Employment and Labour Bulletin
The Canadian courts are taking an increasingly expansive view of jurisdiction, and this broader willingness to review potential claims includes disputes involving matters arising outside of Canada's borders. As a jurisdiction which has both civil and common law systems in place, this may well mean that the interesting interaction between other legal regimes may be developed in unique ways. This will also have interesting implications for multinationals who have a nexus to Canada and are conducting business in Latin America.
real and substantial connection
In the decision in Dundee Precious Metals Inc. v. Marsland, 104 OR (3d) 51, 2010 (ON SC). ("Marsland"), a judge in the Toronto courts allowed a claim to proceed in the context of a dispute over a mine in Serbia and the alleged misconduct of an Australian mining executive based in eastern Europe. The Ontario court found that, even though the relevant individual was not a Canadian national and had never lived, worked or paid taxes in Canada, there was a basis to bring a lawsuit against the individual. This was based on the finding that there is a "real and substantial" connection to Canada (and Ontario specifically) given that the individual was the COO of an Ontario company. Although the individual operated overseas, he took direction from the Board and other executives in Toronto with whom he had a daily telephone call. This created a sufficient nexus to "export" the case to Ontario.
common law vs. civil law claims
On the specific facts in the Marsland case, the executive's dispute with Dundee Precious Metals Inc. was to be determined under applicable common law which prevails in the province of Ontario. If the relevant company had a Quebec head office or was otherwise subject to Quebec law, the claim could have been covered by civil law. As a hypothetical example, if the individual worked for a mine in Chile and never lived or worked in Quebec, he may still have a right to bring a claim governed by the Civil Code of Quebec based on the company's nexus to that province. This could have substantial implications for relevant conditions of employment, including the ability to include a non-competition clause in the contract, and the approach required to terminate the relevant individual's employment.
the test for jurisdiction
While the Marsland decision provides clarity regarding when Ontario courts may assume jurisdiction in an international dispute with a foreign employee, the ground has shifted slightly since the decision was reached. In particular, the Supreme Court of Canada clarified the test for jurisdiction in its decision in Club Resorts Ltd v. Van Breda, 2012 SCC 17 ("Van Breda"),where the Court identified the following four "presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction":
- The defendant lives or resides in the province;
- The defendant carries on business in the province;
- The tort was committed in the province; and
- A contract connected with the dispute was made in the province.
This list of presumptive factors is not intended to be exhaustive or definitive, and could be added to at any time based on the values of "order, fairness and comity". Once jurisdiction is established, the litigation must proceed before the court, unless the defendant successfully invokes forum non conveniens.
"inconvenience" knows no bounds
If a party can show that another jurisdiction is clearly more appropriate to hear the matter, then a court may exercise its discretion to decline jurisdiction. It is not sufficient, however, for a party to show that a comparable or preferable forum exists. Instead, the onus is to prove that this other forum is better suited to hear the matter, and that it would be "fairer and more efficient" for the plaintiff to be deprived of the forum it had initially selected. A court's discretion to decline jurisdiction is to be exercised exceptionally. By requiring clear evidence of the superiority of another jurisdiction to displace a plaintiff's selection, it could be argued that Canadian courts have taken an expansive view of jurisdiction. Finally, on the court's articulation of the forum non conveniens doctrine, it may now be more difficult to convince a court that a matter is more appropriately heard elsewhere.
The increasing scrutiny and potential liability of Canadian multinationals has received further media attention as a result of a decision issued on July 22, 2013 by the Ontario Superior Court of Justice. In her reasons in Choc v. Hudbay Minerals Inc., 2013 ONSC 1414, Madame Justice Carole J. Brown dismissed a preliminary motion which sought to strike claims against Hudbay Minerals Inc. ("Hudbay") and its subsidiaries.
The decision involved three related actions against Hudbay brought by an indigenous Mayan Q'eqchi' group from Guatemala. The claims all alleged that security personnel working for Hudbay subsidiaries, who are allegedly under the control and supervision of Hudbay, committed human rights abuses. The specific allegations include shooting, killing and gang rapes in the vicinity of a proposed open pit nickel mining operation.
The defendants sought to strike all three consolidated actions on a variety of grounds, including that there is no recognized duty of care. Hudbay argued no duty is owed by a parent company to ensure that the 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.
The plaintiffs opposed the motion in large part based on their argument that Hudbay was directly liable for actions leading to the alleged damages based on human rights abuses. In this regard, the plaintiffs pointed to on-the-ground supervision of the relevant project as well as management of relevant security personnel. It was also noted that Hudbay made statements publicly that they were committed to adhering to certain standards of conduct, including adherence to Guatemalan international law and the Voluntary Principles on Security and Human Rights.
Amnesty International Canada ("Amnesty") was granted intervenor status in the proceedings and supported the plaintiffs in opposing the motion to strike. Amnesty also referred other international guidelines and standards relating to corporate responsibility and human rights.
has liability expanded?
The Court's decision to dismiss the Hudbay motion to strike has been heralded by some as confirmation of an expansion of the scope of liability of the activities of multinationals. On a close reading of the decision, however, the exact implications of the ruling remain to be seen. The Court noted that the test to strike a claim, which must be based solely on a reading of the plaintiff's pleadings as presented, is stringent. In the specific circumstances, the Court noted that there are competing policy considerations in recognizing a duty of care between a Canadian company and individuals harmed by security personnel at its foreign mining operations. While the approach to claiming negligence was described as "novel", it does not therefore automatically mean that such a claim will be clearly unsustainable or untenable.
key points for multinationals
Particular attention should be paid to cases where employees are working or employing contractors in other countries, and company policies and relevant agreements should be reviewed carefully as case law in this area evolves. Employees working primarily in a different country from head office may be accorded some greater latitude to bring actions in either jurisdiction. Of course, employers may have the same opportunity. Careful attention to these issues at the project planning and drafting stage will help ensure that employers are not caught off guard by jurisdictional challenges, and do not find themselves fighting a battle or dealing with processes in an unexpected legal system.
by George Waggott and Darrell Podowski
a cautionary note
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2013