Publications

Introduction On February 1, 2023, Minister of Justice Simon Jolin-Barrette introduced and tabled in the National Assembly Bill 8 entitled An Act to improve justice efficiency and accessibility, in particular by promoting mediation and arbitration and by simplifying civil procedure in the Court of Québec1 (hereinafter the “Bill”). The Bill makes amendments to several laws, including the Courts of Justice Act2 and the Professional Code3. We are particularly interested in those relating to the Code of Civil Procedure (“C.C.P.”),4 and more specifically to proceedings pending before the Court of Québec of which practitioners and persons subject to trial will want to take note. Proposed Amendments to the Code of Civil Procedure Most of the amendments to the C.C.P. will come into effect on June 30, 20235. We note the following, in particular: Jurisdiction of the Court  Exclusive jurisdiction granted to the Court of Québec to hear applications in which the amount claimed or the value of the subject matter of the dispute is less than $75,000,6 instead of $85,000, which is the limit in effect on the date of this bulletin. However, the Court of Québec will continue to hear applications under the $85,000 limit that were filed prior to June 30, 2023, and these will remain governed by the provisions of the C.C.P., as they read before June 30, 2023;7 Concurrent jurisdiction with that of the Superior Court granted to the Court of Québec where the amount claimed or the value of the subject matter of the dispute is equal to or exceeds $75,000 but is less than $100,000.8 Case management The Bill also introduces a special procedure for applications in civil matters brought before the Court of Québec in which the amount claimed or the value of the subject matter of the dispute is less than $100,000:9 The preparation of a case protocol will no longer be necessary, as set time limits will now apply to all recourses;10 Originating applications must not exceed five pages in length;11 Preliminary exceptions must be disclosed within 45 days of filing an application;12 A defendant’s arguments must be disclosed within 95 days of filing an application;13 Settlement conferences will be held automatically after trial readiness is achieved (settlement conferences may also be replaced by pre-trial conferences);14 Cases will be set down for trial and judgment by a court clerk.15 Requests for particulars as to allegations made or to strike immaterial allegations The Court of Québec will only authorize such requests by way of exception and if warranted on serious grounds.16 Examinations The limit below which holding an oral examination on discovery is not permitted will be increased to $50,000.17 Currently, the limit is $30,000; Each party will be entitled to only a single oral examination on discovery, unless the Court decides otherwise;18 Written examinations must not exceed three pages in length.19 Expert opinion Parties must seek a joint expert opinion in cases where the amount claimed or the value of the property claimed is equal to or less than $50,000, unless the Court decides otherwise.20 Small claims In a proceeding for a claim not exceeding $3,000, the Court may render a judgment on the face of the record with the parties’ consent.21 Adjustments Each of the monetary limits for the Court of Québec’s jurisdiction will be adjusted annually.22 Conclusion The proposed measures will significantly impact how lawyers will now handle and manage disputes in which the amount claimed is less than $100,000. The concurrent jurisdiction of the Court of Québec with that of the Superior Court for cases with a value equal to or exceeding $75,000 but less than $100,000 is interesting: Although the procedure for conducting proceedings in the Court of Québec has been simplified for such cases, it is likely that many cases will nonetheless be instituted in the Superior Court, as its procedural process is a little less intrusive, particularly with respect to joint expert opinions, mandatory settlement conferences and the number of examinations. The Minister of Justice is hopeful that the amendments to the Act will improve access to justice for persons subject to trial, thanks to faster and less costly justice services, among other things. While these amendments will allow for more out-of-court settlements and prevent costly trials, we believe that there is still some uncertainty as to how accessible the expedited process will be, given the current staffing shortages in courthouses. An Act to improve justice efficiency and accessibility, in particular by promoting mediation and arbitration and by simplifying civil procedure in the Court of Québec, Bill 8 (Introduced — February 1, 2023), 43rd Legislature, 1st Session (Qc) (“B.”). Courts of Justice Act, CQLR c. T-16. Professional Code, CQLR, c. C-26. Code of Civil Procedure, CQLR c. C-25.01. Transitional provision: claims of $85,000 initiated in the Court of Quebec before June 30, 2023 will continue under the provisions in effect prior to the coming into force of the PL amendments (PL, s 44). B., s. 3; C.C.P., art. 35. B., s. 44. B., s. 3; C.C.P., art. 35. B., s. 8; C.C.P., art. 535.1. B., s. 8; C.C.P., art. 535.2. B., s. 8; C.C.P., art. 535.3. B., s. 8; C.C.P., art. 535.5. B., s. 8; C.C.P., art. 535.6. B., s. 8; C.C.P., art. 535.12. B., s. 8; C.C.P., art. 535.13. B., s. 8; C.C.P., art. 535.11. B., s. 7; C.C.P., art. 229. B., s. 8; C.C.P., art. 535.9, para. 2. B., s. 8; C.C.P., art. 535.9. B., s. 8; C.C.P., art. 535.15. B., s. 15; C.C.P., art. 561.1. B., s. 3; C.C.P., art. 35.

The pandemic has not slowed down the arrival of self-driving vehicles on our roads. This technological advancement is becoming more and more commonplace, giving rise to a need for deep reflection, especially in the automobile insurance industry. The AMF issue paper On October 20, 2021, the Autorité des marchés financiers (AMF) published an issue paper on self-driving vehicles (SDVs),1 deeming that the developments surrounding them were likely to have “considerable impacts on insurers and on the overall functioning of the automobile insurance system” in Quebec. In it, the AMF addresses several interesting avenues for reflection. The public insurance plan Under the current Highway Safety Code, the Minister of Transport can, through a pilot project, require manufacturers or distributors to reimburse the compensation paid by the Société d'assurance automobile du Québec (SAAQ) following accidents involving an SDV.2 In this context, the AMF is asking whether these manufacturers, distributors and sellers should be able to purchase insurance to protect themselves in the event of this type of claim. Private insurance plans With certain exceptions, the Automobile Insurance Act provides that the owner of a vehicle is liable for property damage caused by their vehicle.3 Human error is currently the primary cause of collisions; however, with the advent of SDVs, attributing liability for accidents will become more complicated. The transfer of liability to vehicle manufacturers and their subcontractors in the event of an accident could lead to a possible shift from insurance policies offering individual coverage to policies designed to protect manufacturers or software developers, for example. The AMF is considering whether the current wording of the automobile insurance policies issued for SDVs should move towards the notion of “using” a vehicle, thus modifying the notion of driving. In addition, direct compensation agreements currently provide that insurers compensate their own insureds for the liability of drivers of other vehicles involved in an accident. They allow subrogation against a third party responsible for the collision, but exclude collisions involving the same vehicle owners. In the context of SDVs, where a manufacturer could retain ownership of the vehicle during use, for example with a fleet of vehicles, there is reason to question the application of these agreements. Their very relevance is in doubt, according to the AMF. The AMF raises other interesting discussion points: Should automobile manufacturers be required to disclose accident data involving SDVs to the SAAQ? What data should be used to determine the insurance premiums associated with an SDV? Should the order of application of manufacturers', subcontractors' and owners' insurance policies in the event of an accident involving SDVs be provided for by regulation? Criminal charges in California As a result of an accident involving an SDV driving in “autopilot” mode, killing two (2) people, the driver of the vehicle was charged with two (2) counts of manslaughter. The accident was caused by the SDV leaving a highway at high speed, running a red light and hitting a vehicle in the intersection. In a previous report, the National Transportation Safety Board (NTSB) already reviewed the concept of “automation complacency,” in which drivers are inclined to rely too much on the self-driving modes currently on the market, which still require drivers' attention. It should be kept in mind that full vehicle automation is not yet available and that drivers remain responsible for the operation of SDVs, which are only partially automated at this time. Disabling Tesla’s “Passenger Play” Since December 2020, Tesla has offered the “Passenger Play” feature in several of its vehicle models, which allows drivers to play video games while the car is in motion. After receiving a complaint from a Tesla driver, the NTSB launched an investigation and determined that this option “may distract the driver and increase the risk of a crash.” In December 2021, Tesla announced that in future updates to the system, Passenger Play would only be available when the car is stationary. Robots as border patrollers The U.S. Department of Homeland Security recently confirmed that a pilot project involving robot dogs in border surveillance at the U.S.-Mexico border is underway. The fleet of robots, called “automated ground surveillance vehicles,” is presented as a “force multiplier.” The project is facing a range of criticism, with regard to its true ability to be a tangible agent of change in terms of border security, but also from community advocates, who accuse the government of going too far for the sake of security. According to the authorities, the robots have the potential to reduce the risk of border officers’ exposure to deadly hazards in an environment that is inhospitable to humans. Driverless buses at Plaza St-Hubert Closer to home, we saw driverless buses circulating freely along Plaza St-Hubert in Montréal last fall. Keolis made its SDVs available for a free 30-minute route with seven (7) stops. The project, implemented by the Ville de Montréal with a grant from the Government of Québec, was designed to test the SDVs in a dense urban environment. Document de réflexion, Préparer le Québec à l’arrivée des véhicules automatisées et connectés, Autorité des marchés financiers, October 21, 2021. Highway Safety Code, CQLR, c. C-24.2, s. 633.1. Automobile Insurance Act, CQLR, c. A-25, s. 108.

