Disputes between Canadian companies and foreign litigants

Disputes between foreign litigants and Canadian companies are having a fast and significant impact on:

  • Canadian companies' embrace of BHR principles;
  • legal advice concerning international operations; and
  • greater awareness among impacted communities abroad about their ability to bring disputes forward.

​The legal disputes between foreign litigants and Canadian companies all originate in allegations that a Canadian company is directly or indirectly responsible and liable for human rights abuses abroad.

Four main cases have been brought by foreign litigants against Canadian companies:

  • Choc v. Hudbay Minerals Inc. (proceeding to trial on the merits after motion to strike failed at Ontario Superior Court)
  • Araya et al. v. Nevsun Resources (settled in 2019 after company’s motion to strike failed at BC Supreme Court, BC Court of Appeal, and Supreme Court of Canada)
  • Garcia v. Tahoe Resources Inc. (settled in 2020 after company’s motion to strike failed at BC Supreme Court and BC Court of Appeal)
  • Das v. Weston - (Rana Plaza disaster and Loblaws) - (suit dismissed after motion to strike successful at Ontario Superior Court and Ontario Court of Appeal)

These cases have produced a body of jurisprudence highlighting that Canadian businesses can be held liable for human rights abuses connected to their international operations.

Even if companies might believe they have a case to argue on the merits, other factors might influence decisions on whether a business might wish to engage in a public court battle with foreign litigants, including these factors:

  • Challenges to ongoing operations abroad: For companies that may still be operating in the jurisdiction where the dispute originated, relying on support from local stakeholders while disputing them in a foreign court can make company operations more challenging. Building goodwill is critical for companies that wish to continue operating abroad.
  • Reputational damage: Companies might want to put the matter behind them to minimize reputational damage and any knock-on effect that might have. A key aspect of BHR litigation is that the human rights violation is often not at issue. Instead, what's disputed is whether a company should be held legally responsible for that human rights violation. A company that wins in court can still lose in the marketplace. An average consumer is more likely to remember a particular brand is associated with a certain event abroad over the fact that the relationship between the company and injured person was not proximate enough to warrant liability. The fact of a dispute, alone, may irreparably harm a company’s reputation.

i) Non-judicial dispute mechanisms

While judicial mechanisms remain at the core of remedy, Guiding Principle 27 of the UNGPs identifies non-judicial mechanisms as essential, complementary fora for handling human rights disputes. Together, judicial and non-judicial mechanisms form a comprehensive, mutually complementary system for state-based remedy processes.

Canada’s state-based non-judicial dispute resolution mechanisms are meant to facilitate dispute resolution between Canadian companies and individuals or communities abroad alleging human rights violations connected to those companies.

  • The CORE is set up to receive and conduct reviews of allegations of human rights abuses arising from the overseas operations of Canadian companies operating in the garment, mining, and oil and gas sectors.
  • Canada has a National Contact Point for the resolution of disputes related to the OECD Guidelines for Multinational Enterprises, key standards set by the OECD which, as of 2011, incorporates UNGPs.
  • The World Bank's Compliance Advisor Ombudsperson (CAO) is a multilateral dispute-resolution mechanism that applies to Canadian companies that receive financing or underwriting support through the World Bank, either from the International Finance Corporation (IFC) or the Multilateral Investment Guarantee Agency (MIGA). The CAO has a mandate to receive complaints from external parties affected by projects financed by the IFC or MIGA and to conduct investigations into alleged breaches of the IFC Performance Standards.

These processes are all based in home, not host countries. They require participants to conform to certain procedural requirements, which may be costly and time consuming. Not all individuals or groups who the UNGPs envision having access to a remedy will be able to access or participate in these processes. This is why effective operational level grievance mechanisms, discussed in Part II, are so important.