Time to Break New Ground and Regulate Canada’s Extractive Companies Operating Abroad

Thursday, July 7, 2016

The new Trudeau government has had its hands full dealing with a number of important and pressing concerns both domestically and internationally. However, the federal government must soon turn its eye to the glaring hole in Canadian law that allows Canadian extractive companies to engage in, and profit from, human rights and environmental abuses in their overseas operations, often with impunity. Canada hosts a significant majority of the world’s largest exploration and mining companies, as well as a large number of oil and gas companies, many of which have operations in developing countries. Over the last five years an increasing number of civil cases have been launched in Canadian courts alleging egregious conduct, including murder, gang rape, forced labour, torture and complicity in war crimes, on the part of Canadian extractives, their subsidiaries and their security contractors.[1] The most well known case is Choc v Hudbay Minerals Inc., which has been attracting significant media attention over the past six months.[2] The case concerns three related civil actions initiated by indigenous Mayan plaintiffs from the Guatemalan community of El Estor. The plaintiffs allege that the security personnel employed by HudBay’s Fenix mining project shot and killed Angelica Choc’s husband, Adolfo Ich, shot and left paralyzed another plaintiff, German Chub Choc, and along with police and military, gang raped Margarita Caal Caal and 10 other Mayan women.[3] Two other cases against Canadian extractive companies are currently before British Columbia courts, one alleging complicity in forced labour and torture, and another, alleging the use of excessive force by security personnel against peaceful protesters.[4]

These cases represent only the tip of the iceberg. Complaints about the overseas conduct of Canadian extractive companies are far from rare. Individuals, groups and non-governmental organizations have also brought complaints in non-judicial fora or reported allegations of harmful conduct, including human rights violations on the part of members of Canada’s extractive sector.[5] A report commissioned in 2009 by the Prospectors and Developers Association of Canada, which was leaked in 2010, identified 171 high profile incidents between 1999 and 2009 in which “international mining and exploration companies were involved in community conflict, human rights abuses, unlawful or unethical practices, or environmental degradation in a developing country”. According to the study, Canadian mining companies had been involved in 33% of such incidents, which amounted to four times as many incidents as companies from India, Australia, the US or the UK.[6]

What has Canada done to address this problem? Very little indeed. There is no legislative framework in place requiring Canadian extractive companies to adhere to human rights standards in their overseas operations. Nor does Canadian law provide foreign victims of alleged corporate-related human rights violations with access to an effective remedy. Foreign victims of abuses by Canadian extractive companies who choose to sue in Canada face enormous obstacles in accessing justice. Most cases have been dismissed on jurisdictional issues. Of all the civil suits brought so far in Canada, only Choc v Hudbay case has proceeded to the merits. Moreover, there is no independent quasi-judicial complaint mechanism with the capacity to receive complaints of human rights abuse and other misconduct by Canadian extractives, to investigate allegations and to report on its findings, as an alternative to the court system. Instead, Canada continues to rely on extractive companies to regulate themselves and the government only provides for mediation between companies and foreign affected communities with the aim of easing the way forward for extractive projects.

Back in 2005, the Standing Committee on Foreign Affairs and International Trade, recommended, among other things, that the federal government “[e]stablish clear legal norms in Canada to ensure that Canadian companies and residents are held accountable when there is evidence of environmental and/or human rights violations associated with the activities of Canadian mining companies” and implement incentives to ensure corporate compliance.[7] In 2006, the Liberal government initiated nation-wide consultations, know as the National Roundtables on Corporate Social Responsibility (CSR) and the Canadian Extractive Industry in Developing Countries. In early 2007, following the conclusion of the consultations, the Roundtables Advisory Group, made up of leading representatives from civil society, the extractive industry and academia, issued a series of recommendations to the government for establishing a comprehensive and robust CSR policy framework for extractives operating overseas.[8] The Conservative government took two years to respond, and in 2009 launched its CSR strategy, “Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector”, which disregarded the most important recommendations made by the Advisory Group, including the establishment of an independent ombudsman with a mandate to receive and investigate complaints of corporate misconduct abroad.[9] Instead, the 2009 Strategy merely encouraged extractive companies to adopt or sign on to certain intergovernmental and multistakeholder initiatives and established the Office of the CSR Counsellor, an ineffectual dispute resolution mechanism with no power to compel companies, against whom allegations had been made, to come to the table.

In November 2014, the government launched a revised version of the CSR Strategy called “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad”.[10]  The new Strategy is an improvement on the 2009 version. It sets out some expectations of conduct of Canadian extractive companies operating overseas and indicates that diplomatic support and certain types of economic support provided by the government may be withdrawn where such companies fail to adhere to the expectations of conduct or to participate in the dispute resolution process.

