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International Trade - Canada-US-Mexico Agreement. Doxy.Me Inc. v. Ontario Health et al.
In Doxy.Me Inc. v. Ontario Health et al. (Ont Div Ct, 2026) the Ontario Divisional Court dismissed a JR, this brought against "Ontario Health’s refusal to verify that its video service complies with required standards. The result of Ontario Health’s decisions is that Doxy’s physician clients are not entitled to receive payment from the Ontario Health Insurance Plan (“OHIP”) for any services rendered through its videoconferencing platform."
Here the court considers whether it can adjudicate whether a Canadian 'data residency requirement' violates CUSMA:Does the Data Residency Requirement Violate International Trade Agreements?
[69] Doxy submits that:(a) legislation is presumed to comply with Canada’s international obligations and courts should avoid interpretations that would violate those obligations.
(b) Ontario’s authority to make regulations under the Health Insurance Act must be construed to ensure that any regulation complies with Canada’s international obligations including The Canada-United States-Mexico Agreement (CUSMA). [70] Doxy submits that the Data Residency Requirement violates Article 19.11 and Article 19.12 of the CUSMA which state:Article 19.11: Cross-Border Transfer of Information by Electronic Means
1. No Party shall prohibit or restrict the cross-border transfer of information, including personal information, by electronic means if this activity is for the conduct of the business of a covered person.
2. This Article does not prevent a Party from adopting or maintaining a measure inconsistent with paragraph 1 that is necessary to achieve a legitimate public policy objective, provided that the measure:
(a) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; and
(b) does not impose restrictions on transfers of information greater than are necessary to achieve the objective.
Article 19.12: Location of Computing Facilities
No Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that territory. [71] Doxy submits that, contrary to Article 19.11.1, the Data Residency Requirement restricts the cross-border flow of data by removing OHIP eligibility for the use of virtual care solutions that store data outside of Canada. Doxy further submits that the respondents have not shown that the requirements in the exception provided by Article 19.11.2 are engaged. Further, Doxy submits that the Data Residency Requirement violates Article 19.12 because it requires virtual care solutions to maintain Canadian data residency in order to quality for OHIP reimbursement.
[72] I agree with the respondents’ position that this court should not rule on Doxy’s submission that the data residency requirement violates CUSMA because that submission requires the adjudication of state obligations under CUSMA. Domestic courts do not adjudicate state obligations arising out of trade law treaties and that such disputes are properly dealt with by international trade tribunals under such agreements. Accordingly, if Doxy wishes to challenge the data residency requirement relying on CUSMA, then such challenge must be made in the forum mandated by CUSMA.
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