Any Canadian resource company with operations abroad should be
aware of the emerging trend of lawsuits against Canadian mining
companies seeking damages for the alleged actions of their foreign
subsidiaries. Traditionally, such suits have been prevented by the
"corporate veil" that insulates a parent company from
liability for the actions of its subsidiaries. These latest
lawsuits attempt to get around this hurdle by focusing on the
Canadian companies public statements regarding their commitment to
corporate social responsibility.
The first of these cases in Canada originated in Ontario, with
Choc v. Hudbay Minerals Inc. The plaintiffs, indigenous
Mayans from Guatemala, sought damages against Hudbay and its
subsidiaries for alleged human rights abuses by security personnel
at the Guatemalan mine site. Hudbay sought to have the claims
summarily dismissed on the ground that it was "plain and
obvious" that they disclosed no cause of action. However, in a
July 2013 ruling, the Ontario Superior Court
of Justice allowed the claims to proceed.
Likely inspired by the Ontario court's willingness to
recognize that such claims at least deserve a day in court, two
similar actions have now been filed in British Columbia. The first,
Garcia v. Tahoe ResourcesInc., which also
concerns the actions of mine security personnel in Guatemala, was
filed in British Columbia in June 2014 and seeks damages for
the alleged shooting of protestors. The second, Araya v.
NevsunResources Ltd. (filed on November 20, 2014),
concerns wide-ranging accusations of use of forced labour, torture,
slavery and other human rights abuses at a mine in Eritrea.
As mentioned briefly above, the legal theory advanced in these
cases is novel. Rather than seeking to have courts "lift the
corporate veil" to hold the parent companies liable for their
subsidiaries actions, the plaintiffs instead allege that the
companies are directlyliable on traditional tort grounds,
such as negligence, battery, and conversion. In order to make a
direct link to the Canadian companies, the plaintiffs point to
public statements by the companies committing to oversight and the
maintenance of certain standards at the mine sites, as well as the
companies' adoption of various international standards, such as
the 2006 IFC standards on social and environmental performance and
the Voluntary Principles on Security and Human Rights.
It must be stressed that these claims have yet to be accepted by
a Canadian court. However, in the absence of a definitive ruling
precluding such claims – which is unlikely for years, if ever
– increasing numbers of similar actions are to be
Accordingly, Canadian companies operating through foreign
subsidiaries would be well advised to review their corporate social
responsibility commitments and ensure that their actions mesh with
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