4. Litigation examples in Canada

To date, the few business human rights cases litigated in Canada have not achieved positive results for human rights plaintiffs. ¹ However, recent decisions have opened up possibilities for successful corporate human rights litigation ² .

A Way to Establish Jurisdiction: The “Forum of Necessity” Doctrine

In 2010, the Ontario Court of Appeal recognized that Canadian courts may assert jurisdiction in “exceptional cases”, “despite the absence of a real and substantial connection” under the Forum of Necessity doctrine. ³ “Where there is no other forum in which the plaintiff can reasonably seek relief, there is a residual discretion to assume jurisdiction.” ⁴ On appeal, the Supreme Court of Canada left open the “possible application of the forum of necessity doctrine” but did not address it directly. ⁵

In March 2014, the Ontario Court of Appeal reviewed this “relatively new Canadian doctrine”, first incorporated in art. 3136 of the Civil Code of Québec (C.C.Q.), which was enacted in 1991 and came into force in 1994, and then included in s. 6 of the Uniform Law Conference of Canada’s (“ULCC”) model Court Jurisdiction and Proceedings Transfer Act, 1994. ⁶ The Court noted that “[a]ll jurisdictions in Canada that have recognized the forum of necessity have incorporated a ’reasonableness’ test.” ⁷ In Ontario, a plaintiff must establish that “there is no other forum in which the plaintiff can reasonably seek relief”. ⁸

The “reasonableness” requirement has been stringently construed. ⁹ To date, only one Ontario court has assumed jurisdiction based solely on the forum of necessity doctrine. In Bouzari v. Bahremani, the only Ontario case to successfully invoke forum of necessity, the motion judge found in a default judgment that the plaintiff, an Iranian citizen – although he was a Canadian citizen at the time of the suit – was tortured in Iran by the defendant (another Iranian citizen) or at his instigation. The motion judge further found that there was “no reasonable basis upon which [the plaintiffs could be] required to commence the action in a foreign jurisdiction, particularly, the state where the torture took place, Iran”. ¹⁰ The defendant later had the default judgment set aside, and challenged jurisdiction, claiming that england was a more appropriate forum: both the plaintiff and defendant agreed that the action could not be heard in Iran. The court denied the defendant’s request. Ontario had assumed jurisdiction based on the forum of necessity – which the defendant did not initially challenge – and the defendant had not met his burden of establishing that england was clearly a more appropriate forum. ¹¹

In 2015, the defendant – Mehdi Hashemi Bahremani – appealed against this decision. ¹² In its judgment, the Ontario Court of Appeal agreed with the defendant on the basis that the motion judge had made two major errors in his assessment. The first concerned Hashemi’s ability to travel to Canada and to England. The first judge had held that the fact that Canada had repeatedly denied the defendant entry into its territory was not a valid argument to argue that he could not appear in the Ontario Court and thus contested Ontario’s jurisdiction. The second concerned the treatment of the relative procedural advantages granted by each jurisdiction, the judge having considered that proceedings before the English courts could deprive the respondents of certain rights. ¹³ The Court overturned both arguments, considering in particular that the loss of a legal benefit to a party is a concept that "should be applied with some caution, having regard to the principle of comity and an attitude of respect for the courts and legal systems of other countries, many of which have the same fundamental values as we do" ¹⁴ The Court then considered that the English courts were more appropriate because the objectives pursued by the doctrine of forum of necessity would be better achieved through litigation in England. ¹⁵

Examples of situations in which the doctrine has relevance include, but are not limited to:

1. the breakdown of diplomatic or commercial relations with a foreign State;
2. the need to protect a political refugee; or
3. the existence of a serious physical threat if the debate were to be undertaken before the foreign court. ¹⁶

In the case of ACCI vs. Anvil Mining Limited, the plaintiffs tried to argue forum of necessity, but the Court of Appeal rejected the argument. However, the motion judge actually found in the plaintiff’s favour: the judge found that Quebec had jurisdiction simpliciter (i.e. that jurisdiction could be asserted against an out-of-province defendant) and then rejected the defendant’s claim of forum non conveniens. On 24 January 2012 the Quebec Court of Appeals reversed and dismissed the case. ¹⁷ This case is addressed in part II of this section looking at extraterritorial criminal liability and the role of victims and the prosecution in initiating proceedings (see below).

