Ruling opens door to rights lawsuits
B.C. decision on where claims can be adjudicated
If a recent decision from the British Columbia Court of Appeal is any indication, Canadian multinationals are going to have a tough time keeping f oreigners f rom suing them in Canada for human rights violations committed abroad.
The B.C. decision is the third of a recent line of judgments that puts a big dent in the legal principle that claims should be adjudicated where they occur. It involved Tahoe Resources, a company registered in B. C. but based in Nevada. Tahoe’s activities in the province were limited to its record office and occasional annual general and board meetings. Its main business was conducted through a wholly owned Guatemalan subsidiary that operated a silver, gold, lead and zinc mine in Guatemala.
The plaintiffs were Guatemalans who had been protesting against the mine. They alleged that, in 2013, security guards fired on the crowd and injured seven protesters. The plaintiffs sued in B.C., claiming that Tahoe was responsible for the guards’ conduct.
The British Columbia Supreme Court stayed the case on the basis that it was more appropriate for the claim to proceed in Guatemala. The judge pointed out that B.C. had virtually no substantive connection to the claim: Tahoe carried on its business from Nevada; its operating officers lived in Nevada; the injuries occurred in Guatemala; the evidence was in Nevada and Guatemala; the plaintiffs’ evidence would all be given in Spanish; and a Guatemalan company operated the mine. He also pointed out that Guatemalan authorities had laid criminal charges against Tahoe’s security manager and that Guatemalan law allowed the plaintiffs to participate in that proceeding and seek compensation from the manager and other parties.
The plaintiffs appealed and won in the Court of Appeal.
The court took into consideration new evidence that the criminal proceedings were at a standstill because the manager had fled Guatemala and it was unclear whether a pure civil case could be brought there at all. The court also cited Guatemala’s inferior discovery procedures and — given the plaintiff ’s evidence of systemic corruption in Guatemala — the real risk that justice would not be done there.
“In determining the proper forum for a dispute, Garcia clarifies that courts may now take a more in- depth look at a foreign legal system before staying proceedings in Canada in favour of proceedings in a foreign jurisdiction,” write Matthew Good and Joshua Hutchinson in a bulletin for Blake, Cassels & Graydon LLP. “Garcia provides that a court may consider, among other things, limitation periods in the foreign jurisdiction, the scope of discovery procedures, and evidence of corruption in the foreign judicial system.”
The implications for businesses operating abroad are significant.
“The result in Tahoe demands heightened efforts to mitigate tension between local communities and host governments lest they come back to haunt the Canadian investor,” write Milos Barutciski and Josh Scheinert in a bulletin for Bennett Jones LLP. “Such efforts must demonstrate genuine understanding of the issues in question, and the expectations companies put upon themselves by claiming to adhere to certain standards of CSR. The Tahoe plaintiffs highlight that local communities may take a company’s representations concerning its commitments to human rights and other aspects of CSR seriously and at face value.”