Environmental Harm in Developing Countries Caused by Subsidiaries of Canadian Mining Corporations: The Interface of Public and Private International Law

Sara L. Seck

doi:10.1017/S0069005800007141

¹ Bourrie, Mark, “Environment: Overseas Canadian Mines Fail to Clean Up Their Act,” Inter Press Service [Ottawa] (December 29, 1998) [Lexis].Google Scholar See also Gallon, Gary, “Mine Spills Give Canada a Black Eye,” Toronto Star (April 30, 1998) [Lexis]Google Scholar. Further information about the environmental troubles of Canadian mining companies overseas may be found online at CBC TV’s The National website: <http://tv.cbc.ca/national/pgminfo/ugly/index.html>, including links to related sites and the online documentary “The Ugly Canadian.”

Even the United States is not immune to problems created by Canadian mining companies. In 1991, Vancouver-based Galactic Resources Limited gave the United States one of its largest tailings pond disasters in history at the Summitville Mine in Colorado. Nearly seventeen miles of the nearby Alamosa River was polluted. When victims of the pollution and state governments went after Galactic for damages, the company declared bankruptcy. See infra notes 129 and 224. Pegasus Gold Incorporated., an American-owned company registered in Canada, reported nine cyanide spills in nineteen years in Montana. In January 1998, the company sought bankruptcy protection while denying liability for the spills.

² Bourrie, supra note 1; and Gallon, supra note 1.

³ Bourrie, supra note 1. See also Simao, Paul, “Canadian Mine Denies Reported Kyrgyzstan Cyanide Poisonings” (28 May 1998) Journal of Commerce 8A [Lexis].Google Scholar The government was rumoured to be preparing an $8 million lawsuit against Cameco Corporation.

⁴ Bourrie, supra note 1; and Gallon, supra note 1. The damage caused by the sludge from the zinc, copper, lead, and silver mine was initially estimated at $ 113 million. In addition, it threatened Spain’s Donana National Park, a United Nations World Heritage Site.

⁵ Gallon, supra note 1; Damsell, Keith, “Filipino Judge Says Placer Still Owns Troubled Mine,” National Post [Toronto] (April 17, 1999) C1Google Scholar. The four-month continuous spill of mine tailings led to criminal charges being filed by the Philippines government against three Marcopper Copper Mine executives. The four million tonnes of toxic sludge were found by a subsequent United Nations assessment mission to have led to a total loss of the use of the rivers for livestock, fishing, laundry, bathing, and agriculture for the villages along the river. According to the National Post, the mine has been mothballed since the spill, and Placer Dome has spent US $80 million so far cleaning up the river system and compensating the local community. In March 1997, Placer Dome reported it had divested its 40 per cent interest in Marcopper Copper Mine, with MR Holdings, a Cayman Islands company that has used the same Vancouver address as Placer Dome and which was created to transfer ownership and cleanup responsibilities to the Marcopper Copper Mine’s debt. According to the news report, MR Holdings was then sold to an “unidentified” company.

⁶ Bourrie, supra note 1. The remaining 30 per cent are owned by the Denver-based Golden Star Resources Limited. Cambior appoints four of six members of Omai’s board. See also Jacobson, Mark, “Guyana’s Gold Standard: Gold-Mining Boom” (September 1998) 107 Natural History 7 at 46 [Lexis];Google Scholar and Cambior, infra note 38, para. 18, item 7.

⁷ Bourrie, supra note 1. Canadian environmental legislation is found at both federal and provincial levels of government. The discharge of contaminants and the construction of works or other such activities without a permit from the appropriate regulatory authority provide the “backbone” of this regulation. ‘The development of a mine, along with its associated mill or concentrator, tailings impoundment, waste rock dump, and so forth, invariably require permitting with respect to land use, diversion and consumption of water, discharges to water and discharges to air. Toxic hazardous substances, such as the sodium cyanide, commonly used in gold extraction are also closely regulated.” See Barton, Barry J., Canadian Law of Mining (Calgary: Canadian Institute of Resources Law, 1993) at 14, 13–22.Google Scholar

Examples of federal legislation include the Canadian Environmental Protection Act, R.S.C. 1988, c.16 (4^th Supp.),c. 22 [hereinafter CEPA, 1988]; the Fisheries Act, R.S.C. 1985, c. F.-14 [hereinafter Fisheries Act]; the Metal Mining Liquid Effluent Regulations, C.R.C. 1978, c. 819. See also the Alice Arm Tailings Deposit Regulations, SOR/79–345. A new and improved Canadian Environmental Protection Act, 1999, S.C. 1999, c. 33 (formerly Bill C-32) received Royal Assent on September 14,1999 [hereinafter CEPA, 1999]. It came into force on March 31, 2000, repealing CEPA, 1988. According to Environment Canada, CEPA, 1999, is designed with a pollution prevention focus, providing “significant new powers” of enforcement for Environment Canada officers and providing a private right-to-sue if the federal government fails to enforce the act. All substances currently in use in Canada will be categorized to determine if they are toxic, and strict deadlines will be imposed to control toxic substances. In addition, the act meets Canada’s international obligations in connection with, among others, the Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and Their Disposal, and provides authority to regulate or require pollution prevention plans for Canadian sources of international air and water pollution where another Canadian government is unwilling or unable to deal with the pollution source. See Environment Canada Press Release, “New Funding to Implement the New Canadian Environment Protection Act” (September 14, 1999) and Environment Canada Press Release, “The Canadian Environment Protection Act: A Strengthened Act for the New Millennium” (September 14, 1999), available online at <http://www.ec.gc.ca/press/cepa99_n_e.htm>. In Ontario, see the Ontario Environmental Protection Act, R.S.O. 1990, c. E.19 [hereinafter OEPA], and the Environment Approvals Improvement Act, 1997, R.S.O. 1997, Ch. 7.

⁸ Bourrie, supra note 1.

⁹ See Bhopal, infra note 23. Note, however, that not all host states are as eager to support litigation abroad. See Aguinda, infra notes 71, 99, and 128; and Dagi, infra note 40.

¹⁰ See Murase, Shinya, “Perspectives from International Economic Law on Transnational Environmental Issues” (1995) 253 Receuil des Courses 287 at 374,Google Scholar citing a tentative definition from Magraw, Daniel B., “United Nations ECOSOC Draft Code of Conduct on Transnational Corporations,” in Zamora, Stephen and Brand, Ronald A., eds., Basic Documents of International Economic Law, vol. 1 (Chicago: CCH International, 1990) at 533–40.Google Scholar According to Muchlinski, Peter, Multinational Enterprises and the Law (Oxford: Blackwell Publishers, 1995) at 13,Google Scholar the term transnational is used by the United Nations, while the term multinational is more common in economic parlance. The origins of the United Nations Draft Code of Conduct on Transnational Corporations lie in claims of the newly independent and less developed member states of the UN for a new international economic order for, among other things, the legal recognition of the right of a state to control the activities of the transnational corporations [hereinafter TNCs] operating within its borders. From the outset, major disagreements existed as to the nature and contents of the code, with the capital exporting countries primarily concerned to use the code as a means of protecting TNCs against discriminatory treatment contrary to the international minimum standards accepted by these states. The “Group of 77,” who were supported by the former socialist countries, were concerned to use the code as a means of subjecting the activities of TNCs to greater regulation, in line with the contents of the UN Charter of Economic Rights and Duties of States in order to avoid the adverse effects of TNC activities on national economic objectives and political independence (Muchlinski at 592–4). The last version of the code dates from May 31, 1990. Negotiations were suspended in July 1992.

¹¹ Murase, supra note 10 at 374.

¹² For reasons of simplicity, the following discussion will not distinguish between Canadian and American doctrines, although reference will be made to sources from both jurisdictions. As will become evident from the extensive footnotes that follow, the principles that govern corporate liability are complex, and there is no clear consensus as to how liability should be dealt with in even the simplest of corporate structures. Relationships between parent companies and their subsidiaries are inevitably even more complex.

¹³ Blumberg, Philip I., The Law of Corporate Groups: Problems of Parent and Subsidiary Corporations under Statutory Laws of General Application (Boston: Little Brown and Company, 1989) at 611.Google Scholar For an extensive list of recent academic writings on the liability of parent companies for environmental harm of their subsidiaries, see Blumberg, , The Law of Corporate Groups: Problems of Parent and Subsidiary Corporations under Statutory Laws of General Application, 1997 Supplement (Boston: Little Brown and Company, 1997) at 253–56.Google Scholar See also Muchlinski, supra note 10 at 323–25.

¹⁴ Fridman, G. H. L., The Law of Torts in Canada, vol. 2 (Toronto: Carswell, 1990) at 311.Google Scholar The basis of this idea is that some duties cannot be delegated, such that the failure to perform or satisfy them will be attributed to the party on whom the law places the duty, even if its breach was as a result of someone else’s act or omission. The placing of the legal duty upon the parent corporation would be governed by the usual tort law principles, requiring a consideration of whether it would reasonably be within the contemplation of the parent corporation that the act or omissions would likely cause harm to the plaintiffs. It would then be necessary for the plaintiff to prove on the balance of probabilities that her damage or loss was caused by the defendant’s negligence, bringing in issues of causation and remoteness. See Fridman, , The Law of Torts in Canada, vol. 1 (Toronto: Carswell, 1989) at 233–41; 320–29.Google Scholar

¹⁵ Welling, Bruce L., Corporate Law in Canada: The Governing Principles, 2 ^nd ed. (Toronto: Butterworths, l991) at 109.Google Scholar This view of corporate personality presented is based upon the one advocated by Welling in a chapter entitled “The Scope of Corporate Personality in Modern Canadian Law” at 99–119. The application of Welling’s view of corporate personality to the parent-subsidiary relationship is my own.

¹⁶ Ibid, at 152–58, where Welling explores the relationship between principles of corporate liability in criminal law and tort. See also all three cases referred to in note 28, which concern the discussion of “directing mind and will” theory in Canadian law.

