The first step towards corporate accountability for actions abroad?

The first step towards corporate accountability for actions abroad?
There is no doubt as a resource-based economy, Canada has developed an impressive and robust extractive industry sector some would argue is part of our “national security interests.” While this sector brings important gains to the Canadian economy, oil, gas, and mining activities are increasingly taking place in remote areas that have a detrimental effect on local, often indigenous, populations.

Increasingly, Canadian extractive companies and their subsidiaries have been the subject of allegations of human rights violations associated with their overseas activities, particularly when operating in developing countries. For years, liability before Canadian courts has been avoided. However, the recent decision of the Ontario Superior Court in Choc v. Hudbay Minerals Inc. may be the first step towards recognition that Canadian companies should be accountable for their behaviour outside Canada.

Under international human rights law, states have international legal duties to protect the human rights of individuals within their territory and subject to their jurisdiction. However, for a range of reasons host states may be unable or unwilling to regulate the conduct of foreign business actors, even where not doing so violates their international obligations to protect human rights.

A report commissioned by the Prospectors and Developers Association of Canada and publicly leaked in 2010 found that of 171 high-profile incidents involving mining companies since 1999, 34 per cent of companies implicated in such incidents were Canadian. These incidents included environmental and human rights abuses, and conflict with local communities.

Canadians were found to be involved in four times as many incidents as Australian and British companies, both very active in the sector. The report noted some of these high numbers were likely due to the fact 75 per cent of the world’s largest mining exploration and development companies are Canadian.

In an interview, Penelope Simons, an expert in transnational corporate accountability, described the accountability problem as follows:

“International human rights law does not impose obligations on home states, such as Canada, to regulate transnational corporate activity. There are also few effective domestic legal mechanisms that can be used to challenge, monitor, or sanction corporate conduct in order to ensure that Canadian investment abroad does not contribute to, or profit from, violations of human rights. The voluntary self-regulatory mechanisms that have been developed so far have failed to ensure that transnational corporate actors do not violate or contribute to violations of human rights in the host states in which they operate.”

She continued: “The handful of civil suits brought in Canadian courts against Canadian companies for alleged violations of human rights or severe environmental damage in other states have been dismissed on jurisdictional and other grounds and have not proceeded to trial. However, the Choc v. HudBay cases should put Canadian extractive companies operating in other states on notice, particularly those companies operating in weak governance zones.”

The Hudbay proceedings involve three related claims. The plaintiffs, indigenous Mayan Q’echi, allege the security personnel employed by Hudbay’s subsidiary in Guatemala committed egregious violations of their human rights including shooting, killing, and gang rape.

Simons said: “There are two interesting points about this case. First, the defendant company dropped its argument of forum non conveniens (that Guatemala was a more appropriate forum to hear this case) after spending a considerable amount of time and money developing arguments and cross-examining the plaintiffs.”

Simons and Audrey Macklin, who are about to release their book The Governance Gap: Extractive Industries, Human Rights, and the Home State Advantage,  have noted other cases brought in Canada such as the Cambior case (alleging egregious environmental damage in Guyana due to the rupture of a gold mine’s effluent treatment plant) and B’iln v. Green Park (alleging corporate complicity in acts of the Israeli state in the Occupied West Bank, which violated rules of international humanitarian law and international criminal law) “were dismissed on this basis.”

Instead, in Hudbay, the company brought a motion to strike all three claims on the basis, inter alia, that the plaintiffs had failed to disclose a reasonable cause of action in negligence.

As Simons pointed out: “[T]he main argument put forward by the plaintiffs was that the parent company, HudBay, was directly responsible through its acts and omissions for the actions that led to the human rights abuses allegedly committed by the security personnel in Guatemala.”

She concluded: “The court found the plaintiffs had met the threshold of establishing a prima facie duty of care under the Anns test and that, at this stage in the proceedings, there were no clear policy reasons for not recognizing or for restricting such a duty of care. This is the first case of this type in Canada to move beyond the pleadings stage and proceed to trial. Canadian extractive companies should therefore now be mindful of their potential liability in tort in Canada when operating in other countries.”

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