Monday, 28 May 2012

The Rights of Corporations in Administrative Law

An ever-present issue in debates over constitutional law doctrine in the United States is whether corporations should be capable of enjoying constitutional rights. Concern about the equation of natural and legal persons is not unique to American jurists, however. A federal court judge in Canada has stated in strong terms that corporations are not entitled to the same rights as individuals in administrative law

[35] While corporations no doubt face potential economic consequences as a result of a regulatory board decision, and may even lose goodwill associated with their name, these consequences are not on a par with the impact a decision may have on the reputation of an individual and its attendant consequences, both in terms of dignity and livelihood.  In that respect, it is quite telling that the Supreme Court [has] only referred to the importance of the decision to the individual or individuals affected…As a result, I agree with the Respondent that corporations are not entitled to the same level of procedural fairness as individuals, and that tribunals charged with regulating economic activity are not held to the same standards as tribunals dealing with personal individual right…

I think de Montigny J. gets it wrong here. Doctrinally, this is an application of the test laid out by the Supreme Court of Canada in Baker. An individual’s level of entitlement to fair procedures is dependent on five factors, one of which is the nature of the interest in question. It is this factor which the judge is addressing in the quoted paragraph.

The line between individuals and corporations is a difficult one to draw. Indeed, on some occasions, the corporate veil is lifted and the corporation and its controlling mind(s) are one.

Indeed, regardless of whether corporations and their masters are one and the same, individuals are invariably affected when by decisions adverse to corporations’ interests. Shareholders may lose money. Employees may lose their jobs. Consumers may lose the enjoyment of a favourite good or service. If that is so, the argument that corporations should be subject to reduced judicial protection is very weak. Corporations simply provide one means for the actions of individuals.

Moreover, failure to treat corporations as the juridical equal of ordinary people might retard the development of administrative law. Labour unions have been of central importance in the development of judicial review doctrine, in Canada, the United States and beyond. In fact, an important recent Canadian decision, in which the Supreme Court clarified the appropriate standard of review of municipal by-laws, was given in an action taken by a corporation. To reduce the protection accorded to legal persons vis-à-vis natural persons would be to reduce the incentives of corporations and labour unions to litigate important administrative law cases.

Finally, the doctrinal support the judge offers for his position is decidedly weak. One hopes that if and when the Supreme Court of Canada clarifies the law in this area, it does not adopt an anti-corporate stance which, although doubtless an attractive posture, is not a solid position.

Now, it may be that the judge was simply suggesting that economic interests – regardless of whether they are enjoyed by individuals or corporations – should count for less in a Baker analysis. There may be something to commend this more modest position. But even then, courts should not lose sight of the interests of individuals who rely on corporations to serve their interests.