benefits that attend them.

The weakness of the tribunal can be better understood by comparing its initial decision with the decisions of the Supreme Court in the references of 1967 and 1984. As a model of dispute resolution in a federal system, these earlier decisions have much to be admired. They are succinct and compelling, they give the parties a discrete and definitive answer on a cognizable issue and provide a principled basis for future negotiations. The tribunal has no such benefits. It leaves the eventual results of the process open to further manipulation and uses arbitrary criteria, including the use of international law, to give a legal, and thereby determinative, flavour to its ruling. Yet nothing is further from the truth. The process is legal only in appearance, not in reality, and nothing can stop the federal Parliament from changing the boundary should it so choose.

Perhaps the most telling criticism of the tribunal process, legally and politically, is that its decision is not binding. The minister mayor may not have a legal and political obligation to consider its decision, but it is for the minister to make the final decision, as he sees fit. The decisions of the tribunal only complicate the matter. If the minister relies on the finding of the tribunal, that decision is open to review on the basis that he did not exercise an independent judgement on the issue. If he rejects the decision of the tribunal, he is open to review on the basis that he did not consider it properly. For this reason, the decision of the tribunal is arguably worse than no decision at all.

The simplest solution is for the minister to make an independent decision, after duly considering the relevant factors, and abide by it. This is, coincidentally, the morally preferable course of action. With all their machinations, the political actors have invented a process that merely adds uncertainty to a decision that is already replete with uncertainties. As one business observer has recognized, the development of the Atlantic offshore has been held ransom by the political process:

Now that the hearing panel has decided that Newfoundland's claim is valid, it could be years before new offshore boundaries are established and agreed upon by the two provinces. As well, other offshore boundaries between the Atlantic provinces may also be contested, creating a climate of animosity and uncertainty. This uncertainty could have devastating effects on offshore activity and petroleum-related exploration in Atlantic Canada. (46)

This is the major obstacle to development of the offshore resources, as only the business sector seems to have recognized. (47)

It remains to be said that the federal government's management of the Nova Scotia/Newfoundland and Labrador offshore dispute is entirely in keeping with the pattern of Canadian federalism in the last fifty years. The decision of the Supreme Court in Reference Re: Canada Assistance Plan seems to have established the rules of the cooperative federalism game and the limits of the law in intergovernmental conflicts. The case is especially instructive for what it says about the flexibility of the Canadian system and the risks that provincial governments take in committing themselves too strongly to the cooperative mode of operation. The case was brought to the court in 1990 after the federal government put a limit on some of its traditional transfers to the provinces under the cost-shared Canada Assistance Plan. In what by later standards would seem a modest cut, the Mulroney government placed a limit on the amount that payments under the plan could grow for those provinces that did not receive equalization. Plan contributions from the federal government had traditionally covered fifty per cent of the cost of eligible provincial expenditures. Once enacted, the "cap on CAP" limited the growth of federal contributions to five per cent per year. Any increase in expenses beyond the cap were left to the provinces to fund.

The British Columbia government initiated a constitutional reference challenging Parliament's authority to limit its obligations under the Plan without first obtaining the consent of the provinces affected by the cuts. In a unanimous judgement, the court ruled that agreements made by the federal executive could not bind future Parliaments should they wish to alter the provisions of a statut0ry device like the Canada Assistance Plan. Parliament, argued the court, must ultimately decide what Parliament will disburse to the provinces. (48) In sum, the court affirmed that the federal spending power is unrestrained, in good times and in bad. It ruled that the federal Parliament can alter the terms of its contributions to the provinces at will and without prior consultation, whatever dependency has been created. (49) The court rejected the idea that it had any role in the supervision of the federal spending power even if the stability of an intergovernmental agreement was at stake.

Jurisdictionally, the ruling is based on the court's recognition that there are policy decisions that can only be made by the political branch of government. As a result, cooperative agreements are in effect beyond judicial review and are subject only to political regulation. One can be fairly certain that the federal government prefers it that way. The muddy accountability that is endemic in health care, education and welfare is a direct result of these kinds of oblique political practices. The situation is even worse in the design and implementation of fiscal transfers to the provinces, where arrangements are sometimes unclear even to governments. (50) What remains of political accountability has been lost because voters and publics are justifiably unclear about whether or not the cuts in services and accessibility they have experienced are the fault of their federal or their provincial government.

