Ontario Superior Court Decision in Choc v. Hudbay Minerals paves way for defining responsibility of Canadian companies with foreign operations

In Angelica Choc et al v. Hudbay Minerals Inc et al, 2013 ONSC 1414, and two related actions, the Ontario Superior Court of Justice ruled that it is possible that Canadian parent corporations could be held legally responsible in Canada for human rights abuses at a foreign subsidiary's operations.

The plaintiffs are 13 indigenous Mayan Guatemalans who brought three related lawsuits against Canadian mining company Hudbay Minerals over alleged human rights abuses committed by security personnel working for its wholly owned subsidiary at its subsidiary's mining operation in El Estor, Guatemala.
In Margarita Caal Caal v. Hudbay Minerals Inc, the eleven plaintiffs allege that they were each gang-raped by mine company security personnel, police and military during their forced removal from their village of Lote Ocho, which is located on land claimed to be owned by Hudbay's subsidiary. At the time of these alleged rapes, Hudbay had no ownership interest in the mining operation.

In Angelica Choc v. Hudbay Minerals Inc, the plaintiff alleges that her husband, Adolfo Ich, a respected indigenous community leader and critic of mining practices, was hacked with machetes and fatally shot in the head by security personnel.

In German Chub Choc v. Hudbay Minerals Inc, the plaintiff alleges that he was shot and paralyzed by the head of the mine company security personnel in an unprovoked attack in the same series of events that led to the death of Adolfo Ich.

The primary claims against Hudbay Minerals in all three cases are based on the tort of negligence.
The defendants brought motions to strike out the claims, asserting that no proper cause of action had been pleaded. In particular, the defendants argued that the claims were an improper attempt to pierce the corporate veil that was akin to imposing absolute liability on a parent corporation for the operations of its subsidiaries in foreign countries. The defendants argued that there is no recognized duty of care owed by a parent or grandparent corporation to ensure that commercial activities carried on by its subsidiary in a foreign country are conducted in a manner designed to protect those people with whom the subsidiary interacts. Further, the defendants argued, the requisite elements of foreseeability and proximity required to recognize a new duty of care are not present in this case, and that, in any event, policy considerations militate against recognizing any such duty.

Justice Carole Brown dismissed the defendants' motions to strike, and permitted the claims to proceed to trial. The Court rejected the idea that the claims were an improper attempt to hold Hudbay responsible for the torts of others (namely the security personnel or the subsidiary), and instead agreed with the Plaintiffs that the primary allegation was that Hudbay itself was directly negligent for failing to prevent the harms that were committed by the subsidiary's security personnel.

The court accepted that it is possible that a Canadian parent corporation could be directly liable in negligence for its own actions and omissions in another country. Applying the Anns test, the court found that it was possible, based on the pleadings, that Hudbay had brought itself into a relationship of sufficient proximity to the Plaintiffs to justify imposing liability.

The court also found that a secondary claim could proceed because a relationship of agency between the parent and the subsidiary sufficient to pierce the corporate veil was properly pleaded.

The defendants did not appeal Justice Brown's ruling. 

Angelica Choc et al v. Hudbay Minerals Inc et al is the first time that a claim against a Canadian mining company over human rights abuse abroad has been permitted to go to trial in Canada.

Angelica Choc, German Chub, Margarita Caal Caal, Rosa Elbira Coc Ich, Olivia Asig Xol, Amalía Cac Tiul, Lucia Caal Chún, Luisa Caal Chún, Carmelina Caal Ical, Irma Yolanda Choc Cac, Elvira Choc Chub, Elena Choc Quib, and Irma Yolanda Choc Quib were represented by Murray Klippenstein and Cory Wanless of Klippensteins Barristers & Solicitors.

Hudbay Minerals, HMI Nickel and Compañía Guatemalteca de Níquel were represented by Robert Harrison, Tracy Pratt and Christopher Rae of Fasken Martineau DuMoulin LLP.

Amnesty International Canada was granted intervenor status and was represented by Paul Champ of Champ & Associates and Penelope Simons of the University of Ottawa.

Hudbay divested itself of the Fenix operation in 2011. It is headquartered in Toronto.