What is the case law on territorial sovereignty and international relations between Canada and the United States?

As I understand it, the defendants make their argument on the basis of choice of law principles as well as constitutional ones. This connection between territorial sovereignty and private international law should not be surprising — as stated by La Forest J. for the majority in Tolofson v. Jensen 1994 CanLII 44 (SCC), [1994] 3 S.C.R. 1022: The underlying postulate of public international law is that generally each state has jurisdiction to make and apply law within its territorial limit. Absent a breach of some overriding norm, other states as a matter of "comity" will ordinarily respect such actions and are hesitant to interfere with what another state chooses to do within those limits. . . . These are the realities that must be reflected and accommodated in private international law. [at 1047] The principle of comity also applies, of course, between provinces of Canada.