Despite these important changes, the Strategy does little to prevent corporate misconduct and to hold those that do not comply accountable.[11] First, the expectations of conduct are far from clear. Among other things, companies are expected to “respect human rights”, but the Strategy fails to provide specific and crucial guidance on what this might entail or to explicitly refer companies on this issue to the UN Guiding Principles on Business and Human Rights (UNGPs) (the widely accepted global standard on this issue) or the OECD Guidelines for Multinational Enterprises (which, in its chapter on human rights, explicitly draws on the language of the UNGPs). Rather, the Strategy simply refers companies more generally to a variety of diverse multistakeholder and intergovernmental initiatives, including the UNGPs and OECD Guidelines, “with the expectation that Canadian companies will align their practices as applicable”.[12]

Second, the 2014 CSR strategy strengthened the CSR Counsellor’s dispute settlement powers by making government economic and diplomatic support conditional on a company’s participation in its “review process”. But it did not transform the Counsellor’s Office into a much needed independent complaint mechanism, with the capacity to receive and investigate and report on allegations brought by victims of alleged corporate-related violations of human rights or breaches of the other expectations of conduct set out in the Strategy. The Counsellor’s review process remains a dialogue facilitation process. He may receive complaints from “project-affected individuals or communities” (or even extractive companies complaining about vexatious allegations against them) and “bring the disputing parties together to help them resolve their differences for a mutually beneficial result”.[13] Of course this can be a valuable exercise and help extractive companies and local communities to understand each other’s positions, to compromise and come to an agreement on how to move forward. But it does not provide victims with an effective remedy.

Finally, the Strategy does nothing to address the often insurmountable hurdles that victims of alleged human rights abuses face in having their claims considered on the merits in Canadian courts.[14]

The ball is now in the Trudeau government’s court to move beyond the approach of self-regulation and to take meaningful steps to ensure that Canadian extractive companies do respect human rights in their overseas operations, and, where the latter do not, to ensure accountability and to provide effective remedies for victims. In the past year, both the UN Human Rights Committee and the UN Committee on Economic Social and Cultural Rights have called on Canada to take legislative action to address the overseas conduct of Canadian extractives and provide remedies for victims.[15] The government must go further than simply tinkering with the current CSR strategy and the CSR Counsellor’s review process. It must adopt a comprehensive legislative framework with clear standards for Canadian companies operating abroad and develop incentive, facilitative and even coercive legal mechanisms to ensure compliance.[16] In addition to addressing the problem of access to justice in Canadian courts (perhaps by exploring Federal Court jurisdiction and a federal cause of action, or changes to the Uniform Law Conference of Canada’s Court Jurisdiction and Proceedings Transfer Act), the government must also establish an independent complaint mechanism, such as an ombudsman, as an alternative to the courts. The approach by the new Liberal government taken in addressing this pressing issue will be a litmus test for its commitment to the protection international human rights.