¹⁷ A striking example of this focus can be found in the English jurisidictional case Lubbe v. Cape Plc. (July 30, 1998) Eng. C.A., Civil Division (unreported) [hereinafter Lubbe]. Lubbe concerned the liability of Cape London, the defendant (English) parent company, for the injuries suffered by individuals in South Africa as a result of exposure to asbestos from asbestos mines and mills at wholly owned subsidiaries. The wording of the original statement of claim alleged that the defendant company “operated and/or had responsibility [through its subsidiaries] for the mines and mills” in South Africa. The trial judge then stated the issues as including “Is Cape London liable in law for the breaches of duty by the South African companies?” At the Court of Appeal, the plaintiffs submitted that the trial judge had misunderstood the nature of the allegations, confusing them with some form of vicarious liability for the acts of agents or subsidiaries in South Africa rather than accepting that the injuries were caused by negligence of the defendant company itself through its directors and officers. The statement of claim re-formulated the central allegation as follows: “Whether a parent company which is proved to exercise de facto control over the operations of a (foreign) subsidiary and which knows, through its directors, that those operations involve risks to the health of workers employed by the subsidiary and/or persons in the vicinity of its factory or other business premises, owes a duty of care to those workers and/or other persons in relation to the control which it exercises over and the advice which it gives to the subsidiary company?” It was accepted at the Court of Appeal that the plaintiffs did not rely upon a form of vicarious liability and, moreover, that the difference was important, “because the alleged breaches of an independent duty of care owed by the defendant took place in England rather than in South Africa.” Ultimately, the Court of Appeal decided that South Africa was not clearly and distinctly a more appropriate forum for the litigation and allowed the appeal so that the litigation could take place in England. (A second significant factor in this decision was the fact that the South African forum was unavailable to the plaintiffs until the defendant offered undertakings to submit to that jurisdiction.) The defendant’s petition to the House of Lords was refused on December 16, 1998. However, the jurisdictional question was revisited after several thousand South Africans brought a group action against Cape London.

In Group Action Afrika v. Cape Plc. (July 30, 1999) Eng. Q.B. (unreported) [hereinafter Group Action Afrika], Buckley J. claimed that the fact that there could be three thousand plaintiffs as opposed to the five individuals in the original Lubbe action added dramatically to the South Africa weighting. This fact was in part due to the fact that causation would have to be investigated, as parts of South Africa were “awash” with asbestos at the time, and Cape London was not the only operator in the relevant areas. As a result, Buckley J. held that the change in circumstances since the Court of Appeal decision was such that he should reconsider the Lubbe action. Significandy, the plaintiffs argued that the “central” issue to be determined was the relationship between the defendant and the South African operations (essentially, the duty of care), the documentation of which would be in England, while South African documentation would go more towards foreseeability of risk, breach, and causation. Buckley, J. ultimately held that South Africa was the main source of relevant documentation since it was necessary to look at the tort as a whole and in the context of the group action. He concluded that South Africa was clearly and distinctly the more appropriate forum after a consideration of the availability of legal aid and the fact that the defendant had submitted to the South African jurisdiction. This decision was upheld on appeal. See “DAC Wins Appeal Case for Asbestos Company,” Lawyer Online (October 10, 1999) at <http://www.the-lawyer.co.uk>. However, a further appeal to the House of Lords was allowed, and the stay upheld at the Court of Appeal was removed. See Schalk Willem Burger Lubbe (Suing as Administrator of the Estate of Rachel Jacoba Lubbe) and 4 Others v. Cape Plc. (July 20, 2000).

¹⁸ Fridman, supra note 14 at 314.

¹⁹ Blumberg, supra note 13 at 612. See also Farmer, Richard S., “Parent Corporation Responsibility for the Environmental Liabilities of the Subsidiary: A Search for the Appropriate Standard” (1994) 19 Journal of Corporation Law 769.Google Scholar Farmer examines the common law doctrine of piercing the corporate veil in US jurisprudence, noting that three elements must generally be shown before the two entities will be considered as one for legal purposes: (1) control — not just through stock ownership but the complete domination of the policy, practices, and will of the subsidiary; (2) the control was used to commit fraud or wrong by the parent through the subsidiary, that is, to avoid legal obligations or statutory duties, or simply to limit the plaintiff s rights; and (3) the fraud or wrong resulted in injury to the plaintiff. Farmer presents a long list of factors that may be considered by courts in deciding whether the parent corporation has exercised the requisite control, noting that, ultimately, there is a great deal of inconsistency and unpredictability in the application of the common law doctrine of corporate veil piercing (Farmer at 773–75 and 778).

For the Canadian perspective on the circumstances in which a court will pierce the corporate veil, see Phillips, G., Personal Remedies for Corporate Injuries (Toronto: Carswell, 1992) at ch. 7.Google Scholar Phillips first notes: “The law about piercing the corporate veil reflects badly on the legal system, on the legal profession, and on the judiciary. No one knows why the veil should be pierced, when the veil will be pierced, or what it means for the veil to be pierced. Writers have been expressing dismay about the unprincipled nature of the law in this area for decades. Many of the decisions are irreconcilable. Most cannot be justified on any acceptable basis” (Phillips at 133). Phillips then divides the circumstances for veil piercing into six doctrines: “fairness” or “justice”; agency; trust; group enterprise; “fraud”; and, “most importantly,” the “alter ego” or “instrumentality” doctrine (Phillips at 133). He summarizes the present state of Commonwealth law on piercing the corporate veil as follows:

1
1 a company will be equated with the collection of its shareholders if the shareholders are using it to effect a purpose, or to carry on an activity, that they could not properly effect or carry out themselves;
2
2 a company will also be equated with the collection of its shareholders if they are using it as their “alter ego”;
3
3 it is difficult if not impossible to predict in advance when a company will be characterized as the “alter ego” of its shareholders, and it seems that this characterization can be made whenever there would be something opprobrious in the shareholders’ taking advantage of the company’s separate legal personality;
4
4 a company and its parent or sisters will sometimes be equated under the “group enterprise doctrine”; and
5
5 none of these doctrines has any rational basis (Phillips at 172–73).

²⁰ Farmer, supra note 19; and Blumberg, supra note 13.

²¹ Murase, supra note 10 at 382 and 375–82 (absolute liability in Canadian parlance) . This emergent norm is said to have been strengthened by the settlement made by Union Carbide Corporation [hereinafter UCC] after the Bhopal disaster, which occurred at a chemical plant owned and operated by Union Carbide India Limited [hereinafter UCIL], a subsidiary of UCC. UCIL was incorporated under the law of India and had apparendy been fairly independent for fifty years. Despite UCC having contended before an Indian court that it had nothing to do with UCIL, UCC reached a settlement by way of order of the Supreme Court of India under which UCC agreed to pay US $470 million to India in full settlement of all claims, rights, and liabilities related to, and arising out of, the disaster. While UCC denied any role in the day-to-day operations of the plant, the general design of the Bhopal plant was sold to the subsidiary by the parent company, which was then developed and subsequendy modified by UCIL locally, receiving the approval of various regulatory agencies of the government of India. See Chopra, Sudhir K., “Multinational Corporations in the Aftermath of Bhopal: The Need for a New Comprehensive Global Regime for Transnational Corporate Activity” (1994) 29 Valparaiso Law Review 235 at 236 and 242;Google Scholar Baxi, U. and Dhanda, A., Valient Victims and Lethal Litigation: The Bhopal Case (Bombay: N.M. Tripathi, 1990).Google Scholar Further evidence of this norm may be found in the millions of dollars routinely expended by Canadian parent mining companies in efforts to clean-up toxic spills. While these efforts are often inadequate, and the compensation paid to victims negligible, the involvement of the parent may acknowledge the existence of legal responsibility. See Damsell, supra note 5 at 251. See also Muchlinksi, supra note 10 at 325–30. On the other hand, the involvement of parent companies in these clean-up operations may be attributed to a sense of moral responsibility, distinct from the acknowledgment of legal responsibility, or, as is more likely, it may simply reflect extra-legal incentives, such as reputational concerns.

For an analysis of the group enterprise doctrine in Canadian law, see Phillips, supra note 19 at 140–42,who notes at 140 that the theory has been accepted in some decisions and rejected in others. See also Welling, supra note 15 at 113.

²² Muchlinksi, supra note 10 at 328, who states: “This recognizes the corporate group as a distinct form of business association, thereby opening the way for the evolution of a specialized legal regime going beyond the paradigm of the single unit limited liability joint stock company.” An interesting variant on this idea is a proposal by Farmer, supra note 19, that a standard be established requiring a parent corporation to exercise due care to ensure the financial viability of the subsidiary, with the focus on the risks of environmental liability presented by the subsidiary’s activities and the presence of sufficient assets, including liability insurance, in light of these risks. This approach would provide a more effective and principled approach to determining whether a parent corporation must pay for the environmental obligations of its subsidiary (Farmer at 806–7). For Canadian support for the principle of shareholder liability for an undercapitalized corporation’s tort liability, see Welling, supra note 15 at 143–49. For a critique, see Phillips, supra note 19 at 161–65.

²³ Murase, supra note 10 at 375–82;Muchlinski, supra note 10 at 324–27. For a sample of US jurisprudence, see In re Oil Spill by the Amoco Cadiz off the Coast of France on 16 March 1978, 699 F. 2d 909 (7^th Cir. 1983) [hereinafter Amoco Cadiz], where US jurisdiction was taken, and 954 F. 2d 1279 (7^th Cir. 1992), where Standard Oil was found liable for negligence due to its extended capacity for decisionmaking and control over subsidiaries, causing a supertanker to go aground in the territorial waters off France and a massive spill of crude oil (liability thus being attributed on both direct and vicarious liability grounds: its own active involvement through decision-making and the close control over the subsidiaries); Re Union Carbide Corporation Gas Plant Disaster at Bhopal, India in December, 1984, 634 F.Supp. 842 (S.D.N.Y 1985) [hereinafter Bhopal], where US jurisdiction was dismissed conditionally on forum non conveniens grounds, provided that Union Carbide consent to submit to the jurisdiction of the courts of India — this condition (but not others) was upheld on appeal 809 F. 2d 195 (2nd Cir. 1987). The plaintiffs in the Bhopal case attempted to present a tort claim on the basis of the theory of multinational enterprise strict liability (absolute).

