Forum Non Conveniens and Judicial Corruption: Key Developments at BCCA

By Arron Chahal, JD candidate, University of Toronto Faculty of Law

A pair of 2017 decisions by Canadian courts have made it harder for Canadian companies to avoid liability for human rights violations allegedly committed by their subsidiaries in foreign jurisdictions.

When actions are brought against corporations on this basis, the corporation will often argue that the case should be heard in the jurisdiction in which the alleged human rights violation occurred. Two recent decisions by the British Columbia Court of Appeal (BCCA) suggest that judicial corruption in the foreign jurisdiction will play a significant role in determining how successful this argument will be.

The doctrine of forum non conveniens “is based on a recognition that a common law court retains a residual power to decline to exercise its jurisdiction”, where another forum is better suited to hear the case.[1] International corporations have used forum non conveniens to avoid having complaints against them heard in Canadian courts. This approach benefits corporations where the judicial system of the relevant foreign jurisdiction is not independent, particularly where the state’s interests align with those of the corporation. Therefore, corporate defendants subject to allegations of international harm may seek to stay a claim on the grounds of forum non conveniens.

The current test to stay an action on the basis of forum non conveniens comes from the Supreme Court of Canada in Van Breda v. Village Resorts Ltd and its companion decision Black v. Breeden. This test provides that the defendant has the burden to show that another jurisdiction must be “clearly more appropriate,”[2] and in weighing the evidence, the court must consider “all relevant concerns and factors.”[3]

Before, the 2017 decisions of the BCCA in Garcia v. Tahoe Resources Inc. (“Tahoe”) and Araya v. Nevsun Resources Ltd. (“Nevsun”) “there [was] no binding authority” on how judicial corruption was to be incorporated into a forum non conveniens analysis.[4] In those cases, the BCCA rejected applications to stay the actions on the basis of forum non conveniens. In doing so, the Court explained how judicial corruption factors into the forum non conveniens analysis, concluding that judicial corruption in Guatemala and Eritrea was significant enough as to justify refusing to stay the proceedings on the grounds of forum non conveniens.

Background: Tahoe and Nevsun

In Tahoe, seven Guatemalan men are suing the Canadian mining company for injuries they allegedly suffered during a violent suppression of a protest at a mine in Guatemala that is wholly owned by one of Tahoe’s subsidiaries.[5] The BCCA overturned the lower court’s decision granting Tahoe’s application to stay the action on the basis of forum non conveniens.

In Nevsun, the plaintiffs claim that they were subject to forced labour at the Bisha Gold Mine in Eritrea, which Nevsun Resources partially owns.[6] A detailed overview of the facts has been provided in a previous blog post. The BCCA upheld the British Columbia Supreme Court’s ruling, rejecting an application to stay the action on the basis of forum non conveniens.

BCCA Accepts General Evidence of Judicial Corruption

In each case, the plaintiffs introduced general evidence of judicial corruption in the host countries – Guatemala for Tahoe and Eritrea for Nevsun – that was accepted by the BCCA, demonstrating a new willingness to admit less tailored proof of judicial corruption abroad. In Tahoe, the Court found that the evidence of the expert witnesses on Guatemala’s judicial system was only “general in nature,” as the “appellants ha[d] not produced detailed evidence showing instances where the Guatemalan judiciary ha[d] been corrupted by the power of foreign corporations.”[7] In spite of this weakness, the Court found that the evidence was sufficient to establish that “corruption in the Guatemalan justice system is widespread.”[8] However, the Court tempered this finding by noting that “broad assertions of corruption should be given limited weight, whereas detailed and cogent evidence of corruption should attract significant weight.”[9]

In Nevsun, the BCCA again admitted general evidence of judicial corruption. The plaintiffs submitted secondary reports by organizations such as Human Rights Watch to show that they would not receive a fair trial in Eritrea. The Court found that these reports, despite their general nature, could be used “for the limited purpose of providing a social, historical and contextual framework.”[10] The Court further explained that even though the reports did not allow for testing of “the facts and opinions expressed through cross-examination or otherwise,” they could be admitted to establish judicial corruption because they were the only means of adducing the necessary “social” evidence.[11] Recognizing how difficult it is for plaintiffs to provide detailed, first-hand evidence of corruption by state actors, the BCCA was flexible in the evidence it would accept to establish judicial corruption.

The Weight Given to Judicial Corruption

Before Tahoe and Nevsun, it was unclear how judicial corruption would factor into the forum non conveniens test. In Tahoe, the BCCA found that evidence of judicial corruption only has to show that there is “a real risk that the alternate forum will not provide justice.[12]” Furthermore, this factor is to be considered alongside all other relevant factors “with the overall burden on the defendant to establish that the proposed alternate forum is in a better position to dispose fairly and efficiently of the litigation.”[13]

The BCCA in Nevsun not only endorsed this test, but found that judicial corruption in Eritrea outweighed “the expense, inconvenience and practical difficulties of mounting a trial in British Columbia” when deciding not to grant a forum non conveniens action. The Court explained that “the cost, inconvenience and expense that would be involved must be looked at in the light of the grave allegations that the plaintiffs’ claims comprehend.”[14]

Conclusion

The Tahoe and Nevsun decisions demonstrate a new, flexible approach to the types of evidence that will be admitted to establish judicial corruption in a foreign court and the significance of this evidence to the forum non conveniens analysis. This flexibility will make it easier for plaintiffs to combat stays on the grounds of forum non conveniens. In this way, the BCCA’s decisions in Tahoe and Nevsun have made it significantly more difficult for Canadian companies to use forum non conveniens to avoid liability for the actions of their subsidiaries in allegedly corrupt foreign states. With this procedural hurdle weakened, international corporations that disregard human rights abroad will have more difficulty avoiding liability for their actions.

AC

References

[1] Van Breda v. Village Resorts Ltd, 2012 SCC 17 at paras 103 and 104, [2012] 1 S.C.R. 572 [Van Breda].

[2] Van Breda, supra at 108.

[3] Van Breda, supra at 109.

[4] Garcia v. Tahoe Resources Inc, 2017 BCCA 39 at para 124, [2017] 5 WWR 631 [Tahoe].

[5] Tahoe, supra at 1.

[6] Araya v. Nevsun Resources Ltd, 2017 BCCA 401 at paras 2-3, 285 ACWS. (3d) 847 [Nevsun].

[7] Tahoe, supra at 109.

[8] Tahoe, supra at 113.

[9] Tahoe, supra at 125.

[10] Nevsun, supra at 113.

[11] Nevsun, supra at 98.

[12] Tahoe, supra at 124.

[13] Tahoe, supra at 120.

[14] Nevsun, supra at 118.