Criminal liability

Primary liability

What criminal charges can be asserted against businesses for the commission of human rights abuses or involvement or complicity in abuses? What elements are required to establish guilt?

Canadian corporations are subject to the federal Criminal Code. There are no specific offences under the Criminal Code for which corporations can be held criminally liable for human rights abuses conducted in foreign jurisdictions. Additionally, the Criminal Code does not have general extra-territorial application; the acts constituting the offence would need to be in Canada.

Generally, businesses can be found guilty of offences by application of the tests outlined under sections 22.1 and 22.2 of the Criminal Code for negligence and other offences. Under these provisions, an organisation may be guilty if one of the organisation’s senior officers was a directing mind that committed the act and had the necessary state of mind. A senior officer is defined as a ‘representative who plays an important role in the establishment of an organisation’s policies or is responsible for managing an important aspect of the organisation’s activities’ and can include directors, executives, employees, agents or contractors.

For an offence requiring negligence (section 22.1), the prosecution must first prove that a representative or representatives acting within the scope of their authority were parties to the offence. Second, the prosecution must prove that the conduct of the senior officer responsible for the organisation’s activities relating to the offence departed markedly from the standard of care that could reasonably be expected to prevent the representative from being a party to the offence.

For offences other than negligence (section 22.2), the prosecution must first prove that one of the senior officers at least had the intent to benefit the organisation. Second, the prosecution must prove one of three bases for liability:

  • the senior officer, acting within the scope of his or her authority, was a party to the offence;
  • the senior officer had the mental state for the offence, acted within the scope of his or her authority and directed the work of other representatives to perform the offence; or
  • the senior officer, knowing that a representative of the organisation was or was about to be a part of the offence, did not take reasonable measures to stop the commission of the offence.

 

What defences are available to and commonly asserted by parties accused of criminal human rights offences committed in the course of business?

There are no cases addressing defences related to criminal human rights offences committed in the course of business, particularly for offences committed abroad. However, corporations may assert that:

  • there is a lack of jurisdiction, due to territorial or forum issues;
  • the individual involved in the offence was not a senior officer or representative of the corporation;
  • the individual involved did not depart markedly from the standard of care reasonably expected;
  • the individual was not acting within the scope of his or her authority; or
  • the individual did not commit the act intentionally, in any part, to benefit the organisation.

 

Director and officer liability

In what circumstances and to what extent can directors and officers be held criminally liable for involvement or complicity in human rights abuses? What elements are required to establish liability?

There are no specific offences under the Criminal Code for which directors and officers can be held criminally liable for human rights abuses conducted by corporations in foreign jurisdictions.

However, directors and officers can be held criminally liable as senior officers when they participate in the organisation’s commission of or involvement in offences under the Criminal Code. They would likely be jointly charged with the offence alongside the organisation. Otherwise, directors and officers of an organisation cannot be criminally liable for acts of the organisation solely because of their position as such.

Pursuant to section 21 of the Criminal Code, a director or officer is a party to an offence committed by an organisation when he or she:

  • actually commits the offence;
  • does or omits to do anything for the purpose of aiding any person to commit the offence; or
  • abets any person in committing the offence.

 

Piercing the corporate veil

When can the courts disregard the separate legal personalities of corporate entities within a group in relation to human rights issues so as to hold a parent company liable for the acts or omissions of a subsidiary?

Courts may pierce the corporate veil under rare circumstances. First, the court must find that the subsidiary is an alter ego of the parent. A subsidiary will not be found to be the alter ego of the parent unless the subsidiary is under the complete control of the parent and is nothing more than a conduit used by the parent to avoid liability. Second, the court must find that the corporation was created or used for a fraudulent or improper purpose.

Parent companies may also be liable where a senior officer of the parent corporation, along with the foreign-operating subsidiary, is a party to the offence.

With regard to defences, a plaintiff must demonstrate that a parent corporation and its subsidiary are not truly operating as separate corporations. Additionally, in very limited circumstances, courts will pierce the corporate veil when a refusal to do so would yield a result that is flagrantly opposed to justice. When a corporation is convicted of a criminal offence, it may be fined and its representatives imprisoned, depending on the offence at issue. Further, sentencing judges have the discretion to impose probation orders on organisations, pursuant to section 732.1(3.1) of the Criminal Code, including compliance with ‘any other reasonable conditions that the court considers desirable to prevent the organization from committing subsequent offences or to remedy the harm caused by the offence’.

Secondary liability

In what circumstances and to what extent can businesses be held liable for human rights abuses committed by third parties?

An organisation may be held responsible for the negligent or other acts or omissions of its representatives under section 22.1 or 22.2 of the Criminal Code if the responsible senior officer departs markedly from the expected standard of care, or has intent or knowledge of the criminal conduct.

In accordance with Canada’s trade obligations under the Canada–United States–Mexico Agreement (which replaced the North American Free Trade Agreement), on 1 July 2020, amendments to Canada’s Customs Tariff and the Schedule to the Customs Tariff took effect. These amendments prohibited 'goods mined, manufactured or produced wholly or in part' by forced or compulsory labour from being imported into Canada. Compliance with this new import prohibition requires companies importing goods into Canada to conduct ongoing due diligence and review of their supply chains to ensure the absence of forced labour at each step of production.

Prosecution

Who may commence a criminal prosecution against a business? To what extent do state criminal authorities exercise discretion to pursue prosecutions?

The Crown can exercise its discretion to prosecute. When determining whether to exercise its discretion, the Crown will consider the public interest and whether there is a reasonable prospect of conviction.

No provision in the Criminal Code explicitly authorises private prosecutions, but private citizens can institute criminal proceedings for summary or indictable offences. However, private citizens generally pursue civil litigation.

What is the procedure for commencing a prosecution? Do any special rules or considerations apply to the prosecution of human rights cases?

When commencing a prosecution, the Crown must comply with criminal procedures pursuant to the Criminal Code and common law. Criminal procedures differ from province to province. There are no special rules or considerations related to the prosecution of human rights cases in the criminal context.

Law stated date

Correct as of

Give the date on which the information above is accurate.

January 2020.