Canada: Is Parent Company Liable For Crimes Of Foreign Subsidiary?

Last Updated: November 21 2013
Article by Meredith James and Dianne Saxe

The Ontario Superior Court has dismissed Hudbay Minerals' motion to strike out the claims against it, and its subsidiary, for rapes and other human rights abuses allegedly committed in Guatemala. The Court concluded that the plaintiffs' claim, that the Canadian parent company is liable, in Canada, for the subsidiary's security personnel's crimes in Guatemala, will not necessarily fail at trial.

The decision dealt with three related actions, brought by members of the indigenous Mayan Q'eqchi' against the Canadian mining company, Hudbay, and its subsidiary CGN. CGN owned and operated the Fenix mining project in Guatemala, on land that the former dictatorship had seized from aboriginal communities and sold to foreign miners. The communities had returned to part of this land (see Choc v. Hudbay Minerals Inc., 2013 ONSC 1414).

In the Caal action, the plaintiffs assert that they were gang-raped by mining company security personnel, police and the military during their forced removal from their village. The removal was allegedly requested by the purchaser of the land, Skye Resources (since acquired by Hudbay). In the Choc action, the plaintiffs allege that Angelica Choc's husband, a respected indigenous leader and outspoken critic of mining practices, was beaten, shot, and killed by CGN's security personnel in the context of a land dispute. In the Chub action, the plaintiff alleges he was shot and left paralyzed in an unprovoked attack by security personnel employed at the mining project, again in the context of a land dispute.

Direct liability

In all three actions, the plaintiffs argued that a parent corporation can be liable in negligence for its own actions and omissions in another country. Hudbay, they said, was negligent in failing to prevent the harm that the security personnel committed. The Court concluded that the plaintiffs had pled all the material facts required to establish this novel duty of care – although it emphasized that these facts must still be proven at trial. Based on the facts as pled, the harm was a reasonably foreseeable consequence of the defendants' conduct and there was a sufficiently proximate relationship between Hudbay and the plaintiffs.

Hudbay's own statements that it was in discussions with local representatives, that it wanted to work with local stakeholders, that it was building trusting relationships with local communities, and that it was committed to promoting and respecting human rights, were an important factor in the finding of proximity. The court concluded (at para. 69):

Based on the plaintiffs' pleadings, there were numerous expectations and representations on the part of Hudbay/Skye and the plaintiffs. In particular, Hudbay/Skye made public representations concerning its relationship with local communities and its commitment to respecting human rights, which would have led to expectations on the part of the plaintiffs. There were also a number of interests engaged, such as Hudbay/Skye's interest in developing the Fenix project, which required a "relationship with the broader community, whose efficient functioning and support are critical to the long-term success of the company in Guatemala", according to Hudbay's president and CEO. The plaintiffs' interests were clearly engaged when, according to the pleadings, the defendants initiated a mining project near the plaintiffs and requested that they be forcibly evicted.

Both sides raised competing policy considerations in recognizing this novel duty of care. The Court decided not to dismiss the claim on a preliminary motion. In other words, it was not plain and obvious that policy reasons would prevent the courts from recognizing a duty of care.

Piercing the corporate veil

In the Choc action, the plaintiffs also claimed that the corporate veil should be pierced to impose liability on Hudbay for the torts of battery, wrongful imprisonment, and wrongful death committed by CGN's employees or agents.

In Ontario, the courts have recognized three circumstances in which separate legal personality can be disregarded and the corporate veil can be pierced:

  1. Where the corporation is "completely dominated and controlled and being used as a shield for fraudulent or improper conduct"
  2. Where the corporation has acted as the authorized agent of its controllers, corporate or human
  3. Where a statute or contract requires it.

The Court concluded that the plaintiff's had plead the required elements of the second exception to the rule of separate legal personality, at para. 49:

Whether or not this agency relationship is ultimately found to have existed at the relevant time, the allegation is not patently ridiculous or incapable of proof, and therefore must be taken to be true for the purposes of this motion. If the plaintiffs can prove at trial that CGN was Hudbay's agent at the relevant time, they may be able to lift the corporate veil and hold Hudbay liable. Therefore, the claim based on piercing the corporate veil in the Choc action should be allowed to proceed to trial.

Door is open for a new duty of care

The plaintiffs successfully argued that Canadian companies may owe a duty of care to individuals harmed by security personnel at its foreign operations when there is direct control by the Canadian parent (at para.73):

  •  recognizing a duty would support efforts taken by the federal government by encouraging Canadian companies to meet the "high standards of corporate social responsibility" that are currently expected by the Canadian government;
  • recognizing a duty would support the government's stated goal of reducing risks of excessive force or human rights abuse related to the deployment of private security at Canadian enterprises abroad; and
  •  tort law should be evolving to accord with globalization, and local communities should not have to suffer without redress when adversely impacted by the business activity of a Canadian corporation operating in their country. In the words of former Justice Ian Binnie, "Ordinary tort doctrine would call for the losses to be allocated to the ultimate cost of the products and borne by the consumers who benefit from them, not disproportionately by the farmers and peasants of the Third World."

Voluntary initiatives, such as the Voluntary Principles on Security and Human Rights may also be helping to establish a benchmark of diligent conduct by overseas subsidiaries.

If the plaintiffs ultimately succeed, this case could create a precedent for holding Canadian parents liable for overseas environmental damage as well.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Meredith James
Dianne Saxe
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.