International extradition: The Huawei case

The double criminality principle prevents extradition where the alleged conduct would not amount to a criminal offence in the requested state. In this case, the Canadian Supreme Court considered the proper construction of the double criminality test and the extent to which the foreign legal context could be taken into account.

 

Factual background

The United States sought the extradition of Ms Meng for conduct purportedly corresponding to fraud under the Criminal Code of Canada. Ms Meng, Huawei’s Chief Financial Officer, was alleged to have made false statements to the bank HSBC, suggesting that Skycom Tech, a company based in Iran, was a partner, rather than a subsidiary, of Huawei. The effect of these representations was to put HSBC at risk of violating US sanctions against Iran and exposing them to economic and reputational harm.

The central question in this matter was whether Ms Meng’s conduct, had it occurred in Canada, would have amounted to fraud given that Canada did not have sanctions against Iran.

 

Legal framework and double criminality test

The double criminality principle is enshrined under paragraphs 3(1)(b) and 29(1)(a) of the Canadian Extradition Act (1999). Canada, alongside most other jurisdictions, employs the conduct-based approach to determining whether double criminality exists. The conduct approach considers whether the alleged conduct would have amounted to an offence under Canadian domestic law, had the offence taken place in Canada. This is distinct to the alternative offence-based approach which considers whether the elements of the offence match in both jurisdictions. Under the conduct approach, it is the “essence of the offence” which is important.

Fraud under the Criminal Code of Canada requires both dishonest conduct and a corresponding deprivation.

 

Analysis and key findings

 

Double criminality without reference to US sanctions

Her Honour dismissed the Attorney General’s first argument, that fraud could be established without reliance on the US sanctions, because the false statement prevented HSBC from properly assessing their risk. Holmes J found that for fraud offences, the risk of loss must be real and integrally connected with the dishonest act or statement. The risk could not be merely theoretical, and there must be proof of the causal connection. In this case, the link between the dishonest conduct and the deprivation could not be established without reference to the sanctions.

 

The institutions and laws of the foreign jurisdiction in determining double criminality

Ms Meng submitted that the proper test required the extradition judge to transpose the alleged act and consequences to Canada and assess them according to Canadian law without reference to the laws of the requesting state. Thus the conduct could not amount to fraud because Canada had not imposed sanctions against Iran, and without the sanctions, HSBC could not have suffered any deprivation.

Her Honour rejected this interpretation. She stated that the task is to transpose the “essence” of the conduct; the issue is at what level of generality that essence is to be transcribed. By taking Ms Meng’s approach, the specific facts were unduly isolated, such that they lost their overall effect and thus the essence of the conduct.

Holmes J discussed the Candian and US authorities at length. In particular she noted the decision of Duff J in Re Collis (No. 3) (1905) and Watt J in Germany (Federal Republic) v Schreiber (2004) which confirmed that transposing the “institutions and laws of the foreign jurisdiction” may be necessary to provide context for the alleged conduct. Similarly the UK House of Lords in Norris, adopted this construction, stating that it was more consistent with the purpose of extraditions statutes and their transnational interests.

Ms Meng’s approach would have limited Canada’s ability to fulfill its international obligations and given fraud an artificially narrow scope. Her Honour found that the institutions and laws of the foreign jurisdiction, in this case the US Sanctions, may be considered in the double criminality analysis as part of the background or context of the alleged conduct.

 

A policy offensive to Canadian values

Finally, her Honour addressed the argument that considering foreign laws in extradition proceedings might enforce a policy contrary to Canadian values. In this regard, Holmes J held that economic sanctions were not fundamentally contrary to Canadian values in the way slavery laws might be, and secondly, in the final phase of the extradition, the Minister of Justice was required to refuse a surrender order if it would be “unjust or oppressive”. A consideration of Canadian values ought to properly take place during this stage of the proceedings.

Her Honour found that the double criminality requirement had been met and dismissed the application.

Nyman Gibson Miralis provides expert advice and representation in transnational cases involving extradition proceedings.

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