Responsabilité de la société mère international | S1, ÉP4

Une société mère canadienne d’une multinationale peut-elle être responsable des actes de ses filiales étrangères dans d’autres pays ? L’année dernière, dans la décision Nevsun, la Cour suprême du Canada presse les sociétés multinationales de demeurer sur leur garde quant à ce risque. Qui plus est, partout dans le monde les multinationales font l’objet d’une surveillance accrue et doivent agir de manière responsable et durable. Joignez-vous aux coanimateurs Ailsa Bloomer et Andrew McCoomb pour une discussion portant sur la nature évolutive de la responsabilité d’une société mère internationale : le « voile » derrière lequel se cachent les sociétés est-il toujours un moyen efficace pour se défiler de ses responsabilités ? Quel est le rôle de la médiation dans la gestion de ce risque ? Alison FitzGerald et Martin Valasek abordent ces enjeux. Alison est avocate-conseil à notre bureau d’Ottawa et sa pratique est axée sur l’arbitrage international, le commerce et la loi sur l’investissement. Martin est associé à notre bureau de Montréal et responsable de l’équipe d’arbitrage international au Canada.

Crédits FPC : cet épisode est admissible pour 0,5 heure de droit de fond en Ontario et 0,5 heure de droit de fond en Colombie-Britannique.

Pour obtenir plus d’information, veuillez consulter notre Guide transfrontalier sur la responsabilité de la société mère à l’égard de filiales étrangères.

*L’épisode et le guide sont disponibles en anglais seulement.

Transcript

Listen and subscribe to the Disputed podcast on:

• Apple Podcasts
• Spotify

Transcript:

Martin Valasek  00:00
It's no longer an esoteric area of the law, you know, customary international law, doctrines of parent company liability, how those intersect. This will become, I think, one of the dominant themes in the coming years and everyone who's involved in-- in corporate policy, corporate structure and risk advisory and risk mitigation work needs to know about this area.

Andrew McCoomb  00:26
Welcome to Disputed, a Norton Rose Fulbright podcast, with your hosts Andrew McCoomb from Toronto and Ailsa Bloomer from Calgary. This episode is about international parent company liability. Can the Canadian parent of a multinational organization be liable for its foreign subsidiaries actions abroad? Last year the Supreme Court of Canada found that Eritrean mineworkers could pursue claims in Canada against Nevsun Resources for alleged human rights abuses connected with the subsidiaries operation in Eritrea. That lawsuit settled in October last year, but the ruling means multinational companies, particularly energy resource companies with operations across the world, must be alive to the risk that foreign plaintiffs can bring claims directly against a parent of an offending subsidiary in Canadian courts. 

Ailsa Bloomer  01:10
At the same time, the nature of claims brought by foreign plaintiffs is evolving. Instead of establishing liability through piercing the corporate veil, Canadian courts are open to the possibility of novel duties of care owed by parent companies based on their corporate responsibility statements. And one of the interesting court cases you'll hear us talk about on this point is Choc and Hudbay Minerals. A claim brought by Guatemalan mineworkers in the Ontario Superior Courts. 

Andrew McCoomb  01:38
Global scrutiny on all types of companies to act sustainably and responsibly is increasing, meaning questions of international corporate liability are being raised by courts and key jurisdictions across the Western world, not just in Canada, but the Netherlands, Australia, Hong Kong, the UK and the US. 

Ailsa Bloomer  01:54
So this is obviously a huge topic. Our goal in this episode is just going to be to understand the significance of the evolving liability risk. For example, what's happened to the concept of the corporate veil as a means of insulating liability up the corporate chain? On a practical level, what factors might increase the risk of these claims against parent entities? And what role could arbitration play for mitigating the impact of some of these issues?

Andrew McCoomb  02:21
With us to talk about this topic were Alison FitzGerald and Martin Valasek. Alison is of counsel in our Ottawa office who specializes in international arbitration, trade and investment law. Alison's international arbitration practice covers a number of industry sectors including oil and gas, construction, aerospace and technology and software licensing. Alison also has a background in public international and constitutional law, where she has represented clients and human rights abuse cases in connection with their foreign operations. 