It follows that the problems that we have identified in the Implementation Accords and the process before the tribunal are emblematic of the broader problems with the now-decades-old practice of cooperative federalism. Deals are easily and quickly made between provinces and the federal government. Should something go wrong, however, there is little legal structure for either party, much less the citizenry, to fall back on. Those in a position of dependence are worst off under such conditions. Inevitably, such a situation favours richer and more powerful governments and the informal, unregulated exercise of political power. The bottom line in this case is that the offshore is a matter of federal jurisdiction. If Parliament should decide to share control or wealth with the provinces near the shore, that is its prerogative, but should it choose to change its mind it may also do so and is not obliged to give any warning. The art of legal accountability has become so diluted in Canadian federalism that ministers are now able to renege on their constitutional duties by empowering quasi-legal institutions to save them from the political consequences of their decisions.

John Crosbie, a retired federal minister and regional champion intimately involved in the creation of the present offshore regime, has lamented the fact that little has changed in the fortunes of the affected provinces. While his main concern is with the claw-back of royalties paid to the provinces through reductions to equalization payments, fairness in the offshore for Mr. Crosbie "is about honouring agreements." (51) These agreements, he argues, are designed to ensure that the provinces involved are the "principal beneficiaries" of offshore wealth. Any arrangement that denies them access to the lion's share of this wealth undermines that promise. If the clear intent of the governments involved was to ensure that state of affairs, there was nothing to prevent them from enshrining that principle in the Constitution, presumably by changing the boundaries of the provinces. Had the jurisdiction over the offshore been turned over to the provinces, then a real boundary discussion could be had with genuine legal effect. Until then, talk of boundary disputes is nothing more than fiction. The pattern of executive-dominated cooperative federalism, with its fear of formal change or definitive positions, places a higher premium on quick, political deals than on genuine adjustments to the jurisdiction or responsibilities of the two levels of government.

Conclusion

As if exhibiting a pathology, the first instinct of the premiers of Newfoundland and Labrador and Nova Scotia when presented with the tribunal's determination in the first phase was to seek a meeting. Premier Grimes announced that "Premier John Hamm and I appreciate the importance of resolving this dispute as quickly as possible, we have agreed to meet to discuss possible areas of cooperation which may be in our mutual interest." (52) Premier Grimes later withdrew any suggestion that he was unwilling to stand by the tribunal's phase two decision but indicated that he hoped the provinces could cooperate during the year that the tribunal was expected to take for drawing a boundary. (53) When the premiers eventually met, however, it was evident that they were unable or unwilling to cooperate with each other. Instead, press reports indicated that the meeting was much more about agreeing on Ottawa as a common foe. The premiers both expressed an interest in pursuing a greater share of the revenues from present offshore resources. (54) After the meeting, neither discussed publicly the possibility of cooperating on development or exploration in the sub-basin while the arbitration process continued. After the tribunal made its award, the tone was again one of cooperation. In a press release, Premier Grimes emphasized "that this dispute has not strained relations between Newfoundland and Labrador and Nova Scotia." (55) Likewise the Nova Scotia economic development minister stressed that the settlement "should pave the way for more economic development offshore." (56)

Both provinces accepted the tribunal's decision as "final and binding." (57) The governmental and public perceptions remain that this is a dispute, now settled, between two provinces, competing for their entitlements on the offshore. The federal government, in an effort to give some control to the provinces, has seemingly abandoned its jurisdictional responsibilities. But such a characterization may be too charitable. What the federal government has really abdicated is its duty to settle the dispute through open negotiation and an open weighing of the social and political alternatives. Trying to de-politicize the process as it has is a fundamental denial of the responsibility that comes with federal jurisdiction in the area. Legal forms and process, and even the international law, are apparently invoked as tools only because they avoid open conflict between the two levels of government.

The significance of these observations goes well beyond the dispute between Nova Scotia and Newfoundland. There are six provinces with potential offshore conflicts, either with each other or the federal government. The three northern territories reportedly have substantial petroleum and mining resources. It is likely that the final settlement between the Atlantic provinces and the federal government will provide a model for offshore petroleum development in British Columbia. The norms that were followed in deciding the offshore dispute avoid the real political issues and do not provide a substantive basis for the resolution of future disputes. The general erosion of accountability in this kind of process is distressing.