For a Canadian perspective on issues of corporate control in parent-subsidiary relations, see Sargant, Neil C., “Corporate Groups and the Corporate Veil in Canada: A Penetrating Look at Parent-Subsidiary Relations in the Modern Corporate Enterprise” (1987–8) 17 Man. L.J. 156.Google Scholar Sargant focuses here not on establishing which principles should govern liability in parent-subsidiary relations but rather on exploring the reality of the nature of corporate group organization. He notes, among other things, that research disclosed that the traditional legal model of responsibilities of directors did not correspond to the de facto allocation of managerial responsibility within the sample group. This finding is particularly evident in the case of boards of directors of subsidiary corporations, especially where the parent corporation is foreign owned. Thus, while two-thirds of independent or parent corporation boards exercise some degree of control over corporate decision-making, only 25 per cent of the boards of subsidiaries exercise the same degree of control. Instead, the tendency for corporate control within a parent-subsidiary context is for it to be exercised through managerial links rather than through the corporation’s board (Sargantat 164).

²⁴ Murase, supra note 10 at 383–84, citing the case of Asian Rare Earth Company [hereinafter ARE], a Malaysian subsidiary of the Japanese company, Mitsubishi Chemicals, of which Mitsubishi owned only 35 per cent of ARE stock. By “effectively controlled,” I mean to refer to the potential for effective control.

²⁵ For an examination of the various interpretive principles applied to parent corporation liability in the US under the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC, s. 9607(a) [hereinafter CERCLA] (see discussion of CERCLA later in the article under the heading “Recognition and Enforcement of Judgments”) Farmer, supra note 19 at 779–85; Blumberg, supra note 13 at 613–28, and Blumberg, supra note 13, 1997 Supplement, at 257–311. The CERCLA legislation makes no specific reference to parent corporations or other shareholders. Instead it makes use of four classifications of potentially responsible persons including the current owner and operator of the facility, the former owner and operator, generators of hazardous waste, and transporters of hazardous waste. Courts have filled in the gap by articulating three different liability standards, which Farmer categorizes as the capacity to control standard; the actual participation standard; and the traditional corporate veil piercing standard. Again, as these tests are not uniform across jurisdictions, parent corporation liability under CERCLA is as unpredictable as it is for torts or other obligations.

²⁶ R. v. Sault Ste. Marie (City), [1978] 2 S.C.R. 1299 at 1325-26 [hereinafter Sault Ste. Marie].

²⁷ See, for example, s. 78.6 of the Fisheries Act, supra note 7; s. 283 of the CEPA, 1999, supra note 7.

²⁸ Sault Ste. Marie, supra note 26 at 185. The question in the Sault Ste. Marie litigation was whether a municipality could be held liable under s. 32(1) of the Ontario Water Resources Act, R.S.O. 1970, c. 332, for the acts of a waste disposal company with which it had entered into an agreement for the disposal of all refuse originating in the city. The Supreme Court ordered a new trial to allow the municipality to lead evidence related to the due diligence defence. The language of “directing mind and will” was drawn from the United Kingdom case Tesco Supermarkets Ltd. v. Nattrass, [1972] A.C. 153 (H.L.), which was also applied by the Supreme Court of Canada in the leading case on corporate criminal liability, Canadian Dredge & Dock Co. v. The Queen, [1985] 1 S.C.R. 662. Liability under this approach is considered to be primary, or direct, rather than secondary or vicarious.

²⁹ See Saxe, Dianne, Environmental Offences: Corporate Responsibility and Executive Liability (Aurora: Canada Law Book, 1990);Google Scholar Swaigen, J., Regulatory Offences in Canada: Liability and Defences (Toronto: Carswell, 1992).Google Scholar While corporate liability for harm caused by a subsidiary is not directly addressed in legislation, deeming provisions do exist in many statutes whereby an “act or thing done or omitted to be done by an officer, official, employee or agent of a corporation in the course or performance of his or her employment or in the exercise of his or her powers or the performance of his or her duties shall be deemed to be also an act or thing done or omitted to be done by the corporation. See s. 192 of the OEPA, supra note 7; s. 124 of the CEPA, 1988, supra note 7; and s. 282 (1) of the CEPA, 1999, supra note 7.

³⁰ Brownlie, Ian, Principles of Public International Law, 5th ed. (Oxford: Clarendon Press, 1998) at 289.Google Scholar

³¹ Ibid at 301.

³² For the most recent pronouncement of this underlying presumption by the Supreme Court of Canada, see R. v. Cook(1998), 164 D.L.R. (4th) (S.C.C.) at 17 (per Cory and Iacabucci J.J.), and at 55–57 (per Bastarache J.) [hereinafter Cook].

³³ Brownlie, supra note. 30 at 302–3. Brownlie notes that “as civil jurisdiction is ultimately reinforced by procedures of enforcement involving criminal sanctions, there is in principle no great difference between the problems created by an assertion of civil and criminal jurisdiction over aliens. In either case, the prescriptive jurisdiction is involved, and, in any case, antitrust legislation often involves a process that, though formally ‘civil,’ is in substance coercive and penal.”

³⁴ See Libman v. The Queen, [1985] 2 S.C.R. 178, 21 C.C.C. (3d) 206 at 232 [hereinafter Libman]; Cook, supra note 32 at 51–52. The possibility and implications of the “extraterritorial” application of Canadian criminal and regulatory environmental law will be explored in greater detail later in this article.

³⁵ See Morguard Investments v. De Savoye, [1990] 3 S.C.R. 1077, 76 D.L.R. (4th) 256 (S.C.C.) [hereinafter Morguard Investments]; Hunt v. T. & N. PLC, [1993] 4 S.C.R. 289 (S.C.C.) [hereinafter Hunt]. See also Castel, J. G., Canadian Conflict of Laws, 4th ed. (Toronto: Butterworths, 1997) at 51–56.Google Scholar

³⁶ Castel, supra note 35. See Hunt, supra note 35, which gives constitutional status to principles expounded in Morguard Investments, supra note 35, according to which the exercise of jurisdiction must conform to the demands of territoriality and the principles of order and fairness. Thus, to be constitutionally valid, statutory or judicial conflict of laws rules in interprovincial situations must conform to the demands of territoriality and the principles of order and fairness. As a result, the requirement of “a real and substantial connection” has become the absolute constitutional limit on the power of each province to confer judicial jurisdiction on its courts.

³⁷ Castel, supra note 35 at 66.

³⁸ Recherches Internationales Québec v. Cambiar Inc., [1998] Q.J. No. 2554 (Q.L.) [hereinafter Cambior].

³⁹ Ibid. at para. 1–5.

⁴⁰ Dagi v. B.H.P. (No. 2), [1997] 1 V.R. 428 (S.C. Vic.) [hereinafter Dagi]. Further analysis of the Moçambique principle will be found later in the article.

⁴¹ Baer, M. et al., Private International Law in Common Law Canada: Cases, Texts, and Materials (Toronto: Emond Montgomery Publications, 1997) at 183.Google Scholar

⁴² See Ontario Rules of Civil Procedure, R.R.O. 1990, Regulation 194, r. 16.02 (1)(c). For the Ontario rules concerning service outside Ontario (ex juris), see r. 17. Also note that for the purpose of service, an extraprovincial or foreign company that has registered in a province pursuant to provincial company legislation is clearly present in that province for jurisdictional purposes. See ibid, at 185.

⁴³ Morguard Investments, supra note 35. With respect to the text in note 36, it should be noted that the principles expounded in Morguard were given constitutional status in Hunt, supra note 35. See Castel, supra note 35; Edinger, “The Constitutionalization of the Conflict of Laws” (1995) 25 Can. Bus. J. 38. This constitutional prohibition is of extra-provincial over-reaching vis-à-vis federal authority over both regulation with interprovincial and international dimensions.

⁴⁴ This principle is most often of concern in cases involving the ex juris service of defendants but could arise even if service was in juris upon a corporate resident. See Castel, supra note 35 at 54–56 and 65–67. See also Black, “The Other Side of Morguard: New Limits on Judicial Jurisdicdon” (1993) 2 Can. Bus. L.J. 4; V. Black and J. Swan, “New Rules for the Enforcement of Foreign Judgments: Morguard Investments Ltd. v. De Savoye” (1991) 12 Advocates’ Q. 489.

⁴⁵ While perceived as a background concern for courts in the determination of jurisdiction, the question of a sufficient real and substantial connection inevitably also arises in discussions of forum non conveniens. It should be noted that in a developing country of common law jurisdiction, an ex juris service of the parent corporation on the basis of a real and substantial connection to the litigation linked perhaps to issues of effective control would be treated as a sufficient basis for an assertion of jurisdiction and thus lead to the enforcement of judgments rendered by the foreign jurisdiction in a Canadian court. This will be discussed later in the article under the heading “Recognition and Enforcement of Judgments.”

⁴⁶ Indeed, Recherches Internationales Québec [hereinafter RIQ] suggested in June 1998 that the only province in which a Canadian-based company can be sued in its home country for the damage that a mining activity has done to the environment, health, and livelihood of the inhabitants of another country is Québec, due to the governing civil code. See Weinberg, Paul, “Canada-Environment: Canadian Mining Company Taken to Court” Inter Press Service [Toronto] (June 22, 1998) [Lexis].Google Scholar While it may be easier to sue in Québec, this claim is without merit.

⁴⁷ Civil Code of Québec, Art. 3134, 3148(1) and 3148(3) [hereinafter CCQ].

