These FAQs address access to Canadian courts for foreigners who are harmed by the overseas operations of Canadian extractive companies.
The terms parent company, subsidiary, home state and host state appear frequently in these FAQs. A parent company owns another company. The latter is often called a subsidiary. Home state denotes the parent company’s country of origin. In most cases, it is the country where the company is incorporated, where it is headquartered and/or from which it exercises control over its operations. Host state refers to a country in which the parent company operates, often through a subsidiary. It is the country that “hosts” the parent company’s investments.
Individuals and communities can be adversely impacted by the overseas operations of Canadian mining, oil and gas companies in a variety of ways, several of which are identified here. Extractive projects may involve the forced relocation of local residents from their land. The evicted may suffer economic hardship, as well as the social and cultural impacts associated with community disruption or dissolution. The mismanagement of hazardous inputs or waste by-products can degrade land and water resources, with attendant impacts on health and livelihood. Moreover, opposition to extractive projects may be met with unwarranted violence resulting in death, injury and sexual assault.
Many Canadian extractive companies operate in countries where the judiciary is unable or unwilling to provide the victims of corporate abuse with access to justice. Local courts may lack the resources needed to effectively adjudicate claims. The judiciary may also lack the independence required to provide a fair hearing. Potential plaintiffs who are affected by Canadian companies may have no viable alternative if their claims are not adjudicated in Canada. Furthermore, transnational litigation is one way of ensuring that Canadian corporations are held to Canadian legal standards.
Eight cases involving allegations of corporate abuse related to the overseas operations of Canadian extractive companies have been launched in Canadian courts. To date, no foreign plaintiff has been successful in a claim against a Canadian company in Canada. However, at the time of writing, five cases involving foreign plaintiffs remain before the courts.
For more information about these cases, please consult our backgrounder on transnational lawsuits in Canada against extractive companies.
Foreign victims of corporate abuse face a variety of legal and financial challenges. First, a foreign plaintiff must establish that a Canadian court has the jurisdiction to hear their case. Jurisdiction refers to a court’s legal authority to adjudicate a matter. A plaintiff must establish that there is a substantial connection between the case and the province over which the court presides.
Although a court may have jurisdiction over a transnational matter, it may decline to exercise that jurisdiction. The legal principle of forum non conveniens allows a court to dismiss a claim if it determines that another court is better positioned to adjudicate the case. A corporate defendant that seeks the dismissal of a claim on this basis often argues that the host state is a more appropriate venue due to its proximity to the parties, witnesses and/or evidence.
A further challenge for foreign plaintiffs concerns the legal structure of multinational corporations. The ‘corporate veil’ is a legal construct that treats a parent company and its subsidiaries as separate entities, shielding the former from liability associated with the latter. However, the separation is often fictitious, as parent companies are commonly involved in the management and operations of their subsidiaries. Plaintiffs may argue that the veil does not apply. Alternatively, they may recognize the veil but seek to ‘lift’ or ‘pierce’ it in the circumstances in order to hold a parent company responsible for the wrongdoing of its subsidiary. However, courts have often been reticent to remove the veil.
Another approach is to hold the parent company directly responsible for events overseas. Rather than argue that the parent company is responsible for the actions of its subsidiaries, this approach seeks to hold the parent responsible for its own acts and omissions regarding overseas operations. This basis of liability is currently being tested in the four transnational cases that are before Canadian courts.
Transnational litigation is expensive. Although a plaintiff’s lawyers may work free of charge (pro bono) or on a contingency fee basis, cases routinely involve additional expenses related to travel and translation, the hiring of experts and the collection of evidence abroad.
Furthermore, it is typical for Canadian courts to order the losing party in civil litigation to pay at least a portion of the winning party’s legal fees and expenses. The procedure for determining the value of a costs award varies from province to province. In some provinces, plaintiffs can apply for a no cost ruling, by which the court waives the plaintiffs’ obligation to pay the other party’s costs. In other provinces, however, plaintiffs may be ordered to post security prior to a court ruling in anticipation of a potential costs award.
In addition to legal and financial challenges, transnational litigation involves significant logistical burdens, such as long-distance communication and travel.
A number of strategies can be pursued to improve access to Canadian courts by foreign victims. Efforts can be made to support potential plaintiffs and their lawyers to overcome the financial and logistical challenges associated with transnational litigation. Lawyers can bring forward compelling cases that set favourable legal precedents, making it easier for plaintiffs to obtain access to justice in Canada in the future. Finally, legislators can be encouraged to pass new legislation to address the legal challenges that impede access to the Canadian judicial system
Civil litigation deals with disputes between private parties. The cases that have been brought before Canadian courts involve grievances between private citizens: the individuals and associations that file the suits, and the companies that are named as defendants. In contrast, criminal law is the purview of the state. With very limited exception, only the state can lay criminal charges.
Canadian legislation allows for the prosecution of certain crimes that are committed by Canadians or Canadian companies overseas. In other words, Canada applies some provisions of the Criminal Codeextraterritorially. For example, amendments to Canadian criminal law in 2000 made it possible to prosecute those responsible for war crimes, crimes against humanity and genocide that take place overseas. Canadian legislation also includes provisions that permit the prosecution of Canadian citizens who bribe foreign public officials. There is a strong argument that these provisions could be applied to Canadian corporations as well as individuals. However, these provisions are very limited in scope and are enforced exclusively by the state.
The filing of a legal claim in Canada does not preclude the use of local judicial mechanisms. For example, criminal proceedings are underway in Guatemala regarding the events that form the basis of several civil suits against Hudbay Minerals and Tahoe Resources that are currently before Canadian courts.
When foreign plaintiffs launch a lawsuit in Canada, their Canadian legal team often works in close collaboration with lawyers in the host state, and with local and international civil society organizations. This collaboration increases opportunities for sharing resources, experience and expertise that may, in turn, help to strengthen the local rule of law.
Furthermore, transnational lawsuits can serve to draw international attention to the challenges that plaintiffs face in their local struggle for justice.
Transnational civil litigation seeks to compensate victims for any harm they have suffered and to deter corporate wrongdoing. These lawsuits can also empower victims by drawing national and international attention to their struggles and by generating important political and moral support.
Nonetheless, international litigation can create challenges for plaintiffs and their communities. Litigation can aggravate tensions between plaintiffs and company staff or third parties in the host state. Plaintiffs can face an increasingly hostile environment and incur additional risks to their personal safety. If their claims are unsuccessful, plaintiffs can also be burdened with the obligation of paying costs awards to corporate defendants.
While local and international civil society organizations, as well as plaintiffs’ legal teams, can take steps to try and mitigate these impacts, prospective plaintiffs must decide whether the potential benefits of transnational litigation outweigh the prospective costs.
Despite the growing number of allegations against Canadian extractive companies, it is unlikely that improved access to Canadian courts will result in a flood of new cases. As discussed above, the financial cost of transnational litigation is very high. There are also significant logistical challenges. Furthermore, civil lawsuits often take a very long time to litigate – upwards of a decade in some cases – and therefore require a significant time commitment on the part of plaintiffs and their legal teams. Moreover, transnational civil litigation is likely to have a deterrent effect on corporate wrongdoing, which should result in a decline in complaints.