By: Christina Hall and Kevin MacNeill
On July 22, 2013, the Ontario Superior Court of Justice ruled in Choc v. Hudbay Minerals Inc. that three separate lawsuits brought by indigenous Guatemalans against a Canadian mining company, Hudbay Minerals Inc. (“Hudbay”) and other defendants, can go forward in Canada.
The plaintiffs’ lawsuits allege that between 2007 and 2009, security personnel working for Hudbay’s subsidiaries – who were allegedly under the control and supervision of Hudbay, the parent company – committed various human rights abuses. These include the alleged gang rape of 11 Guatemalan women, the beating and shooting death of a respected Guatemalan indigenous leader who had been an outspoken critic of mining practices, and the shooting of another Guatemalan man in an unprovoked attack which left the man paralyzed. All of these abuses are alleged to have been committed by security personnel at Hudbay’s Fenix mining project, a proposed open-pit nickel mining operation located in eastern Guatemala. According to the pleadings in the lawsuit, Hudbay and the other the defendants asserted that they had a valid legal right to this land, while indigenous communities claimed that the Mayan Q’eqchi’ were the rightful owners of the lands, which they considered to be their ancestral homeland.
Following the filing of the lawsuits, the defendants moved to have them dismissed on the basis that they had no reasonable prospect of success.
A central issue on the motions was whether the lawsuits were doomed to fail because they were predicated on Hudbay’s owing the plaintiffs a “duty of care” in negligence law, which the defendants argued has no support in Canadian law. The plaintiffs responded by arguing that that the facts they had pleaded met the requirements for establishing a novel duty of care in law in accordance with the “Anns test” – a legal test established by the British House of Lords in 1978 and adopted by the Supreme Court of Canada in 1984.
Justice Brown of the Ontario Superior Court of Justice considered the parties’ arguments and determined that the plaintiffs had set out sufficient facts in their pleadings which, if proven at trial, could give rise to a novel duty of care. This, in turn, would require a determination by the court as to whether Hudbay had breached that duty of care and whether it owed compensation to the plaintiffs. Justice Brown therefore concluded that it was not plain and obvious that the plaintiffs’ claims had no reasonable prospect of success and ordered that the lawsuits go forward in the usual course. Furthermore, although Justice Brown acknowledged in her decision that the “Anns test” required an assessment of policy considerations, she confirmed that, “[a] court should be reluctant to dismiss a claim as disclosing no reasonable cause of action based on policy reasons at the motion stage before there is a record on which a court can analyze the strengths and weaknesses of the policy arguments”.
Justice Brown’s decision in this case will surely be noted by Canadian mining companies and other Canadian corporations that operate in foreign jurisdictions, given that it marks a departure from the traditional understanding that a parent company has no duty to ensure that the commercial activities of its subsidiaries in foreign countries are conducted in a manner designed to protect those people with whom the subsidiary interacts.
As the parties themselves noted in their arguments before Justice Brown, the implications of this case weigh heavy from a policy perspective. Those who wish to see greater corporate accountability for the overseas conduct of Canadian companies are welcoming Justice Brown’s decision as a positive first step. At the same time, the decision is being decried by others on the basis that it opens the door to Canadian companies with a foreign presence being exposed to a myriad of possibly meritless claims.
All of that said, the practical reality is that Justice Brown’s decision is procedural in nature – it does nothing more than permit the three lawsuits to move forward in the ordinary course towards a more fulsome determination on their merits. This will likely be a long way off, particularly if Hudbay chooses to appeal Justice Brown’s decision. However, no matter what direction these cases take as they move forward, there can be no doubt that many Canadian companies will be following them closely.
Choc v. Hudbay Minerals Inc.,  O.J. No. 3375