⁴⁸ Cambior Incorporated initially argued that the court lacked jurisdiction by reason of subject matter, alleging that it had committed no fault that could give rise to an action against it, as it was not responsible for any acts of negligence Ornai Gold Mines Limited may have committed. See Cambior, supra note 38 at para. 16 and 17. Maughan J., however, noted that Cambior’s claim amounted to asking the court to decide the issue of personal liability itself, which could not be raised in the context of a jurisdictional question (Cambior at para. 23 and 24). This conclusion would be consistent with an understanding that the substantive issues surrounding liability, whether direct or vicarious and including the piercing of the corporate veil, could and should be dealt with in the parent corporation’s forum court.

Among the facts contained in Cambior’s submissions were that: Cambior, unlike Ornai, was not a party to the contracts entered into with consultants and contractors for the design and construction of the mine and, in particular, the tailings pond; the services furnished by Cambior to Ornai were minimal and billed to Omai, amounting to no more than $300,000 per annum; of the 1,000 employees of Omai, only ten were once employed by Cambior; since Omai’s incorporation on August 15, 1991, no Cambior employees had been involved in any aspect of the design or construction of the tailings dam; and, even though Cambior appointed four of the six members of Omai’s Board of Directors, each was required by the law of Guyana to act in Omai’s best interests, not those of the appointing shareholder (Cambior at para. 18, items 5, 7, 8, 9, and 10).

Maughan J., on the other hand, noted that while Cambior made proof that it did not act as Omai’s directing mind so as to be the corporate entity responsible, RIQ made proof to the contrary. According to RIQ Cambior financed the study that determined that the mining project would be economically feasible, which also contained a basic design concept for the tailings pond later built in accordance with this concept. Furthermore, Mr. Gignac, president and chairman of the Board of Directors of both Cambior and Omai, made all strategic decisions relating to Omai’s operations (Cambior at, para. 25).

⁴⁹ Cambior, supra note 38 at 2 2.

⁵⁰ The significance of this characterization could arise in a situation where, for example, a corporation was served in juris in Ontario, then argued that no real and substantial connection to the jurisdiction existed as decision-making took place in another province or country. Arguably, this situation could also provide the basis for ajudge to exercise a residual discretion over a non-domiciled corporation served ex juris, where the locus of the decision-making was in the forum. The idea that the location of decision-making may be significant as a consideration is consistent with jurisdictional consideradons articulated in the Supreme Court of Canada’s products liability case, Moran v. Pyle National (Canada) Ltd. (1973), 43 D.L.R. (3d) 239 (S.C.C.) [hereinafter Moran], which acknowledged that it is possible for a tort to have more than one locus in the jurisdictional context.

⁵¹ CCQ, supra note 47 at Art. 3135, states: “Even though a Quebec authority has jurisdiction to hear a dispute, it may exceptionally and on an application by a party, decline jurisdiction if it considers that the authorities of another country are in a better position to decide.”

⁵² Amchem Products Inc. v. B.C.(W.C.B.), [1993] 1 S.C.R. 897 at 916–21 [hereinafter Amchem]. The analysis in Amchem was in the context of an application for an antisuit injunction.

⁵³ Spiliada Maritime Corp. v. Cansulex Ltd., [1987] A.C. 460 at 476–78 [hereinafter Spiliada]. Maughan J. also drew upon guidelines set forth by the Québec minister of justice to determine whether exceptional circumstances exist that would permit a Québec court to decline jurisdiction in favour of a foreign authority, including the availability of witnesses, the absence of familiarity of the seized tribunal with the applicable law, the weakness of the connection between the litigation and the tribunal, and whether the litigation was more closely connected to another state’s tribunal. See Cambior, supra note 38 at para. 30.

⁵⁴ Cambior, supra note 38 at para. 31–35. Maughan J. also examined principles found in jurisprudence of the United States Federal Courts according to which the plaintiff’s choice of forum was lessened since their home forum was not selected, and little weight was given to the fact that plaintiffs would lose juridical advantages should an acdon not be allowed to proceed in the United States (see Cambior at para. 36, citing Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) [hereinafter Piper]). However, these principles were not explicitly endorsed by Maughan J.

⁵⁵ These factors are: (1) the residence of the parties and the witnesses; (2) the location of the elements of proof; (3) the place where the fault occurred; (4) the state of pending liugation in the foreign jurisdiction; (5) the location of the defendant’s assets; (6) the law applicable to the litigation; (7) the advantages to the plaintiffs of suing in their chosen forum; and (8) the interests of justice. Cambior, supra note 38 at 38 and 39.

⁵⁶ The test in Spiliada, supra note 53, follows these stages, although it begins with a threshold question of whether the court is satisfied that there is some other available forum having competent jurisdiction where the acdon may be tried. While I have merged this question with the substantial injustice analysis, it would also be possible to follow the approach laid out in the United States in Piper, supra note 54, which was applied in Bhopal, supra note 23. In Bhopal, the question of whether there is an adequate (competent) forum in which a remedy would be available is addressed in stage one, along with the requirement that the defendant be amenable to process in the alternate jurisdiction. The analysis in stage two of Bhopal involved a balancing of public and private interest factors to determine whether to accept or dismiss jurisdiction. It is interesting to note that in Cambior, supra note 38 at para. 29, a brief initial discussion that was reminiscent of the threshold question in Spiliada notes that Guyanese courts do have jurisdiction to try the issues, as the High Court of Guyana tries in first instance actions founded on torts committed within the jurisdicdon and has jurisdiction over foreign parties, whether plaintiffs or defendants.

⁵⁷ Hunt, supra note 35 at 326.

⁵⁸ Indeed, Cambior is a virtual model of the problems. It has not been appealed, due to a lack of funding. However, while Cambior is the only case dealing with environmental harm, there are, interestingly, two cases in which Canadian jurisdiction has been taken in relation to a parent company of a mining subisidiary, both of which relate to a helicopter crash in Kyrgyzstan in October 1995, in which nine Canadians were killed. Eight of them were from Saskatchewan, and their next-of-kin filed a negligence suit against the parent company Cameco Corporation and various subsidiaries established in Kyrgyzstan, among others. (The subsidiaries involved were the same as those operating the mine in the accident described in note 3 and in the accompanying text.) In Garrett Estate v. Cameco Corp. (1996), 151 Sask. R. 86, [1997] 10 W.W.R. 393 (Sask. Q.B.) [hereinafter Garrett Estate], the plaintiffs made an application arguing that Saskatchewan was the appropriate forum to try the action, and the court agreed. In Hermann v. Kilborn Engineering Pacific Ltd. (1995), 55 B.C.L.R. (3d) 319 (B.C.S.C.) [hereinafter Hermann], Cameco Corporation applied for a stay against the single plaintiff, on the basis of forum non conveniens (the alternate forum argued was Saskatchewan in light of the ongoing action there.) The court dismissed the application and held not only that BC was the appropriate forum but that BC law would apply. Both courts were clearly influenced by the fact that the victims and plaintiffs were Canadian and also by the fact that a representative of the Canadian Transportation Safety Board had participated in the investigation in Kyrgyzstan, who would presumably be available in Canada to act as a witness. In addition, the fact that the victims of the crash were employees appears to have been significant, as the allegations of negligence arose with respect to the upkeep and operation of the helicopter transport service provided to the employees. There were also complaints that the employer had failed to place life insurance on the lives of the deceased, which it had contracted to do, and flight insurance obtained was rendered invalid since the aircraft in question had not been validly licensed.

⁵⁹ Cambior, supra note 38 at para. 43–45. Maughan J. notes at para. 42 that Cambior’s head office and executive offices are in Québec as are the minutes of Board meetings and corporate records. It should also be noted, however, that RIQ added Cambior’s insurer, Home Insurance, and Colder Associates, a geotechnical consultant invoked in the construction of the Ornai Gold Mine’s effluent treatment plan, as co-respondents. Neither had filed a declinatory exception as had Cambior, but they reserved the right to do so (para. 15). While these two parties both had places of business in Québec, the representatives of Golder Associates who would be called by RIQ were from the Toronto head office (para. 46).

⁶⁰ Ibid, at para. 47.

⁶¹ This paternalistic approach and resultant shift in focus is also found in the Bhopal case, supra note 23 at 862–66, where even the presence of the Indian government as plaintiff in a US court was not enough to dampen Keenan J.’s contention that India had a stronger public interest in taking jurisdiction over the litigation than the United States. See critique of the judgment in Baxi, U., “Introduction: Towards the Revictimization of the Bhopal Victims,” in Indian Law Institute, Inconvenient Forum and Convenient Catastrophe: The Bhopal Case (Bombay: Tripathi Bombay, 1986) at 1–34.Google Scholar

⁶² The evidence would consist of, among other things, engineering relating to the construction and design of the tailings dam, mine construction, management and supervision, and the management of events during and after the spill.

⁶³ Only those individuals residing in Ottawa and Montreal would have been compellable by a Québec court.

⁶⁴ Cambior, supra note 38 at para. 51–54. Maughan J. goes on to outline the allegations put forward by RIQof physical damage caused by long-term health risks as a result of the contamination of the river as well as of psychological damage, economic damage, and environmental damage.

⁶⁵ Maughan J. also noted that of the twenty members of three specialized committees that the government of Guyana appointed to investigate specific areas of concern, fourteen are residents of Guyana. He noted that it would be logical to assume that a number of these experts would be examined and cross-examined on the facts and opinions on which they had already reported. See Cambior, supra note 38 at para. 55. While the Commission of Inquiry did not attribute blame for the spill, it did find Omai liable “for all the foreseeable loss and damage” along the Essequibo River. See Weinberg, supra note 46.

⁶⁶ Cambior, supra note 38 at para. 47 and 55–56. Note that in Hermann, supra note 58, the new capacity of the BC Supreme Court to hear witness testimony by video link was considered worthy of some weight.

