Canadians have closely followed the bombshell criminal charges against five members of Team Canada’s 2018 World Juniors hockey team.
The case is scheduled for trial in 2025, seven years after the alleged sexual assault. Following the incident, the complainant reached a settlement with Hockey Canada that included a non-disclosure agreement (NDA). As the case moves toward trial, it raises important questions about the restrictions NDAs impose on those who agree to them.
The Basics
What is a non-disclosure agreement? NDAs are contractual agreements between two parties, preventing one or both parties from sharing confidential information with those outside the agreement. They describe the legal obligations one has to protect certain information, and the legal consequences if that information is shared with others. Typically, NDAs are used in commercial settings, protecting information such as trade secrets.
NDAs can be mutual, where both parties are prohibited from sharing information on the matter, or non-mutual, where only one party is held to secrecy. NDAs must follow all required elements of contract law to be enforceable. They must state the parties involved, the specific information that must be kept confidential, and the duration of the agreement (which can last until death). The agreement may also state any exclusions to secrecy that apply.
There are generally two distinct types of damages that act as a remedy when one party breaches the agreement. The NDA itself may specify a certain amount the signee must pay in damages if the confidentiality of the information is breached; these damages are labelled as liquidated damages. Otherwise, the courts may assign compensatory damages in wake of a breach, compensating the losses suffered due to the breach.
NDA signees may be prohibited (by the agreement) from publicly acknowledging they have signed an NDA. This is most common in circumstances where an NDA has been used to shield the public from finding out about misconduct within a company or organization. Signees may also be precluded from sharing the monetary amount of any settlement. This tactic was used by Hockey Canada in the 2018 World Junior sexual assault scandal, before Hockey Canada agreed to waive the NDA in 2022.
Exceptions to NDAs
Individuals who have signed an NDA are bound by their terms. However, there exists exceptions to their enforceability. There is no penalty for sharing the confidential information, if the information is requested by a court order. Further, NDAs signed by an employee of a company/organization cannot be used to conceal any criminal activity, and do not function as a barrier to reporting crimes to law enforcement.
Changing Tides
Despite being created to maintain the confidentiality of trade secrets, NDAs have a history of being used by organizations to cover up incriminating behaviour. In these cases, affected parties generally receive a financial settlement, on the condition that they sign an NDA, prohibiting their ability to discuss what led to the settlement. This practice has traditionally been associated with concealing allegations of harassment and sexual assault, as was the case involving Hockey Canada.
Critics have advocated for a ban on NDAs, arguing that they limit accountability for perpetrators, and discourage behavioral change. In 2023, Senator Marilou McPhedran tabled the Can’t Buy Silence Act, prohibiting federal agencies from using NDAs to silence victims of harassment, violence, or discrimination. As of July 2024, the Act has not yet come into force. In 2022, Prince Edward Island passed the Non-Disclosure Agreements Act, becoming the first province to pass legislation on the applicability of NDAs. The Act bans the use of NDAs for allegations of harassment and discrimination unless it is the express wish of the victim to enter one.
In February 2023, the Canadian Bar Association passed a resolution titled Principles to Prevent Misuse of Non-Disclosure Agreements in Cases of Abuse and Harassment. This resolution demonstrates the broad support of the legal community for the application of legislation like that in Prince Edward Island. Whether this motion of support from Canada’s legal community leads to national changes remains to be seen.
It is noteworthy that opinions among experts are not unanimous. Some argue that in instances of harassment or sexual misconduct, NDAs are often the leverage needed to reach a settlement. Without an NDA, the perpetrator has little motivation to compensate the victim. For victims, vindication via settlements is often preferable to the long, difficult, and public process of a criminal trial.
It appears that there is not an absolute consensus amongst Canadian legal scholars on the best path forward for NDAs. There is little doubt, however, that changes to the practice are looming.
About Kyle Paziuk