The Autorité des marchés financiers (AMF) has recently published a study that it conducted with the largest active insurers in the Quebec insurance industry, entitled “Critical Illness Insurance Supervisory Report”1 (hereafter the “Report”).The study reveals surprising statistics that have led the AMF to issue recommendations for changes to critical illness insurance: Insurers must try to better explain insurance products to consumers in order to help them better understand the policies they are buying. Critical illness insurance   Critical illness insurance is insurance that consumers can purchase for themselves or a loved one. It provides for the payment of a sum of money should the insured suffer from a critical illness that matches the definition set out in their insurance contract. The illnesses that are typically covered by this type of insurance are cancers (at a life-threatening stage), heart attacks and strokes. In general, the following principles apply to critical illness insurance: Each policy has a list of illnesses it covers. An insurance policy may also specify exclusions to covered illnesses. When an insurance policy covers a critical illness and no exclusions apply, it may have other conditions such as a waiting period2 or a survival period,3 which can vary from one insurance policy to another. AMF findings   The AMF found that insurers deny one out of five critical illness insurance claims. In its Report, it notes that, in general, consumers face several issues with critical illness insurance, both in terms of understanding the product and with its purchase. These issues appear to result from the lack of information, clarity, support and consumer understanding. Covered illnesses and their characteristics differ from one product to the next and from one insurer to another. This makes it hard for consumers to easily compare available products. Moreover, the language used to describe products and draft policies is often complex. Insurance policies also contain many limitations and exclusions (such as pre-existing conditions) and various time limits that can be hard to grasp. AMF Recommendations   Based on its findings, the AMF has developed five recommendations for insurers, and it expects insurers to apply corrective action. For the time being, the AMF does not intend to apply sanctions, but says that it will “take appropriate action when required.”4 Avoid situations where prepared materials and advertising result in confusion for consumers or in an incorrect understanding of the product Insurers must exercise care in how they use statistics and slogans in their materials and advertising. The AMF believes that certain forms of advertising can lead consumers to misunderstand the provided coverage because of statistics and slogans that are broader than the actual coverage set out in a contract. Insurers must keep to information that is relevant to the actual features of the product offered. The AMF insists that “it should not appear to consumers as if the product covers more than it really does or as if they require more insurance than they really need.” Better help consumers properly understand the product An insurance policy may cover different illnesses and may contain varying features. The vocabulary used in critical illness insurance contracts is often technical and specific to medical and insurance fields. Insurers should provide relevant and complete information written in accessible language to avoid confusion with the insured. The AMF suggests that insurers make tools such as guides, glossaries, summaries, illustrations and timelines available to help consumers better understand the features of their insurance policies, the scope of their coverage and any limitations, exclusions, time limits, and so forth. Provide insureds with post-purchase assistance The AMF indicates that support after purchasing critical illness insurance is key to help the insured better understand their rights and obligations and when to exercise them. It suggests that insurers implement post-purchase information communication mechanisms, such as making information available on a secure website, periodic statements or reminders of options that can be exercised. Better equip the distribution channels to appropriately advise their clients The AMF stresses that the various distribution channel stakeholders must be able to provide clear and relevant information to the insured over the entire lifecycle of the product. To do so, insurers should improve their training programs and provide appropriate reference tools to their distribution channels, which could include product features, the target client group for each product and a comparison with other types of products to assist customers in making choices. Facilitate the claims, complaint examination and dispute resolution processes Insurers must ensure that they provide sufficient information to the insured and fairly process claims. The AMF suggests that insurers make claims processes and claim forms easily accessible on their websites. The reasons for denying a claim should also be clearly explained in the letter to the insured, and the letter should outline the next steps, such as the opportunity to request a review or to file a complaint. Conclusion   Insurers offering critical illness insurance products should implement the recent AMF recommendations to better inform consumers on their rights and obligations and on products offered and the coverage they provide. By implementing the AMF’s suggestions into their critical illness insurance activities, insurers will not only reduce the claims denial rate in the industry, but also avoid potential litigation. Autorité des marchés financiers, Critical Illness Insurance Supervisory Report (Report), Québec City, 2021. [Report] Time period that must elapse before critical illness coverage comes into force after the insurance policy is issued. Time period that must elapse before compensation after a critical illness is diagnosed. Report, p. 7.

