HudBay case raises litigation risk for Canadian resource companies – by Peter Koven (National Post – October 30, 2013)

The National Post is Canada’s second largest national paper.

When an Ontario court ruled against HudBay Minerals Inc. in a human rights case in July, it sent shockwaves across the Canadian mining and legal communities. Months later, lawyers remain far from certain what kind of long-term impact the decision will have.

In its decision, the Ontario Superior Court of Justice determined that the suit against Toronto-based HudBay should proceed in Canada, even though the alleged abuses took place in Guatemala. HudBay is not appealing the ruling, which paves the way for a trial some years in the future. The plaintiffs claim that HudBay’s security personnel killed a local activist and gang-raped 11 women.

The implication of the court ruling was obvious: In the future, Canadian resource companies with foreign operations (which is most of them) face a real risk of increased litigation at home based on their conduct abroad. That introduces significant risk for companies like Barrick Gold Corp. and Goldcorp Inc. that have been accused of massive misconduct in far-flung jurisdictions.

Murray Klippenstein, the plaintiff lawyer in the Choc vs. HudBay case who played a key role in bringing it to Canada, said he does expect more lawsuits of this kind. In fact, he said he has already been approached about other possible cases. “This is a real risk that Canadian companies didn’t think they had to worry about before. Now they do,” he said.

He pointed out that the general principal the court accepted is that it is appropriate for a Canadian court to judge a Canadian company for decisions made by management in Canada, regardless of where the impact is felt. And given that many developing companies have weak or dysfunctional legal systems, it is only fair that allegations in those countries should be heard here instead, he added.

But now that the shock from the decision has worn off and lawyers have taken the time absorb it, they are far from certain that the ruling will open the floodgates for more suits like this one.

Kevin MacNeill, a partner at Heenan Blaikie LLP, said that while the ruling was novel, it was only a procedural move.

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