⁶⁷ It is interesting to note that in Garrett Estate, supra note 58, the fact that Kyrgyzstan is not a party to the 1970 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters was viewed as adding some merit to the respondents argument that there would be difficulty in getting evidence as to the cause of the crash were the trial to take place in Canada, as all those individuals with knowledge were outside Canada. This consideration, however, was not determinative.

⁶⁸ Cambior, supra note 38 at 57–59.

⁶⁹ Similar conceptual difficulties have arisen in other litigation against parent corporations, as is evident in Bhopal, supra note 33, in particular at 852–60, and the discussion of private interest concerns.

⁷⁰ Cambior, supra note 38 at 60–62. By way of contrast, note the language used in Garrett Estate, supra note 58: “Notwithstanding the creadon of the subsidiary and related companies and the joint venture company, it is quite clear that Cameco Corporation, a firm with its head office in this Province would ultimately be the directing mind of those various firms. The evidence indicates that a number of senior executives attached to the Cameco companies are located in this Province” (emphasis added).

⁷¹ See the discussion earlier in this article under the heading “Liability Principles” for a discussion of these principles and, in particular, the English Court of Appeal decision in Lubbe, supra note 17. The focus upon decisions made by a corporate parent within the jurisdiction of the home state has also been addressed in at least one appeal court in the United States. Jota v. Texaco, Inc., 157 F.3d 153 (2^nd Cir. 1998) [hereinafter Jota], involved consolidated appeals from two actions filed against Texaco for environmental and personal injuries resulting from Texaco’s exploitation of oil fields in Ecuador: Aguinda v. Texaco, Inc. 945 F. Supp. 625 (S.D.N.Y. 1996) [hereinafter Aguinda] and Ashanga v. Texaco, S.D.N.Y. Dkt. No. 94 Civ. 9266 (13 August 1997). The court in Jota noted that the District Court should, upon reconsideration of the forum non conveniens issue, consider the plaintiff’s argument that they are only challenging decisions made by Texaco within the United States and that the necessary documentation and witnesses would be more readily accessible in a US forum (Jota at 159).

⁷² Cambior, supra note 38 at para. 63–64.

⁷³ According to Maughan J., Cambior’s assets in Guyana consist of common and preferred shares in the Ornai Gold Mines Limited and its rights as a creditor under loan facilities extended to Omai, the value of which would be sufficient to satisfy any adverse judgment against Cambior in Guyana. See Cambior, supra note 38 at para. 65–66.

⁷⁴ Canadian cases have held that the mere presence of funds unrelated to an action, despite creating a juridical advantage for a foreign party, is not by itself a legitimate means to found jurisdiction. However, these cases also note that jurisdiction might be assumed where it is shown that without the security provided by the presence of the asset in the forum, any judgment the plaintiff might obtain elsewhere would likely remain unsatisfied. See Tortel Communications Inc. et al v. Suntel, Inc. (1994), 120 D.L.R. (4th) 100 (Man. CA.); Antares Shipping Corp. v. The Ship “Capricorn” (1976), 65 D.L.R. (3d) 105, [1977] 2 S.C. R. 422 (S.C.C.).

⁷⁵ Cambior, supra note 38 at para. 67.

⁷⁶ In a common law jurisdiction, it may not have been so clear that the applicable law would be that of Guyana — a possibility that will be canvassed later in this article under the heading “Choice of Law.”

⁷⁷ Cambior, supra note 38 at para. 68.

⁷⁸ Cambior, supra note 38 at para. 18. The agreement apparently stipulated that Ornai Gold Mines Limited would operate as a distinct corporate entity and provided that Ornai is bound by the environmental standards set fourth in the environmental impact Statement prepared by an independent consultant. The statement established standards that Omai was required to respect and describes the anticipated impact of the mining project on various aspects of the Guyanese environment (Cambior at para. 69–70). On the other hand, the Australian court in Dagi, supra note 40, refused to accept jurisdiction for the claims based on agreements to which the plaintiffs were not parties, as they called into question the acts of the government of Papua New Guinea and were therefore not jusdciable due to the Act of State doctrine. See discussion later in the article under the heading “Agreements, Act of State, and Non-Justiciability.”

⁷⁹ In this light, it is interesting to note his further acknowledgment that the “very essence of provisions of the Quebec Civil Code on private international law is that Quebec courts will apply foreign law in many varying circumstances.” (Cambior, supra note 38 at para. 70.) A similar inference was drawn from the choice of law discussion in Bhopal, supra note 23.

⁸⁰ Cambior, supra note 38 at para. 71–79. One advantage of the class action related to the limitation of the Guyanese representative action to persons having the “same interest” in the litigation, while the class action allowed recourse to people with “identical, similar or related questions.” A second difference related to the manner in which the victims would be required to prove their damages, as the class action would not require each plaintiff to prove damages individually, instead allowing for recovery if evidence enabled the court to establish with sufficient accuracy the total amount of the claims of the members of the class for collective recovery. This method of recovery makes the class action a particularly useful remedy in cases of environmental damage where harm done to each individual may be relatively small

⁸¹ Ibid, at para. 77. The fact that only two other Canadian provinces have instituted class action vehicles appears influential to his evaluation.

⁸² Ibid, at para. 80–81.

⁸³ See Connelly v. RTZ Corp pic and another, [1997] 4 All ER 335 (H.L.), in which jurisdiction was taken due to a lack of access to legal aid in the alternate forum. The rationale was that the plaintiff would be caused substantial injustice if jurisdiction were not taken. This finding was regardless of whether the procedure was found in all sophisticated legal systems, on a basis of absolute access, not simply better access. It is not clear, however, whether the fact that the plaintiff in this case had resumed his domicile of origin in Scotland was influential in reaching this decision. But note that the access to legal aid was not viewed as a problem in Group Action Afrika, supra note 17. Note that in Hermann, supra note 58, the fact that the plaintiff would not be able to afford her share of the disbursements in the Saskatchewan action but, rather, intended to take advantage of the summary trial procedures available only in British Columbia was given some weight despite the fact that the result of taking jurisdiction was that two similar actions would proceed in different jurisdictions. The fact that the plaintiff had a legitimate connection to British Columbia was significant with regard to fears of forum shopping.

⁸⁴ Cambior, supra note 38 at para. 82–99. The court concluded that the procedural deficiencies were reasonable when compared with Québec, despite evidence from a US State Department Country Report on Human Rights, which stated that the inefficiency of the judicial system in Guyana was so great as to undermine due process. However, it should be noted that the Ornai Gold Mines Limited was served with a representative action in August 1998, which was filed in Guyana. The acdon represents 23,000 individuals in Guyana seeking US f 100 million as compensation for damages as a result of the tailings spill. See the press release of August 19, 1999 on Cambior’s website at <http://www.cambior.com/com-munique/cambior/1999/anglais/13_99e.htm>.

⁸⁵ Note that allegations were made as threshold question of the analysis in Bhopal, supra note 23, that India, a longtime democratic country, did not offer an adequate forum for the litigation, due to procedural deficiencies. This may be contrasted with the allegations of both corruption and procedural deficiencies in Cambior, supra note 38, given that 1992 marked for Guyana the first un-fixed election since independence in 1966. See Jacobson, supra note 6.

⁸⁶ In this light, it is interesting to note that the plaintiffs in the Amoco Cadiz litigation, supra note 23, included France as well as various French departments, enterprises, associations, and individuals, who brought the action against an American company with its headquarters in Chicago. The reason that the French plaintiffs flocked to the American courts was because France, but not the United States, had ratified the International Convention on Civil Liability for Pollution Damage, which would have severely limited the polluters’ liability. Seejuenger, infra note 250 at 205, note 23.

⁸⁷ That “democracy” provides no guarantee that plaintiffs will receive a fair hearing is evident from the discussion of the Dagi litigation later in this article under the heading “The Reality of Host State Participation,” where the difficulties that face developing countries in this context will be examined.

⁸⁸ Totefson v. Jensen; Lucas (Litigation Guardian of) v. Gagnon, [1994] 3 S.C.R. 1022 [hereinafter Tolofson].

⁸⁹ Ibid. at 1047.

⁹⁰ British South Africa Co. v. Companhia de Moçambique, [1893] AC 602 (HL) [hereinafter Mocambique].

⁹¹ Ibid, at 629 (per Lord Herschell L.C.).

⁹² The origin is found in an ancient procedural requirement that the plaintiff in its declaration accurately specify the neighbourhood where the alleged facts had taken place, so that the trial might take place in that neighbourhood. See Dagi, supra note 40 at 436.

⁹³ According to Dagi, supra note 40 at 433–34, these exceptions are: (1) the conscience of the defendant is affected by some contract trust or breach of fiduciary duty (that is, personal obligations that in the view of equity would be unconscionable and do not depend for their existence on the law of the locus of the immovable property); (2) the issue as to title arises incidentally; and (3) the issue arises in the Admiraltyjurisdiction.

⁹⁴ Dicey, A. V. and Morris, J. H. C., The Conflict of Laws, 9th ed. (London: Stevens, 1973), as quoted in Hesperides Hoteh Ltd. v. Muflizades, [1979] AC 508 (HL) [hereinafter Hesperides]Google Scholar

⁹⁵ The facts of Hesperides, supra note 94, concerned the ownership of hotels in Cyprus following Turkey’s invasion of Cyprus and the expropriation, and then transfer, of ownership of the hotels. The original owners of the hotels sued the new owners for trespass and conspiracy. Neither action was allowed in respect of the immovables.

⁹⁶ Albert v. Fraser Companies Ltd., [1937] 1 D.L.R. 39 (NBSC).

⁹⁷ Ibid, at 55.

⁹⁸ Ibid. at 51–5 a.