While the style of federalism displayed in the Atlantic dispute may serve the short-term interests of governments, in the long term such behaviour weakens the foundation of the federal system. It is true that arguing against cooperation seems counterintuitive. Canadians are not impressed by squabbling politicians and governments. However, there are legal and political decisions that must be made in any federation. This requires a proper separation of the legal and political roles. It is governments that have the responsibility to make political decisions. Legal decisions should be left to authentic legal bodies with the context, background and legitimacy to make decisions that bind other actors in the system. This division of roles has not been respected in the rather dubious reliance on the arbitration tribunal by governments, provincial and federal.

We have not taken a position as to whether the federal or provincial governments should have control over the development of offshore resources. What concerns us, and what any thoughtful observer should object to, is the process by which the federal government has refused to make the necessary decisions in the area, primarily by devolving its rightful jurisdiction to the arbitration tribunal. The use of the tribunal served the reigning political interests by adopting adjudicative forms that to the public seem fairer and less "political" than any ministerial or parliamentary choice. The fictional nature of the exercise undermines the legitimacy of the entire federal system. Ultimately, this process sets a terrible precedent for the practice of Canadian federalism, a system already fraught with numerous examples of lost or mystified lines of accountability.

Notes

(1) The Newfoundland Atlantic Accord Implementation Act, S.C. 1987, c. 3, and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, S.C. 1988, c. 28. The relevant provisions in the two accords are identical.

(2) Reference re: Offshore Mineral Rights of British Columbia, [1967] S.C.R. 792; Reference Re: Strait of Georgia, [1984] 1 S.C.R. 388; and Reference re: the Seabed and Subsoil of the Continental Shelf Offshore Newfoundland, [1984] S.C.R. 86.

(3) Attorney General of Ontario v. Canada Temperance Federation, [1946] A.C. 193; Johannesson v. West St. Paul, [1952] S.C.R. 292.

(4) Re: Offshore Mineral Rights of British Columbia, at 816.

(5) P.E. Trudeau to G. Regan [letter], 22 June 1972, cited in [Arbitration Tribunal (henceforth "Tribunal")], Arbitration between Newfoundland and Labrador and Nova Scotia concerning portions of the limits of their offshore areas as defined in the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act and the Canada-Newfoundland Atlantic Accord Implementation Act: Award of the Tribunal in the First Phase ([Ottawa]: [Government of Canada], 2001), at http://www.boundary-dispute.ca/phase_1.html, para. 3.14.

(6) Peter Hogg, Constitutional Law of Canada: 2001 Student Edition (Scarborough, Ont.: Carswell, 2001), p. 301.

(7) Now the Constitution Act, 1871. A boundaries amendment procedure also seems to be contemplated in Section 43 of the Constitution Act, 1982.

(8) A.G. Nova Scotia v. A.G. Canada, [1951] S.C.R. at 31 (emphasis added).

(9) An agreement that laid out the principles of the final accord with Newfoundland was signed by Premier Peckford and candidate Mulroney in June of 1984, three months before the September election that brought the Conservatives to power. Herman Bakvis, Regional Ministers: Power and Influence in the Canadian Cabinet (Toronto: University of Toronto Press, 1991), p. 261.

(10) Prior to his Supreme Court appointment, Justice La Forest was an acknowledged expert on the offshore. As a New Brunswicker, he had the added advantage of being an Atlantic Canadian who was resident neither of Newfoundland and Labrador nor of Nova Scotia. The hearings of the tribunal were held on neutral soil in Fredericton.

(11) One would assume that the general trend towards the use of arbitration as a means of resolving disputes has made it increasingly more acceptable in intergovernmental relations.

(12) See Baker v. Carr, [1962] 369 U.S. 186.

(13) Lorne M. Sossin, Boundaries of Judicial Review: The Law of Justiciability in Canada (Scarborough, Ont.: Carswell, 1999), p. 132. Sossin includes "disputes involving intergovernmental relations" among the settings that stand outside the reach of judicial inquiry. Ibid., p. 145.

(14) Operation Dismantle v. The Queen, [1983] 1 S.C.R. 441.

(15) Reference Re: Canada Assistance Plan, [1991] 2 S.C.R. 545. This passage was quoted with approval in the Reference Re: Secession of Quebec, [1998] 2 S.C.R. 236.

