Alison fitzgerald norton rose

The nature of the claim that was brought was in relation to treatment suffered, not even at the hands of the subsidiary down the chain from Hudbay, but at the hands of a security company that had been retained by the subsidiary in order to maintain security over the site.

Andrew McCoomb So not only not only is it a parent liability issue, but it's a parent liability issue on top of a vicarious liability type issue. Alison FitzGerald Absolutely. So this is how many of these claims evolved. They're not even necessarily directly aimed at conduct that the subsidiary and chain from the parent was responsible for, but may have been responsible for overseeing in the sense of having engaged a subcontractor or provider of services.

Now, the Guatemalan plaintiffs essentially, they-- they attempted to sue directly Hudbay for the treatment that they had suffered. They alleged a number of different fairly horrific abuses by employees of this security company that had been engaged by the local subsidiary. Now Hudbay fought the claim in Canada. And an important point to bear in mind, it's relevant to this case and it's relevant to every case that is proceeded before Canadian courts so far is that none of these cases have been adjudicated on the merits.

But what Canadian courts have proved to be open to is acknowledging that there is a legal possibility that this claim could move forward to an adjudication on the merits, with eventual liability at the feet of the parent company. Ailsa Bloomer So I think that's an important point to emphasize there. This is not the court saying parent companies are responsible for the acts of their foreign subsidiaries. This is court saying, it is possible for a foreign plaintiff to sue the parent company in Canada, but there is no substantive decision on the merits yet.

So it—i. Alison FitzGerald That's correct. No Canadian court has actually adjudicated on that issue that there is a positive duty of care on Canadian parent companies that can give rise to direct liability as a result of harm suffered by a foreign plaintiff.

We've yet to get that far in the jurisprudence. Andrew McCoomb And even-- even that part Alison, it's interesting in terms of the economics of how these cases go, I mean, you mentioned that often these types of cases are going to be class proceedings. And-- and once you get to that stage, either on a motion to strike or a certification motion, or the motion to strike test of whether a pleading discloses a reasonable cause of action is going to be built into the analysis.

And you get a judge saying, well, I'm not gonna throw this case out on that ground. Well, then that's, you know, that's distributing some risk towards that parent, even at that moment. Ailsa Bloomer I mean, not to mention Andrew, the reputational element as well, even just having it on the court, public record that an entity is being sued for alleged human rights abuses, regardless of the liability outcome, that can have huge consequences for organizations, especially those that have been very public about their commitments to sustainability and ethical conduct.

Alison FitzGerald That's-- that's absolutely right. And, you know, that in terms of how Canadian courts are receiving these claims, and Hudbay is a good example of this, one of the bases for the Ontario Superior Court to allow the claim to move forward and not kill it at a motion to strike phase, is the court, the court actually looked at the engagement between the parent and the sub, right, and Hudbay in some respects, that looked like a model corporate citizen based on the policy structure that they had rolled out.

And the standards that they had adopted for-- for workers at the promotion of human rights within their corporate environment, that the standards that they had expected to be observed by all participants in their supply chain as well, including, notionally, that security company that was retained to provide security services with respect to the mine site, that, having taken those steps, was one of the bases on which the Court acknowledged there was a possibility that a novel duty of care could be made up in direct liability as against the parent company.

Having a robust policy framework in place that sets-- that sets a rigorous standard for conduct has, frankly, been viewed as an asset within a responsible corporate community. And I think there is a bit of a risk with how the reasoning has been articulated in the Canadian courts, that corporations may now look at that and see that robust policy environment as a risk, as opposed to a risk mitigating device.

Andrew McCoomb But it sounds like it creates a real tension between the incentive to have those robust policies in place and to take an active role in making sure that your subs are conducting themselves appropriately and also trying to manage your risk and exposure.

Alison FitzGerald I think it may do. My concern is that companies may look at how the discourse is evolving in the courts and see the presence of conduct standards within their company as a risk in itself, as opposed to continuing to see them as a risk mitigating device, which I continue to think they are. I think we would be remiss if we didn't flag that in some cases, in some jurisdictions, parent companies are no longer left to take that--to take those steps voluntarily.

So where parent companies are seated in a jurisdiction that has moved forward to legislate, for example, certain responsibilities, like the duty of vigilance that has now been legislated in France, that has had an impact on how French parent corporations operate, how they maintain their investments abroad.

In Canada, we don't yet have comparable legislation, but a bill has been tabled that would effectively introduce a Modern Slavery Act. And that would, for example, outlaw forced labour of the nature that we'll discuss in the Nevsun case. But for those companies seated in jurisdictions where parliament or legislature has actually taken a step to legislate this, they don't really have a choice, but to adopt rigorous standards that they're going to apply throughout their chain.

They can't walk back from that. And I suspect that will increasingly become the case so that companies will simply need to navigate this, ultimately, what may save companies that are sued by foreign plaintiffs for human rights abuses, or even things like environmental harm and climate change disputes, for example.

What may save them at the end of the day is the fact that they turned their minds to these issues, the fact that they were diligent in taking steps to define appropriate standards of conduct, to train their people, to actually audit their programs, for example, to live and breathe, the policies that they've put into place and the conduct standards that they've put into place.

Ailsa Bloomer I think that's a really interesting point. The idea of Canada introducing legislation that mandates human rights due diligence procedures for companies, I mean, the existence of such a possible statute, that should provide some comfort for companies, shouldn't it?

Because it gives entities an opportunity to point to that legislation, to demonstrate their compliance with, let's say, disclosure and reporting obligations that might be under that statute or regulation. And that could be a possible defense to these allegations, couldn't it? It may also provide a legal framework in order to inform the scope of the duty of care.

Andrew McCoomb And as well, the extent to which companies are going to increasingly great lengths to tell their shareholders or potential shareholders about the things that they're doing as good corporate citizens, you have to imagine that those promises and commitments will be the sorts of things that may revisit them in the event that their commitments fall short of reality, and how they're engaging with subsidiaries, foreign subsidiaries, or-- or otherwise.

So the Hudbay precedent is so interesting, just-- just for everyone to understand that what you say about what you mean to do, will play a role in determining how interested our courts are in engaging with--, with-- with what it is that you're really doing out there. And you know, much of this, where corporations are undertaking to put in place robust policy structures, compliance programs, training, etc.

A lot of that is driven by shareholders in a public company environment, many cases, shareholders want to be investing in companies that are in fact ensuring that their ethical companies that their business conduct is consistent throughout their operations. It's hugely on the rise. It's, it's on everyone's minds.

Ailsa Bloomer The rise of ESG and sustainability and active activism around those issues is definitely going to be a separate topic for another episode, or even a series of episodes. But for now, I think we need to keep on track. So we just, we need to talk about the leading decision in this area at the moment, and that is the Supreme Court of Canada decision in Nevsun Resources that was handed down last year.

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