⁹⁹ It is interesting to note that in the Aguinda decision, supra note 71, the court concluded that a sufficient independent reason to dismiss the action was the plaintiffs failure to join indispensable parties, Petroecuador and the Republic of Ecuador. The extensive equitable relief sought by the parties ranged from total environmental clean-up of the affected lands in Ecuador to a major alteration of the consortium’s pipeline. These actions could not possibly be taken in the absence of Petroecuador, now the 100 per owner of both consortium and pipeline, or the Republic of Ecuador, which helped supervise the consortium’s activities and owns much if not all of the affected lands. However, the court fur-ther noted, while they were both subject to service, they were both immune due to sovereign immunity, which alone would be sufficient to warrant dismissal of the action. In reality, any equitable relief granted without them, would be unenforceable, thus, while it was disputable whether or not the courts of Ecuador could provide adequate remedy, Rakoff J. concluded that the courts of the United States could not. On appeal in Jota, supra note 71, the failure to join an indispensable party was considered not to be sufficient grounds for dismissing the action, as the court should have allowed the legal claims and any remaining equitable claims to stand. The denial of Ecuador’s post-judgment motion to intervene was also reconsidered in Jota. While Ecuador had initially filed papers repeatedly with the District Court contesting the court’s jurisdiction and seeking a dismissal, it changed its mind after the entry of the judgment. The Jota court held that Ecuador’s motion to intervene could also be reconsidered at the District Court, provided Ecuador elected to fully relinquish its sovereign immunity

¹⁰⁰ Duke v. Andler, [1932] 4 D.L.R. 529 (SCC).

¹⁰¹ Such a money judgment might in fact force the sale of the land.

¹⁰² Godky v. Cole (1988), 39 CPC (ad) 162 (Ont. D.C.).

¹⁰³ Dagi, supra note 40.

¹⁰⁴ The style of cause for the proceedings are: Dagi v. B.H.P. (No. 2); Shackles v. B.H.P. (No.2) [hereinafter Shackles]; Ambetu v. B.H.P. (No.2); and Maun v. B.H.P. (N0.2). The Ok Tedi Mine was owned 52 per cent by BHP, 18 per cent by Toronto-based Metall Mining Corporation, and 30 per cent by the national government of Papua New Guinea. See Heather G. White, “Including Local Communities in the Negotiation of Mining Agreements: The Ok Tedi Example” (1995) 8 Transnat’ 1 Law 303 at 308.

¹⁰⁵ Plaintiffs in three of the proceedings were representatives of clans, which were said to be the possessors and occupiers of certain land adjacent to the Ok Tedi River, each of whom is a riparian proprietor by custom or is entitled to the beneficial use of the water in its ordinary state. The Shackles proceeding, supra note 104, was initiated on behalf of a fishing company.

¹⁰⁶ In addition, three causes of action were based on rights and obligations imposed on Ok Tedi Mining Limited [hereinafter OTML] under two agreements made between the company and the government of Papua New Guinea, which had been enacted by the Papua New Guinea Parliament. The dismissal of the causes of action relating to these agreements will be discussed later in this article under the heading “The Reality of Host State Participation.”

¹⁰⁷ Implicitly, a claim “essentially” concerning the possessory or proprietary rights over foreign land would require a court to judge who has title to the land in order to assess whether any liability would attach for negligent harm to that property.

¹⁰⁸ Dagi, supra note 40 at 441–52.

¹⁰⁹ Ibid, at 447.

¹¹⁰ Ibid. at 448.

¹¹¹ Ibid, at 451. It should be noted that the jurisdictional analysis of the court did not stop here, as it was felt necessary to satisfy the two requirements laid out in Phillips v. Eyre (1870), L.R. 6 Q.B. [hereinafter Phillips]. While some uncertainty was expressed over the problem of proof of principles of Papua New Guinea law, Byrne J. held that this would not prevent the court from exercising jurisdiction under Phillips. He noted, however, that this consideration might be different in the context of a forum non conveniens argument, which was not argued in this case.

¹¹² Dagi, supra note 40 at 457.

¹¹³ Ibid. at 458. Byrne J. stated: “Whether this relief will continue to be sought by the plaintiffs may depend upon the ultimate disposition of the justiciability issues and I propose therefore that it be deferred until the plaintiffs have had the opportunity of preparing new statements of claim in response to this judgment.” It should be noted in this context that the basis of the Dagi claims were rooted in the fact that the mine had no tailings dam, unlike the Guyana situation in which a breach of the dam caused several days of damage. In this case, the lack of injunctive relief would severely hamper the relief sought by the plaintiffs. In the end, the claim settled, with Broken Hill Proprietary Company Limited (BHP) agreeing to pay up to Aus. $150 million as compensation for environmental damage as well as paying for the construction of a tailings containment system. See The Australian (March 25, 1997), as cited in Peter Prince, “Bhopal, Bougainville and Ok Tedi: Why Australia’s Forum Non Conveniens Approach is Better” (1998) 47 I.C.L.Q. 573 at 595, note 120. Prince argues that the Australian courts approach to forum non conveniens, which was not argued in Dagi, encouraged the settlement, in particular by retaining harassment as the standard against which to judge the inconvenience to the defendant. As a result, the real prospect of armed conflict in Papua New Guinea, like that in Bougainville, was avoided, and the settlement applied Australian environmental standards to determine appropriate remedial action and other compensation (Prince at 574 and 593–95)

¹¹⁴ For information on the discussion of the choice of law, please see the text accompanying notes 75–77.

¹¹⁵ Tolofson, supra note 88.

¹¹⁶ For example, in Tolofson, ibid, at 1054, La Forest J. notes that he is not averse to retaining a discretion where a rigid lex loci delicti rule at the international level would give rise to injustice in circumstances where the double actionability rule of Chaplin v. Boys might be relevant. More significantly, at 1047, he indicates that while states as a matter of comity will ordinarily respect the jurisdiction of another state to make and apply law within its territorial limit, this would not necessarily be the case given a breach of an “overriding norm.”

¹¹⁷ La Forest J., in Tolofson, ibid, at 1050, leaves open this question, noting that while the general rule to apply is lex loci delicti, “there are situations, of course, notably where an act occurs in one place but the consequences are directly felt elsewhere, when the issue of where the tort takes place itself raises thorny issues. In such a case, it may well be that the consequences would be held to constitute the wrong. Difficulties may also arise where the wrong directly arises out of some transnational or interprovincial activity. These territorial considerations may become muted; they may conflict and other considerations may play a determining role.”

¹¹⁸ Moran, supra note 50.

¹¹⁹ Ibid, at 250–51, where a purely jurisdictional test is formulated. The notion that a tort may have more than one locus finds its parallel in La ForestJ.’s analysis of the extraterritorial application of Canadian criminal law in the Supreme Court of Canada’s decision in Libman, supra note 34. In Libman, the accused was alleged to have operated a telephone sales solicitation room in Toronto, from which calls were made to residents of the United States in order to induce the purchase of shares in two companies purportedly engaged in gold mining in Costa Rica. Money for the shares was sent to the accused’s associates in Central America. For La Forest J., traditional approaches, such as the “gist of the offence” test or the “completion of the offence” test, both of which establish a single locus for the offence, involved “a large measure of unreality.” He noted that there was a presumption against the application of laws beyond the realm, tied to the territoriality principle, for a country generally has little direct concern in the actions of malefactors abroad, and other States may legitimately take umbrage if a country attempts to regulate matters taking place wholly or substantially within their territories. However, a transnational offence may be subject to the jurisdiction of the Canadian courts where a significant portion of the activities constituting the offence took place in Canada, establishing a “real and substantial link” between the offence and Canada. This test, La Forest J. noted, was well known in public and private international law, and its’ outer links “may well be” coterminous with the requirements of international comity. La Forest J. pointed out that a transnational offence of this kind may occasionally be subject to prosecution in more than one country, but any injustice that might result could be avoided by resort to pleas of autrefois acquit and autrefois convict (Libman at 2 32–34), and the discussion of prescriptive jurisdiction later in this article under the heading “The Extraterritorial Application of Canadian Regulatory Law.”

¹²⁰ Moran, supra note 50. Moran concerned the alleged negligent manufacture of a light bulb in Ontario that electrocuted an electrician in Saskatchewan. The Saskatchewan court was allowed to take jurisdiction, on the basis that a manufacturer who tenders his products in the market place “ought to assume the burden of defending those products wherever they cause harm as long as the forum into which the manufacturer is taken is one that he reasonably ought to have had in his contemplation when he so tendered his goods” (at 250–51).

¹²¹ In addition, is the issue of control one of substance, or procedure? See Muchlinski, P. T., “The Bhopal Case” (1987) 50 M.L.R. 578 at 580.CrossRef Google Scholar It should be noted that the potential clearly exists for more than one choice of law to govern these types of disputes. This idea was the subject of comment by the English Court of Appeal in Lubbe, supra note 17, where the court stated: “[T]he issue of whether a duty of care was owed by the defendant, may be governed by English law, even if the other factors making up the alleged tort of negligence are governed by South African law: the kind of hybrid situation envisaged by Dicey and Morris’ Rule 203(2).”

¹²² See, for example, Vita Food Products Inc. v. Linus Shipping Co., [1939] A.C. 277 (P.C.); Amin Rasheed Shipping Corp. v. Kuwait Insurance Co. [1984] A.C. 50 (H.L.). Note that in Hermann, supra note 58, British Columbian lawwas held to apply to both the tort and contract claims arising out of an accident in Kyrgyzstan, likely due to the fact that a relevant contract of employment was made in BC.

¹²³ Indeed, Cambior claimed in its submissions that as RIQ had requested an injunction obliging Cambior to restore the Guyanese environment to its original state, as well as to pay damages, the court should decline to take jurisdiction over this aspect of the case. This argument was not addressed by the court. Cambior, supra note 38 at para. 18, item 11.

¹²⁴ See Castel, supra note 35 at 320; Morguard Investments, supra note 35.