[1] See Bil’in (Village Council) v Green Park International Inc, 2010 QCCA 1455, leave to appeal to SCC refused [2010] SCCA No 364; Piedra v Copper Mesa Mining Corp (2011), 332 DLR (4th) 118, affirming 2010 ONSC 2421; Association canadienne contre l'impunité (ACCI) c Anvil Mining Ltd, 2011 QCCS 1966, rev’d [2012] JQ no 368 (QCCA), leave to appeal to SCC refused, 34733 (November 1, 2012); Choc v Hudbay Minerals Inc, 2013 ONSC 1414; Gize Yebeyo Araya v Nevsun Resources Ltd (20 November 2014), Vancouver S-148932 (BC SC) (Notice of Civil Claim); and Garcia v. Tahoe Resources Inc., 2015 BCSC 2045.
[2] Suzanne Daley, ‘Guatemalan Women’s Claims Put Focus on Canadian Firms’ Conduct Abroad’, New York Times (2 April 2016), online: http://www.nytimes.com/2016/04/03/world/americas/guatemalan-womens-claims-put-focus-on-canadian-firms-conduct-abroad.html?_r=0. Marina Jimenez, “Mayan families’ quest for justice against Canadian mining company HudBay”, Toronto Star (20 june 2016) online: https://www.thestar.com/news/world/2016/06/20/the-mayans-vs-the-mine.html; and Marina Jimenez “How a Guatemalan murder trial could forever change Canadian overseas mining”, Toronto Star (20 June 2016) online: https://www.thestar.com/news/world/2016/06/20/how-a-guatemalan-murder-trial-could-forever-change-canadian-overseas-mining.html.
[3] Choc v. Hudbay, note 1.
[4] Araya v Nevsun and Garcia v. Tahoe note 1.
[5] For the cases (called Specific Instances) brought against Canadian companies before Canada’s National Contact Point under the OECD Guidelines for Multinational Enterprises see http://www.international.gc.ca/trade-agreements-accords-commerciaux/ncp-pcn/index.aspx?lang=eng&menu_id=1&menu=R. With respect to NGO and other reports on Canadian extractive companies see Human Rights Watch, “Papua New Guinea - Gold’s Costly Dividend: Human Rights Impacts of Papua New Guinea’s Porgera Gold Mine” (2010),  https://www.hrw.org/report/2011/02/01/golds-costly-dividend/human-rights-impacts-papua-new-guineas-porgera-gold-mine; Geoffrey York, “Barrick’s Tanzanian Project Tests Ethical Mining Policies” The Globe and Mail (Toronto, 29 September 2011) http://www.theglobeandmail.com/report-on-business/rob-magazine/barricks-tanzanian-project-tests-ethical-mining-policies/article559188/?page=all; Georgette Gagnon, Audrey Macklin and Penelope Simons, ‘Deconstructing Engagement: Corporate Self-Regulation in Conflict Zones - Implications for Human Rights and Canadian Public Policy’ (January 2003) University of Toronto Public Law Research Paper No. 04-07, http://ssrn.com/abstract=557002; and Working Group on Mining and Human Rights in Latin America, “The Impact of Canadian Mining in Latin America and Canada’s Responsibility: Executive Summary of the Report Submitted to the Inter-American Commission on Human Rights” (3 April 2014), http://www.dplf.org/sites/default/files/report_canadian_mining_executive_summary.pdf.
[6] Canadian Centre for the Study of Resource Conflict, “Corporate Social Responsibility: Movements and Footprints of Canadian Mining and Exploration Firms in the Developing World” (October 2009) at 6-7, http://miningwatch.ca/news/2010/10/18/suppressed-report-confirms-international-violations-canadian-mining-companies.
[7] Canada, Parliament, House of Commons, Fourteenth Report of the Standing Committee on Foreign Affairs and International Trade: Mining in Developing Countries - Corporate Social Responsibility, 38th Parl, 1st Sess (2005) http://www.parl.gc.ca/HousePublications/Publication.aspx?Language=e&Mode=1&Parl=38&Ses=1&DocId=1961949&File=0.
[8] National Roundtables on Corporate Social Responsibility (CSR) and the Canadian Extractive Industry in Developing Countries, “Advisory Group Report” (29 March 2007) http://www.pdac.ca/docs/default-source/public-affairs/csr-national-roundtables-advisory-group-report.pdf?sfvrsn=6.
[9] Foreign Affairs, Trade and Development Canada, “Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector” (March 2009), http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse-2009.aspx?lang=eng.
[10] Foreign Affairs, Trade and Development Canada, “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad” (14 November 2014), http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse.aspx?lang=eng.
[11] For a full assessment of the 2014 CSR Strategy, see P. Simons, “Canada’s Enhanced CSR Strategy: human Rights Due Diligence and Access to Justice for Victims of Extraterritorial Corporate Human Rights Abuses” (2015) 56(2) CBLJ 167, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2631158.
[12] “Doing Business the Canadian Way”, p. 6.
[13] “Doing Business the Canadian Way”, p. 12. Where formal mediation is needed, the Counsellor will support the parties to bring the issue to Canada’s National Contact Point, a body it is required to maintain under the OECD Guidelines for Multinational Enterprises. For a discussion of the self-imposed limitations and other shortcomings of the NCP process see Simons, “Canada’s Enhanced CSR Strategy”, note 11, pp. 194-198.
[14] For a discussion of these obstacles and the various cases that have been launched in Canadian courts, see Simons, “Canada’s Enhanced CSR Strategy”, note 11, pp. 198-205.
[15] See UN Human Rights Committee, “Concluding Observations on the Sixth Periodic Report of Canada”, UN Doc. CCPR/C/CAN/CO/6 (13 August 2013) para 6; and UN Committee on Economic Social and Cultural Rights, “Concluding Observations on the Sixth Periodic Report of Canada”, UN Doc. E/C.12/CAN/CO/6 (6 March 2016) para 16.
[16] See P. Simons and A. Macklin, The Governance Gap: Extractive Industries, Human Rights and the Home State Advantage (Routledge 2014) chapter 5.
Designed by Rachel Gold.