Canadian Supreme Court Deliberating Wine Case

Nation's top court deliberating on case that centers on interprovincial wine shipments

by Peter Mitham

Vancouver, British Columbia—Supreme Court of Canada justices are set to deliver a ruling within days in the matter of Gérard Comeau, a New Brunswick resident caught red-handed by the Royal Canadian Mounted Police as he returned from the neighboring province of Quebec with 14 cases of beer and three bottles of liquor in violation of New Brunswick liquor laws governing the interprovincial movement of wine.

Word of the pending ruling was the talk of the day at the ninth annual wine law seminar that Seattle-based Law Seminars International hosted in Vancouver on Feb. 26, days after Alberta called off a ban on imports of B.C. wine implemented in response to B.C.’s opposition to construction of a pipeline carrying bitumen from Alberta to processing facilities in Vancouver.

Alberta backed off the ban after B.C. Premier John Horgan pledged to ask the courts to decide whether or not B.C. has the right to restrict what products cross its boundaries, mirroring a court challenge the B.C. Wine Institute threatened to take regarding Alberta’s ban on B.C. wine.

A détente now exists, but Alberta hasn’t disbanded a task force convened to advise its premier on the issue and the BC Wine Institute hasn’t ruled out a court challenge of the Alberta ban. “We remain concerned that any provincial government believes it has the constitutional authority to impose trade bans on Canadian products based on their place of origin,” BCWI said in a statement circulated to media on Feb. 22.

“It’s still a live issue,” lawyer Shea Coulson told the seminar, who represented five wineries from the ad hoc Coalition of Small B.C. Wineries that were granted intervener status when the Supreme Court of Canada heard the Comeau case in December.

The coalition claims to represent more than 100 British Columbia wineries seeking changes to interprovincial shipping laws, something Coulson expects to follow from the Supreme Court’s ruling in the coming days. “There’s no status quo decision. Whatever the decision is, it will have a resounding impact,” he told the room of lawyers, winery principals and wine trade professionals. “The debate is between whether there will be an affirmation of a protectionist vision of Canada or will there be a liberal, free trade interpretation.”

Coulson expects a modest liberalization referencing the spat between Alberta and B.C. The timing of the decision suggests this, as well as the unusual speed, just three months after the December hearing rather than six months originally expected. “If there’s a liberalization, it will be very restrictive, most likely, and it will probably deal with something like the Alberta wine ban in B.C., because that is a politically motivated protectionist policy on its face,” he explained. “[And] if we get some form of liberal interpretation, if for example, there’s a prohibition on discrimination between in-province production and out-of-province production, you could start seeing interesting challenges.”

On the one hand, the effective prohibition on direct-to-consumer shipments between provinces that exists in much of the country could fall, while B.C.’s own efforts to oppose Alberta bitumen shipments could face a new legal barrier.

International implications
Discrimination was very much on the minds of other presenters at the seminar.
While wineries from California prepared to serve guests at the Vancouver International Wine Festival that kicked off later in the day, the fact that those wines face don’t have equal access to store shelves in B.C. was on the mind of Tom LaFaille, who recently retired as vice-president and international trade counsel of California’s Wine Institute. “Our fundamental policy is we oppose any type of blatant discrimination,” said LaFaille, who remains a consultant to but not a spokesman for the Wine Institute.

By creating two kinds of retail models for wine in grocery stores – one that gives B.C. wines exclusive access to grocery store shelves while requiring a separate store within a store complete with its own checkout for wines from everywhere else – B.C. has effected the kind of segregation frowned upon in most social circles these days. “You don’t say, ‘Well, we’ll take care of your over here but we’re not going to treat you fairly here on this side,’” LaFaille said, dismissing the B.C. argument that the licences grocers are receiving were permitted under the original free trade agreement between Canada and the United States. 
“The idea that there were these so-called grandfathered licenses floating around, or that existed in 1987 – they certainly weren’t grocery stores.”

The matter has gone all the way to the World Trade organization, with the U.S. requesting consultations in January 2017, A second complaint followed in September 2017, with Argentina, Australia, New Zealand and the European Union joining the U.S. complaint in October. Australia subsequently filed its own complaint in January 2018, challenging not just the retail model but the distribution system that makes it possible as well as similar preferential distribution systems in Ontario, Quebec and Nova Scotia.

LaFaille doesn’t object to the efforts each province is making to promote its domestic wineries, but says they shouldn’t be undertaken in a discriminatory fashion. It makes as much sense, he says, as U.S. wineries trying to limit the tide of packaged imports, most notably rosé and sparkling wines from France and Italy – entering the country. "We’ve got our own share of market share challenges in the U.S. with the influx of imports, but … when you’re talking about discrimination, market share doesn’t really matter,” he said.

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