Introduction There are multiple insurance policies available on the market to protect your property in Quebec. But how well do you know all your options? In 2016, we addressed peer-to-peer insurance, which is essentially a community of users wanting to insure similar goods and services together.1 However, in November 2021, the Superior Court of Québec rendered an interesting decision2 on self-insurance in the context of insurance offered by two (2) student associations. This form of insurance suggests that the first part of compensation be borne by the insured, who cannot therefore transfer this part of the risk to a third party. The decision of the Superior Court of Québec The facts The Association générale des étudiants hors campus de l’Université du Québec à Trois-Rivières and the Association générale des étudiants de l’Université du Québec à Trois-Rivières (hereinafter, the “Associations”) have been providing supplemental health and dental insurance to their 14,000 student members since 2014. They refer to this as a self-insurance plan, which is managed through insurer Major Group Inc. The Autorité des marchés financiers (“AMF”) applied to the Court for a permanent Order of Injunction to require Major Group Inc. and the Associations to cease their insurance activities. It contended that the Associations were acting as insurers and that they cannot do so without its authorization, as provided for under section 21 of the Insurers Act (“IA”).3 Under the IA, the AMF’s authorization is required to carry on insurer activities, if such activities constitute the operation of an enterprise, regardless of any other activities that may be carried on by the operator. The AMF also claimed that the Associations were not practising self-insurance. The Associations maintained that they were not acting as insurers but engaged in self-insurance. Furthermore, they argued that section 21 of the IA cannot apply to their activities as they are non-profit organizations and therefore cannot operate a business within the meaning of the act. The Court’s grounds The Court defined the concept of a self-insurance contract under Quebec law as follows: the insured chooses not to subscribe an insurance contract for all or part of a risk, opting instead to assume the financial consequences itself, thereby not transferring the risk to a third party. The Court determined that the Associations were the policy holders, and the student members were the insured. In this sense, it cannot be considered a self-insurance contract since the risk of the student members is transferred to the Associations, which agreed to insure them in exchange for the payment of a premium. The Court then concluded that the supplemental health and dental insurance offered by the Associations constitutes insurer activities in the course of operating an enterprise, in accordance with section 21 of the IA. Even though the Associations are not-for-profit organizations, they can operate an enterprise. Furthermore, the application of section 21 of the IA does not require an analysis of the nature of the organization as a whole. The agreements between the student associations and Major Group Inc. had a pre-established economic objective, namely, to benefit from the profits that an insurer would normally make. The Associations have been offering this product for almost seven (7) years; it is, therefore, not an episodic or occasional activity. Conclusion The Superior Court of Québec granted the AMF’s application for a permanent injunction against the Associations. It issued an order to the Associations to cease, within three (3) months of the judgment, all insurance activities under the IA, and to Major Group Inc. to cease acting as a third-party administrator with respect to any self-insurance plan implemented by the Associations. *** Self-insurance can save a policyholder money on an insurance premium by providing protection on the essentials of a claim at a lower cost. However, it must be practised in accordance with the law. “Peer-to-peer” insurance: a grassroots revolution? (lavery.ca). Association générale des étudiants hors campus de l’Université du Québec à Trois-Rivières (AGÉHCUQTR) c. Autorité des marchés financiers, 2021 QCSC 5090. Insurers Act CQLR c. A-32.1.

Introduction Non-liability clauses are often included in many types of contracts. In principle, they are valid and used to limit (limitation of liability clause) or eliminate (exoneration clause) the liability of a party with respect to its obligations contained in a contract. The recent unanimous decision of the Supreme Court of Canada confirms that under Quebec law, parties may limit or exclude their liability in a contract by mutual agreement. However, a party may have such a clause declared inoperative by invoking the doctrine of breach of a fundamental obligation of the contract. In this case, the Supreme Court of Canada confirmed the validity of the clause at issue and circumscribed the limits of the application of the doctrine. The Supreme Court of Canada’s decision The facts The dispute relates to a contract signed between 6362222 Canada inc. (“Createch”), a consulting firm specializing in the improvement and implementation of integrated management systems, and Prelco inc. (“Prelco”), a manufacturing company specializing in the fabrication and transformation of flat glass. Under the terms of the contract that the parties concluded in 2008, Createch was to provide software and professional services to help Prelco implement an integrated management system. Createch prepared a draft contract and Prelco did not ask for any changes to the proposed conditions. A clause entitled Llimited Liability was included in the contract, which stipulated that Createch’s liability to Prelco for damages attributed to any cause whatsoever would be limited to amounts paid to Createch, and that Createch could not be held liable for any damages resulting from the loss of data, profits or revenues or from the use of products or for any other special, consequential or indirect damages. When the system was implemented, numerous problems arose and Prelco decided to terminate its contractual relationship with Createch. Prelco brought an action for damages against Createch for the reimbursement of an overpayment, costs incurred to restore the system, claims from its customers and loss of profits. Createch filed a cross-application for the unpaid balance for the project. At trial, the Superior Court of Québec concluded that the limitation of liability clause was inoperative under the doctrine of breach of fundamental obligation, because Createch had breached its fundamental obligation by failing to take Prelco’s operating needs into account when implementing the integrated management system. The Court of Appeal of Québec confirmed the trial judge’s decision and held that the doctrine of breach of fundamental obligation can annul the effect of an exoneration or limitation of liability clause by the mere fact that a breach relates to a fundamental obligation. The Supreme Court of Canada’s reasons The Supreme Court of Canada allowed the appeal and set aside the decisions of the lower courts. Per Chief Justice Wagner and Justice Kasirer, the Supreme Court held that the limitation of liability clause in the parties’ contract was valid, despite the fact that Createch had breached its fundamental obligation. The Supreme Court addressed the two legal bases for the existence of the doctrine of breach of fundamental obligation: the validity of the clause having regard to public order and he validity of the clause having regard to the requirement relating to the cause of the obligation. In this case, the Court determined that public order could not render the limitation of liability clause inoperative as the contract at issue was one by mutual agreement and the parties were free to share the risks associated with a contractual breach between them, even if the breach involved a fundamental obligation. As for the validity of the limitation of liability clause, the Court determined that it was not a no obligation clause that would exclude the reciprocity of obligations. Createch had significant obligations to Prelco, and Prelco could keep the integrated management system, obtain damages for unsatisfactory services and be compensated for necessary costs for specific performance by replacement, but no higher than what had been paid to Createch. A limitation of liability clause does not therefore deprive the contractual obligation of its objective cause and does not exclude all sanctions. The Court explains: “[86] Thus, art. 1371 C.C.Q. applies to contract clauses that negate or exclude all of the debtor’s obligations and, in so doing, deprive the correlative obligation of its cause. Where a contract includes such clauses, it can be said that the reciprocal nature of the contractual relationship is called into question (arts. 1371, 1378 para. 1, 1380 para. 1, 1381 para. 1 and 1458 C.C.Q.). To apply a more exacting criterion would amount to annulling or revising a contract on assessing the equivalence rather than the existence of the debtor’s prestation and, as a result, to indirectly introducing the concept of lesion, which is narrowly delimited in the Code.”1 Prelco remains bound by the limitation of liability clause in this case. The Supreme Court of Canada is of the view that the trial judge and the Court of Appeal erred in law in declaring the limitation of liability clause inoperative. It allowed Createch’s appeal. Conclusion This Supreme Court of Canada decision confirms the importance of the principles of autonomy of contracting parties and freedom of contract between sophisticated legal persons in Quebec law. The doctrine of breach of fundamental obligation does not permit the circumvention of the principle of freedom of contract: It cannot be said that an obligation is deprived of its cause when a sanction for nonperformance of obligations fundamental to the contract is provided for in a limitation of liability clause. [1] 6362222 Canada inc. v. Prelco inc., 2021 SCC 39, para. 86..

