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BC Courts Taking Jurisdiction Over Foreign Disputes

Posted in Mining
Nicholas HughesJessica Dorsey

For the second time in recent months, a British Columbian court has allowed a civil case to proceed against a resource company in British Columbia for wrongs allegedly committed outside of Canada.

On October 6, 2016, the British Columbia Supreme Court determined that a civil claim alleging human rights violations at an Eritrean mine could proceed to trial against a British Columbia mining company (see Araya v. Nevsun Resources Ltd., 2016 BCSC 1856: British Columbia Supreme Court refuses to strike civil claims alleging human rights violations at Eritrean mine).

On January 26, 2017, the British Columbia Court of Appeal determined that seven Guatemalan nationals who were allegedly shot while protesting at a mine in Guatemala can continue an action in British Columbia against a British Columbia mining company, Tahoe Resources Inc. (Garcia v. Tahoe Resources Inc., 2017 BCCA 39). In doing so, the Court of Appeal reversed the decision of the chambers’ judge, who had stayed the case on the basis that Guatemala was clearly the more appropriate forum for the action.

Garcia is significant, both for Canadian resource companies operating abroad and for foreign nationals alleging that Canadian parent companies are responsible for wrongs committed in the complainants’ home countries.

Background

The lawsuit arises out of a protest at Escobal mine in Southeast Guatemala, during which private security personnel employed at the mine are alleged to have shot seven Guatemalan protesters. Escobal mine is owned by a Guatemalan subsidiary of Tahoe.

A criminal proceeding was commenced in Guatemala against the security manager for assault, aggravated assault, and obstruction of justice. The seven injured protesters were joined to the criminal proceeding as civil complainants in order to seek compensation, as is permitted in Guatemala. The Guatemalan criminal proceeding, to which Tahoe is not a party, was suspended indefinitely on December 1, 2015, after the accused fled to Peru.

On June 18, 2014, the protestors commenced an action against Tahoe in British Columbia, seeking damages for (1) direct liability for battery, (2) vicarious liability for battery, and (3) negligence.

In a preliminary application, Tahoe argued that Guatemala was clearly the more appropriate forum for the action. The British Columbia Supreme Court agreed and stayed the proceedings. In doing so, the chambers judge noted that the alleged battery occurred in Guatemala, the evidence was predominantly located in Guatemala, and that Tahoe could be added as a party to the Guatemalan criminal proceeding or be sued civilly in Guatemala. The chambers judge also found that evidence of corruption in the Guatemalan criminal justice system was not relevant to the plaintiffs’ civil claims for “personal injury” and noted her reluctance to find that a foreign court is incapable of providing justice to its own citizens.

The Court of Appeal’s Decision

New Evidence

The Court of Appeal allowed the plaintiffs to adduce new evidence to show that the Guatemalan criminal proceedings had been adjourned indefinitely after the accused fled the country. The Court found that the existence of the Guatemalan criminal proceedings had been a significant factor in the lower court’s decision to grant a stay, and agreed with the plaintiffs that the new evidence was relevant to and could affect the outcome of the forum non conveniens analysis.

The plaintiffs also sought to admit new evidence to support their allegations of corruption in the Guatemalan judiciary. The Court of Appeal refused to admit this evidence on the basis that it was not qualitatively different from the evidence already before the chambers judge.

Criminal Proceeding in Guatemala

In light of the indefinite adjournment of the Guatemalan criminal proceeding, the Court of Appeal concluded that it could not be considered a clearly more appropriate forum to adjudicate the Appellants’ dispute as against Tahoe.

Stand-alone Civil Suit in Guatemala

The Court of Appeal concluded that a stand-alone civil suit in Guatemala was not a clearly more appropriate forum in which to judge the plaintiffs’ dispute. In doing so, the Court found that the chambers judge had made at least three errors.

First, the chambers judge did not adequately consider the difficulties the plaintiffs would face in bringing a civil suit against Tahoe in Guatemala. In particular, the Court noted the limited discovery procedures available in Guatemala and the fact that the plaintiffs would be required to petition courts in both Guatemala and British Columbia in order to require Tahoe to produce documents.

Second, the chambers judge erred in determining that the expiration of the limitation period in Guatemala would not bar the appellants from bringing a civil suit against Tahoe. The Court attached significant weight to this factor because it meant that the plaintiffs may not be able to pursue a civil action in Guatemala against Tahoe at all.

Third, the chambers judge erred in ignoring the context of the dispute and placing insufficient weight on the risk that the plaintiffs would not receive a fair trial in Guatemala.

Disposition

The Court of Appeal concluded that the chambers judged erred in determining that Guatemala was clearly the more appropriate forum and dismissed Tahoe’s application for a stay.

Implications

Garcia is yet another example of Canadian courts allowing claims to proceed in Canada against parent companies on the basis of allegations of wrongdoing committed outside of Canada by their foreign subsidiaries. It should be noted that this decision is a ruling on the preliminary question of whether the Court should take jurisdiction over the dispute and does not address the substantive question of whether the Canadian defendant has liability or responsibility for the alleged wrongs.