In March 2019, the Ontario Court of Justice issued the case of Mohammad v. Tarraf et al. ¹⁸ In that case, the Court first concluded that it did not have jurisdiction to hear the claim before it since the given reasons were not sufficient to establish its jurisdiction. The Court then used the case of WestVanInc.v.Daisleyin which it was held that a "reasonableness" test was necessary for the doctrine to be applied. In other words, it must be shown by the plaintiff, by putting forward exceptional reasons, that no other forum can be seized upon in order for him to reasonably seek relief. In the present case, the Court decided that there were indeed exceptional grounds justifying the application of the doctrine of forum of necessity, and ruled in favour of the applicant. ¹⁹

This judgment is not intended to develop the doctrine of "forum of necessity" to any greater extent in Canada. However, it does constitute a fundamental precedent in this matter since, in previous judgments on which case law has developed (in particular Van Breda v. Village Resorts Ltd and West Van Inc. v. Daisley), the Court had not declared itself competent, having declined to exercise its discretion to do so. This decision essentially demonstrates that the doctrine of “forum of necessity” is still being applied in Canada. ²⁰

On 7 November 2016, in the case of Cook v. 1293037 Alberta Ltd., the Ontario Court of Appeal issued a judgment in which it stated that this doctrine must remain exceptional and that it cannot be invoked when necessity is the result of the appellant’s actions or mismanagement. In this case, the argument of necessity arose because the time limit for bringing an action in Alberta had expired as a result of a tactical decision by the appellants not to bring their case to the Alberta Court which was normally the appropriate forum for the case. ²¹

Direct negligence liability and piercing the corporate veil: Choc v. Hudbay Minerals

Mayan Q’eqchi’ from Guatemala brought three related actions against a Canadian mining company, Hudbay Minerals, and its subsidiaries, HMI Nickel (formerly Skye Resources, Inc.) and CGN, in Ontario Superior Court of Justice. They allege that security personnel working for Hudbay’s subsidiaries, who were allegedly under the control and supervision of Hudbay, committed human rights abuses, including a shooting, a killing, and gang-rapes committed in the vicinity of the former Fenix mining project, a proposed mining operation located in eastern Guatemala. Hudbay Minerals is a Canadian mining company headquartered in Toronto. During the relevant period, Hudbay Minerals owned the Fenix mining project through CGN. Since then, HMI Nickel Inc./ Skye Resources amalgamated with Hudbay, who is now legally responsible for all its legal liabilities. CGN owned and operated the Fenix mining project in Guatemala, and was wholly-controlled and 98.2% owned subsidiary of Hudbay Minerals. The defendants’ motion to strike the three actions was denied by Justice Carole J. Brown on July 22, 2013. ²⁶ The two main issues were whether Hudbay could be found liable in negligence for actions or omissions in another country and whether the plaintiffs had pleaded facts able to lift the corporate veil and hold Hudbay liable.