The COVID-19 pandemic has been not only causing major social upheaval but disrupting business development and the economy as well. Nevertheless, since last March, we have seen many developments and new projects involving self-driving vehicles (SDV). Here is an overview. Distancing made easy thanks to contactless delivery In mid-April 2020, General Motors’ Cruise SDVs were dispatched to assist two food banks in the delivery of nearly 4,000 meals in eight days in the San Francisco Bay Area. Deliveries were made with two volunteer drivers overseeing the operation of the Level 3 SDVs. Rob Grant, Vice President of Global Government Affairs at Cruise, commented on the usefulness of SDVs: “What I do see is this pandemic really showing where self-driving vehicles can be of use in the future.  That includes in contactless delivery like we’re doing here.”1 Also in California in April, SDVs operated by the start-up Nuro Inc. were made available to transport medical equipment in San Mateo County and Sacramento.  Toyota Pony SDVs were, for their part, used to deliver meals to local shelters in the city of Fremont, California.  Innovation: The first Level 4 driverless vehicle service In July 2020, Navya Group successfully implemented a Level 4 self-driving vehicles service on a closed site. Launched in partnership with Groupe Keolis, the service has been transporting visitors and athletes on the site of the National Shooting Sports Centre in Châteauroux, France, from the parking lot to the reception area.  This is a great step forward—it is the first trial of a level 4 vehicle, meaning that it is fully automated and does not require a human driver in the vehicle itself to control it should a critical situation occur. Driverless buses and dedicated lanes in the coming years In August 2020, the state of Michigan announced that it would take active steps to create dedicated road lanes exclusively for SDVs on a 65 km stretch of highway between Detroit and Ann Arbour.  This initiative will begin with a study to be conducted over the next three years. One of the goals of this ambitious project is to have driverless buses operating in the corridor connecting the University of Michigan and the Detroit Metropolitan Airport in downtown Detroit. In September 2020, the first SDV circuit in Japan was inaugurated at Tokyo’s Haneda Airport. The regular route travels 700 metres through the airport.  A tragedy to remind us that exercising caution is key  On March 18, 2018, in Tempe, Arizona, a pedestrian was killed in a collision with a Volvo SUV operated by an Uber Technologies automated driving system that was being tested. The vehicle involved in the accident, which was being fine-tuned, corresponded to a Level 3 SDV under SAE International Standard J3016, requiring a human driver to remain alert at all times in order to take control of the vehicle in a critical situation. The investigation by the National Transportation Safety Board determined that the vehicle’s automated driving system had detected the pedestrian, but was unable to classify her as such and thus predict her path. In addition, video footage of the driver inside the SDV showed that she did not have her eyes on the road at the time of the accident, but rather was looking at her cell phone on the vehicle’s console. In September 2020, the authorities indicted the driver of the vehicle and charged her with negligent homicide. The driver pleaded not guilty and the pre-trial conference will be held in late October 2020.  We will keep you informed of developments in this case.   In all sectors of the economy, including the transportation industry and more specifically the self-driving vehicles industry, projects have been put on hold because of the ongoing COVID-19 pandemic. Nevertheless, many projects that have been introduced, such as contactless delivery projects, are now more important than ever. Apart from the Navya Group project, which involves Level 4 vehicles, all the initiatives mentioned concern Level 3 vehicles. These vehicles, which are allowed on Quebec roads, must always have a human driver present. The recent charges against the inattentive driver in Arizona serve as a reminder to all drivers of Level 3 SDVs that regardless of the context of an accident, they may be held liable. The implementation of SDVs around the world is slow, but steadily gaining ground. A number of projects will soon be rolled out, including in Quebec. As such initiatives grow in number, SDVs will become more socially acceptable, and seeing these vehicles as something normal on our roads is right around the corner.   Financial Post, April 29, 2020, “Self-driving vehicles get in on the delivery scene amid COVID-19,”.

On March 18, 2018, in Tempe, Arizona, a vehicle being operated by self-driving software which was under development, collided with a pedestrian, causing her death. Following this accident, the U.S. National Transportation Safety Board ("NTSB") conducted an investigation and, on November 19, 2019, issued its preliminary results and recommendations.1 The circumstances of the accident involving an autonomous car from Uber The autonomous vehicle ("AV"), a 2017 Volvo XC90, was equipped with an automated driving system being developed by Uber Technologies Inc. ("Uber"). At the time of the collision, the vehicle was travelling at a speed of approximately 72 km/h, and was completing the second portion of a predetermined route as part of a driving test. The pedestrian was struck while crossing the street outside the crosswalk. The NTSB's investigation found that the vehicle's automated driving system had detected the pedestrian, but was unable to qualify her as a pedestrian and predict her path. Further, the automated driving system prevented the activation of the vehicle's emergency braking system, relying instead on the intervention of the human driver on board to regain control of the vehicle in this critical situation. However, videos from inside the vehicle showed that the driver was not paying attention to the road, but was rather looking at her cell phone lying on the vehicle console. Since the collision between the pedestrian and the vehicle was imminent, the inattentive driver was unable to take control of the vehicle in time to prevent the accident and mitigate the damages. What are the causes of the accident? The NTSB issued several findings, including the following: Neither the driver's experience nor knowledge, her fatigue or mental faculties, or even the mechanical condition of the vehicle, were factors in the accident; An examination of the pedestrian showed the presence of drugs in her body which may have impaired her perception and judgment; Uber's automated driving system did not adequately anticipate its safety limitations, including its inability to identify the pedestrian and predict her path; The driver of the vehicle was distracted in the moments preceding the accident. Had she been attentive, she would have had enough time to see the pedestrian and take control of the vehicle to avoid the accident or mitigate its impact; Uber did not adequately recognize the risks of distraction of the drivers of its vehicles; Uber had removed the second driver from the vehicle during the tests, which had the effect of giving the sole remaining driver full responsibility for intervening in a critical situation, thereby reducing vehicle safety. The probable cause of the accident was found to be the driver's distraction and failure to take control of the AV in a critical situation. Additional factors were identified, including insufficient vehicle safety measures and driver monitoring, associated with deficiencies in the safety culture at Uber. The NTSB issued recommendations, including the following: Arizona should implement obligations for AV project developers regarding the risks associated with the inattentiveness of vehicle drivers which are aimed at preventing accidents and mitigating risks; The NTSB should require entities conducting projects involving AVs to submit a self-assessment report on the safety measures for their vehicles. Additionnaly, the NTSBshould set up a process for the assessment of these safely measures; Uber should implement a policy on the safety of its automated driving software. Can an identical tragedy related to autonomous vehicles occur in Quebec and Canada? Following the update to the Highway Safety Code in April 2018, level 3 AVs are now permitted to be driven in the province of Quebec when their sale is allowed in Canada. Driving of level 4 and 5 automated vehicles is permitted where it is expressly regulated in the context of a pilot project.2 According to SAE International Standard J3016, level 3 AVs are vehicles with so-called conditional automation, where active driving is automated, but require the human driver to remain attentive so that they can take control of the vehicle in a critical situation. Thus, the vehicle involved in the Arizona accident, although still in the development phase, corresponded to a level 3 AV. Level 3 AVs are now circulating fully legally on Quebec roads. In Canada, the Motor Vehicle Safety Act3 and the relevant regulations thereof govern “the manufacture and importation of motor vehicles and motor vehicle equipment to reduce the risk of death, injury and damage to property and the environment”. However, there is currently no provision specifically for the regulation of automated driving software or the risks associated with the inattention of Level 3 AV drivers. With the arrival of AVs in Canada, taking in consideration the recommendations of the NTSB and to ensure the safety of all, we believe the current framework would need to be improved to specifically address VA security measures.   National Transportation Safety Board, Public Meeting of November 19, 2019, “Collision Between Vehicle Controlled by Developmental Automated Driving System and Pedestrian”, Tempe, Arizona, March 18, 2019, HWY18MH010. Highway Safety Code, CQLR c. C-24.2, s. 492.8 and 633.1; the driving of autonomous vehicules in Ontario is regulated by Pilot Project - Automated Vehicles, O Reg 306/15. Motor Vehicle Safety Act, S.C. 1993, c. 16; see, in particular, the Motor Vehicle Safety Regulations, C.R.C., c. 1038.

