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Open for Litigation: Will Latin-American Plaintiffs Strike Gold in Canadian Courts?

By: Victoria L. Henderson - @vlhenderson - Jan 13, 2014, 8:47 am

Resource extraction defines much of Canada’s engagement with Latin America.

Canadian firms are responsible for an estimated 200 active mining projects in the region, with as many as 1,000 additional projects proposed or under development.

So formidable is the national extractive industry that Canada’s public broadcaster refers to Canadian mining companies as “the new conquistadors” — a rhetorical nod to anti-mining activists who argue the industry is rife with human and environmental abuses that tarnish Canada’s international reputation.

Analysts suggest legal claims over Canadian mining projects may be the next big export from Latin America to Canada. Source: CBC.

According to an investigative research group at McGill University in Montreal, Canadian mining firms are complicit in more than 80 unresolved conflicts in the Americas, including disputes over land tenure, human rights, and the environment. Until recently, attempts to address these conflicts have been overwhelmingly ad hoc and, in the view of critics, decidedly unsatisfactory.

Now, two separate but simultaneous moves — one judicial, the other legislative — are poised to put Canadian mining companies, and other multinational firms, in the crosshairs by making it easier for foreigners to launch legal action in Canada.

The Push for Expansive Jurisdiction

Whether or not a claim by foreign plaintiffs should be heard in Canada is at the discretion of the courts. Historically, forum non conveniens — the discretionary power of the court to decline jurisdiction — has worked to the favor of corporate defendants, allowing claims to be redirected to another forum (usually the home state of the plaintiff).

Anti-mining protest in Vancouver (2011).
Source: David P. Ball.

However, legal experts argue that the grounds for exercising forum non conveniens in Canada have shifted as a result of recent judgments finding plaintiffs must have access not only to an alternate but also to a superior forum in order for the court to rightfully decline jurisdiction.

Attorneys George Waggott and Darrell Podowski point to last year’s landmark ruling by the Ontario Superior Court of Justice that allowed 13 Guatemalans to bring three lawsuits against Toronto-based HudBay Minerals Inc. to Canadian courts. This “align[s] with a recent trend,” they write, “which is that courts in Canada appear to be taking an expansive view of their own jurisdiction in respect [to] events that take place outside of our borders.”

Indeed, this helps to explain why the Washington-based law firm Patton Boggs turned to Ontario courts on behalf of 48 Ecuadorians, most from indigenous tribes in the Amazon, in its bid to enforce a multi-billion-dollar ruling levied against Chevron in Ecuador.

The Ecuadorian plaintiffs won on appeal to have the case heard in Canada — opening a new chapter in a legal saga that began in 1993 with a class-action suit filed in US courts against Texaco. Chevron purchased Texaco in 2000 and later successfully argued to have the case relocated to Ecuador on the grounds of forum non conveniens.

Like Chevron, and following the strategy of other national mining companies facing claims by foreign plaintiffs in Canadian courts, HudBay initially sought to have the cases relocated to Guatemala. At the eleventh hour, however, the company changed course, agreeing to Canadian jurisdiction.

Anti-mining activists interpreted HudBay’s decision as a victory. For its part, the company said it simply wanted to avoid the excessive time and travel that would be needed to defend the cases in Guatemala.

But in the run up to HudBay’s decision, Canadian lawyers were already speculating that a motion to move the litigation to Guatemala would be rejected.

Instead of appealing to forum non conveniens, HudBay argued that the lawsuits filed by the Guatemalan plaintiffs stood no reasonable chance of success and should, therefore, be dismissed. The suits are predicated on the argument that HudBay owes a “duty of care” to the plaintiffs, whose grievances arise from the alleged violent actions of HudBay’s subsidiary in Guatemala.

Since Canadian law has not traditionally recognized the duty of care provision for corporate subsidiaries, the judge’s ruling to proceed with the cases has prompted a flurry of cautionary legal briefs (here, here, here, and here), with lawyers drawing parallels to the Chevron case.

The Push for Presumptive Jurisdiction

Alongside what legal experts say is the increasingly expansive self-assessment of the jurisdiction of Canadian courts, new legislative efforts seek to make Canada the presumptive jurisdiction for foreign plaintiffs with legal claims against multinational corporations.

Activists say the Canada needs to hold mining companies accountable for foreign activities. Source: Toronto Media Coop.

