Federal Court of Appeal sends West Bank wine-labelling case back to Canadian Food Inspection Agency

The Federal Court of Appeal has sent a dispute, concerning whether wine produced in the West Bank was properly labelled a product of Israel, back to the Canadian Food Inspection Agency, after it found the Federal Court had not followed the post-Vavilov reasonableness standard of review.

The labelling of Psagot Winery was first challenged at the CFIA by Dr. David Kattenburg, who argued the wine was produced in Israeli settlements in the Occupied Palestinian Territories, not in the state of Israel. Initially, the CFIA agreed with Kattenburg but then reversed its decision. Kattenburg appealed to the CFIA Complaints and Appeals Office. The Appeals office found that, since the Canada-Israel Free Trade Agreement defines areas where Israeli customs are applied – such as the West Bank – as Israeli territory, the wine was properly labelled as a product of Israel.

Kattenburg sought judicial review with the Federal Court, and Justice Anne Mactavish found the Complaints and Appeal Office decision unreasonable. Canada appealed. Shortly after Justice Mactavish had made her decision, the Supreme Court of Canada established a new framework for standard of review in administrative law cases with its ruling in Canada (Minister of Citizenship and Immigration) v. Vavilov.                                            

In a decision released Wednesday, Federal Court of Appeal Justices Marc Noël, Marianne Rivoalen and Richard Boivin dismissed the appeal and sent the case back to the CFIA. The Court ruled that the CFIA’s reasoning was imperceptible, so its reasonableness could not be evaluated. Post-Vavilov, Justice Mactavish should not have determined the proper outcome herself, absent a discernible, reasoned explanation from the CFIA, said the Court.

“The Federal Court of Appeal emphasized that Parliament made an institutional design choice in conferring on administrative decision-makers the task of interpreting legislation and applying it to the facts of the case before it,” says David Elmaleh, partner at RE-LAW LLP and lead counsel for Psagot Winery.

“In so doing, reviewing courts are to exercise deference, and if reasons are insufficient, the court in a post-Vavilov context should refrain from determining the issue itself,” he says. “The Federal Court of Appeal ruled that the Federal court judge should not have embarked on the administrative agency’s task.”

Representing Kattenburg is Dimitri Lascaris. He says the most important aspect of the decision is that Canada has now failed to persuade four judges that that the CFIA adequately justified its decision that the wine was properly labelled.

“Every judge who has heard argument on this point is mystified by the reasoning of the government,” says Lascaris. “And the reasoning of the government is that even though it admits – it says publicly – it has said for decades that the West Bank is not part of Israel, and that the settlements in the West Bank violate the Fourth Geneva Convention, it's reasonable to allow products made in those illegal settlements to be labeled as product of Israel. That's a preposterous position. It's absolutely illogical.”

“There's nothing, in my view, that the CFIA can do to make this seem like a reasonable decision. I understand that the court wanted to give them another kick at the can, and that's fine, and we'll deal with it.”

In coming to its decision, the Federal Court of Appeal said that the issue at hand was whether Justice Mactavish had identified the appropriate standard of review and applied it properly.

While Mactavish applied reasonableness in a pre-Vavilov world, the Court said it would determine whether the standard was properly applied based on the law post-Vavilov.

“Perhaps the most significant development” in light of Vavilov, said the Court, was the SCC’s recognition that when Parliament creates an administrative decision-maker to administer a legislative scheme, Parliament has conferred legitimacy and authority on that decision-maker to interpret the law applicable “to all issues that come before it.” This makes it clear that in conducting a reasonableness review, the court must focus on the decision made and the reasons given for it. The decision-maker is correspondingly required to “adopt a ‘culture of justification’ and provide a reasoned explanation,” said the Court.

But the Court was unable to discern the CFIA’s reasoning in finding the winery was in line with labelling requirements under the Food and Drug Act and the Consumer Packaging and Labelling Act.

“Vavilov makes it clear” that without a ‘reasoned explanation,’ courts should not determine the proper outcome and justify it themselves. That is what Mactavish had done: carried out the Agency’s task, said the Court.

“Our client is very pleased with the ruling, as the appellate court expressly found that the Canadian Food Inspection Agency, when it considers the merits of the labelling issue, is not bound by the lower court’s reasons,” says Elmaleh.

“The agency is open to come to its own conclusion. Psagot Winery proudly makes products of Israel, and it looks forward to advancing that position before the administrative agency tasked with reconsidering appropriate labelling practices.”

There is a passage in Vavilov, where the SCC cautions against reverse-engineering statutory interpretations in order to achieve a desired outcome, says Lascaris.

“That's precisely what happened here,” he says.

The affiant from the CFIA who Lascaris cross-examined said “the sole basis” on which they decided the labelling was proper was the Canada Israel Free Trade Agreement, says Lascaris. Prior to Kattenburg filing the judicial review application, neither the CFIA, nor the Complaints and Appeals Office said that part of their reasoning was that “they construed narrowly” the Food and Drug Act or the Consumer Packaging and Labelling Act, he says.

“The first time this argument appeared, throughout our extensive dealings with the CFIA and the [Complaints and Appeals Office], was when the AG filed its memorandum of law in opposition to the judicial review application,” says Lascaris.

“The government is trying to reverse engineer an interpretation of these statutes to achieve what it regards as a politically desirable outcome. And Vavilov says that that is prohibited.”