Look to judges, not politicians for transnational corporate liability

Canadian media outlets and water coolers alike were abuzz recently about revelations that the prime minister’s office attempted to inhibit former attorney general Jody Wilson-Raybould from prosecuting Canadian mega-corporation SNC-Lavalin after the company had allegedly bribed public officials abroad.

Canadian media outlets and water coolers alike were abuzz recently about revelations that the prime minister’s office attempted to inhibit former attorney general Jody Wilson-Raybould from prosecuting Canadian mega-corporation SNC-Lavalin after the company had allegedly bribed public officials abroad.

Just this month, the Globe and Mail published an article about its investigation into how Export Development Canada, a Crown corporation, furnishes Canadian multinational companies operating in Latin America and Africa with substantial loans and then looks the other way when those companies are implicated in human rights and environmental violations.

Whether it be the perceived impetus to protect Canadian jobs or facilitate foreign investment, legislatures appear to be the bastions of corporate protection and thus the last place to look when attempting to impose accountability on Canadian multinationals alleged to have engaged in misconduct abroad.

Previous attempts to legislate transnational corporate accountability through private members’ bills have gained little traction. Bill C-300, introduced in 2010, proposed that the ministers of foreign affairs and international trade devise corporate accountability guidelines. Under that bill, Canadian multinationals would have been obliged to submit annuals reports illustrating their compliance with the proposed legislation. Bills C-323 and C-354 went even further than C-300 by proposing to amend the Federal Courts Act to permit foreign plaintiffs to commence tort proceedings when they allege harm committed by Canadian multinationals abroad. Suffice it to say that the Conservative government in power at the time the three bills were introduced, as well as today’s Liberal government, have shown little interest in passing those bills into law.

There is a dearth of legislative measures with the ability to impose liability on Canadian multinationals that commit violations abroad. But companies are, in essence, left to their own devices under domestic and international corporate social responsibility measures, which have made little headway in curbing how Canadian companies behave toward foreigners in the course of transnational commerce.

Last year, the Trudeau government replaced Canada’s CSR counsellor with the Canadian Ombudsperson for Responsible Enterprise, a position that was only filled this April. The CORE is “mandated to review allegations of human rights abuses arising from the operations of Canadian companies abroad” with the possibility that the EDC withdraw support if companies are found to be committing human rights violations. However, as the Globe’s recent investigation revealed, the EDC “has never debarred any firm, even briefly, at any point in its history — a conclusion EDC neither confirmed nor denied.”

Whether the CORE will have any tangible effect on the operation of Canadian multinationals operating abroad remains to be seen. What is clear is that neither the CORE (as the CSR counsellor before it) nor the EDC are endowed with powers to impose liability on Canadian multinationals such that individuals harmed abroad can be compensated.

Recognizing that legislatures are reticent to impose transnational corporate liability on wealthy and powerful Canadian multinationals that continue to operate with impunity abroad, where then do we look to advance the rights of foreigners (often from the least developed nations) who have been subjected to human rights violations committed by Canadian multinationals?

One avenue — and perhaps the only one, considering that legal systems in the developing world remain ill-equipped to handle transnational human rights cases — may be to advocate for the expansion of common law tort principles in Canada through novel judicial decisions. Rather than statutory provisions unlikely to emerge from the close ties between legislatures and multinationals, independent judges may be able to piece together existing tort principles and prevailing business norms in order to consistently consider transnational corporate liability.

Seminal test cases such as Araya v. Nevsun Resources Ltd., currently on reserve at the Supreme Court of Canada, and Choc v. Hudbay Minerals Inc., which allowed for the possibility for a corporate parent company to be liable for the actions of its foreign subsidiary, have pushed the boundaries such that transnational tort claims against Canadian multinationals have some possibility of succeeding.

Those wary of the ability of Canadian judges to push the envelope on transnational corporate liability should look no further than how corporate liability in mass tort claims have evolved at the domestic level. For instance, in both the pharmaceutical and tobacco industries, powerful corporations once considered virtually immune from liability for harm incurred by their customers are now fighting protracted legal battles in the courts. In March of this year, the Quebec Court of Appeal upheld a landmark decision ordering three tobacco companies to pay $15 billion in damages to a class of plaintiffs who had suffered health consequences from the companies’ products. Similar advances in domestic and transnational corporate liability as a result of mass harm are occurring in other developed countries, such as the United States and the United Kingdom.

Like other advancements in the common law of torts, do not expect the consideration of transnational corporate liability to proceed at lightning speed or even upon a consistent and progressive arc. Let’s not forget that it took many decades before a British court took seriously the question of “who, then, in law, is my neighbour?” But if lawyers and activists are confronted with ostensible options of where to invest their efforts when human rights violations are alleged to have been committed abroad by deep-pocketed corporate actors, they need only peruse recent history to conclude that they would be spinning their wheels with two out of the three branches of governments. As such, the time has arguably come to robe up and flood the courts with transnational tort claims. It’s either that or impunity.


Hassan M. Ahmad is a Toronto-based lawyer and doctoral candidate at the University of Toronto, Faculty of Law. His research focuses on transnational human rights claims against corporate actors. 

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