For many years now, we have been discussing the arrival of autonomous vehicles on Quebec roads. Thus, in April 2018, the government amended the Highway Safety Code1 to adapt it to the particularities of these new vehicles However, the automotive sector is not the only one being transformed by automation: the aeronautics industry is also undergoing profound changes, particularly with the introduction of autonomous air transport technologies in urban travel. Terminology There are many terms used in the autonomous air transport industry, including “autonomous flying car”, “unmanned air vehicle” and even “autonomous air taxi”. For its part, the International Civil Aviation Organization (ICAO) has proposed some terms that have been included in various official documents, including certain legislation2. These terms are as follows: Unmanned air vehicle: A power driven aircraft, other than a model aircraft that is designed to fly without a human operator on board; Unmanned air system: An unmanned aircraft and all of the associated support equipment, control station, data links, telemetry, communications and navigation equipment; Remote piloted aircraft system: A partially autonomous remotely piloted aircraft; Model aircraft (also called “drone”): A small aircraft, the total weight of which does not exceed 35 kg that is not designed to carry persons. As for Canadian legislation, it uses specific vocabulary and defines a remotely piloted aircraft system as a “a set of configurable elements consisting of a remotely piloted aircraft, its control station, the command and control links and any other system elements required during flight operation”, whereas a remotely piloted aircraft is defined as “a navigable aircraft, other than a balloon, rocket or kite, that is operated by a pilot who is not on board3”. Legislative Framework In accordance with Article 8 of the Convention on International Civil Aviation4, it is prohibited for unmanned aircraft to fly over the territory of a State without first obtaining the authorization of the State in question. In Canada, the standards governing civil aviation are found in the Aeronautics Act5 and its regulations. According to subsection 901.32 of the Canadian Aviation Regulations ((the “CARs”), “[n]o pilot shall operate an autonomous remotely piloted aircraft system or any other remotely piloted aircraft system for which they are unable to take immediate control of the aircraft6.” In Canada, the standards governing civil aviation are found in the Aeronautics Act5 and its regulations. According to subsection 901.32 of the Canadian Aviation Regulations ((the “CARs”), “[n]o pilot shall operate an autonomous remotely piloted aircraft system or any other remotely piloted aircraft system for which they are unable to take immediate control of the aircraft6.” Since the 2017 amendment of the CARs, it is now permitted to fly four (4) categories of aircraft ranging from “very small unmanned aircraft” to “larger unmanned aircraft7”, subject to certain legislative requirements: The use of unmanned aircraft weighing between 250 g and 25 kg is permitted upon passing a knowledge test or obtaining a pilot permit, if applicable8; To fly unmanned aircraft over 25 kg to transport passengers, it is mandatory to obtain an air operator certificate9. Ongoing projects Many projects developing unmanned aircraft are underway. The most high-profile and advanced projects are those of automotive, aeronautics and technology giants, including Airbus’s Vahana, Boeing’s NeXt program, Toyota’s SkyDrive and the Google-backed Kitty Hawk Cora10. The most advanced project appears to be UberAIR. In addition to actively working on developing such a vehicle with many partners like Bell and Thales Group, Uber’s project stands out by also focusing on all the marketing aspects thereof. The program is slated for launch in three cities as early as 202311. These cities are expected to host a test fleet of approximately fifty aircraft connecting five “skyports” in each city12. Challenges Despite the fact that technology seems to be advancing rapidly, many obstacles still remain to truly implement this means of transport in our cities, in particular the issue of the noise that these aircraft generate and the issues relative to their certification, costs and profitability, safety linked to their urban use, social acceptability and the establishment of the infrastructure necessary to operate them. In the event of an accident of an autonomous aerial vehicle, we can foresee that the manufacturers of such vehicles could be held liable, as could the subcontractors that are involved in manufacturing them, such as piloting software and flight computer manufacturers. We could therefore potentially be faced with complex litigation cases. Conclusion A study predicts that there will be about 15,000 air taxis by 2035 and that this industry will be worth more than $32 billion at that time13. In the context of climate change, sustainable transportation and in order to bear urban sprawl, these vehicles offer an interesting transit alternative that may very well change our daily habits. The flying car is finally at our doorsteps!   Highway Safety Code, CQLR, c C-24.2. Government of Canada, Office of the Privacy Commissioner of Canada, Drones in Canada, March 2013, at pp. 4-5 Canadian Aviation Regulations, SOR/96-433, s. 101.01. International Civil Aviation Organization (ICAO), Convention on International Civil Aviation (“Chicago Convention”), 7 December 1944, (1994) 15 U.N.T.S. 295. Aeronautics Act, RSC 1985, c. A-2. Canadian Aviation Regulations, SOR/96-433, s. 901.32. Government of Canada, Canada Gazette, Regulations Amending the Canadian Aviation Regulations (Unmanned Aircraft Systems) - Regulatory Impact Analysis Statement, July 15, 2017. Canadian Aviation Regulations, SOR/96-433, s. 901.64 et seq. Canadian Aviation Regulations, SOR/96-433, s. 700.01.1 et seq. Engineers Journal, The 13 engineers leading the way to flying car, May 29, 2018 Dallas, Los Angeles, and another city yet to be announced. Uber Elevate, Fast-Forwarding to a Future of On-Demand Urban Air Transportation, October 27, 2016, Porsche Consulting, “The Future of Vertical Mobility – Sizing the market for passenger, inspection, and goods services until 2035.” 2018

The Autonomous Bus and Minibus Pilot Project 1 (the “Pilot Project”) came into effect in Quebec on August 16, 2018. The project provides guidelines for the regulated driving of the first autonomous vehicles on Quebec’s roads. Driving autonomous vehicles in quebec An autonomous vehicle is defined by the new Highway Safety Code as “a road vehicle equipped with an automated driving system that can operate a vehicle at driving automation level 3, 4 or 5 of the SAE International’s Standard J3016”.2 Driving autonomous vehicles is currently prohibited in Quebec other than in accordance with a pilot project.3 Eligibility requirements To be authorized by the Minister under the Pilot Project, a manufacturer, distributor or operator of autonomous vehicles (referred to by the Pilot Project as the “promoter”) must submit certain information to the Minister of Transport and to the Société de l’assurance automobile du Québec (“SAAQ”) concerning their experimental project, including, in particular: -      an application specifying their project and the objectives pursued; -      a description of the vehicles that will be used; -      the area in which the project will be implemented; and -      the safety measures proposed.4 