(16) Section 6 of the Newfoundland Implementation Act; Section 48 of the Canada--Nova Scotia Implementation Act, which are quoted in Tribunal, Award of the Tribunal in the First Phase, para. 1.2.

(17) Ibid., para. 3.9.

(18) It is interesting that this appears in a subsidiary clause, which adds to the air of subterfuge that pervades the entire process.

(19) Cook v. Alberta (Minister of Environmental Protection), [1999] 241 A.R. 36. This principle is exercised in different ways in different circumstances. There have been a number of cases dealing, for example, with the refusal of a minister to disclose information under the Access to Information Act. See Canadian Council of Christian Charities v. Canada (Minister of Finance), [1999] 3 C.T.C. 123.

(20) Tribunal, Award of the Tribunal in the First Phase, para. 1.2.

(21) The rules regarding the application of the international law by domestic courts has been radically altered by the Supreme Court in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817. Gerard V. La Forest, "The Use of International and Foreign Material in the Supreme Court of Canada" in Canadian Council on International Law, Proceedings of the 1988 Conference (Ottawa: Council, 1988), p. 230. See also, Louis LeBel and Gloria Chao, "The rise of international law in Canadian constitutional litigation: Fugue or fusion? Recent developments and challenges in internalizing international law," The Supreme Court Law Review (2d) 16 (2002), pp. 23-64.

(22) Tribunal, Award of the Tribunal in the First Phase, para. 3.24.

(23) Ibid., para. 3.13. Legal issues aside, one cannot help but wonder about the sagacity of a process that postulates the formation of treaties between provinces.

(24) Ibid., para. 3.23.

(25) John Stuart Mill wrote, "[T]he Court of Justice acting as such ... does not declare the law eo nomine and in the abstract, but waits until a case between man and man is brought before it judicially involving the point in dispute," cited in H.B. Acton, ed., Utilitarianism, On Liberty and Considerations on Representative Government (London: Dent, 1984), p. 403, quoted in Sossin, Boundaries of Judicial Review, p. iii.

(26) Tribunal, Award of the Tribunal in the First Phase, para. 3.26.

(27) The tribunal has acknowledged that it is not awarding a remedy, and it may be difficult to subject an advisory opinion to judicial review. The minister's decision would nevertheless be subject to review.

(28) Tribunal, Award of the Tribunal in the First Phase, para. 3.23.

(29) Ibid.

(30) [Arbitration Tribunal (henceforth "Tribunal")], Arbitration between Newfoundland and Labrador and Nova Scotia concerning portions of the limits of their offshore areas as defined in the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act and the Canada-Newfoundland Atlantic Accord Implementation Act: Award of the Tribunal in the Second Phase ([Ottawa]: [Government of Canada], 2002), at http://www.boundarydispute.ca/index.html, paras. 1.24 and 1.25.

(31) See Ibid., para. 2.3, where the tribunal writes that "by a curious transposition ... Nova Scotia argued in the present phase that the Tribunal's task was rather a domestic one."

(32) Ibid., para. 1.31. It is notable that the use of a highly charged term like "title" has gone largely unnoticed.

(33) Ibid., para. 1.25.

(34) Ibid., para. 2.18.

(35) See J.I. Charney, "The delimitation of lateral seaward boundaries between states in a democratic context," American Journal of International Law 75, no. 1 (1981), pp. 28-68; Tribunal, Award of the Tribunal in the Second Phase, para. 2.18.

(36) See United States v. Louisiana, [1960] 363 U.S. 1, and United States v. Alaska, [1975] 422 U.S. 184.

(37) There is also the Coastal Zone Management Act of 1972, 16 U.S.C. 1451, which raises related issues.

(38) Charney, "The Delimitation of Lateral Seaward Boundaries," American Journal of International Law.

(39) Tribunal, Award of the Tribunal in the Second Phase, para. 2.5.

(40) The provisions on denominational schools in Section 93(2) of the Constitution Act, 1867 are a good example. Jennifer Smith, "The Meaning of Provincial Equality in Canadian Federalism," Working Paper Series 1 (Kingston: Institute of Intergovernmental Relations, Queen's University, 1998). In addition, the representation from the provinces in the Senate is uneven, and smaller provinces effectively have an unequal vote in the general amending formula. On the amending formula, see Jennifer Smith, "Informal Constitutional Change: Change by Other Means," in Herman Bakvis and Grace Skogstad, eds., Canadian Federalism: Performance, Effectiveness and Legitimacy (Don Mills, Ont.: Oxford University Press Canada, 2001), pp. 40-58.

