Canadian Ruling on Liability of Parent Entity for Alleged Human Rights Violations at a Subsidiary
Corporate structures continue to face new challenges as plaintiffs seek to hold parent companies liable for actions related to subsidiaries. A new ruling on this subject is from Canada, and arises in the context of alleged human rights violations by persons working for a subsidiary. Lawyers from Gowlings summarize the case in this article. The opinion is online; key excerpts from the Gowlings article are as follows:
"The recent decision of Justice Carole Brown in Choc v. Hudbay Minerals Inc., 2013 ONSC 1414 is a reminder for Canadian companies of the expanding scope of liability in Canada with respect to foreign operations.
Hudbay Minerals Inc. (“Hudbay”) and its wholly-controlled subsidiaries HMI Nickel Inc. (“HMI”) and Compañia Guatemalteca De Níquel (“CGN”) brought a preliminary motion to strike three related actions pursuant to Rule 21.01(1)(b) of the Rules of Civil Procedure on the ground that it is plain and obvious that they disclose no reasonable cause of action.
The actions all stem from allegations from 13 Mayan Guatemalans of rape and murder related to land disputes by security personnel working for Hudbay’s subsidiaries at the Fenix mining project formerly owned by Hudbay’s subsidiary in Guatemala.
Hudbay argued that in allowing the case to proceed the plaintiff was attempting to pierce the corporate veil and to hold Hudbay vicariously liable for wrongs committed by the employees of the Guatemalan subsidiary. Hudbay argued that this was an attempt to create and new a novel supervisory duty of care. Hudbay urged the Court to find that all of these positions are untenable at law. The Court found that the plaintiffs had pleaded all of the materials facts required to attempt to pierce the corporate veil and to establish the claim of direct negligence against Hudbay and that it was not plain and obvious that the claims would fail. Therefore, the motion to strike was dismissed, and the actions will be allowed to proceed against Hudbay and the other companies in the Ontario Courts."