Insurance and security Under the new Highway Safety Code, the Pilot Project provides that the promoter of a project must carry a minimum of $1,000,000 in liability insurance to guarantee compensation for material harm.5 In the event of an accident involving an autonomous vehicle operated under an experimental project, the SAAQ may recover the compensation it will be required to pay under the Automobile Insurance Act6 from the manufacturer or distributor of the autonomous vehicle involved in the accident. In that case, the operator of a project will have the obligation to reimburse the SAAQ for the compensation paid.7 Security must also be provided to the SAAQ to guarantee reimbursement, in an amount that will be determined by the Minister on a case by case basis, depending on the project. A manufacturer or distributor from which the SAAQ has made a claim for compensation paid may refuse to make reimbursement or request a reduction of the amount claimed in two situations: (1)  by proving the fault of the victim or of a third person; or (2)  in the case of superior force.8 Experimental project The entry into effect of the Pilot Project has authorized a first experimental project in Quebec, sponsored by Keolis Canada Innovation, s.e.c.9 The purpose of the project is to put Navya autonomous minibuses into service that are capable of transporting up to 15 passengers, travelling on a closed circuit in Candiac. The vehicles will travel at a maximum speed of 25 km/h and a driver will be on board to take control of the vehicle, if necessary.10 We can count on seeing a number of other projects in the future, now that there is a legislative framework allowing them.   Autonomous Bus and Minibus Pilot Project, (Highway Safety Code, CQLR chapter C-24.2, s. 633.1).[ Pilot Project] Highway Safety Code, CQLR chapter C-24.2, s. 4. Highway Safety Code, CQLR chapter C-24.2, s. 492.8; except for vehicles at level 3, which may be driven if their sale is authorized in Canada. Pilot Project, s. 4. Pilot Project, s. 20. Automobile Insurance Act, CQLR c. A-25. Pilot Project, s. 21. Pilot Project, s. 22. Pilot Project, s. 26. “Une navette à L’essaie pour un an à Candiac”, La Presse, August 11, 2018, Montréal.    

With the enactment on April 17th 2018 of Bill 165, An Act to amend the Highway Safety Code and other provisions1, the driving of autonomous vehicles in Quebec is finally regulated, although a number of uncertainties remain. Indeed, the driving of autonomous vehicles of automation level 3, such as Tesla’s model X equipped with an improved guidance system, is now permitted in Quebec. While driving vehicles of levels 4 and 5 is not allowed for the moment, we can anticipate that it will be permitted as part of a pilot project implemented by the government, since it has expressed its desire for Quebec to become a recognized leader in certain segments of the electric and smart vehicle industry.2 As a reminder, there are six levels of automation for cars: Level 0 – no automation; Level 1 – driver assistance; Level 2 – partial automation, which provides automatic assistance and acceleration/braking functions but requires that the human driver retain control over all dynamic driving tasks; Level 3 – conditional automation, in which dynamic driving tasks are performed by the control system but the human driver must remain available at all times; Level 4 – high automation, when a vehicle’s control system provides total control of all driving tasks, even in critical safety situations; and Level 5 – full automation, when a vehicle performs all driving tasks alone, without the possibility of human intervention. THE “OLD” HIGHWAY SAFETY CODE Until recently, the Highway Safety Code3 (hereinafter the “Code”) contained no definition of an autonomous vehicle. It defined a road vehicle as “a motor vehicle that can be driven on a highway” and a motor vehicle as “a motorized road vehicle primarily adapted for the transportation of persons or property”.4 Those broad definitions, and the fact that there was no specific definition of an autonomous vehicle, created a legal uncertainty. Were autonomous vehicles allowed on roads in Quebec? What would happen in the event of an accident involving an autonomous vehicle? The Transportation Ministry recognized this legal vagueness and introduced amendments to the Code relating to autonomous vehicles, among other things. THE “NEW” HIGHWAY SAFETY CODE The Code now defines an autonomous vehicle as “a road vehicle equipped with an automated driving system that can operate a vehicle at driving automation level 3, 4 or 5 of the SAE International’s Standard J3016”.5 ). The Code prohibits driving autonomous vehicles on roads in Quebec, other than vehicles at automation level 3, when they are authorized for sale in Canada.6 However, the Ministry may implement pilot projects relating to autonomous vehicles, “to study, test or innovate”.7 Pilot projects will last for five years and may also “provide for an exemption from the insurance contribution associated with the authorization to operate a vehicle and set the minimum required amount of liability insurance guaranteeing compensation for property damage caused by an automobile”8. On the question of liability in the event of an accident involving an autonomous vehicle, a pilot project may “require the manufacturer or distributor to reimburse the Société [de l’assurance automobile du Québec] for compensation that it will be required to pay in the event of an automobile accident”9. IMPLICATIONS AND UNCERTAINTIES While Transportation Minister André Fortin maintains that Bill 165 is forward-looking and is confident that it will further improve Quebec’s road safety record,10 uncertainties still surround the conditions that will be placed on projects involving cars of automation levels 4 and 5. Also, the obligations of the drivers and manufacturers of autonomous vehicles towards liability insurance will have to be clarified. A more specific framework for autonomous vehicle manufacturers’ liability will necessarily have to be put in place. The Quebec government will have no choice but to keep doubling its efforts to ensure that pilot projects are proposed if it is to catch up to Ontario, which has had an autonomous vehicle pilot project in place since 2016.11   Bill 165, An Act to amend the Highway Safety Code and other provisions; The sanction date of the Bill and the entry into force of the new dispositions are not yet known. Gouvernement du Québec, ministère de l’Économie, de la Science et de l’Innovation, “Le gouvernement du Québec soutient la Grappe industrielle des véhicules électriques et intelligents”, Montréal, April 13, 2018, online. Highway Safety Code, RLRQ, c C-24.2. Highway Safety Code, RLRQ, c C-24.2, art 4. Bill 165, An Act to amend the Highway Safety Code and other provisions, s. 4. Bill 165, An Act to amend the Highway Safety Code and other provisions, s. 125 (addition of section 492.8 to the Highway Safety Code). Bill 165, An Act to amend the Highway Safety Code and other provisions, s. 164 (amendment of section 633.1 of the Highway Safety Code). Bill 165, An Act to amend the Highway Safety Code and other provisions, s. 164 (amendment of section 633.1 of the Highway Safety Code). Bill 165, An Act to amend the Highway Safety Code and other provisions, s. 164 (amendment of section 633.1 of the Highway Safety Code). Journal des débats of the National Assembly, Vol. 44, No. 327, April 17, 2018, online.  Pilot Project - Automated Vehicles, O Reg 306/15.  