Ailsa Bloomer  02:49
And joining Alison is Martin Valasek, who you heard in the clip at the beginning of this episode. Martin is a partner in our Montreal office, and he's head of our Canadian International Arbitration team. Martin has extensive experience in both investor state and commercial contract disputes, covering a wide range of industries, from aerospace to banking, construction, energy and pharmaceuticals. Also, if you would like to understand more about the global disputes risk profile for multinational businesses, Norton Rose Fulbright has produced a comprehensive guide to parent company liability for foreign subsidiaries. A link to this guide is in this episode's description. 

Alison, Martin, thank you very much for joining us on Disputed.

Martin Valasek  03:37
Thank you. It's good to be here. 

Alison FitzGerald  03:39
Pleasure. 

Andrew McCoomb  03:40
So guys, Ailsa, and I have done our homework and what I can take away from that homework is this is a fascinating topic, but it's also a huge one. There's a vast amount of case law, treaties, statutes, principles that affect what we're going to talk about on this podcast. So maybe can you start us off by telling us who needs to pay attention to this episode? And why? 

Alison FitzGerald  04:04
I think the short answer to that is, everyone. There has been a doctrine in place in Canada and again, in many other jurisdictions that essentially prevented putative plaintiffs from piercing what's called the corporate veil. So that veil that has essentially shielded parent companies from liability has held for many, many years, it's arguably now under attack. And in some respects, plaintiffs are looking where they're not able to pierce through it, to sidestep it, by looking for ways to sue parent companies directly. 

Ailsa Bloomer  04:45
So just to start at the beginning, traditionally, parent liability is established through the process of piercing the corporate veil. Can you explain this theory of the corporate veil and how companies have made use of it to contain their liability? 

Alison FitzGerald  04:59
Historically, each entity in the corporate structure has been considered to have its own separate legal personality. And so this theory of corporate veil piercing essentially, phenomenon that happens when a court disregards the separate personality of each of the corporation to the entities in that corporate chain, that's called piercing the veil. And so when that happens, a subsidiary’s actions can be attributed to its parent wherever that parent is in the world, meaning that the parent becomes liable for any harmful conduct for which the subsidiary is responsible. There are, as I mentioned earlier, piercing the corporate veil is typically not easy. Typically, plaintiffs would have had to have demonstrated that a subsidiary was wholly dominated and controlled by the parent, and was actually used as a shield and set up for an improper or fraudulent purpose. Obviously, fraud is a high-- high bar to prove. Secondarily, you could have, you could pierce the corporate veil, where this you can demonstrate that the subsidiary acted as an agent for the parent company. So demonstrating an agency relationship or otherwise where a statute or-- or contract provides for it.

Martin Valasek  06:16
I suppose I could add to the-- the corporate veil analysis, some observations on what companies try to do in order to actually invoke the corporate veil or be in a position to invoke it. And so traditionally, in order to be able to invoke the corporate veil, parent companies typically will ensure that their subsidiaries have boards that are functioning independently, have a majority of directors that are not resident in Canada, that meet regularly in the foreign jurisdiction to receive operations updates and make policy decisions. And the point of that, of course, is ultimately to demonstrate, when necessary, that the subsidiaries are operating in a way that enables the parent company to invoke the corporate veil and insist on the separate corporate identities for purposes of jurisdiction. 

Andrew McCoomb  07:16
So obviously, companies can take their cues from the common law on how to arrange their affairs, so as to make sure that that veil gets protected, but are attitudes towards the sort of the sanctity of the corporate veil changing in the law that you see?

Alison FitzGerald  07:32
I think they absolutely are. I think courts are increasingly looking at corporations and considering that they should not be able to absolve themselves of any responsibility for wrongdoing that happened somewhere along their corporate chains. And courts, in Canada and abroad, have been increasingly willing, even where a plaintiff is unable to pierce the veil, to look at other theories and acknowledge that there is some possible basis on which a theory could move forward in negligence or even in a new nominate tort, in which the plaintiff could sue that parent company directly in a Canadian court as a result of conduct, for example, that the parent company has undertaken vis-a-vis its subsidiary or the operations on the ground. 

Ailsa Bloomer  08:30
So on that point, can you outline some key decisions that suggest there's been a shift away from piercing the corporate veil and perhaps and move towards an alternative method of establishing liability, such as through novel duties of care? 