Introduced in 2011, Bill C-323 seeks to amend Canada’s Federal Courts Act in order to make it easier for foreign plaintiffs to access Canadian courts. According to the bill’s sponsor, Peter Julian (NDP-BC), the bill would “allow lawsuits in Canada for a host of universal human rights violations, such as genocide and torture, as well as activities that significantly destroy the environment or violate key international labour rights.”

While the gesture to genocide and torture suggest that Bill C-323 is intended to cover self-evidently egregious cases, the bill actually sets out a broader and much vaguer basis for claims, including “transboundary pollution”; “the failure of a person or government agency with direct knowledge of an impending environmental emergency to immediately and adequately [sound the alarm]”; and any form of “degrading” treatment, which, according to a petition released by Julian to lobby support, includes any form of “emotional distress.”

According to Julian, Bill C-323 “mirrors” the US Alien Tort Statute (ATS, also known as the Alien Tort Claims Act). But as Canadian critics of the bill explain, this is false. Bill C-323 begins with the presumption of corporate liability. The ATS, which has been repeatedly interpreted as disallowing tort actions against corporations, holds no such presumption.

Sadly, such details are wanting in debates over the bill.

The anti-mining lobby, not least in academia, has had considerable success in Canada. That is undoubtedly why the plaintiffs in the HudBay case recently opted for a jury trial, and why Vancouver-based Goldcorp recently received a litigation threat from a Canadian law firm claiming to represent communal landowners involved in an ongoing dispute over Goldcorp’s largest project in Mexico.

The Court of Law versus the Court of Public Opinion

Mining industry analysts say the vagaries of Bill C-323 would subject Canadian mining companies to frivolous litigation, putting them at a competitive disadvantage and perhaps even prompting them to relocate. This argument is unlikely to sway the anti-mining lobby; but it is in the interest of mining-affected communities to give it further consideration.

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Experts say litigation is inefficient and ineffective tool for advancing human rights. Source: E-Consulta.

Selectively reducing the competitiveness of Canadian firms would give a clear edge to industry rivals. In Latin America, that advantage would fall to Chinese firms, whose record on socio-environmental policy is certainly no better — and is arguably (see here and here) significantly worse — than Canadian firms.

Activists argue that Bill C-323 is necessary to ensure corporations do not “escape punishment” by appealing to forum non conveniens. Yet, as the Chevron case reveals, forum non conveniens can result in rulings favorable to foreign plaintiffs. To suggest that Bill C-323 is self-evidently preferable for plaintiffs because it mirrors the Alien Tort Statute is also misleading, since the ATS has never produced a ruling against a corporate defendant similar to the one levied against Chevron in Ecuador.

The irony of the fact that Chevron appealed to forum non conveniens to send the case to Ecuador is not lost on scholars who argue that presumptive claims about the inadequacy of foreign courts are paternalistic and may put downward pressure on attempts to improve the rule of law abroad. That includes undermining innovative efforts toward law and governance entrepreneurship and stronger property rights for indigenous communities.

Equally ironic is the fact that anti-mining activists tend to frame civil litigation as a counterpoint to corporate impunity, overlooking the fact that big law is big business. Patton Boggs, the US firm representing the plaintiffs in the Chevron case, earned US$45.8 million in lobbying fees in 2012. At least one of the firm’s partners is known for having defending corporations in suits involving Agent Orange and asbestos.

Litigation may help to raise the profile of activists and lawyers, but experts in corporate social responsibility say litigation is a “profoundly inefficient and ineffective tool” for advancing human rights policies and practices, and at least some legal scholars seem to agree.

If this is correct, it calls Canada’s looming litigation rush into question — not because it is a risk for corporations but because it appears an inappropriate means to the ends being sought. Then again, maybe it is worth clarifying what these ends actually are: specifically, whether the objective is to secure a forum that favors one party over the other, or whether it is to secure a forum in which justice is best served.

The answer demands that we distinguish between the court of public opinion and the court of law.

Victoria L. Henderson Victoria L. Henderson

A former print journalist and magazine editor, Henderson is a PhD Candidate (ABD) at Queen’s University and a director at the Institute for Social and Economic Analysis in Ontario, Canada. She holds degrees in Spanish & Latin American Studies and Geography. Follow @vlhenderson, and read more of her featured PanAm Post column, "The Northern Passage."