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PART I of BILL C-93 from February 1997 described the establishment of a corporation and some definitions related to it. The concept of a corporation being established in legislation is new to me, so I do not feel completely confident in knowing how the legislation works.

For example, one of the first definitions provided on that page (linked above) is the legislation's definition of "eligible", where it defines what types of institutions would be "eligible" to work with the newly established corporation, and lists hospitals, universities, colleges, and non-profit organizations under the definition of "eligible" recipients. What if the corporation were to one day decide that hospitals are no longer eligible, would the corporation be breaking the law? What recourse would hospitals have in this case?

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The corporation referred to in the OP is the Canada Foundation for Innovation (CFI) established to:

help build and sustain a research landscape in Canada that will attract and retain the world's top talent, train the next generation of researchers, support private-sector innovation and create high-quality jobs that strengthen Canada's position in today's knowledge economy.

The CFI awards grants to eligible institutions as per the terms and conditions detailed in an Award Agreement - see para 6.3.1 of the Policy and Programme Guide 2019 pdf.

As this is a contractual arrangement, if the CFI decided to revoke the eligibility status of hospitals and withdraw funding outside of these terms and conditions it may be open to civil action for breach of contract brought by the affected hospitals. If successful, the courts may award damages to the hospitals and/or order the CFI to fulfil its contractual obligations.

(However, the application process appears to be quite lengthy and comprehensive so this scenario is probably unlikely to occur that often.)

The particular reasons why the CFI was established in this way are not readily available, but government-created private companies are not that uncommon (in England and Wales anyway).  One example may be to ensure an arms-length independence from party politics and political influence.

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  • Thank you and +25 for the answer! But what makes that policy a "contractual agreement"? Also what you linked was labelled as the 2019 policy, which can change from year to year. Maybe the 2021 version won't include hospitals. Then it wouldn't seem that they are violating the 2021 version of the policy right? What if the 2021 policy is in violation of the "definition" of "eligible institution" in the legislation referred to in "BILL C-93, Feb. 1997" which states that an eligible institution is a hospital, university, college, or not-for-profit organization with the capacity to do research?
    – Nike Dattani
    Feb 4, 2021 at 0:17
  • (1) Canadian contract law makes the Award Agreements contractual agreements. (2) Any future changes to the eligibility criteria would not / should not affect extant agreements. (3) Any policy that contradicts the legislation will be void and unenforceable.
    – user35069
    Feb 4, 2021 at 6:39
  • Okay, my question is not so much about how future changes will affect extant grants, it's about your point (3): What are we to do if CFI changes their eligibility criteria so that hospitals are no longer eligible?
    – Nike Dattani
    Feb 15, 2021 at 5:13
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What if the corporation were to one day decide that hospitals are no longer eligible, would the corporation be breaking the law?

Probably not.

Section 19 of the law authorizes ("may") the foundation to provide funding to eligible recipients but it does not require it ("must" or "shall"). It is a restrictive provision that does not give the eligible recipients any entitlement to the fund.

19 (1) From and out of its funds, the foundation may make grants to eligible recipients to be used by them solely for the purposes of eligible projects in accordance with any terms and conditions specified by the foundation in respect of the grants.

What recourse would hospitals have in this case?

First, it is very unlikely for the foundation to exclude hospitals specifically, there is literally no reason to do so. To effect this change, someone would need to convince the 8 of the 15 directors.

But if somehow they were to make this change (non-retroactively), the hospitals and affected employees or other persons can petition and pressure the federal government, who appoints 7 directors on the board and can replace these directors at will. 7 is not a majority but it's one person short to reverse such decision.

The Parliament can of course also legislate the issue.

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