CHAPTER 10 EMERGING LIABILITY AT HOME FOR ALLEGED WRONGS ABROAD: THE EVOLVING PHENOMENON OF TRANSNATIONAL TORTSd1

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
(Apr 2015)
CHAPTER 10
EMERGING LIABILITY AT HOME FOR ALLEGED WRONGS ABROAD: THE EVOLVING PHENOMENON OF TRANSNATIONAL TORTS¹
H. Scott Fairley ^*
Anastasija Sumakova ^**
Partner
WeirFoulds
Toronto

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H. SCOTT FAIRLEY is a Partner at WeirFoulds LLP in Toronto. He is a litigation practitioner and strategic adviser with particular interest and experience in the fields of public and private international law and international trade, constitutional and administrative law, insolvency, and trade-mark litigation and commercial arbitration. Scott has appeared before both Ontario and Canadian Federal Courts, and has extensive experience as counsel in the Supreme Court of Canada. He has also acted as counsel, advisor to U.S. counsel, and expert witness in the U.S. Federal Courts. He has served as a sole arbitrator appointed by the Canadian Transportation Agency on several occasions for complex commercial disputes. Scott has been frequently retained by other law firms as either co-counsel or as a strategic adviser and opinions counsel, such that a significant portion of his practice is in the role of a "lawyer's lawyer." He holds an AV rating by Martindale-Hubbell, their highest, identifying him as a lawyer with "very high to preeminent legal ability." Scott is a Fellow of the Chartered Institute of Arbitrators (F.C.I. Arb.), 1999, and holds degrees from Harvard University: S.J.D., 1987; New York University: LL.M. (International Legal Studies), 1979; and Queen's University: LL.B., 1977; B.A. (1st class), 1974. He is also a biographee of Canadian Who's Who (2005-), a Fellow of the American Bar Foundation (2011-), and an Executive Member of the Canadian Branch of the International Commission of Jurists (2014-). Scott is a past President of the Canadian Council on International Law (1992-1994), former National Section Chair for Constitutional Law (1991-1993), and National Section Chair for International Law (1998-2000) of the Canadian Bar Association, and is a founding editor of the Canadian International Lawyer. He has spoken and published widely in Canada and abroad on public international law, transnational litigation, administrative and constitutional law issues and has also taught those subjects at the University of Windsor and University of Ottawa law schools and at Osgoode Hall Law School. He is a member of the Ontario Bar Association, International Law Section; and has served as the American Bar Association Section of International Law, Co-Chair (2006-2008) and Senior Adviser (2010-), Canada Committee, Vice-Chair, International Litigation.

Introduction

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The relationships between international project development, corporate social responsibility, civil society, investor-state and host-state responsibility, and legal accountability both globally as a matter of international law as well as within national legal systems are rapidly developing, overlapping and intertwined: nowhere so more than in the extractive industries which provide the raison d'îetre of this forum. Arising out of these increasingly ubiquitous forces, Western corporate actors of various sizes and jurisdictional presence the juniors, the developers and the major multinational producers -- have emerged as defendants of choice in relation to transnational wrongs alleged by or on behalf of foreign plaintiffs in developing countries. They come from afar to Western jurisdictions connected remotely, if at all, to the subject matter of the complaint, but more intimately with parent companies and their attendant assets. The relatively new phenomenon of the transnational torts case typically displays at once the dimensions of an international human rights case, a domestic negligence case and what might also be characterized in some fact situations as the civil liability side of an international criminal case. As such, they impose significant challenges on litigants, their counsel and the courts.