Introduction In January 2018, the Senate's Standing Committee on Transport and Communications (hereinafter the "Committee"), chaired by the Hon. David Tkachuk, published a report on the impact of automated vehicles in the country at the behest of the Minister of Transport of Canada. The first generation of these vehicles are already travelling on our roads, and their increased use will probably have far-reaching social consequences, such as a reduction in the number of accidents 1 and greater transport freedom for the elderly, but also, potentially, the loss of jobs in the country. The Committee issued sixteen (16) recommendations relating to smart vehicles2, in particular on these vehicles' cybersecurity and insurance coverage, urging the government to act now, since "technology will overtake regulations". Automobile manufacturers seem to hold the same opinion. Shawn Stephens, Planning and Strategy Director at BMW Canada, says that "the technology is ready. The manufacturers are ready. It is the laws and the government that are slowing us down [our translation]"3. Plug-in vehicles and automated vehicles Plug-in vehicles are described by the Committee as relying on to two kinds of technologies: the ones designed for “infoentertainement” and the ones relating to communication between vehicles.  These plug-in vehicles can therefore receive information on approaching vehicles, for example on their speed, relevant routes, and on the services available along the selected route. For their part, automated vehicles make different degrees of autonomous driving possible by relying on various technologies. The automation of these vehicles is classified between levels 0 and 5, that is, from no automation at all to complete automation, which refers to a vehicle that is entirely self-driven, without any possibility of human input.4 The smart cars designation encompasses both these categories. Cybersecurity The Committee recommends that a best practices guide be adopted with regard to cybersecurity. Indeed, the threat of cyberattacks targeting smart cars has been worrying the automobile industry for some years, to such an extent that the Automotive Information Sharing and Analysis Centre was established in July 2015, to allow various manufacturers to share their knowledge and cooperate on this topic. A cyberattack against a smart vehicle could target the integrity of its electronic data, and therefore the safety of its passengers, as well as the personal information of the drivers obtained from the vehicle. As a matter of fact, a recommendation for drafting a bill aimed at protecting the personal data of smart vehicles' users was also issued.  Insurance Considering the real threat of cyberattacks targeting smart vehicles, manufacturers must to take out an insurance policy covering cyberattacks. On another note, KPMG deems that, as a result of the use of automated vehicles, accidents will drop by 35% to 40%, while repair costs will increase by 25% to 30%5. So, one can reasonably expect an impact on drivers' insurance premiums. Moreover, it is possible that the liability in an accident involving an automated vehicle be transferred from the vehicle's driver to its manufacturer by means of amendments to the Automobile Insurance Act6, or of new laws specifically relating to the driving of automated vehicles. These changes could have significant consequences on the various laws regulating automobile insurance in the country7. The Committee therefore issued the recommendation for Transport Canada to oversee the impact of plug-in and automated vehicles on the automobile insurance industry.  Some initiatives and challenges The Motor Vehicle Test Centre in Blainville is currently working on establishing whether or not smart vehicles comply with current Canadian security standards. We have also learned from the Committee's Report that the Canadian Regulatory Cooperation Council is currently working with the United States on the various issues connected to plug-in and automated vehicles. Despite the numerous initiatives on record, so far only Ontario has introduced legislation specifically regulating the use of automated vehicles on the province's roads. 8. Québec will have to go down this path in order to fill the current legal vacuum9.  Conclusion As discussed in our bulletin of February 201710, the growing number of automated vehicles on the roads of Québec cannot be taken lightly. A legislative framework specifically providing for this kind of vehicle is of the essence when we consider that, by some projections, a quarter of the total worldwide vehicles will be defined as smart by 203511. Plug-in vehicles are already traveling on the roads of Québec, as are various levels of automated vehicles. It is therefore vital for all levels of government to catch up with these technologies. Regulating the driving of smart vehicles is a hot topic pertaining to the development of artificial intelligence. As such, it needs to be followed closely.   It is estimated that up to 94% of road accidents are caused by human error, see Standing Senate Committee on Transport and Communications, "Driving Change: Technology and the Future of the Automated Vehicle", Ottawa, January 2018, page 29. Standing Senate Committee on Transport and Communications, "Driving Change: Technology and the Future of the Automated Vehicle", Ottawa, January 2018. MCKENNA, Alain, La Presse, « Véhicules autonomes : « Ce sont les lois et le gouvernement qui nous freinent », Montréal, 1 February 2018, online:  http://auto.lapresse.ca/technologies/201802/01/01-5152247-vehicules-autonomes-ce-sont-les-lois-et-le-gouvernement-qui-nous-freinent.php. See GAGNÉ, Léonie, Need to Know, Bulletin Lavery, de Billy, “Autonomous vehicles in Québec: unanswered questions” Montreal, February 2017. Standing Senate Committee on Transport and Communications, "Driving Change: Technology and the Future of the Automated Vehicle", Ottawa, January 2018, page 65. Automobile Insurance Act of Québec, CQLR c. A-25.Automobile insurance falls under provincial jurisdiction. Pilot Project - Automated Vehicles, O Reg 306/15. The Government of Québec is currently assessing Bill 165, which aims at, among other things, amending the Highway Safety Code and regulating the driving of autonomous vehicles. Supra, note 4. Boston Consulting Group, (2016), Autonomous Vehicle Adoption Study.

Autonomous cars have really taken off in the last few years, particularly due to the interest of both consumers and the businesses who develop and improve them. In this context, on April 5 and 10, 2017, the City of Montréal and the Government of Québec respectively announced significant investments in the electrification and intelligent transportation sector to make the Province of Québec a pioneer of that industry. Investments from the City of Montréal and the Government of Québec The City of Montréal intends to invest $3.6M toward the creation of the Institute on Electrification and Intelligent Transportation, created as a part of the Transportation Electrification Strategy developed to fight climate change and promote innovation. The creation of the Institute on Electrification and Intelligent Transportation is one of the ten strategic orientations that the Transportation Electrification Strategy puts forward. The City of Montréal explains that [TRANSLATION] “the Institute will rely on the collaboration of partners, including universities and the Innovation District, and on the availability of land near downtown Montréal in order to create a world-class site to develop, experiment and promote innovation and new concepts in the field of electric and intelligent transportation ”.1 The mission of the Institute is, among other things, to create a testing corridor and an experimentation area in downtown Montréal for autonomous vehicles. In addition, an autonomous shuttle project is already under way, involving “Arma” minibuses developed by Navya, a partner of the Keolis Group. These vehicles are automated at level 5, meaning that they are entirely automated. The first road test is anticipated to take place in the context of the International Association of Public Transport’s (UITP) Global Public Transport Summit, which will be held in Montréal from May 15 to 17, 2017. For its part, the Government of Québec has undertaken to invest $4.4M [TRANSLATION] “to support the electric and intelligent vehicles industrial cluster”2. This industrial cluster will be set up in spring 2017 and its business plan will be established by an advisory committee created for such purpose. [TRANSLATION] “The cluster will help position Québec among the world leaders in the development of ground transportation and their transition to an all-electric and intelligent transportation” stated Dominique Anglade, Minister of Economy, Science and Innovation and Minister responsible for the Digital Strategy. Issues related to driving autonomous vehicles in Québec Intelligent cars were introduced in the Québec market and have earned their place over the last few years. They are referred to as autonomous when they possess at least a “conditional” degree of automation, commonly referred to as level 3 on the scale of automation degrees.3 This level of automation allows for dynamic driving of the vehicle by its control system but requires the driver to remain available. Under the Québec Automobile Insurance Act4, the owner of an automobile is liable for the property damage caused by such automobile with some exceptions. This statute also provides for a no-fault liability regime allowing victims of a car accident to claim an indemnity for the bodily injuries they suffer. As to the Highway Safety Code5, it governs, among other things, the use of vehicles on public roads. To our knowledge, no legislative amendment has been proposed to this day to fill this legal void prior to autonomous vehicles appearing on the Québec roads. In this regard, it is appropriate to note that the Province of Ontario recently passed the Regulation 306/156, which outlines who may drive autonomous vehicles on Ontario roads and in which context. Comments Many questions remain unanswered as to the content of the projects and initiatives recently announced by the City of Montréal and the Government of Québec. This lack of information creates uncertainty as to the scope of specific regulations governing the use of autonomous vehicles in the Province of Québec which would possibly need to be passed. However, Ms. Elsie Lefebvre, Associate councilor for the City of Montréal, responsible for the Transportation Electrification Strategy, declared that [TRANSLATION] “there will be guidelines and the projects will be supervised to ensure that there is no danger on the road”, without giving details on the scope of such measures. In the wake of these announcements, many issues deserve to be discussed. What will be the degree of automation of the autonomous vehicles allowed to be driven in the Province of Québec? Who will drive these vehicles and who will insure them? Will special permits be required? Will these vehicles be allowed to be driven on public roads or exclusively on closed circuits? In the event of an accident, who will be held liable? What will be the legislative measures passed to adequately govern the use of these vehicles? Many questions remain and not many answers are provided for the time being. This is something to follow… Transportation Electrification Strategy 2016-2020, published by the City of Montréal. GOVERNMENT OF QUÉBEC, Information feed – “Québec annonce 4,4 millions de dollars pour soutenir la grappe industrielle des véhicules électriques et intelligents”, online. For more details, please consult the Need to Know newsletter, “Autonomous vehicles in Québec: unanswered questions”. Automobile Insurance Act, CQLR, c. A-25. Highway Safety Code, CQLR, c. C-24.2, art. 1. Pilot Project – Automated Vehicules, O Reg 306/15.

