Further to our
January 26, 2015 post about recent attempts to hold Canadian
parent companies liable for the actions of their foreign
subsidiaries, last week the British Columbia Supreme Court declined
jurisdiction to hear one such case brought against Tahoe Resources
Inc. ("Tahoe") by a group of Guatemalan citizens. The
court concluded that Guatemala was the clearly more appropriate
forum for the action.
As readers may recall, the facts in Garcia v. Tahoe Resources
Inc., 2015 BCSC 2045, concerned the actions of mine security
personnel at the Escobal mine in Guatemala. The mine is owned by
two subsidiaries of Tahoe. In April 2013, the mine was the site of
protests, which were forcibly broken up by mine security personnel.
The plaintiffs were all participants in those protests who alleged
that they had been shot or otherwise injured in the incident.
What made the lawsuit interesting from a legal perspective was
the novel way the plaintiffs attempted to link Tahoe to the abuses
that were alleged to have been committed. Rather than seeking to
have courts "lift the corporate veil" to hold Tahoe
liable for its subsidiaries' actions, the plaintiffs instead
alleged that Tahoe was directly liable on the traditional tort
grounds of negligence and battery. In order to make a direct link
to Tahoe, the plaintiffs pointed to Tahoe's adoption of various
international human rights and social responsibility standards. The
plaintiffs alleged that these commitments represented
acknowledgement by Tahoe that they retained ultimate control over
and had responsibility for operations, particularly security
The plaintiffs' notice of civil claim was filed in
Vancouver. Tahoe responded with a forum challenge recognizing that
the court had jurisdiction to hear the case because Tahoe was
registered in British Columbia, but arguing that the action should
be heard in Guatemala. In order to succeed with its application,
Tahoe had to convince the court that Guatemala was the
"clearly more appropriate" forum.
The plaintiffs' main argument in support of having the
action heard in British Columbia was that they could not be assured
a fair and impartial trial in Guatemala, as a result of what they
characterized as "serious systemic barriers to justice"
in the Guatemalan legal system.
The court rejected this argument, concluding that while
Guatemala's legal system "may be imperfect, it functions
in a meaningful way". The court also held that Canadian courts
must proceed extremely cautiously in finding that a foreign court
is incapable of providing justice to its own citizens.
Further, the court found that consideration of the comparative
expense and convenience for the parties and their witnesses weighed
heavily in favour of Guatemala as the forum for the plaintiffs'
action for two reasons. First, many of the witnesses and all of the
plaintiffs only spoke Spanish and most if not all of the records
required to assess the plaintiffs' claims for damages were in
Spanish. Obtaining and translating all of this evidence would be a
significant challenge if the case as heard in British Columbia.
Second, while Tahoe was registered in British Columbia, it did not
carry on its operations here. The majority of its personnel and
documents were located in Reno, Nevada.
Accordingly, the court declined to take jurisdiction and granted
Tahoe's application for a stay.
The full reasons for judgment can be found here. It is not yet known whether the
plaintiffs intend to appeal.
While a setback for the plaintiffs, the decision was made solely
on jurisdictional grounds and did not consider the merits of the
case. As a result, the question of whether corporate social
responsibility commitments are enough to ground liability for
Canadian parent companies remains to be answered in future
In situations where management of the Canadian parent is
actually conducted from Canada, it will be significantly harder to
convince a court that a foreign jurisdiction is the "clearly
more appropriate" forum for the dispute.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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