¹²⁵ In this context, it is interesting to note that Cambior had undertaken not to invoke in Guyana any ground based upon forum non conveniens if the Québec Court decided not to take jurisdiction and the victims of the spill instituted suit in Guyana. See Cambior, supra note 38 at para. 8. A condition to this effect was imposed in Bhopal, supra note 23, requiring Union Carbide to submit to the jurisdiction of the court of India and continue to waive defences based upon the statute of limitations.

Interestingly, two other conditions imposed by the lower court as conditions for not taking jurisdiction in the United States were later rejected by the appeal court. These were that Union Carbide agree to satisfy any judgment rendered by an Indian court, where such judgment comport with the minimal requirements of due process; and that the Union Carbide submit to the US rules of discovery. See Murase, supra note 10 at 380; and In Re Union Carbide Corp. Gas Plant Disaster, 809 F.2d 195 (2nd Cir., 1987). This aspect of the Bhopal decision was followed in Jota, supra note 71 at 159, where it was stated that dismissal for forum non conveniens was not appropriate in the absence of a commitment from Texaco to submit to the jurisdiction of the Ecuadorian courts for the purposes of this action.

There are essentially two options for creditors seeking to enforce a foreign judgment in Canada: they can file a common law action using Morguard Investments, supra note 35, or take advantage of registration procedures pursuant to the applicable provincial Reciprocal Enforcement of Judgments Act, if they come from a reciprocating state. However, in Ontario, for example, the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, Chap. R.5, applies only to other provinces. See O. Reg. 322/92. In other provinces it includes foreign jurisdictions. Registration may also be achieved pursuant to the conventions in place between Canada and the United Kingdom, or between Canada and France, if a UK or French judgment is sought to be enforced. In cases of oil pollution, the 1969 International Convention on Civil Liability for Oil Pollution Damage, as amended, may apply, enabling the judgment creditor to apply to the Federal Court for registration. See Castel, supra note 35 at 301, 317, 321, or generally at Chapter 15, “Recognition and Enforcement of Foreign Judgment.”

¹²⁶ Castel, supra note 35 at 296, see text accompanying note 99 for discussion of Duke v. Andler.

¹²⁷ See Bhopal, supra note 23 at 862–66, where Keenan J. alleged in the context of balancing private and public interest factors that India has a very serious interest in developing environmental standards, while the United States has no interest in regulating technologies of subsidiaries abroad. This argument may have more merit than it would seem to on the surface, as Union Carbide’s preference was for the importation to India of pesticides manufactured in West Virginia, while the Indian government’s policy was for self-sufficiency in pesticide production. Consequently, Union Carbide agreed to the building of the plant. See Muchlinski, supra note 121 at 578. In these circumstances, the Indian gov-ernment may be said to have encouraged the introduction of hazardous technologies into its country and so, according to Muchlinski, ought to bear some strict liability for its failure. However, this situation does not necessarily mean that a US court could not take jurisdiction to apportion liability.

¹²⁸ See Rio Declaration, Report of the United Nations Conference on Environment and Development, Distr. General, A/CONF.151/26 (1992), Principle 11. Indeed, interests of comity in this regard are sometimes raised to defeat arguments that a home state should take jurisdiction over this type of litigation. The Texaco cases provide an interesting example of this argument. In Sequihua v. Texaco, Inc., 847 F. Supp. 61 (S.D. Tex. 1994), the court refused to take jurisdiction on the ground of comity of nations due to the fact that the challenged conduct was regulated by the Republic of Ecuador, and the exercise of jurisdiction by a US court would interfere with Ecuador’s sovereign right to control its own environment and resources. This argument was strengthened by the strenuous objection to the exercise of jurisdiction expressed by the Republic of Ecuador at that time. However, by the time of the Jota appeal, supra note 71 at 159–161, the government of Ecuador was supporting the litigation in the United States, and contended that as a result dismissal on the ground of comity would not be warranted. The court did not have to decide whether or in what circumstances a case might be remanded solely because of a sovereign state’s altered litigating position, as other grounds warranted the remand. However, it noted that the comity issue could be reconsidered in light of Ecuador’s current position.

¹²⁹ United States ofAmerica v. Ivey (1995), 26 O.R. 533; 130 D.L.R. (4th) 674 (Ont. Gen. Div.); affirmed (1996), 139 D.L.R. (4th) (Ont. CA.), leave to appeal to S.C.C, refused, [1997] 2 S.C.R. x (S.C.C.) [hereinafter Ivey]. Another case of interest, which also involved Justice Sharpe and CERCLA, supra note 25, is United States ofAmerica v. Friedland, [1996] O.J. No. 4399 (Ont. Gen. Div.) [hereinafter Friedland, 1996]. The Friedland litigation concerned a motion by the US seeking a Mareva injunction freezing US $152 million worth of the individual defendant’s assets in the form of INCO shares. The US government had instituted proceedings against Friedland in the US courts for restitution of cleanup costs in connection with environmental damage at the open-pit heap leach gold mine in Summitville, Colorado. The focus of the claim was upon Friedland’s activities as a director and at times president or CEO in connection with three companies, Summitville Consolidated Mining Company, and its parent Galactic Resources Incorporated, and its parent Galactic Resources Limited., a Canadian company. The companies had declared bankruptcy. The key issue to be established was whether the United States had a strong prima facie case that Friedland had operated the facility within the meaning of the CERCLA statute, which was a high standard to meet given the extraordinary nature of the ex parte injunction relief sought. Previous applications for the order had been brought in both a BC court and in Ontario, which granted the injunction on the basis that Friedland was the directing mind of the companies and was aware that the construction and operation of the mine threatened the environment (see USA v. Friedland, [1996] B.C.J. No. 2845 — the BC order was discontinued when it was realized that the shares were all physically located in an Ontario bank account. The Ontario judgment of August 21, 1996, by Judge Borins adopts the reasoning of Judge Spencer in BC.) However, Sharpe J. held that the plaintiff had failed to make the full and frank disclosure required of a party seeking the extraordinary relief, and the ex parte order was set aside. Among his criticisms were that the plaintiff gave the court a less stringent test for finding liability under CERCLA than was previously used in the Tenth Circuit jurisdiction. Among the facts he found to be significant in Freidland’s favour were that Galactic Resources was a publicly traded company with the usual governing structure — not a one-man operation, and further, that at the relevant times of bankruptcy and abandonment of the site, he was not involved with the companies.

The Friedland case should be distinguished from Ivey on the basis that it concerned the liability of an individual, rather than a corporate parent, and in light of the context as an ex parte injunction. This litigation has spawned more litigation, as Friedland filed a statement of defence and counterclaim seeking damages from the US in tort in light of an undertaking the US had made to pay any damages to Friedland should the injunction have turned out to be wrongly given. Friedland’s allegations include the fact that the US had approved all of the Summitville’s operations, including the heap-leaching pad blamed for the problems. In Friedland v. United States of America et al. (1998), 40 O.R. (3d) 747, the US arguments of forum non conveniens and sovereign immunity were dismissed. This decision was overturned on appeal: (1999) 46 O.R. (3d) 321. See also Paul Wade, “Friedland Sues U.S. in Pollution Feud,” Globe and Mail (April 10,1999) B3. See Bourrie, supra note 1 and note 224 for further discussion of the surrounding issues.

¹³⁰ These proceedings were the culmination of a lengthy history of proceedings involving Liquid Disposal Incorporated [hereinafter LDI] following a serious accident at its site in 1982. The Michigan Department of Natural Resources issued an order severely restricting operations, a nuisance action was commenced claiming injunctive relief, and a temporary restraining order was issued requiring LDI to cease all operations except those necessary for a safe and orderly shut-down. Following this action, LDI went into bankruptcy. Thus, when the Environmental Protection Agency [hereinafter EPA] notified Ivey and LDI’s trustee in bankruptcy of the environmental problems, the trustee indicated that LDI had insufficient funds to respond. See Ivey, supra note 129 at 677–79. This outcome would explain the significance of attaching responsibility to the parent company in a bankruptcy situation, which frequently arises in environmental liability cases. Note however the problems in Friedland, 1996, supranote 129, where both parent and subsidiary companies declare bankruptcy.

¹³¹ CERCLA, supra note 25.

¹³² Ivey, supra note 129 at 678–79. Defences to CERCLA, supra note 25, are limited to acts of God, acts of war, or omissions of third parties in narrowly defined circumstances. The EPA has the power to issue orders requiring clean-up action, and, if the parties are unwilling or unable to undertake clean-up action, the EPA can initiate clean-up using the Hazardous Substances Superfund.

¹³³ See Farmer, supra note 19; and Blumberg, supra note 13.

¹³⁴ The defendant Ivey, an individual resident in Ontario, had a controlling interest in LDI and oversaw its management and operations between 1974 and 1982. The defendant Maziv, an Ontario corporation, was the parent of LDI and held 80 per cent of LDI’s shares. The defendant Ineco, also an Ontario corporation, acquired the shares Maziv held in LDI in December 1986 — a term of the transfer being that Ineco assumed the liabilities of Maziv. Ivey was the president and chief executive officer of Ineco and was the president, general manager, and a director of Maziv from 1961 to 1986. See Ivey, supra note 129 at 677.

¹³⁵ Morguard Investments, supra note 35. Sharpe J. pointed to the fact that Maziv and Ivey had a direct ownership interest in LDI, and Ivey was a principal officer of both corporations, that Ivey was regularly present in Michigan to make decisions concerning the environmental issues that gave rise to the claims that Ivey dealt with, and appeared before, the environmental regulatory agencies on behalf of LDI and that Ineco acquired its interest in the shares on the express understanding that it would assume any liability of Maziv. Ivey, supra note 129 at 683–84.

¹³⁶ Ibid, at 573.

¹³⁷ Huntington v. Attriti, [1893] A.C. 150 at 157. Sharpe J. cited the definition of “penal laws” from Huntington: “[A]ll suits in favour of the state for the recovery of pecuniary penalties for any violation of statutes for the protection of its revenue or other municipal laws, and to all judgments of such penalties.”