Alison FitzGerald  08:45
So there are several courts in Canada that have been looking into these matters, and that have received claims from foreign plaintiffs attempting to sue Canadian parent companies directly for events that have occurred abroad. One interesting case is Choc and Hudbay Minerals. It's a claim that was brought before the Ontario Superior Court a number of years ago now, by a group of Guatemalan plaintiffs. Now these are-- these are Guatemalan nationals working in a mine that is operated by a subsidiary of Hudbay Minerals ultimately owned through a corporate chain with several corporate entities in between the Canadian parents and the local subsidiary. The nature of the claim that was brought was in relation to treatment suffered, not even at the hands of the subsidiary down the chain from Hudbay, but at the hands of a security company that had been retained by the subsidiary in order to maintain security over the site.

Andrew McCoomb  10:00
So not only not only is it a parent liability issue, but it's a parent liability issue on top of a vicarious liability type issue. 

Alison FitzGerald  10:08
Absolutely. So this is how many of these claims evolved. They're not even necessarily directly aimed at conduct that the subsidiary and chain from the parent was responsible for, but may have been responsible for overseeing in the sense of having engaged a subcontractor or provider of services. Now, the Guatemalan plaintiffs essentially, they-- they attempted to sue directly Hudbay for the treatment that they had suffered. They alleged a number of different fairly horrific abuses by employees of this security company that had been engaged by the local subsidiary. Now Hudbay fought the claim in Canada. And an important point to bear in mind, it's relevant to this case and it's relevant to every case that is proceeded before Canadian courts so far is that none of these cases have been adjudicated on the merits. But what Canadian courts have proved to be open to is acknowledging that there is a legal possibility that this claim could move forward to an adjudication on the merits, with eventual liability at the feet of the parent company. 

Ailsa Bloomer  10:09
So I think that's an important point to emphasize there. This is not the court saying parent companies are responsible for the acts of their foreign subsidiaries. This is court saying, it is possible for a foreign plaintiff to sue the parent company in Canada, but there is no substantive decision on the merits yet. So it—i.e., there's no precedent saying, yes, a duty of care is owed, and here is an example of conduct amounting to a breach of that duty. 

Alison FitzGerald  11:50
That's correct. No Canadian court has actually adjudicated on that issue that there is a positive duty of care on Canadian parent companies that can give rise to direct liability as a result of harm suffered by a foreign plaintiff. We've yet to get that far in the jurisprudence. 

Andrew McCoomb  12:12
And even-- even that part Alison, it's interesting in terms of the economics of how these cases go, I mean, you mentioned that often these types of cases are going to be class proceedings. And-- and once you get to that stage, either on a motion to strike or a certification motion, or the motion to strike test of whether a pleading discloses a reasonable cause of action is going to be built into the analysis. And you get a judge saying, well, I'm not gonna throw this case out on that ground. Well, then that's, you know, that's distributing some risk towards that parent, even at that moment. 

Ailsa Bloomer  12:44
I mean, not to mention Andrew, the reputational element as well, even just having it on the court, public record that an entity is being sued for alleged human rights abuses, regardless of the liability outcome, that can have huge consequences for organizations, especially those that have been very public about their commitments to sustainability and ethical conduct. 

Alison FitzGerald  13:06
That's-- that's absolutely right. And, you know, that in terms of how Canadian courts are receiving these claims, and Hudbay is a good example of this, one of the bases for the Ontario Superior Court to allow the claim to move forward and not kill it at a motion to strike phase, is the court, the court actually looked at the engagement between the parent and the sub, right, and Hudbay in some respects, that looked like a model corporate citizen based on the policy structure that they had rolled out. And the standards that they had adopted for-- for workers at the promotion of human rights within their corporate environment, that the standards that they had expected to be observed by all participants in their supply chain as well, including, notionally, that security company that was retained to provide security services with respect to the mine site, that, having taken those steps, was one of the bases on which the Court acknowledged there was a possibility that a novel duty of care could be made up in direct liability as against the parent company. Having a robust policy framework in place that sets-- that sets a rigorous standard for conduct has, frankly, been viewed as an asset within a responsible corporate community. And I think there is a bit of a risk with how the reasoning has been articulated in the Canadian courts, that corporations may now look at that and see that robust policy environment as a risk, as opposed to a risk mitigating device. 

