On January 26, 2017, the B.C. Court of Appeal’s (Court) decision in Garcia v. Tahoe Resources Inc. (Garcia) challenged the premise that claims will be dealt with where they occur. The decision will be a factor in future cases where defendants argue that claims against them for overseas events should be stayed in favour of foreign jurisdictions, especially where there is a real risk that justice will not be provided abroad.
The defendant in Garcia was a British Columbia company, but its presence in the province was limited to its registered and records office and occasional annual general meetings and directors’ meetings. Based in Nevada, the defendant operated a silver, gold, lead and zinc mine in southeast Guatemala through a wholly-owned local subsidiary.
According to the Guatemalan plaintiffs, during a protest outside the gates of the mine, security guards allegedly opened fire on the crowd, injuring protesters. The plaintiffs started a lawsuit in British Columbia against the defendant on the basis of direct and vicarious liability for battery and liability for negligence as a result of the security guards’ conduct.
STAY OF CLAIM
In 2015, the defendant successfully applied to stay the plaintiffs’ action in British Columbia. It conceded that the B.C. courts had jurisdiction but argued that it would be more appropriate for the plaintiffs to advance their claim in Guatemala. There was an ongoing criminal proceeding in Guatemala against the defendant’s security manager, and under Guatemalan law the plaintiffs could be added to that proceeding and seek compensation from the security manager and other parties. The chambers judge noted that:
- The defendant carries on its business from Nevada
- Its operating officers reside in Nevada
- The injuries and losses occurred in Guatemala
- The evidence was in Nevada and Guatemala
- All of the plaintiffs’ evidence was in Spanish
- The direct operator of the mine was a Guatemalan company
The judge held that the plaintiffs’ evidence of corruption in the Guatemalan justice system did not render Guatemala’s legal system incapable of providing justice. She consequently granted the stay requested by the defendant. The plaintiffs appealed.
The Court reversed the stay, permitting the plaintiffs to continue their claim in British Columbia for three reasons. First, the Court admitted new evidence that the security manager had fled Guatemala and brought the criminal proceedings to a halt. This cast doubt on the chambers judge’s conclusion that the plaintiffs could apply for compensation in that proceeding. This was particularly important because the one-year limitation period for bringing a standalone civil action in Guatemala had expired and it was unclear whether a civil claim could be pursued there at all. Second, the chambers judge failed to adequately consider the inferior discovery procedures in Guatemala for evidence; letters of request would need to be obtained from Guatemala’s courts and issued to Nevada’s. Lastly, in light of the plaintiffs’ evidence of systemic corruption in Guatemala, the chambers judge erred by considering only whether Guatemala’s courts were capable of providing justice. She should have considered whether there was a real risk that justice would not be provided. These factors, including the risk of judicial corruption, meant that Guatemala was not a clearly more appropriate forum for the plaintiffs’ claim.
In determining the proper forum for a dispute, Garcia clarifies that courts may now take a more in-depth look at a foreign legal system before staying proceedings in Canada in favour of proceedings in a foreign jurisdiction. Garcia provides that a court may consider, among other things, limitation periods in the foreign jurisdiction, the scope of discovery procedures, and evidence of corruption in the foreign judicial system. If adopted more broadly, the decision in Garcia has the potential to result in more cases regarding conduct abroad proceeding in Canada, even where the facts and circumstances of those cases largely connect to the foreign court.