An individual complaint against Canada has been filed in February 2013 before the UN Human Rights Committee under the Optional Protocol to the International Covenant on Civil and Political Rights. ²⁷

Torts committed in another country

The main issue in Choc v. Hudbay Minerals was whether the plaintiffs had pleaded all material facts required to establish the constituent elements of their claim of direct negligence and whether Hudbay “owed a duty of care to the plaintiffs.” ²⁸ Because the plaintiffs did not argue that there is an established duty of care, it was necessary to apply the test for establishing a novel duty of care. the following must be proven:

• The harm complained of is a reasonably foreseeable consequence of the alleged breach;
• There is sufficient proximity between the parties that it would not be unjust or unfair to impose a duty of care on the defendants; and,
• No policy reasons exist to negatively or otherwise restrict that duty. ²⁹

In Choc v. Hudbay Minerals, the judge concluded that the plaintiffs had pleaded all materials facts required to establish their claim of negligence. Moreover, in 2019, the Ontario Superior Court permitted the claims to proceed on the basis that it was not "plain and obvious" that Hudbay did not owe a duty of care to the plaintiff. ³⁰

Piercing the corporate veil

In her decision in Choc v. Hudbay Minerals, the judge explained that “Ontario courts have recognized three circumstances in which separate legal personality can be disregarded and the corporate veil can be pierced: a) where the corporation is ’completely dominated and controlled and being used as a shield for fraudulent or improper conduct’ ³¹ ; (b) where the corporation has acted a the authorized agent of its controllers, corporate or human ³² ; and (c) where a statute or contract requires it ³³ . The judge noted that “the Plaintiffs have pleaded second exception to the rule of separate legal personality” by pleading that CGN is an agent of Hudbay, and concluded that “[i]f plaintiffs can prove at trial that CGN was Hudbay’s agent at the relevant time, they may be able to lift the corporate veil and hold Hudbay liable.” ³⁴

Foreseability

Because the pleadings state that Hudbay/Skye knew that violence was frequently used by personnel during forced evictions; that violence had been used at previous forced evictions it had requested; that the security personnel was in possession of illegal firearms; and that there was a general risk that violence and rape would occur, the Judge concluded that the pleadings make it reasonably foreseeable that requesting the forced eviction of a community could lead to violence and rape. ³⁵

Proximity

The judge noted that “proximity is determined by examining various factors, rather than a single unifying characteristic or test.” These include the parties’ expectations, representations, reliance, the property or other interests involved, ³⁶ a close causal connection, and any assumed or imposed obligations. ³⁷ The Judge concluded that “[b]ased on the plaintiffs’ pleadings, there were numerous expectations and representations on the part of Hudbay/Skye”, in particular, “Hudbay/Skye made public representations concerning its relationship with local communities and its commitment to respecting human rights, which would have led to expectations on the part of the plaintiffs. There were also a number of interests engaged, such as Hudbay/Skye’s interest in developing the Fenix project, which required a ’relationship with the broader community, whose efficient functioning and support are critical to the long-term success of the company in Guatemala’, according to Hudbay’s President and CeO.” The judge found that a prima facie duty of care may be found to exist. ³⁸

Policy considerations

The judge found that “it is not plain and obvious that policy reasons would negative or otherwise restrict a prima facie duty of care” because there “are clearly competing policy considerations in recognizing a duty of care in the circumstances of the case.” ³⁹

The plaintiffs must now prove the facts alleged in their complaint at trial, but the ruling is significant in that it recognizes the possibility of holding corporations liable for their negligence in foreign countries.

In June 2015, the Court ordered HudBay to disclose extensive documentation concerning its corporate structure and control over its subsidiaries, which Hudbay did in December 2016. ⁴⁰ Also, in November 2017, the plaintiffs, 11 Guatemalan Q’eqchi’ women, travelled to Canada to give testimony as part of the ongoing discovery procedure. In September 2019, they requested to add some details about the January 2007 attacks. Despite Hudbay Minerals’ attempt to block the request, the Superior Court of Justice accepted the plaintiffs’ amendments. ⁴¹ No final decision has been issued.

The Ontario Superior Court’s decision that Hudbay may owe a duty of care to the plaintiffs is significant. ⁴² As highlighted by Above Ground, “the court’s ruling sets a precedent with respect to parent company liability. For the first time in Canada, cases involving foreign plaintiffs who allege to have suffered harm caused by Canadian company’s overseas operations will proceed to trial.” ⁴³