Such claims have fueled massive - and massively expensive -- litigation for extractive industries, among others, primarily - if not exclusively - under the historically neglected, latterly attractive and now potentially restrictive jurisdictional theory provided by the Alien Tort Statute ("ATS") in the United States. Since 1789, the ATS has given U.S. federal courts jurisdiction to entertain "any civil action by an alien for a tort only, committed in violation of the law of nations or a

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treaty of the United States".¹ Those simple words of the First United States Congress lay dormant until the ATS was discovered as a human rights vehicle in the 1980s.² However, in the last few years the United States Supreme Court has seen fit to curtail the extraterritorial scope of ATS litigation bringing into question the viability of its future, primarily in the context of foreign subsidiaries of U.S. parent companies operating abroad, often in jurisdictions fraught with perennial governmental instability and thus, inevitably fragile legal environments.³

In short, these have been the paradigm circumstances for extractive industries inexorably drawn to where the resource development opportunities become available, despite the geopolitical/legal uncertainties associated therewith. Why a Canadian lawyer in particular is addressing this subject at this conference arises from the fact that the phenomenon of ATS-like cases has recently come to Canada and, thus far, focused almost exclusively on Canadian extractive industries. The Canadian footprint in this sector is a very large one,⁴ which this audience knows well. It follows that what happens in and before Canadian courts bears scrutiny from abroad as well as within Canada, not only in terms of how Canadian litigation is being fed by U.S. experience, but also how its foundations differ from it.

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Recent U.S. based scholarship and empirical research suggest that transnational tort cases have often underwritten and may even be subsidiary to other extra-legal strategic objectives. These have been supported by a broad array of out-of-court tactics pursued by plaintiffs and their sponsoring constituencies.⁵ Thus, the lawsuit is better understood, not as an autonomous event, but only one element in a suite of tactics advanced against a corporate target in respect of its operations in high risk jurisdictions. Social and other media (e.g. the internet, periodical literature, radio, television and film) loom large among these, along with: public events and protests organized by NGOs and other perhaps less well organized elements of civil society;⁶ engaging investors specifically at shareholder meetings of the corporate target and more generally elsewhere; and the mobilization of political commentary on and government investigation into corporate conduct abroad.⁷

One Canadian company, Talisman Energy, was exposed to much of the foregoing in addition to a protracted ATS-based lawsuit in respect of its controversial investments in and operation of a joint venture to develop oil fields in Southern Sudan. While Talisman successfully defended

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itself in court both in terms of defeating a putative class action ultimately and on the merits,⁸ the out-of-court pressures of adverse publicity, disgruntled shareholders mobilized by civil society and negative impacts on stock prices induced Talisman to divest altogether, well in advance of the protracted case against it being resolved by the courts.⁹ Whether the legal and ex cathedra aspects of transnational tort litigation commenced in Canada will follow a similar pattern and take on similarly broad dimensions to their ATS analogue in the United States remains to be seen. Nevertheless, it bears emphasis, as we explain below, that a comparable set of tools are available within Canadian political, social and legal institutions, even without the benefit of an ATS-like statutory trigger.

Here, we describe the development and salient features of Canadian transnational tort caselaw to date, the sources of substantive law underpinning it and the emerging jurisdictional theory prompting Canadian courts to venture into previously uncharted waters. From this description of what very much remains a work in and of uncertain progress, we make some tentative observations on emerging liabilities and how these might inform responsible corporate conduct to minimizing them. Co-equally tentative conclusions complete the analysis.

Extraterritorial Human Rights-Based Tort Liability: The Canadian Version

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There are several cases currently at large in Canadian courts premised to varying degrees on extraterritorial human- rights based tort liability. None of them have reached trial on the merits to date, but at least one of them is virtually certain to do so. However, even in their preliminary phases, the cases illustrate how the Canadian Courts may deal with human rights-based tort claims on their merits, confirm that these lawsuits have not been rejected by the Canadian Courts outright. They also continue to highlight jurisdictional challenges that these cases may present.

Choc v. Hudbay

Choc v. Hudbay Minerals Inc.,¹⁰ involves three lawsuits brought in Ontario by members of the indigenous Mayan Q'eqchi population in El Estor, Guatemala, for alleged abuses committed by security personnel at a former mining project in Guatemala of Hudbay Minerals Inc. in 2007 and 2009, including a shooting, a killing and gang-rapes. Hudbay is a Canadian mining company with headquarters in Toronto and incorporated under the Canada Business Corporations Act. The plaintiffs advanced negligence claims (i.e. claims in tort) against Hudbay for being directly liable for the actions of its former wholly-controlled Guatemalan subsidiary (and in one of the three actions, for also being vicariously liable for the actions of the Guatemalan subsidiary). On the preliminary motions with respect...