Andrew McCoomb  14:54
But it sounds like it creates a real tension between the incentive to have those robust policies in place and to take an active role in making sure that your subs are conducting themselves appropriately and also trying to manage your risk and exposure.

Alison FitzGerald  15:08
I think it may do. My concern is that companies may look at how the discourse is evolving in the courts and see the presence of conduct standards within their company as a risk in itself, as opposed to continuing to see them as a risk mitigating device, which I continue to think they are. I think we would be remiss if we didn't flag that in some cases, in some jurisdictions, parent companies are no longer left to take that--to take those steps voluntarily. So where parent companies are seated in a jurisdiction that has moved forward to legislate, for example, certain responsibilities, like the duty of vigilance that has now been legislated in France, that has had an impact on how French parent corporations operate, how they maintain their investments abroad. In Canada, we don't yet have comparable legislation, but a bill has been tabled that would effectively introduce a Modern Slavery Act. And that would, for example, outlaw forced labour of the nature that we'll discuss in the Nevsun case. But for those companies seated in jurisdictions where parliament or legislature has actually taken a step to legislate this, they don't really have a choice, but to adopt rigorous standards that they're going to apply throughout their chain. They can't walk back from that. And I suspect that will increasingly become the case so that companies will simply need to navigate this, ultimately, what may save companies that are sued by foreign plaintiffs for human rights abuses, or even things like environmental harm and climate change disputes, for example. What may save them at the end of the day is the fact that they turned their minds to these issues, the fact that they were diligent in taking steps to define appropriate standards of conduct, to train their people, to actually audit their programs, for example, to live and breathe, the policies that they've put into place and the conduct standards that they've put into place. 

Ailsa Bloomer  17:28
I think that's a really interesting point. The idea of Canada introducing legislation that mandates human rights due diligence procedures for companies, I mean, the existence of such a possible statute, that should provide some comfort for companies, shouldn't it? Because it gives entities an opportunity to point to that legislation, to demonstrate their compliance with, let's say, disclosure and reporting obligations that might be under that statute or regulation. And that could be a possible defense to these allegations, couldn't it? 

Alison FitzGerald  17:59
Absolutely. It may also provide a legal framework in order to inform the scope of the duty of care. 

Andrew McCoomb  18:04
And as well, the extent to which companies are going to increasingly great lengths to tell their shareholders or potential shareholders about the things that they're doing as good corporate citizens, you have to imagine that those promises and commitments will be the sorts of things that may revisit them in the event that their commitments fall short of reality, and how they're engaging with subsidiaries, foreign subsidiaries, or-- or otherwise. So the Hudbay precedent is so interesting, just-- just for everyone to understand that what you say about what you mean to do, will play a role in determining how interested our courts are in engaging with--, with-- with what it is that you're really doing out there. 

Alison FitzGerald  18:48
Absolutely. And you know, much of this, where corporations are undertaking to put in place robust policy structures, compliance programs, training, etc. A lot of that is driven by shareholders in a public company environment, many cases, shareholders want to be investing in companies that are in fact ensuring that their ethical companies that their business conduct is consistent throughout their operations. 

Andrew McCoomb  19:19
And ESG activism, right? It's hugely on the rise. It's, it's on everyone's minds. 

Alison FitzGerald  19:25
Absolutely. 

Ailsa Bloomer  19:26
The rise of ESG and sustainability and active activism around those issues is definitely going to be a separate topic for another episode, or even a series of episodes. But for now, I think we need to keep on track. So we just, we need to talk about the leading decision in this area at the moment, and that is the Supreme Court of Canada decision in Nevsun Resources that was handed down last year. 

