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Canadian Corporate Rights and Canada’s Supreme Court

The Supreme Court of Canada’s decision this July (2007) to uphold federal law restricting the advertising of tobacco was a welcome endorsement of government’s right to control the activities of corporations. Unfortunately, the reasoning used by the Court in dismissing big tobacco’s case may actually strengthen corporate power when the bigger picture is considered.

The tobacco companies had argued that the law limiting advertising infringed on their right to freedom of expression under the Charter of Rights and Freedoms. The Court, in a unanimous decision, agreed, but went on to argue that such a restriction is constitutionally valid under Section 1 of the Charter. This section states that the rights set out in the Charter are not unconditional, but are guaranteed “subject … to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.” Given the demonstrable health risks posed by tobacco use, the Court said, government is justified in this case in restricting freedom of expression.

But the Court’s assertion that corporations have the right to protections offered by the Charter of Rights and Freedoms was explicit and forthright. The judgment cites as precedent a 1989 case brought before it by the Irwin Toy Company challenging the constitutionality of a Quebec law that prohibited all advertising aimed at children under the age of thirteen. The Supreme Court justices in that case briefly raised the question of whether corporations are entitled to the same rights and freedoms as people under the Charter and noted that: “given the Court’s previous pronouncements that Charter rights should be given a large and liberal interpretation, there was no sound reason for excluding commercial expression from the protection of (Charter protection of the right to freedom of expression).”

As a fall-back position, Irwin Toy had also claimed that the law violated the Charter’s assertion that: “Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.” Irwin claimed its rights to “security of the person”—in this case, economic security— had been violated as well.
But here the Court drew the line. First of all, it said, “everyone” is clearly intended to refer only to human persons, and not corporate persons. Nor was the clause intended to protect property or other economic rights, it said. As evidence of this it noted the difference between the clause and a similar guarantee in the U.S. Constitution. In the American version the phrase “life, liberty and security of the person” is replaced by “life, liberty, and property.” Had Canadian legislators intended property to be protected by this clause, the Court stated, they would have said so.

Here are the Court’s exact words: “… it appears to us that this section was intended to confer protection on a singularly human level. A plain, common sense reading of the phrase ‘Everyone has the right to life, liberty and security of the person’ serves to underline the human element involved; only human beings can enjoy these rights. ‘Everyone’ then, must be read in light of the rest of the section and defined to exclude corporations and other artificial entities incapable of enjoying life, liberty or security of the person, and include only human beings.”
So on the one had we have the Court’s reiteration last week of the right of corporations to the protection of Charter rights to “freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication.” And on the other we have its reiteration of the absence of corporate rights to “life, liberty, and security of the person.”
Why should corporations be granted one set of rights, and not the other? Or to put it another way, why is the corporation a “person” in one instance, and not the other?
It seems obvious, as the Court said, that corporations are not persons in the sense that they have a right to “life and liberty and security of the person,” if only because they are not alive. But is it not equally obvious that corporations are not persons in the sense that they have rights to freedom of thought, belief, opinion, and expression? Can a corporation think? Believe?

Surely only the living can think and believe, and therefore by the Court’s own reasoning, only the living can reasonably be granted the protection of their right to do so without undue hindrance by government.

And so we are left to ask, where does a corporation’s “right” to freedom of expression, and other Charter rights, come from?

Corporations are creatures of government—they exist only insofar as they have been granted a charter by the state, giving them permission to do business. As creatures of the state, it is clear that any rights they may have derive from the state and therefore can be withdrawn, suspended, or eliminated by the state. In fact, rights that are not explicitly granted by the state in issuing corporate charters simply do not exist, however conditionally.

This is not the case where fundamental rights are claimed by living, breathing, people. These rights, such as the rights to life and liberty, freedom of expression, belief, opinion, assembly, religion, justice, and so on are not granted by the Charter, they are protected by it. The rights pre-exist the state—they are ours to claim simply by virtue of being human beings. For this reason they are often called inalienable, in that we cannot give them away even if we wanted to. Nor can they be withdrawn by the state, and indeed it is assumed that any attempt by the state to withdraw fundamental rights can legitimately be met with rebellion by the people.
In its casual assertion in Irwin Toy that a “large and liberal” interpretation of the Charter means granting to corporations most of the same Charter rights as are afforded human beings, the Supreme Court of Canada was following an American legal tradition that has been a source of puzzlement among legal scholars for more than a century. In that country in 1886 a conservative, pro-business Supreme Court formally granted personhood to corporations in a famous case known as Santa Clara County v. Southern Pacific Railroad. The case involved the railway’s objection to government regulation of the rates it charged for moving freight. It argued that such regulation amounted to the seizure of its property without due process, a violation of the fourteenth amendment to the U.S. constitution which states that no government shall “deprive any person of life, liberty, or property, without due process of law.”
The puzzlement stems from the fact that the fourteenth amendment was adopted for the specific purpose of protecting the property and other rights of freed slaves—the “persons” in question—following the U.S. Civil War, and therefore clearly was meant to apply to human beings. It makes no mention of corporations. Since the issue was never argued in open court, and the justices gave no reasons for their arbitrary definition, no one knows why they granted this historic boon. But in doing so the Court set in motion a sea change in the power relations between corporations and the state.

This change culminated in the last thirty years of the twentieth century when corporations, leveraging their status as legal persons, began achieving routine successes in U.S. Supreme Court challenges to government regulations which could be construed as in some way infringing on the corporate person’s “human rights” as protected under the U.S. Bill of Rights. By the late twentieth century U.S. corporations had established precedents granting them virtually the same protections as people with regard to free speech, trial by jury in both criminal and civil cases, search and seizure without a warrant, and double jeopardy.
These successes have made it increasingly difficult for governments at all levels to regulate corporate activity where it conflicts with public welfare, as in, for example, limitations on cigarette or liquor advertising, or regulation of fees and tariffs, or provisions for unannounced workplace inspections under occupational health and safety regulations, or restrictions on corporate donations to political campaigns, or limits on corporate donations intended to influence public debates on issues of civic importance.

The Supreme Court in this country has at least been able to find some wiggle room by exercising the clause in our Charter of Rights which permits the override of rights where the need can be “demonstrably justified in a free and democratic society.” And, as noted, it wisely used this tactic in dealing with the recent challenge to advertising restrictions on big tobacco.
But the larger issue remains unresolved. Why should corporations, which are essentially machines for making money, have access to human rights protections at all? By what twisted logic does such a machine have a right to freedom of thought and expression, or the right to trial by jury, or any other human right? Why should Canadian courts accept a precedent of American law that the best American legal minds cannot explain or justify, and which seriously interferes with the democratic legislative process?

Corporations obviously need protection from arbitrary and capricious government actions if they are to carry on business. But those protections are already provided in ordinary corporate and contract law. If revisions are needed from time to time, then Parliament is the place to make them. The only rights corporations ought to be able to claim are those explicitly granted to them by duly elected governments, with the informed consent of the people. Access to Charter rights gives these innately irresponsible and amoral entities power and autonomy that is unnecessary, unreasonable, and dangerous.

U.S. President Grover Cleveland’s prescient warning in 1888 is one our Supreme Court ought to heed: “Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.”

Published inArticles-Blog