During a three-day hearing last month, Tahoe Resources Inc. asked the Supreme Court of British Columbia to dismiss a civil lawsuit launched by plaintiffs in Guatemala on the basis Canadian courts don’t have jurisdiction. The company says the claims should be heard by Guatemalan courts, not in B.C.
It’s just the latest Canadian company to face legal action for activities involving its entities outside Canada. The case is similar to one involving Hudbay Minerals. In the Hudbay case it wasn’t a pure jurisdiction argument as the company is firmly based in Ontario, but it did challenge the claim. At the 11th hour it decided not to proceed on forum non conveniens grounds. However, in August 2013 Ontario Superior Court Justice Carole Brown ordered the lawsuits to proceed in Ontario.
“In our case, Tahoe wanted to challenge jurisdiction. They knew Hudbay had abandoned it but in their case felt they needed to pursue it,” says Karen Carteri, the lawyer for Tahoe Resources and partner with McMillan LLP in Vancouver.
In the Tahoe case, seven Guatemalan nationals are seeking damages for injuries allegedly suffered in an incident in Guatemala on April 27, 2013. The lawsuit originates as a result of alleged actions by security guards who were trying to disperse protesters who had gathered outside the company’s Escobal Mine. The protesters were hurt by a spray of rubber bullets and allege shotguns, pepper spray, and buckshot were also used.
The Escobal Mine is the third-largest silver mine in the world.
“The Hudbay case became focused on the cause of action,” says Carteri. “We may or may not focus on that if the claim remains here. We may have different grounds to bring a similar application that Hudbay brought but that would come after the jurisdictional challenge.”
This is the first case where jurisdiction of the Canadian court is being challenged and the court has heard the application.
Carteri says her submission was based on existing Canadian law on the issue of whether courts should accept or decline jurisdiction.
“In this case the court has jurisdiction simpliciter but we said the court should decline that jurisdiction,” says Carteri.
The court has jurisdiction simpliciter because Tahoe is a registered company in B.C., but Carteri says that’s the only thing that connects it to the province. It doesn’t do business in B.C. and while listed on the TSX, it doesn’t have a business office in Canada. Its head office is in Reno, Nev. It does have three directors who live in Canada.
Carteri insists Tahoe has “very limited connecting factors” to B.C. More importantly, the subsidiary that operates the mine — Minera San Rafael — is a separate entity that employs workers and holds the contracts with the security guards involved in the case.
“We think our evidence demonstrates the Guatemalan entity is a real operation with 800 employees and a general manager — all separate from the Tahoe operation in Reno,” she says.
While some operations are carried out from the Reno office, lawyers for the plaintiffs argue Tahoe’s annual general meetings happen in Vancouver and “pretty much every aspect of its corporate being is defined by Canadian law.”
“Our main approach was that these companies, Tahoe in particular, claim to have corporate social responsibility policy that makes it the responsibility of the board of directors to oversee the impact in Guatemala of company operations, both on the environment and on humans. That board committee is centred in Canada,” says Joe Fiorante of Camp Fiorante Matthews Mogerman.
Fiorante says the contest is between B.C. and Guatemala as the appropriate court. (Tahoe did not ask the court to dismiss the case to Nevada.) He says it’s about modern international business at work.
“The other point is the people in the Nevada office are officers of the British Columbia company. This is just part of the modern business; you’re incorporated someplace, you raise your capital there, you conduct corporate business there, but your officers don’t need to be physically present in Vancouver all of the time,” he says.
Carteri says it doesn’t mean all cases involving Canadian companies and their operations abroad shouldn’t be heard here.
“If the court says this case should be heard in Guatemala, we will have succeeded but . . . I don’t think it means these cases shouldn’t be brought in Canada. What I think it means is if you bring it in Canada don’t assume the court will take jurisdiction just because it’s this kind of claim. The court will still consider declining jurisdiction, if the other forum is a more appropriate forum for determining the disputes,” says Carteri.
Nevsun Resources, also of Vancouver, is also facing a lawsuit in a B.C. court by three workers from the African country of Eritrea who allege human rights violations. The action was filed November 2014. Nevsun denies the allegations. It has a 60 per cent ownership in the copper and gold mining operation.
As with Hudbay, the plaintiffs with Tahoe and Nevsun say they have filed in Canada because it offers the better opportunity to have their cases heard. Camp Fiorante is also representing plaintiffs in Nevsun.
It’s not just the mining sector that is being targeted in these kinds of actions. Earlier this month, a class action was launched against Loblaw’s Joe Fresh clothing maker for $2 billion for its alleged responsibility in the garment factory collapse in Bangladesh.
Meanwhile, lawyers for the Hudbay case are in the “nitty gritty” of their litigation.
“We are negotiating discovery plans,” says Cory Wanless, a lawyer with Klippensteins Barristers & Solicitors. “It’s quite important for our clients and quite contentious. We want much broader discovery. We are going to court on that issue probably at the end of June.”
Wanless says since the Hudbay case, the risk of Canadian companies being brought into Canadian courts has increased and inspired others to bring cases forward.
“Back when we first spoke about this case with our clients, one of the hopes was that not only would they be able to fight for justice in their case and achieve justice, but they would be paving the way for other communities similarly affected,” says Wanless.
“The next while will be key for corporate accountability in Canada. The Tahoe case is important, although even if not successful it won’t be the final word on these cases.”