(41) Reference Re: Secession of Quebec, [1998] 2 S.C.R. 236.

(42) "In a number of previous cases, it has been necessary for this court to look to international law to determine the rights or obligations of some actor within the Canadian legal system. For example, in Reference Re: Powers to Levy Rates on Foreign Legations and High Commissioners" Residences, [1943] S.C.R. 208, the Court was required to determine whether, taking into account the principles of international law with respect to diplomatic immunity, a municipal council had the power to levy rates on certain properties owned by foreign governments." Ibid., at 235. The Supreme Court referred to its judgements in the British Columbia and Newfoundland references, both of which required an examination of international conventions.

(43) One would assume that the general trend towards the use of arbitration as a means of resolving disputes has made it increasingly more acceptable in intergovernmental relations.

(44) These are contained in the Convention on the Continental Shelf, April 29, 1958 U.N.T.S. 311, entered into force on 10 June 1964.

(45) This is clearly the Quebec government's position. See its response to the tribunal's ruling. See [n.a.], "Quebec reitere sa position concernant la position concernant la propriete et la competence territoriale a l'egard du lit du golfe Saint-Laurent et des resources qu'il recele. April 3, 2002," Quebec, Ministere des Ressources naturelles, de la Faune et des Parcs [web site] ([Quebec City]: Gouvernement du Quebec, 2003), at http://www.mrnfp.gouv.qc.ca/ presse/communiques-detail.jsp?id+472.

(46) Ashley Sullivan, "Sharing the petroleum pie," Ocean Resources (June 2001) at http:// www.ocean-resources.com.

(47) Although it deals with an international border dispute, the decision of the High Court of Australia in Australia v. WMC Resources, [1998] 152 A.L.R. 1, illustrates the kind of arduous compensation problems that can arise in a situation where the ownership and control of resources has not been definitively settled.

(48) This is naturally based on the most fundamental principle in the British parliamentary tradition, which is that every Parliament is sovereign.

(49) Jennifer Smith argues that this is essentially a violation of the provinces' exclusive jurisdiction in social matters. Smith, "Informal Constitutional Change," in Bakvis and Skogstad, Canadian Federalism, p. 54.

(50) Stephen Thorne, "Old error triggers $3.3 billion federal overpayment to four provinces," Canadian Press Newswire, 29 January 2002.

(51) John Crosbie, "Offshore fairness about honouring agreements," The Chronicle-Herald (Halifax), 13 September 2001, p. D2.

(52) Government of Newfoundland and Labrador, "Premier announces tribunal's decision in Phase One of Newfoundland and Labrador/Nova Scotia Offshore Boundary Dispute," Press Release, 22 May 2001 (St. John's: Queen's Printer, 2001).

(53) Bruce Erskine, "Grimes touts co-operation: Nfld. premier wants to talk while sub-basin is decided," The Chronicle-Herald (Halifax), 23 June 2001, p. B7.

(54) Michael Macdonald, "Hamm, Grimes agree to fight for more cash," The Chronicle-Herald (Halifax), 16 August 2001, p. A1.

(55) Government of Newfoundland and Labrador, "Government reacts to decision in Newfoundland and Labrador/Nova Scotia Offshore Boundary Dispute," Press Release, 2 April 2002 (St. John's: Queen's Printer, 2002).

(56) Government of Nova Scotia, "Nova Scotia says Boundary Decision Paves Way for Oil and Gas Activity," Press Release, 2 April 2002 (Halifax: Queen's Printer, 2002).

(57) Government of Newfoundland and Labrador, "Government reacts," Press Release.

Gerald Baier is assistant professor of political science, University of British Columbia. Paul Groarke is assistant professor of criminology and criminal justice, St. Thomas University, and is presently on leave with the Canadian Human Rights Tribunal. The authors wish to acknowledge the helpful comments and suggestions of Jennifer Smith and the Journal's anonymous reviewers. The research assistance of Kelly Hogan and the financial assistance of the Social Sciences and Humanities Research Council are both gratefully acknowledged.
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