Case Comment: Garcia v. Tahoe Resources Inc.

The Supreme Court of British Columbia recently issued reasons for judgment in Garcia v. Tahoe Resources Inc. (“Garcia”).* Madam Justice Gerow granted the application of the defendant, Tahoe Resources Inc. (“Tahoe”), and ordered that the litigation be stayed on the basis that British Columbia was not the appropriate forum for resolution of the dispute. This decision has significant implications for corporations that do business in foreign jurisdictions.

Garcia is one of a number of cases recently launched in British Columbia by foreign nationals against parent Canadian mining companies that operate overseas, typically through subsidiaries. The action was filed in June 2014 by seven Guatemalan nationals seeking damages for injuries they claimed to have received as a result of being shot at close range by Tahoe security personnel during a protest over construction of a Tahoe mine in Guatemala. The plaintiffs claimed that the security personnel used excessive force and that Tahoe was vicariously liable for battery. The plaintiffs also claimed that Tahoe was negligent in failing to have adequate oversight and procedures in place to ensure that any security personnel complied with Tahoe’s corporate social responsibility policies and international standards for the use of private security personnel.

Tahoe challenged the litigation on jurisdictional grounds, taking the position that Guatemala was clearly the more appropriate forum for adjudicating the plaintiffs’ claims. The plaintiffs opposed the application on the basis that the central issue in the lawsuit was whether a Canadian company had any responsibility under Canadian law for the conduct of security personnel it hired to protect its asset. The plaintiffs asserted that they were seeking justice in Canada against the Canadian company that owned the mine, because they had no faith in the Guatemalan legal system to hold Tahoe accountable.

After hearing expert evidence from both sides about the Guatemalan legal system, the Court applied the principles set out in the Court Jurisdiction and Proceedings Transfer Act and considered whether Tahoe had demonstrated that Guatemala was “clearly” the more appropriate forum. The Court noted that while most of the plaintiffs’ submissions involved an attack on the Guatemalan justice system, the question was not whether Canada’s legal system was fairer or more efficient, but whether the foreign legal system was capable of providing justice. The Court held that “[W]here the forum non conveniens analysis points to a clearly more appropriate forum, then the plaintiff must take the forum as he finds it even if it is in certain respects less advantageous to him unless he can establish that substantial justice cannot be done in the appropriate forum”.

The Court observed that while the Guatemalan justice system might be “imperfect”, it still functioned “in a meaningful way” and damages to compensate for battery and negligence were available to the plaintiffs in Guatemala. Madam Justice Gerow concluded “In my view, the public interest requires that Canadian courts proceed extremely cautiously in finding that a foreign court is incapable of providing justice to its own citizens. To hold otherwise is to ignore the principle of comity and risk that other jurisdictions will treat the Canadian judicial system with similar disregard”.

While each case falls to be decided on its own unique facts, corporations operating overseas can take some comfort from the analysis in Garciathat the Courts of British Columbia will be cautious in asserting jurisdiction over disputes involving events occurring outside British Columbia, particularly where some form of redress is available in the foreign jurisdiction. The decision underlines the importance of the principle of judicial comity to the resolution of inter-jurisdictional disputes, particularly the need to provide a high degree of deference to the decisions of foreign courts. That said, Canadian companies operating in foreign jurisdictions ought nonetheless to be prepared for the possibility of having to defend their actions (and those of their subsidiaries) on foreign soil before Canadian courts, particularly as the number of these types of claims continues to proliferate.

 


* 2015 BCSC 2045.

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