Doing Business in Canada: Government and Legal System

by Bennett Jones LLP

Canada is a prosperous society with a highly educated workforce, substantial natural resources, modern infrastructure, well-functioning public organizations and sound financial institutions. The country’s high standard of living and quality of life is sustained through a diversified, open economy that respects the rule of law, pursues free trade, supports innovation, fosters competition and welcomes foreign investment.


Canada is a very large country with a relatively small population. It is the second largest country in the world in terms of area and is ranked 37th in terms of inhabitants. Canada’s vast territory stretches from the Atlantic Ocean to the Pacific Ocean, across six time zones, and from the same latitude as Rome, Italy, to beyond the magnetic North Pole. However, nearly 90 percent of the country’s population of 34 million lives in southern Canada within 160 kilometres (100 miles) of the long border with the Lower 48 American states. Over 50 percent of Canadians reside in the corridor from Québec City to Windsor (opposite the American city, Detroit).

Natural Resources

As a result of Canada’s relatively small and concentrated population, vast tracts of the country are uninhabited and unspoiled. This hinterland contains a substantial storehouse of natural resources, including a coniferous boreal forest greater in size than the continent of Europe, a wide range of valuable minerals, metals and other materials, nine percent of the world’s renewable (and 20 percent of its surface) freshwater, substantial natural gas deposits, and a massive deposit of bitumen that contains proven reserves of 178 billion barrels of oil (at current prices using available technology), and total reserves exceeding 1.6 trillion barrels.

From Colony to Country

Canada is a federation, like the United States, and a constitutional monarchy and Parliamentary democracy, like the United Kingdom. Its political structure and legal system reflect its roots as (first) New France and then British North America.

A colony of France for 160 years beginning in the early 17th century, and of Britain for an additional century thereafter, Canada became a country in 1867 through the union of the three British colonies of Nova Scotia, New Brunswick and the original Province of Canada (which subdivided into the Canadian provinces of Ontario and Québec). Subsequent expansion transformed the western territories into additional provinces so that, today, Canada is a federation of 10 provinces, with three remaining territories in the Far North. 

Division of Powers

Canada is a more decentralized federation than the United States. Under the division of powers agreed to at the time of Canada’s Confederation in 1867, the federal government is generally responsible for national and international matters. The provincial governments are responsible for matters that are more local or private in nature, as well as property and civil rights. The power of both the federal and provincial governments to act unreasonably has subsequently been constrained through the entrenchment of certain rights and freedoms in the Canadian Charter of Rights and Freedoms.

Developments since the mid-19th century and the complexities of modern societies have caused an unavoidable overlapping of federal and provincial jurisdictions. This overlap has created inevitable tensions and has required extensive inter-governmental delegation and collaboration as well as the harmonization of provincial legal frameworks. In particular, the assignment of jurisdiction over health and education matters to the provinces has necessitated the development of a complex scheme of federal-provincial fiscal transfers.

Head of State

Canada’s Head of State remains Queen Elizabeth II, as Queen of Canada. Her largely ceremonial role is fulfilled on a daily basis by an appointed Canadian Governor-General.

Parliament of Canada

Like the British Parliament at Westminster, the Parliament of Canada is bi-cameral, with an elected House of Commons and appointed Senate (with limited, subordinated powers). The leader of the political party that holds the largest number of seats in the House of Commons is the Prime Minister and he or she forms a government that must maintain the confidence of the House. As in the United Kingdom, a permanent professional civil service, up to the level of Deputy Minister, is charged with providing advice to the various Ministers.

In contrast with the bi-cameral federal Parliament, single legislatures now exist at the provincial level. While municipalities have a significant role in the delivery of public services and regulation of economic activity, they remain creatures of provincial statute without their own constitutional basis. Municipalities have limited powers of taxation, both in absolute terms and relative to their growing responsibilities.

There are three remaining territories (in the north of Canada) which remain under federal jurisdiction although with their own territorial legislatures now possessing province-like powers. In addition, Canada’s aboriginal peoples exercise limited self-government in certain regions and areas pursuant to treaties and agreements.

Official Languages

Canada is officially bilingual at the national level. However, the French language is spoken primarily in the province of Québec, as well as in adjacent areas of Eastern Ontario and Northern New Brunswick, which is an officially bilingual province. While Québec has remained a relatively homogeneous French-speaking society, continuing waves of immigration throughout the 20th century have caused the rest of Canada (and particularly the largest cities) to become multi-racial and multicultural, with English as the lingua franca.

Legal System

There are three branches of government in Canada – the executive, legislative and judicial. The independence of Canadian courts from the executive and legislative branches of Canadian government is a well-established principle that is scrupulously observed and defended as a fundamental requirement of the rule of law. Commercial court proceedings are usually heard in the federal courts or the superior courts of the provinces (which are presided over by federally-appointed judges)

There is one criminal law across Canada and it is rooted in the British common law. Most provinces across Canada have private legal systems based on the English common law and legal precedents. However, matters of private law in Québec (i.e., contract, family and property matters) continue to be governed by a Civil Code. Meanwhile, corporate/business laws in all provinces, including Québec, have been heavily influenced by American legal developments and innovations. In short, Canada’s legal system reflects its dual French and English roots, and North American reality.

Bennett Jones’ Governmental Affairs & Public Policy Group

Staffed by individuals who have played leading roles in the shaping of public policy in Canada and the development of appropriate business responses, the Bennett Jones’ Governmental Affairs & Public Policy Group is a unique resource among Canadian law firms. Our Group provides clients with strategic legal and policy advice on domestic and international matters ranging from financial services regulation and competition and investment policy to energy, environmental and border measures.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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