This matter concerned the jurisdiction of the Federal Court to entertain an action by a foreign ship owner against foreign crew members for breach of contract of employment and against a Canadian union for inducing breach of contract. While the "Japan Rainbow II" was loading a cargo of grain wage demands were made by the Defendants which were not satisfied by the Plaintiff. A strike sign was posted on the ship which resulted in the cessation of the loading activities. The Plaintiff then commenced this proceeding and obtained an injunction restraining the picketing for 14 days. The order granting the injunction was appealed but as the loading was completed during the time the injunction was in effect the issue of the appropriateness of the injunction was moot and the Court of Appeal declined to hear argument on this point. The Court of Appeal did, however, agree to adjudicate the issue of whether the Federal Court had jurisdiction to hear the claim of the Plaintiff. The Defendant argued that it did not have jurisdiction as the claims were in personaum and not in rem, did not fall within the maritime jurisdiction of the court and jurisdiction was specifically assigned by the Canada Labour Code to the Canada Industrial Relations Board. The Plaintiff argued that the claims fell within the court’s admiralty jurisdiction.
The Court of Appeal reviewed the authorities and reiterated that the test for jurisdiction was threefold: (1) there must be a statutory grant of jurisdiction by Parliament; (2) there must be an existing body of federal law essential to the disposition of the case that nourishes the grant of jurisdiction; and (3) the law on which the case is based must be a "law of Canada" as that phrase is used in s. 101 of the Constitution Act. The Court of Appeal held that all three branches of this test had been met. The statutory grant of jurisdiction was found in s. 22 of the Federal Court Act and the nourishing law and the "law of Canada" was found in Canadian maritime law. The Court of Appeal held that the claims advanced were integrally connected with maritime matters as to be legitimate Canadian maritime law. The Court of Appeal expressly held that it did not matter that the claims were in personam and not in rem as the court had jurisdiction in either event. The Court of Appeal further held that the Canada Labour Code had no application as it did not govern relations between a foreign ship owner and a foreign crew. In the result, it was held that the Federal Court had jurisdiction.