Transnational Lawsuits in Canada Against Extractive Companies: Developments in Civil Lititation [Brief – Above Ground]

Source: AboveGround

Published February 17, 2016; last updated May 31, 2018

INTRODUCTION

Eight claims containing allegations of environmental or human rights abuse related to the overseas operations of Canadian extractive companies have been filed in Canadian courts. To date, no foreign plaintiff has been successful in a claim against a Canadian company in Canada. However, five cases involving foreign plaintiffs are before the courts. Two of these, Garcia v. Tahoe Resources and Araya v. Nevsun Resources Ltd., were filed in 2014. Three others, which were filed in 2010/11, involve the defendant Hudbay Minerals.

In addition to the claims described above, Ecuadorian plaintiffs filed an action in Canada in 2012 that seeks to enforce an Ecuadorian judgment against a US extractive company. Both the US company and its Canadian subsidiary were named as defendants in the Canadian suit.

Transnational suits face a number of legal challenges. First, foreign plaintiffs must establish that a Canadian court has the jurisdiction to hear their case. Jurisdiction refers to a court’s legal authority to adjudicate a matter. A plaintiff must establish that there is a substantial connection between the case and the province or territory over which the court presides.[1] The same is true for cases brought before the federal court.

Although a court may have jurisdiction over a transnational matter, it may decline to exercise that jurisdiction. The legal principle of forum non conveniens allows a court to dismiss a claim if it determines that another court is better positioned to adjudicate the case. A corporate defendant that seeks the dismissal of a claim on this basis may argue that the host state is a more appropriate venue due to its proximity to the parties, witnesses and/or evidence. The burden is on the plaintiffs to prove, on the contrary, that a foreign court is unable to provide them with a fair trial.

A further challenge for foreign plaintiffs concerns the legal structure of multinational
corporations. The ‘corporate veil’ is a legal construct that treats a parent company and its subsidiaries as separate entities, shielding the former from liability associated with the latter. The separation is often fictitious, as parent companies are commonly involved in the management and operations of their subsidiaries. In order to hold a parent company responsible for the wrongdoing of its subsidiary, plaintiffs may argue that the veil does not apply. Alternatively, they may recognize the veil but seek to ‘lift’ or ‘pierce’ it in the circumstances. However, courts have often been reticent to remove the veil. Another approach is to seek to hold the parent company directly responsible for events overseas. Rather than argue that the parent company is responsible for the actions of its subsidiaries, this approach seeks to hold the parent responsible for its own acts and omissions regarding overseas operations. This basis of liability is currently being tested in the five transnational cases that are before Canadian courts.

Footnote:

[1] In Canadian common law jurisdictions (all but Quebec), the fact that a defendant company is registered or operates an establishment in the jurisdiction is sufficient to establish a substantial connection.

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Read the the whole brief here.

This entry was posted in Copper Mesa (Ascendant Copper), Corporate Impunity, Nevsun Resources, Oh, Canada: Canadian policy, Tahoe Resources and tagged , , . Bookmark the permalink.

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