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The state of things in Quebec

Compliance, regulatory, and Quebec-specific challenges keep in-house counsel busy.
|Written By Jennifer Brown
The state of things in Quebec

Regulatory and compliance issues pose challenges for in-house counsel in all provinces these days, but in Quebec corporate lawyers often find they face their own set of challenges. “Considering that Montreal is the third-biggest avionic city in the world after Toulouse and Seattle, export control is a domain that is becoming more and more important in the province of Quebec,” says Daniel Marion, vice president, general counsel, and corporate secretary with Thales Canada. “Compliance is a hot topic, anti-bribery in general, and export control, in particular, for us,” says Marion. “This subject has taken more and more of our time in the last few years and it continues to grow.”

Thales has three main divisions in Canada: defence, aerospace, and rail signaling. With the recent modification of the U.S. laws on the subject, Marion says Thales’ export control team  — under the responsibility of the legal department — has to constantly be aware of the changes. “In addition, since it is more and more part of our daily life in the avionic world we need to do some training internally on a regular basis (new employees and management) as well as implementing an export control process internally to make sure that we’re compliant with all applicable regulations.”

For David Felicissimo, keeping up with current privacy laws and copyright issues is top of mind as he oversees the legal department for Montreal-based Valnet Inc., a private investment company specializing in the acquisition and development of Internet-based businesses. It is a rapidly growing company. Valnet’s online brands include a variety of web sites ranging from movie reviews and TV news sites to popular Top 10 list sites. The Valnet group of sites generate between five- and 10-million views per day. “We’re looking for under-monetized web businesses that have been in the same hands for quite a while,” he says. “In terms of the videos and images we put up we have to keep a close eye on copyright issues. There are also privacy issues — the various terms and conditions around mobile apps and social media is becoming a big part of the web sites. Copycat sites are also a daily battle.”

As the solo lawyer at the company, Felicissimo has a background in intellectual property and is a trademark agent, but has to truly be a generalist in his day-to-day work. While he uses outside counsel strategically, he handles a lot of acquisition deals and most of them originate outside Quebec. He recently closed a deal involving a web property based in Utah and the deal caused more than the usual amount of consternation with the sellers. “Choice of law is always difficult being in Quebec,” says Felicissimo. “There are all these preconceived notions about civil law and the legal landscape in Quebec; they have no idea it is bilingual. It has put us in a weaker position on occasion because we may not be as familiar with the choice of law, say, in Utah so we have to reach out to local counsel.”

Jurisdiction is frequently an issue, notes Felicissimo. “If we’re in Ontario, B.C., or Saskatchewan I have always found it’s a lot easier to win that battle. Once you mention Quebec the hands go up around preconceived notions they’ve heard about civil law,” he says. “There’s a whole notion that all the documentation has to be in French and if there are any litigious issues — that it has to be in French, so that’s an uphill battle and we have to re-educate them. It’s a battle we usually lose, unfortunately because there’s always hesitation to have choice of law as Quebec.”

Being the only in-house lawyer, who also has a paralegal on board, Felicissimo says: “We outsource most of our tax work. I’m from an IP background so I handle most of the IP stuff in house.”

Keeping an eye on how provincially generated legislation could impact the business is something Deborah Greenberg, vice president and general counsel of loyalty rewards management and data analytics company Aimia Canada, is constantly on the watch for. “We as a company, and especially on the Aeroplan side, do a lot of business with federally regulated organizations including banks and the airlines,” she says.

A bill introduced in 2011 by the Quebec government was meant to prevent banks from offering loyalty currency as an incentive to take up a credit card. The concern was about debt and getting people to sign up for a card by offering them a carrot that could only serve to spur them to incur futher debt. The bill was bill 24 — an amendment to the Consumer Protection Act known as “An act mainly to combat consumer debt overload and modernize consumer credit rules.” It was put forward on the basis of the decision of the Quebec Superior Court in the case of the Bank of Montreal v. Marcotte, which ended up at the Supreme Court of Canada. It was ultimately decided in September 2014 and the SCC upheld the decision that Quebec’s consumer protection legislation is applicable to federally regulated banks. “Part of it is going too far in understanding people’s motivations to take a credit card; loyalty currrency plays a part in which credit card a consumer chooses, but not necessarily the decision to take up a credit card,” says Greenberg. “Further, the banks have robust credit worthiness safeguards in place, so I am not sure that the appropriate mechanism for addressing credit card debt is via consumer protection legislation.”

What was concerning from a Quebec law perspective, she says, was the thought process around how a proposed provincial type of law would impact a federally regulated organization. “Marcotte provided that provincial law could apply to federally regulated organizations as long as the law didn’t conflict with one another and the Supreme Court upheld that decision,” she says.

The government opted to hold off passing the bill, pending the outcome of the SCC deliberations in Marcotte, but Greenberg says the concern is it could come up again. “Now that we know that there has been a Supreme Court decision that allows for provincial legislation to apply in respect of a federally regulated organization — there is a concern the bill will get re-introduced. It’s certainly something we’re keeping an eye on given the industry we’re in,” she says. “Given that bill we wonder what might come through that could affect our federally regulated partners and will it potentially affect us.”

Apart from that, Greenberg is always on the look out for changes to privacy laws. “CASL was a big one. At this point things are relatively quiet but there could be changes,” she says.

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