In June, 2014, a Notice of Civil Claim was filed in the British
Columbia Supreme Court in the case of Adolfo Garcia v. Tahoe
Resources Inc. (“Garcia”). In
Garcia, the plaintiffs have sued a Canadian parent company
that conducts mining activities through a foreign subsidiary in
Guatemala. This is the first time this type of claim has been
bought in British Columbia. This claim parallels the claim brought
in Ontario in Choc v. Hudbay Minerals Inc.
(“Choc”). The courts in Ontario have
refused to strike the claim in Choc and it appears to be
heading to trial.
Historically, corporations have relied upon the separate legal
personality of subsidiary corporations to shield the parent
corporation from direct legal liability for the activities of the
subsidiary. Garcia and Choc are examples of
plaintiffs, usually backed by non-governmental organizations, using
traditional legal principles in an attempt attach liability
directly to the parent corporation for the activities of a foreign
subsidiary. Importantly, these claims have been brought in
Canadian, not foreign, courts. Accordingly, corporations conducting
activities abroad should take note of these types of claims
because, absent a strong judicial rebuke, the use of this
litigation strategy is likely to increase.
The plaintiffs in Garcia are seven Guatemalan
individuals. The pleadings allege that they were shot by security
personnel during a protest at mine owned by the subsidiary of the
defendant. The plaintiffs claim damages, saying that the
defendant, a Canadian parent corporation, is directly liable for
battery. Battery is a legal term for a claim for the intentional
use of force to the body of another person without consent.
Alternatively, the plaintiffs claim that the defendant is
vicariously liable for battery through its wholly owned Guatemalan
subsidiary or for the battery committed by the security personnel.
Finally, the plaintiffs claim that defendant was negligent in
failing to prevent the use of excessive force by its security
personnel. The plaintiffs also seek punitive damages.
Choc involves three actions that have been consolidated
into one claim before the courts in Ontario. There the
plaintiffs’ claims are based primarily on allegations that
the defendants has direct liability for negligence in failing to
prevent harms committed by mine security personnel. The plaintiffs
also allege that the defendant was vicariously liable for torts of
its subsidiary and its subsidiary’s employees. In July of
2013, the Superior Court of Ontario ruled that Choc
should proceed to trial and refused to strike the claim on either
legal or jurisdictional grounds.
Garcia and Choc are both examples of the use
of traditional and well known legal principles – battery,
negligence and vicarious liability – in an effort to have
claims against Canadian parent companies adjudicated in
Canada. The legal principles are not new but how they are
being used is novel. Canadian corporations doing business abroad
can expect the use of this legal strategy to increase. Ultimately,
the use of this strategy means that Canadian corporations ought to
be prepared to defend their activities and the activities of
their subsidiaries in Canadian courts.
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.
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