Alison FitzGerald  19:49
So going back to Nevsun, which is the most recent iteration of this discussion in Canada, in terms of the factual matrix, underpinning the claim, the case related to allegations of abuse of workers at a mine site in Eritrea, in which Nevsun has an interest. Three Eritrean mine workers, or former mine workers in particular came forward and provided some evidence that they have been forced to provide labour at the mine site. They alleged a number of different types of abuse that had happened routinely at mine site. Workers having been beaten with sticks, tying their-- tying their elbows and feet together behind the back, leaving them in the Eritrean sun and various other harmful acts. This all began with a claim that was filed on behalf of a class in the BC Supreme Court. A motion similar to a motion to strike was brought on several bases, there was an appeal to the BC Court of Appeal. Again, this is Nevsun appealing up through the chain, and eventually to the level of the Supreme Court appealing on two main grounds – one of them in connection with something called the active state doctrine, which is essentially to say, well, these are really acts of the Eritrean state, not acts of a private entity, and Canadian courts cannot sit in judgment of the acts of a foreign state. And then also, again, on the basis that many of the claims were framed in the language of customary international law and alleged breaches of customary international law. Nevsun took the position that these were not, they were not recognized causes of action to be directly in Canadian law, a breach. So that was the nature of what the Supreme Court was looking at. And as very close judgment five-to-four, is that novel claims for breach of customary international law norms, as pleaded by the Eritrean plaintiffs, do disclose a reasonable cause of action as against the parent company directly for being complicit in the abuses. 

Andrew McCoomb  22:16
Alison, can you just unpack what the Supreme Court is referring to when it's considering this idea of customary international law.

Alison FitzGerald  22:24
Sure, so in very simple terms, customary international law is generally considered to be composed of two things. One, state practice and two, something called opinio juris. So there are very few norms that are recognized to exist under customary international law, in part because it requires broad agreement or consensus among the community of nations as to what that norm is, how we understand it, whether or not it can be actionable, classically as against a state. So, for example, if a state is accused of crimes against humanity, then you might look to something like the Rome Statute for a generally agreed definition of what might constitute a crime against humanity. State responsibility could be engaged where a state is found to have committed such a crime, precisely because it is considered to be something that is condemned by the community of nations as a whole, as a heinous act. What the Supreme Court of Canada did, in essence, is that it said, well, we think-- we think it is at least possible in our system of law, that we could not only potentially hold a state responsible for a violation of a customary international law norm. But we could potentially hold a corporate body responsible for that. And as we mentioned in the Nevsun case, what they're really alleged to have done is to have been complicit with the Government of Eritrea, or its instrumentalities in committing an alleged violation of several customary international law norms. In this sense, our Supreme Court has been a kind of first mover. It's why, first of all, I think Canadian courts are likely to see more of these claims, precisely because our highest court has said we think this is at least possible, we don't think these claims are bound to fail. And until we have a court that works one of these claims through to the merits, I think Canadian corporations will have to live with the risk that the corporate bodies, in fact, don’t at customary international law have the same obligations that states do.

Ailsa Bloomer  24:51
Martin, what are your thoughts? 

Martin Valasek  24:53
One of the themes I think that clearly comes across is-- is the risk of coming to conclusions on the basis of these jurisdictional decisions. I'm quite curious how a court will address the issue of actual liability of a company under principles of customary international law. The other observations I wanted to make, Alison, about Nevsun were, I guess, twofold. One, on the issue of customary international law, it again suggests that, at least in Canada, where the highest court has now weighed in, a law, which traditionally has been seen as being a law that governs relationships among states is seeping into the way that the courts are looking at the behaviour of private actors. Now, there's never been a clear, hermetic seal between the private and public space in customary international law. But nevertheless, this decision truly opens up a flow of-- of standards towards private actors that we haven't necessarily seen before. And I think that that suggests that we're not just looking at areas like international human rights abuses, but we might, we may well be looking at future areas of customary international law, including obligations that are found to exist in areas like climate change, like resource use more broadly, as-- as the world addresses the issues that that have come forward so evidently over the last number of months, and let's face it, there is a, it was a close decision, it was five-four, I think the dissent made some important points about going too far. And the courts themselves have an eye on-- on their reputation, I think, in this very important area. And I think the Supreme Court in Canada knows that as a Canadian court, perhaps it wants to be seen as a progressive leader on-- on these issues. But when you actually need to make out, you know, a-- a verdict, if you will, or a decision on whether or not a company has violated customary international law to the point of having damages assessed against it, let alone its directors or officers, I think we're gonna have to see how that plays out. And I think that now that people are thinking about this, you'll also see people on both sides, working through how these principles can actually be analyzed in a coherent way. And it could be that the best way to resolve some of these things will be, not through customary international law, but through treaty law, where countries could actually get a handle on what their obligations are, what the rights of their investors are, but also what the obligations of their investors are. And that's an area that I think we'll see proceeding in parallel. I think it's been on the horizon for some time. But I think cases like Nevsun are probably highlighting a certain urgency in bringing more coherence to the international framework for what companies can be expected to obtain from the countries in which they're investing. And that's the whole area of investment protection. But I think more and more they need to know what their responsibilities are to the countries in which they're investing and to the international community as a whole. And that's a lot of hard work, that not just lawyers but negotiators and international diplomats need to do to work through that. 

