Another threat to Canada’s mining industry – by Fred McMahon (Troy Media – April 18, 2012)

Troy Media is dedicated to fostering debate about issues shaping Canada and the world. Fred McMahon is the Fraser Institute’s vice-president of international policy research.

VANCOUVER, BC, Apr. 18, 2012/ Troy Media/ – Canadian politicians like to beat their chests about creating world-class centres of industrial and technological excellence. So why then, do some appear intent on destroying our mining industry, the one area where Canada is not simply a world leader but THE world leader?
Mining has deep historical roots in Canada. It was a growth engine that elevated us from a developing economy to one of the world’s richest nations. But now the mining sector is facing a threat posed by Private Member’s Bill C-323, the stepchild of C-300 which was narrowly defeated in 2010.
Idea has merit . . . but
Bill C-323, which appears to be aimed primarily at resource companies, would give Canadian courts jurisdiction in all civil cases from anywhere in the world that involve a violation of international law or a treaty to which Canada is party. The idea is to hold companies responsible in countries where the court system is corrupt, an idea that has merit.
But typically, bias in many countries is against foreign companies. For example, in 2001, Chevron bought Texaco, which once had operations in Ecuador. Now, Ecuadorian courts have fined Chevron $18 billion for dumping waste in the Lago Agrio area, never mind that Petroecuador, Ecuador’s state-owned oil company, has had a controlling interest in the area since 1977 and took over the full operation in 1992 (meaning neither Chevron nor Texaco has had any presence for the past 20 years). Never mind that Texaco  paid $40 million for clean-up with a successful completion signed off by the Ecuadorian government in 1998 releasing Texaco from all liability; or that government-owned Petroecuador not only failed to clean up the pits assigned to it but continued using  them; and that “impartial” court documents recite verbatim pages of plaintiff documents. The list goes on.
C-323 could be used mercilessly by anti-mining, anti-development NGOs to tie up companies in huge costs and red tape anytime they felt like it. Imagine the costs of dealing with frivolous lawsuits launched every other day from a far off country.
C-323 also adds a lengthy list of other offences that seem to stop short only of spitting out gum. Here’s an example: A company with “direct knowledge of an impending environmental emergency” which fails to provide “adequate” warnings could be subject to Canada’s civil law. What does this mean? What is “direct knowledge” or “environmental emergency” or “adequate” warnings?” Well, just about anything, in the view of radical NGOs these days. Thus, off to Canadian courts under C-323.
Does C-323 provide evidentiary or other safeguards against abuse? Quite the opposite. C-323 abolishes all time limits, so you could literally be sued for an environmental accident from 100 years ago. Additionally, the burden of proof is placed on the defendant to “clearly, cogently and convincingly establish” that Canadian courts should not accept the case. So a Canadian company facing a frivolous lawsuit could face a multi-million-dollar bill for the costs of dealing with evidence from a distant land, lawyers, and procedures. And even if the action is dismissed, the plaintiff is free to start all over again.
Introducing the bill, Peter Julien, NDP MP for Burnaby-New Westminster, claimed it “mirrors the U.S. alien torts claim act.” False.
That act, passed in 1789 as part of the original Judiciary Act, simply says “district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”
Business chill
No long list of additional areas of jurisdiction, no lifting of time limits, no burden of proof reversal. The act was ignored for 200 years and has rarely been used since with few applicants and fewer successful applicants.
Instead C-323 leaves Canadian firms vulnerable to huge risks and costs. One blog supporting the bill notes that Canadian companies are risk adverse, so the law will be effective.
This is likely right. Companies are risk adverse. In the face of a bill as reckless as C-323, they will flee to nations with sensible legal codes. And for some anti-development types, that would be success.