A wake-up call for Canadian justice

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Law360 Canada (August 29, 2025, 8:22 AM EDT) —

In a moment of remarkable candour before the French senate on June 10, 2025, Microsoft’s director of public and legal affairs, Anton Carniaux, delivered an admission that should send a shock wave through Canada’s justice system.

“Non, je ne peux pas le garantir.” — Carniaux, when asked if he could guarantee U.S. authorities would not access French data without French approval.

With those five words, Carniaux didn’t just confirm the long-held fears of privacy advocates, he single-handedly dismantled the foundational premise upon which much of the Canadian justice system’s digital transformation has been built. The polite fiction that data residency (storing Canadian data on servers located on Canadian soil) is a sufficient shield against the extraterritorial reach of U.S. law has been exposed for what it is: an illusion. This testimony is not a warning of a potential future problem; it is a clear and present confirmation of a systemic vulnerability. For a legal system whose legitimacy rests on sovereignty, procedural fairness and the rule of law, Microsoft has inadvertently made the most compelling case imaginable that our reliance on American technology partners for critical justice infrastructure must end.

The shattered illusion of data sovereignty

For years, Canadian courts, governments and legal institutions have operated under a comforting assumption. The belief was that by mandating “data residency,” requiring that sensitive information be physically hosted within Canada’s borders, we were ensuring our nation’s data sovereignty. This principle is the bedrock of our digital governance; the Government of Canada itself defines data sovereignty as “Canada’s right to control access to and disclosure of its digital information subject only to Canadian laws.”

However, the testimony from Microsoft’s representative confirms that this belief was tragically misplaced. The issue has never been about the physical location of a server rack. The true vulnerability lies with the nationality of the corporation that owns it. Under the United States’ Clarifying Lawful Overseas Use of Data Act (the CLOUD Act), the U.S. government can legally compel American-based technology companies like Microsoft, Amazon and Google to provide requested data, regardless of where in the world that data is stored.

Carniaux’s hearing laid this process bare. While Microsoft maintains it has “strong, rigid legal processes to contest unfounded” requests from the U.S. government, he ultimately confirmed that when a request is deemed legally valid under U.S. law, they are obligated to comply. In short, as one report analyzing the testimony concluded, “Microsoft will listen to the U.S. government regardless of Canada or and other country’s domestic laws.” This policy strips Canada of its autonomy, allowing a foreign government to access the data of Canadians without the knowledge or permission of Canadian authorities.

The implications for our justice system are profound. As courts across the country accelerate their digital transformation, adopting cloud-based case management systems, e-filing portals and virtual hearing platforms, they are increasingly entrusting their most fundamental data to these very companies. The Department of National Defence and the Canadian Armed Forces already make significant use of a tailored “Defence 365” platform built on Microsoft’s cloud infrastructure. Is the data of our judiciary, court filings, evidence, judicial deliberations and lawyer-client communications any less critical to our national sovereignty? By continuing this reliance, we are building our 21st-century justice system on a foundation that is subject to the laws and political whims of another country.

A foundational threat to procedural fairness

This vulnerability is more than a matter of geopolitical tension; it strikes at the heart of procedural fairness, the cornerstone of our legal system. Canadian jurisprudence, from Baker to Vavilov, has consistently affirmed that the legitimacy of a legal decision depends not just on the outcome, but on the transparency and reason-giving behind it (Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; Canada (Minister of Citizenship and Immigration) v. Vavilov, [2019] S.C.J. No. 65). A decision-making process that cannot be fully explained or accounted for cannot be properly contested or reviewed, undermining the very essence of due process.

How can a Canadian court guarantee procedural fairness to litigants when the data central to their case could be accessed by a foreign power without a Canadian warrant, without transparency and without any mechanism for judicial review in Canada? The answer is simple: it cannot. The HITL (“human-in-the-loop”) principle, which demands meaningful human oversight in automated decision-making, becomes meaningless if the entire “loop” is subject to covert external access. The human decision-maker, being the judge or administrative officer, loses ultimate control over the informational environment in which justice is administered.

This reality creates a direct conflict. The Canadian Judicial Council’s guidelines on AI note that explainability is paramount, akin to a judge’s duty to provide reasons. Yet, the U.S. CLOUD Act operates as a “black box,” removing the process from Canadian oversight entirely. This isn’t just a technical backdoor, it’s a legal one that circumvents the sovereignty our entire justice system is built upon.

A wake-up call for Canadian justice

This moment of clarity from Microsoft should serve as a powerful catalyst for change. The argument for cultivating a robust, domestic legaltech ecosystem has often been framed in economic terms or as a response to trade tensions. While those reasons remain valid, Microsoft’s admission elevates the issue to one of constitutional and judicial necessity. We must recognize, now more than ever, the urgent need for Canada to cultivate self-reliance in legal technology.

Supporting our domestic innovators is no longer just a “nice-to-have” industrial policy, it is a prerequisite for a secure and sovereign judiciary. We need to ensure that our service providers are not only based in Canada but that their solutions are built to comply with Canadian laws and regulations first and foremost. More importantly, they must be built to uphold Canadian values of transparency, fairness and access to justice.

For too long, the adoption of legal technology has been framed as a choice between the feature-rich, globalized platforms of U.S. giants and the supposedly less-developed domestic alternatives. It has been viewed through a lens of institutional efficiency rather than user-centric access to justice. We must now reframe this choice. The question is no longer “Which platform has the slickest interface?” but “Which platform guarantees that the administration of justice in Canada remains subject only to the laws of Canada?”

Microsoft’s startling admission in Paris has provided a definitive answer. Carniaux has done our legal system an unintentional favour by ending the debate. The era of unchecked data scraping and blind trust in foreign providers is over. The risk is no longer theoretical.

The path forward requires a deliberate, strategic and urgent shift. Judicial leaders, court administrators and government policymakers must treat technological procurement not as a back-office IT decision, but as a core issue of judicial governance and national sovereignty. The only way to guarantee that Canadian justice data is protected by Canadian law is to entrust it to Canadian companies. The time for deliberation is over. The time for action is now.

Daniel J. Escott is a research fellow at the Artificial Intelligence Risk and Regulation Lab and the Access to Justice Centre for Excellence. He is currently pursuing an LL.M. at Osgoode Hall Law School, and holds a J.D. from the University of New Brunswick and a BBA from the Memorial University of Newfoundland.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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