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BC Court Declines Jurisdiction in Garcia v. Tahoe Resources Inc.

Fasken
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Corporate Social Responsibility & Mining Bulletin

On November 10, 2015, the BC Supreme Court (“BCSC”) declined jurisdiction and stayed the plaintiff’s action in Garcia v. Tahoe Resources Inc., 2015 BCSC 2045, in which seven Guatemalan citizens attempted to sue the Canadian parent company of a Guatemalan subsidiary for a shooting. The shooting was allegedly committed by private security personnel employed at a mine in southeast Guatemala. 

Background

Tahoe Resources Inc. (“Tahoe”) is a mining company incorporated under the laws of British Columbia. Tahoe conducts its annual general meeting in Vancouver, BC, but is headquartered in Reno, Nevada. Tahoe has no officers or employees in BC. Three of Tahoe’s directors reside in BC, two reside in Ontario and the majority reside in Reno.

Tahoe’s subsidiary, Minera San Rafael SA (“MSR”), owns the Escobal mine in San Rafael Las Flores, Guatemala. On June 18, 2014, seven Guatemalan men commenced legal action in BC against Tahoe for injuries they suffered when they were allegedly shot at close range by Tahoe security personnel while protesting peacefully on the road outside the gates of the Escobal mine.

The plaintiffs alleged that Tahoe was liable, either directly or vicariously, for battery and directly for negligence. The plaintiffs plead that Tahoe expressly or implicitly authorized the use of excessive force by its security guards or, in the alternative, was negligent in preventing or failing to prevent the security guards from using excessive force. The plaintiffs claimed that Tahoe owed them a duty of care since it knew that the security personnel failed to adhere to Tahoe and MSR’s corporate social responsibility (“CSR”) policies, and was aware of the internationally accepted standards on the use of private security personnel to which Tahoe had committed.

On July 9, 2014, Tahoe filed a jurisdictional challenge, seeking to have the court exercise its discretion to refuse to hear the case and stay the proceeding. The jurisdictional challenge was filed on the basis that the case is more appropriately tried in Guatemala, where the actions in question took place. 

BCSC Decision

The court sided with Tahoe, holding that Guatemala is clearly the more appropriate forum to determine the issues in dispute. In reaching this decision, the court found the following factors persuasive:

  • None of the evidence relating to the events alleged in the notice of civil claim is located in BC. 
  • Both the alleged battery and the alleged breach of the duty of care on the part of Tahoe occurred in Guatemala, or possibly Nevada.
  • All of the plaintiffs reside in Guatemala where their injuries and losses occurred.  
  • None of the plaintiffs speak English.  All of the records required to assess their claims for damages are in Guatemala, and most, if not all, are in Spanish. Most, if not all, of the witnesses will have to travel to Vancouver from Guatemala and Reno, and many will only speak Spanish.  Obtaining and translating evidence would be inconvenient and considerably lengthen the trial.
  • Tahoe is incorporated in BC but does not carry on its operations in the Province. The majority of Tahoe’s management and staff, who might be called as witnesses, live and work in Reno, Nevada. The majority of Tahoe’s documents will be in Nevada. 
  • All of MSR’s employees are resident in Guatemala or Reno, and MSR carries on business in Guatemala.
  • Both Tahoe and MSR could be held vicariously liable under Guatemala law. Despite any imperfections of the Guatemalan justice system, the remedies sought by the plaintiffs are available in Guatemala.
  • Since litigation has already been commenced in Guatemala seeking damages arising out of the same incident (despite Tahoe not currently being a party to that proceeding), there is risk of duplicative proceedings or conflicting decisions if the British Columbia Supreme Court were to take jurisdiction. 
  • There is no evidence to suggest that the plaintiffs would not be able to enforce a foreign judgment awarded by a Guatemalan court in BC.

The plaintiffs’ claim against Tahoe attempted to find Tahoe directly liable, either by piercing the corporate veil or in negligence – a novel legal claim that that has yet to be tested in Canadian courts. The plaintiffs argued that they would not be able to advance such claims against Tahoe in Guatemala. Though the BCSC did not need to address the merits of these claims, the court did note that it was “far from clear” that such a claim would succeed.

Conclusion

This case reflects recent efforts in Canada to pursue the novel claim of parent company responsibility for the actions of its subsidiaries overseas. Although the Court in this case held that it is “far from clear” that such a claim would succeed, it remains to be seen whether, in circumstances where Canadian jurisdiction was accepted, a Canadian court would hold a Canadian parent company liable in negligence or by piercing the corporate veil for alleged wrongdoings committed by a foreign subsidiary.

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