The increasing scrutiny and potential liability of Canadian
multinationals has received further media attention as a result of
a decision issued on July 22, 2013 by the Ontario Superior Court of
Justice. In her reasons in Choc v Hudbay Minerals Inc.,
2013 ONSC 1414, Madame Justice Carole J. Brown dismissed a
preliminary motion which sought to strike claims against Hudbay
Minerals Inc. ("Hudbay") and its subsidiaries.
The decision involved three related actions against Hudbay
brought by an indigenous Mayan Q'eqchi' group from
Guatemala. The claims all alleged that security personnel working
for Hudbay subsidiaries, who are allegedly under the control and
supervision of Hudbay, committed human rights abuses. The specific
allegations include shooting, killing and gang rapes allegedly
committed in the vicinity of a proposed open pit nickel mining
The defendants sought to strike all three consolidated actions
on a variety of grounds, including that there is no recognized duty
of care. Hudbay argued no duty is owed by a parent company to
ensure that the commercial activities carried on by its subsidiary
in a foreign country are conducted in a manner designed to protect
those people with whom the subsidiary interacts.
The plaintiffs opposed the motion in large part based on their
argument that Hudbay was directly liable for actions leading to the
alleged damages based on human rights abuses. In this regard, the
plaintiffs pointed to on-the-ground management of the relevant
project as well as management of relevant security personnel. It
was also noted that Hudbay made statements publicly that they were
committed to adhering to certain standards of conduct, including
adherence to Guatemalan international law and the Voluntary
Principles on Security and Human Rights.
Amnesty International Canada ("Amnesty") was granted
intervenor status in the proceedings and supported the plaintiffs
in opposing the motion to strike. Amnesty also referred other
international guidelines and standards relating to corporate
responsibility and human rights.
The Court's decision to dismiss the motion to strike has
been heralded by some as confirmation of an expansion of the scope
of liability of the activities of multinationals. On a close
reading of the decision, the exact implications of the ruling
remain to be seen. The Court noted that the test to strike a claim,
which must be based solely on a reading of the plaintiff's
pleadings as presented, is stringent. In the specific
circumstances, the Court noted that there are competing policy
considerations in recognizing a duty of care between a Canadian
company and individuals harmed by security personnel at its foreign
operations. While the approach to claiming negligence was described
as "novel", it does not therefore automatically mean that
such a claim will be clearly unsustainable or untenable.
There are many other issues referenced in the ruling, and the
specific outcome on the motion was based on a legal question which
only serves as a preliminary determination of how the case will
proceed. The actual merits of the allegations remain unproven.
The Hudbay decision does align with a recent trend, which is
that courts in Canada appear to be taking an expansive view of
their own jurisdiction in respect of events that take place outside
of our borders. Particular attention should therefore be paid to
cases where employees are working or employing contractors in other
jurisdictions, and company policies and relevant agreements should
be reviewed carefully as case law in this area evolves.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
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