Alison FitzGerald  28:39
But again, this is an area in which Canada's arguably leading in that Global Affairs Canada recently issued its new model, bilateral investment treaty, foreign investment and promotion agreement. It's the model treaty on which they will seek to negotiate additional bilateral investment treaties with foreign states and potentially seek to renegotiate old bilateral investment treaties with current state partners. Included within that model is a provision with respect to business and human rights. In other words, that states will agree bilaterally, that each will seek to hold businesses to an essentially an international standard of business conduct, not necessarily liability, but certainly that states will not seek to attract investment by, for example, lowering labour standards, or enabling things like child labour in order to incent a company to set up business and run its operations cheaply. So Canada is pushing an agenda, I think, in that direction. 

Ailsa Bloomer  29:51
That's so interesting. It makes-- it makes me think that we should do an episode on the development of these investment treaties, you know, with universal standards of business conduct and how that fits with the development of private investor ESG frameworks. But yeah, let's bring it back to the practical application of Nevsun for now. And Martin, you mentioned the strong dissent in the decision, too. What long term impact do you think that the principles in Nevsun are going to have? 

Martin Valasek  30:19
I think that if there is a strong decision in favor of a company on-- on liability, on the merits, then I think it could cool the trend towards bringing such claims in Canadian courts because it could simply indicate to potential plaintiffs that there's a costly process that may not result in-- in a successful outcome. On the other hand, if those bringing the claims are more are, you know, are being supported by non-governmental organizations or by activists, they may well continue to bring such claims simply to attract attention to foreign practices. And if the goal is not the ultimate liability decision, but simply the jurisdictional decision or the headlines, then I think that that's, you know, a completely separate concern, it's a public relations concern. And, you know, we know that often the-- the battle can be won or lost in that sphere, even if there's a very solid defense on the ultimate merits. So I think that companies really do need to be aware of this and increasingly factor into their plans. 

Ailsa Bloomer  31:29
I think that's what makes it even more frustrating, perhaps, that we don't have a decision on the merits. And I think Nevsun was settled just over a year ago, and settlement tends to be the common outcome of these cases, of course, and in many ways, it's the efficient route to reconciling the action from the company's perspective, but how-- how do you even determine what a reasonable settlement amount would be, especially when the allegation is that you're-- you're complicit, you know, you're not-- you're not the primary perpetrator. And that's where having a liability decision with the damages quantum that's put on the type of conduct or complicity would be really helpful. 

Martin Valasek  32:04
Ailsa, I was going to make a similar observation that the fact that all three of these cases have settled leaves us in-- in an environment in which we're commenting on cases where the judges necessarily assume the allegations to be true, and worked through doctrines that the defendant sought to advance on the basis that they were and therefore it's-- it's also important not to leap to conclusions about the liability that would eventually be imposed, we just don't know yet how the judges would evaluate how the company acted, whether it's in respect of allegations of being complicit or actively in breach of a duty. And one would expect that at some point, we will get a decision, because at some point, plaintiffs will be holding out for a damages amount that may simply not be acceptable to a company, and a company, likely on the right facts will-- will tell itself that they like their chances at showing not just to themselves, but to their shareholders and to the world at large that they are willing to defend the way they do business in that particular jurisdiction and around the world. Settlements are fine, obviously as-- as regards how the respective parties who are privy to the settlement feel about it, but it does leave open inferences in the market, in the legal community, in the business community, that neither side may want that community to come to. And there will be a case I think, where-- where those factors will lead to a liability decision. 

Ailsa Bloomer  33:48
So I just want to finish this discussion by asking about the role of international arbitration, which of course is both your areas of expertise. Alison, what role might arbitration play in resolving allegations of human rights abuses on similar claims? Could this be a more appropriate forum for multinational companies than the courts? 

