Thursday, August 17, 2017

History of trade dispute arbitration

The NAFTA negotiations and the return of the dispute-settlement mechanism to the headlines reminds me of a piece I wrote more than a decade ago.  It is a light historical piece about lawyers' fees, mostly, but the beginning, at least, seems timely:
The American inclination to sign trade agreements and then resist being bound by them is longstanding. In 1871 Canada and the United States agreed to give each country open access to the other’s fishing grounds. Since such access benefited Americans more than Canadians, an additional payment was due to Canada. The Americans took the fish but stalled on the payments. Finally an arbitration was held in Halifax in 1877.
Four Canadian lawyers spent seven months making the case to the arbitrator, a Belgian diplomat. His award, $5.5 million, delighted the Canadian government. (It was at least $5 million more than the Americans intended to pay.) Persuaded of the wisdom of using Canadian advocates rather than the complacent British diplomats who had previously represented Canada, the government offered the four lawyers $7000 each for their services.
One of the four lawyers, Joseph Doutre of Montreal, thought he was worth more.
There had been an election, and the new Tory government hated paying the four Grit lawyers to whom its predecessor had given this work, so the crown stuck to its offer. Doutre took the matter to court. Canada lost, appealed, and lost again, all the way to the Privy Council. In 1884 Doutre was awarded an additional $8000.
In 1885 the government put $24,000 in the estimates to give the other three lawyers the same increase Doutre had won. By then, one of the three had died and one had gone to the bench, but the third, Louis Henry Davies of Prince Edward Island (a future Chief Justice of Canada), was an MP and a prominent member of the opposition front bench (though he was absent the day the estimate came up). The debate that ensued suggests that the attitudes both lawyers and clients hold regarding appropriate pay for lawyers are timeless.
Thomas Farrow, a Conservative farmer MP from Huron County, launched the debate with an attack on Davies. $15,000 for seven months? It was “an extraordinary amount.”
Why, only weeks before, the honorable gentleman (Davies, that is), “his breast filled with righteous indignation,” had been castigating the government for wasting public money. Now he was rolling in it, complained Farrow.
But the legal profession had friends and defenders in the House. Liberal member Charles Weldon of Saint John had been a partner of the dead lawyer, S.R. Thompson, “one of the most eloquent and able men who ever lived in the Dominion of Canada.” Since he and Davies and the others had won the case, they had earned their fee, said Weldon. Other lawyer MPs agreed that these were “leading counsel,” men “of the greatest eminence” in their profession.
Liberal MP Richard Cartwright had been a minister in the previous government, and the big arbitration win had been a proud moment. But he was a penny-pinching banker. “I have often thought myself, although a humble member of that [legal] profession, having been a student only, that the public at large were grossly abused by the immense amount of fees they were obliged to pay.” Perhaps some control of lawyers’ fees was needed.
Fisheries Minister Archibald McLelan weighed in, defending the payment as unavoidable, but also getting in a dig. The fault lay with the previous government, which “had not had the understanding with the legal gentleman more clearly defined.” Donald McMaster, a prominent Montreal lawyer and Conservative MP for Glengarry, echoed his sentiments.
McMaster’s contribution inspired the best shot of the exchange, from Strathroy merchant Donald Cameron, a Liberal backbencher. “If the hon. gentleman, who is a distinguished member of the bar, will explain how a client can make anything else than a loose bargain in a law case, he will give us some valuable information!”
A last word went to Mackenzie Bowell, a cabinet minister and future prime minister, and a printer by trade. He wished his own profession had the esprit de corps lawyers had. “When an unfortunate printer gets a few [government] dollars, every other printer pitches into him as if he was purchased and is the biggest rascal that ever lived. But you touch a lawyer and it makes not the slightest difference whether he is a political friend or opponent. They all stick together like wax.”

The expenditure was approved (no one had doubted it would be), and the House moved on to the next item. Probably the Gomery lawyers will be spared this kind of scrutiny.
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