Monday, 30 November 2015

Forum Non Conveniens and Corrupt Foreign Courts

             The recent B.C. Supreme Court decision in Garcia v. Tahoe Resources 2015 BCSC 2045 brings into question the adequacy of the forum non conveniens analysis where the foreign jurisdiction has a disreputable justice system.    Does the analysis give sufficient weight to this factor?   The plaintiffs in Garcia would go even further, saying if they cannot be assured of a fair and impartial trial in the foreign jurisdiction, that ought to be dispositive of the forum non conveniens analysis.

Forum non conveniens analysis is a comparison of the jurisdiction where the proceeding has been commenced with a certain foreign jurisdiction the defendant alleges is clearly a more appropriate one in which to litigate the case, based on a review of a range of factors.  However, the factors usually considered by Canadian courts do not even mention the need to avoid corrupt legal systems.  This concern, if it is included at all, is subsumed in the factor of “ juridical advantage/disadvantage”, which factor the Supreme Court of Canada has said is to be given little weight   (Breeden v. Black [2012] 1 S.C.R. 666) or under the catch-all factor, “interests of justice”.    It comes as no surprise then when a court doing a forum non conveniens analysis gives insufficient weight to concerns about corruption in foreign courts.

            In Garcia, seven Guatemalan residents sued Tahoe in B.C. for negligence and battery arising out of an incident occurring outside a mine in Guatemala, the operator of which is a wholly-owned subsidiary of Tahoe.  The plaintiffs had gathered in front of the mine, and were allegedly shot and injured by the operator’s security personnel.            Tahoe moved for a stay, arguing that based on forum non conveniens principles Guatemala was a more appropriate jurisdiction in which to litigate this case.*   Although Tahoe is incorporated in B.C. , several factors  pointed to Guatemala, and away from B.C., including the facts that the plaintiffs are all Guatemalan residents, the event that forms the subject matter of the case occurred in Guatemala, much of the evidence is located in Guatemala, and the fact that Tahoe’s offices and all employees are in Reno, Nevada, not B.C.  (The mine’s general manager reported to the Reno office, not to anyone in B.C.)   The main issue was whether the plaintiffs’ evidence of serious systemic barriers to justice in the Guatemalan justice system would outweigh those facts. 

            The plaintiffs led expert evidence that, among other things, powerful actors may enjoy impunity, judges lack independence, and corruption and influence peddling is a problem within the judiciary.  They claimed the Guatemalan justice system often does not provide a remedy, but they did not assert that all trials there are unfair or that all judges there are corrupt.   The motion court stated however, “the question is not whether Canada’s legal system is fairer and more efficient than Guatemala’s legal system.  It is whether the foreign legal system is capable of providing justice…. If the forum non conveniens analysis points to a clearly more appropriate forum, then the plaintiff must take the forum as he finds it even if it is in certain respects less advantageous to him unless he can establish that substantial justice cannot be done in the appropriate forum.”  (para. 64)    The Court found that Guatemala has a “functioning justice system” (para. 42), found Guatemala to be clearly the more appropriate forum (para. 106) and stayed the B.C. proceedings.      

With respect, this test sets the bar far too low.  A legal system that delivers justice in only five out of ten cases is clearly a seriously dysfunctional system.  Yet no one could say that such a system is not “capable of providing justice” or that “substantial justice cannot be done” because even in such a system at least some litigants do get justice.   The same can be said for a system providing justice in even just one out of ten cases.

            The test used in Garcia, and the low weight the Court gave to concerns about getting a fair trial, stands in sharp contrast to the approach taken in Norex Petroleum v. Ingosstrakh 2008 ABQB 442, which involved a motion for a stay brought by a Russian defendant.  The central issue of the forum non conveniens analysis there related to juridical advantage, specifically about the allegation that the Russian courts, specifically the Arbitrazh courts, were corrupt.  Justice C. S. Brooker (at para. 102-116) examined expert evidence in depth and concluded that although the corruption was not as pervasive as Norex contended, there was a real risk that Norex could be unable to obtain justice from the Russian courts. “It is unreasonable to expect that Norex should be obliged to court that risk. That risk does not exist in the Alberta court…” (para. 116).   This difference tipped the balance in favour of Alberta over Russia, and clearly carried considerable weight:    “In my view, it is of fundamental importance that litigants be assured that their dispute will be adjudicated in an honest, fair and unbiased tribunal. No litigant should have to run the risk that the court hearing the dispute might be corrupt.”  (para. 127). 

            In the United Kingdom, the Judicial Committee of the Privy Council, in AK Investment CJSC v. Kyrgyz Republic Tel Limited [2011] UKPC 7, took a similar approach in deciding whether that case ought to be moved to the Kyrgyz courts.  The plaintiff opposed this, relying on evidence of corruption in those courts.   The lower court had framed the question as whether litigants “would” not obtain justice in the foreign court, a test similar to the one used in Garcia.  The Judicial Committee ruled that this was an error, and that the correct question was “whether there was a risk that [the litigants] would not obtain justice”, which is similar to the test in Norex.   

            Garcia is reminiscent of the OCA decision in Oakwell v. Enernorth [2006] O.J. #2289, which made clear that a very strict standard of evidence would apply to claims of corruption in foreign courts. There, judgment debtors opposing a proceeding to enforce a Singapore judgment in Ontario led uncontroverted evidence of Singapore’s government’s interference in trials, but not in that particular case and, as the OCA pointed out,  only in political cases, not commercial ones (Oakwell was a commercial case).  This distinction ought not to have mattered in light of evidence that Oakwell had close ties to the government of Singapore.  Also, in a motion for leave to present fresh evidence at the appeal, Enernorth led evidence of a litigant in another case in Singapore who had been charged with criminal contempt after arguing that the Singapore judicial system lacked independence and fairness.   The Ontario Court of Appeal ruled that evidence of corruption in political cases would not suffice in commercial cases, there should be evidence of corruption in the very case before the court, and a party asserting bias must prove actual bias, not merely a reasonable apprehension of bias.   The Court allowed enforcement of the Singapore judgment.

Garcia’s facts are quite similar to those of Choc v Hudbay 2013 ONSC 1414, an Ontario case recently in the news.  There too, the plaintiffs are Guatemalan residents suing in Canada a company that wholly owns a mining operation in Guatemala, for damages arising out of injuries inflicted by security personnel at the mine.   In both Hudbay and Garcia the plaintiffs claim that the Canadian defendant owed them a duty of care to take certain steps to prevent the violence perpetrated by the security personnel.   In Hudbay the defendants moved not to stay the action but to strike out that claim, arguing it does not disclose a cause of action in Canadian law.  The Court declined to do so.   It seems likely that Hudbay will now consider moving for a stay in light of the ruling in Garcia. 

            In the end, on the particular facts of Garcia the decision to stay the B.C. proceeding and move the case to Guatemala was likely justified, insofar as the evidence of corruption was not very strong, and other factors pointed strongly to Guatemala while few pointed to B.C.   It is the test used in Garcia that needs to be revisited. 


* The test a defendant in British Columbia must meet is a little lower than in Ontario, although the factors are basically the same.  In B.C., the Court Jurisdiction and Proceedings Transfer Act   S.B.C. 2003, c. 28 (“CJPTA”) says defendant must show the foreign jurisdiction to be “more appropriate” than the domestic one the plaintiff has chosen.  By contrast, cases such as Breeden v. Black 2012 SCC 19  and Van Breda 2012 SCC 17 (para. 108) say the defendant must show the foreign jurisdiction is “clearly more appropriate”.    


1 comment:

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