Alison FitzGerald  34:08
There's been some discussion as to whether or not arbitration is potentially better suited to manage the types of claims that are currently moving forward in the courts alleging human rights abuses, etc. And so a body was formed in The Hague some years ago, to take a look at this question and consider whether or not there are elements of arbitration in particular that could be well adapted to the resolution, private adjudication of human rights, business and human rights disputes. And the outcome of that study is essentially a body of rules called The Hague Rules on Business and Human Rights Disputes. These are arbitration rules that have been created as a bespoke tool to address human rights, business and human rights disputes, human rights related claims arising from precisely the scenario we've been talking about, plaintiffs in one jurisdiction that have suffered some alleged harm who are seeking to claim against, say, a foreign parent. The challenge with this is that even with adaptations in arbitration rules, for example, The Hague Rules have much more robust transparency provisions in them to ensure that there is publication of documents, to ensure that in a context where you may well have an entire community that has an interest in the outcome of the dispute, have access to what's happening in the dispute and its ultimate resolution to ensure there's legitimacy throughout the process and that it is capable of actually achieving a meaningful resolution of the dispute, you still need consent. That's been the most challenging question in terms of whether or not arbitration can serve as the right means by which to resolve these types of disputes. What the Hague Rules do is they provide a tool that even after a dispute has arisen, a plaintiff class, for example, and a defendant could agree to adopt, and they can essentially fashion their own procedure to address those claims. 

Ailsa Bloomer  36:22
What are the key reasons why parties might prefer to adopt this type of arbitration framework? 

Alison FitzGerald  36:27
There might be any number of reasons why parties might wish to do that, again, the defendant company may wish to manage at least to some extent publicity around the claim, they may not want to be sued in the courts of their home jurisdiction, they may have to accept along the lines of how the Hague Rules have been drafted, that there will be some transparency over the proceeding but in a very orderly process. And plaintiff class may have an interest in having disputes arbitrated as opposed to having that brought in a-- in a foreign court, they would have a body of adjudicators say a panel of three arbitrators, with expertise in this area, as opposed to a general judge, for example, in the BC Supreme Court or in the Ontario Superior Court, that has general knowledge of any number of laws, but no particular expertise in dealing with the nature of the allegations that may be made. So there could be interest on both sides to adopt those rules. And after a dispute has arisen, there could be a possibility for companies when they're initially setting up their-- their operations abroad, to make an assessment of where are potential claims likely to come from, what is the footprint or the impact of our investment likely to be, understanding that we're going to maintain certain conduct standards, make an assessment of the jurisdiction, is there a risk, for example, of some form of negative impact on the local environment, who's likely to have an interest in that, and to see whether or not a class can be identified at the outset. And buy-in secured at that stage to understand that any claims that do arise will in fact be ventilated in arbitration using the Hague Rules, as opposed to having that plaintiff class chase them in in a foreign jurisdiction?  

Ailsa Bloomer  38:22
That's been an absolutely fascinating discussion. Thank you very much for your time. 

Martin Valasek 38:25
Well, thank you very much, Andrew and Ailsa, for leading us through the discussion. I had a thoroughly enjoyable time talking to you. 

Alison FitzGerald  36:30
It’s been an absolute pleasure to be here with both of you today. So yes, thank you. 

Andrew McCoomb  36:35
Thanks, guys.

Ailsa Bloomer  38:40
We hope you enjoyed this episode of Disputed. If you'd like to find out more about this topic, or how to contact our guests, please visit nortonrosefulbright.com/disputed. Also, if you have any feedback or topics you'd like us to cover in a future episode please do email us at Disputed@nortorosefulbright.com. And, if you would like to hear more, please subscribe to Disputed on Apple podcasts, Spotify, or wherever you get your podcasts.

Norton Rose Fulbright Canada LLP is providing this podcast as a purely educational service. While it may contain legal information, it should not be construed as legal advice, a legal opinion or recommendation, or a statement of process or policy of Norton Rose Fulbright Canada LLP. The information, views and opinions expressed by guest speakers are entirely their own and their appearance on the podcast does not express or imply an endorsement by Norton Rose Fulbright Canada LLP of the information, views or opinions expressed by any guests, or of any entities they represent. Norton Rose Fulbright Canada LLP expressly disclaims any and all liability or responsibility for any direct, indirect, incidental or any other form of damages arising out of any individual’s or organization’s use of, reference to, reliance on, or inability to use this podcast or the information presented in this podcast.