According to a recent study, 25% of new cars sold around the world will be self-driving by 20351. A group of researchers from Princeton University estimates that by 2035-2050 over half of American cars will be self-driving2. Smart cars are currently being sold in Québec and their advent is sure to have repercussions on several players. Self-driving cars Smart cars use information and communication technology in accident prevention systems with varying levels of automation. In simple terms, a smart car uses a control system equipped with an algorithm that predicts how the car should react. This sophisticated system is connected to satellites and is continually updated to adapt to new situations by detecting new risks. There are six levels of automation for cars3: Level 0 – no automation; Level 1 – driver assistance; Level 2 – partial automation, which provides automatic assistance and acceleration/braking functions but requires that the human driver retain control over all dynamic driving tasks; Level 3 – conditional automation, in which dynamic driving tasks are performed by the control system but the human driver must remain available at all times; Level 4 – high automation, when a vehicle’s control system provides total control of all driving tasks, even in critical safety situations; and Level 5 – full automation, when a vehicle performs all driving tasks alone, without the possibility of human intervention. Cars are considered self-driving or autonomous as of Level 3, when the control system can perform dynamic driving. Québec’s Automobile Insurance Act The Québec Automobile Insurance Act (hereinafter the “Act”) sets out a no-fault regime4which provides that the Société de l’assurance automobile du Québec compensates victims of automobile accidents who have suffered bodily harm regardless of who caused the accident. However, under the Act, the owner is liable for material damages caused by his vehicle and cannot escape liability unless he proves fault by the victim or a third party, or a superior force. There is some legal uncertainty regarding self-driving cars in Québec since they are not covered by the current legislation. In 2016, a pilot project covering self-driving cars in Canada was presented by the Ontario government. In addition to providing an investment by the province in research on autonomous automobiles, the project resulted in a change to the Ontario Highway Traffic Act5 through the enactment of Regulation 306/156. Although that Regulation allows automated cars to be driven in specific situations, it did not change the liability rules under the Ontario law7. Self-driving cars should be regulated in Québec for two reasons: they are not yet covered by the law and several liability issues would arise in the event of an accident. Who will be liable for an accident caused by a self-driving automobile—the manufacturer or the driver? Who should bear the risk? The manufacturer’s liability in Québec In Québec, the product liability regimes in the Civil Code of Québec8 and the Consumer Protection Act9 include a presumption against the distributor, the professional seller and the manufacturer when the buyer establishes that an item had a latent defect or failed prematurely compared to similar items, which shifts the burden of proof onto the manufacturer. To rebut this presumption, a manufacturer cannot rely on its ignorance of the defect or even wear and tear of the item. Only two defences are available10: proof of causal fault on the part of the buyer or a third party, or a superior force; or proof that it would have been impossible to detect the defect given the state of scientific knowledge at the time the item was put on the market. Comments The issue of when liability will transfer from the driver of an autonomous vehicle to the manufacturer is unclear. However, we can expect that the manufacturer’s level of liability will increase pursuant to the incremental use of technology in the automation of automobiles. The very design of some autonomous vehicles entails that they will no longer be controlled by a human being, who will become a passenger as the vehicle’s control system takes over the driving. The manufacturer of the vehicle could henceforth be fully liable in the event of an accident, which would result on the application of the Québec product liability regimes. If the manufacturers of autonomous vehicles were to be liable in the event of an accident, the recourses could lead to highly complex litigation. The subcontractors of the manufacturer of an autonomous vehicle, such as the company which designed the car’s algorithm and the company responsible for data transmission, could also be liable. The transfer of liability onto the manufacturers of autonomous vehicles could also have repercussions in terms of insurance. Both the determination of insurance premiums for drivers and manufacturers and the underwriting of insurance for these parties could be affected, depending on who will bear the risk. The arrival of autonomous vehicles could also lead to an influx of new players in automobile insurance. For example, Tesla currently has an insurance policy in Australia adapted to one of its smart cars11. Conclusion Accident statistics show that self-driving vehicles will lead to a decrease in traffic accidents, 93% of which are currently attributable to human error in the U.S.12. Autonomous vehicles will not only change how we travel, they will also impact Québec’s legislation governing liability in case of automobile accidents. Boston Consulting Group, (2016), Autonomous Vehicle Adoption Study. Jane Bierstedt et al., (2014), Effects of Next-Generation Vehicles on Travel Demand and Highway Capacity, FP Think Working Group. Pilot Project - Automated Vehicles, O Reg 306/15, s. 2. Québec Automobile Insurance Act, CQLR c. A-25, s. 108 and ff. Highway Traffic Act, RSO 1990, c H.8. Pilot Project - Automated Vehicles, O Reg 306/15. Insurance Act, RSO 1990, c I.8, s. 267.1. Civil Code of Québec, CQLR c. CCQ-1991, art. 1726 and ff. Consumer Protection Act, CQLR c. P-40.1, s. 38. ABB Inc. v. Domtar Inc., [2007] 3 SCR 461, par 72. See tesla.com John Maddox, Improving Driving Safety Through Automation, Congressional Robotics Caucus, National Highway Traffic Safety Administration, 2012.