¹³⁸ Ivey, supra note 129 at 684. For confirmation of this view, Sharpe J. cited US v. Monsanto, 858 F2d 160 (4th Cir. 1988) at 174–5: “CERCLA does not exact punishment. Rather it creates a reimbursement obligation on any person judicially determined responsible for the costs of remedying hazardous conditions at a waste disposal facility. The restitution of cleanup costs was not intended to operate, nor does it operate in fact, as a criminal penalty or a punitive deterrent.” The argument that liability imposed under CERCLA, supra note 25, is a revenue law or in the form of a tax was quickly dismissed by Sharpe J., who noted that according to Huntington the characterization of the nature of CERCLA is up to the court, and the suggestion that CERCLA is a tax “might appropriately be described as ungrounded rhetoric completely inconsistent with [the assertion] that the effect of the law is to require those who have created a hazard to bear the cost of cleanup.”

¹³⁹ See, for example, R. v. United Keno Mines Ltd. (1980), 10 C.E.L.R. 43 (Y Terr. Ct.), in which Stewart J. articulated a list of special considerations to be applied in the sentencing of environmental offences, including remorse, as evidenced by the speed and efficiency of corporate action to rectify the problem or clean up, voluntary reporting of the violation to authorities, and the personal appearance of corporate executives in Court. Fines may in some cases be disposed of to complainants or prosecutors. See, for example, the Fishery (General) Regulations, SOR/93–53 to the Fisheries Act, supra note 7. The new CEPA, 1999, supra note 7, also contains a list of factors to be considered on imposing a sentence in s. 287. These include: (b) an estimate of the total costs to remedy or reduce any damages caused by the commission of the offence; (c) whether any remedial or preventive action has been taken or proposed by or on behalf of the offender, including having in place an environmental management system that meets a recognized Canadian or international standard or a pollution prevention plan; (d) whether any reporting requirements under the Act or the regulations were complied with by the offender; (e) whether the offender was found to have committed the offence intentionally, recklessly, or inadvertently; (f) whether the offender was found by the court to have been negligent or incompetent or to have shown a lack of concern with respect to the commission of the offence; and (g) any property, benefit or advantage received or receivable by the offender which, but for the commission of the offence, the offender would not have been entitled.

¹⁴⁰ See, for example, Fisse, Brent and Braithwaite, John, Corporations, Crime and Accountability (Cambridge: Cambridge University Press, 1993);Google Scholar and Ayres, Ian and Braithwaite, John, Responsive Regulation: Transcending the Deregulation Debate (New York: Oxford University Press, 1995).Google Scholar

¹⁴¹ This argumentis based upon Dicey and Morris, supra note 94 at 97, stating that English courts have no jurisdiction to entertain an action for the enforcement of “other public law” of a foreign state. Sharpe J. also cited several cases that he found to be distinguishable on this issue. See Attorney-General of New Zealand v. Ortiz, [1984] 1 A.C. 1; Attorney-General (United Kingdom) v. Heinemann Publishers Australia Pty. Ltd. (1988), 165 C.L.R. 30.

¹⁴² See Secretary of State of Canada and Custodian v. Alien Property Custodian for the United States, [1931] SCR 170; Union of India v. Bumper Development Corp., [1995] 7 WWR 80 (AB Q.B.), aff’d (Dec. 4, 1995) (AB. C.A.), leave to appeal refused, [1996] 9 W.W.R. xlvii (note).

¹⁴³ According to Sharpe J., “CERCLA represents the judgment of Congress as to an appropriate regime of civil liability for environmentally hazardous substances in certain circumstances. The defendants chose to engage in the disposal business in the United States and the judgments at issue here go no further than holding them to account for the cost of remedying the harm their activity caused.”See Ivey, supra note 129 at 689.

¹⁴⁴ The defendants third argument was based on the assertion that the order violated principles of natural justice, as CERCLA was lacking in procedural protections. In particular, it was alleged that while liability was assumed on the basis of the presumed control test, they were denied the ability to assert defences due to the bankruptcy of LDL According to Sharpe J., however, this submission did not establish a defence, especially in light of the fact that the defendants failed to avail themselves of the procedural protections actually afforded by CERCLA. He further stated: “Acceptance of the argument that the imposition of strict liability or a relaxed burden of proof should render American judgments unenforceable in Canada would have far reaching consequences. Rules of liability and the burden of proof are preeminently matters for the law of the foreign jurisdiction. I am aware of no authority for the proposition that a judgment rendered on the basis of a strict form of statutory liability will not be enforced. Moreover, as will be seen below, the OEPA, supra note 7, imposes similarly strict liability in certain situations.” See Ivey, supra note 129 at 690–93.

¹⁴⁵ See Morguard Investments, supra note 35; Tolofson, supra note 88; and Amchem, supra note 5 2.

¹⁴⁶ Ivey, supra note 129 at 689–90; 693–94. The defendants’ fourth argument was based upon the application of the public policy doctrine. Sharpe J. noted that while the public policy defence exists in theory it is rarely applied. As Castel puts it, “[i]t is not enough that the local law on the same point differs from the foreign law. Fundamental values must be at stake.” Sharpe J. held that the comparison between CERCLA and the OEPA did not advance the case of the defendants, as the similarities between the regimes were more striking than the differences, with, if anything, the comparison with the OEPA significantly strengthening the case for enforcement. “It demonstrates that the Ontario legislature has deemed it necessary to depart from the traditional common law and establish a statutory regime which includes drastic powers and the imposi-tion of statutory liability on those responsible for the creation of environmental hazards. These measures include personal liability of corporate officers and directors, Ministry sponsored cleanup and liability for costs of cleanup. While the measures chosen by our legislature do no correspond precisely with those chosen by the Congress of the United States, they are sufficiendy similar in nature to defeat the application of the public policy defence.”

¹⁴⁷ See Tolofson, supra note 88.

¹⁴⁸ See report of the non-governmental organization, Mineral Policy Center [hereinafter MPC], endded “Golden Dreams, Poisoned Streams” as discussed in Knight, Danielle, “Environment: Lust for Gold Leaves Toxic Legacy,” Inter Press Service [Washington] (September 16, 1997).Google Scholar While the MPC report focused largely on the United States, it underlined that water damage due to mines is worse in developing countries. The MPC has studied the large-scale devastation of water resources, harm to aquatic life, and the impact on local communities of mining operations in Africa, Asia, and the Americas.

¹⁴⁹ Ibid. See also Cohen, Madeline, “A New Menu for the Hard-Rock Cafe: International Mining Ventures and Environmental Cooperation in Developing Countries” (1996) 15 Stan. Envtl. L.J. 130.Google Scholar

¹⁵⁰ Cambior, supra note 38 at para. 18, items 2, 3. The agreement stipulated that Omai Gold Mines Limited would operate as a distinct corporate entity, yet Cambior Incorporated acquired extensive powers and dudes as “managing member.” Cambior’s duties included assisting Omai in the daily operations of the mine; causing Omai to prepare work programmes relating to the development and operations of the mine under Cambior’s direction; the preparation of budgets; and directing Omai in the execution of all decisions of the Board of Directors.

¹⁵¹ The statement established standards that Omai was required to respect and describes the anticipated impact of the mining project on various aspects of the Guyanese environment. The Guyanese government relied on Cambior for most of its information and technical expertise, and Cambior maintained that the tailings dam was designed and constructed to meet “North American standards.” See Knight, supra note 148. There is no indication in the judgment of what the “standards” set in the agreement were.

¹⁵² Ibid.

¹⁵³ Jacobson, supra note 6.

¹⁵⁴ Ibid. However, Jacobson points out that while entering into agreements with multinational gold mining companies may seem “Faustian,” the situation is in fact far more complicated, as serious environmental damage is also perpetuated by freelance miners, who in 1997 produced 70,000 ounces of gold, compared to the Omai Gold Mine’s 340,000 ounces. The real question is whether Omai is safer or more easily regulated. The question may go without answer in Guyana since the government has granted a large exploratory concession in the area where the Mahdia freelance miners work, to Golden Star, a company that helped to develop the Omai Gold Mine.

An additional question to ask in the Guyana context, is whether or not the tailings dam construction did in fact measure up to the standards set in North America — it must not be forgotten that Canadian mines have caused tailings disasters in various parts of the United States, see, for example, Bourrie, supra note 1, and the discussion of the resulting Friedland litigation in note 128. See also Cohen, supra note 149 at 141–44, for a discussion of the severe problems that arise in artisanal mining — mineral extraction by independent or very small-scale operators, which “plagues” the developing world. Cohen also cites R. Craig Johnson, senior attorney at Cyprus Amax Minerals Corporation, as stating: “Use of North American-type standards has become customary for mining companies in Latin America due to the well-founded belief that such standards will minimize the need of the company to play “catch-up” as the local standards are tightened. Designing for [tougher] standards at the outset is often far less expensive than having to retrofit an operation later” (at 139, note 31).

¹⁵⁵ Knight, supra note 148. The result was the destruction of aquatic life, riverside flooding of agricultural land, and the displacement of the local indigenous population whose livelihood depended upon the river. See White, supra note 104 at 308.

¹⁵⁶ White, supra note 104 at 323. Indeed, in 1981, a United Nations Conference on Trade and Development-sponsored study of environmental provisions in mining agreements involving developing countries described the Ok Tedi Agreement as the only current mineral development agreement containing an environmental protection clause that attempted to create a comprehensive enforcement framework. See Knight, supra note 148 at 323, citing Stephen A. Zorn, Environmental Provisions in Developing Country Mining Agreements, UNCTAD/LDC/15 (1981) at 5.

¹⁵⁷ white, supra note 104 at 324. According to White, citing Pintz, William S., Ok Tedi: Evolution of a Third World Mining Project (London: Mining Journal Books, 1984),Google Scholar the government undertook extensive and expensive field studies in 1979 and used computer models based upon the environmental effects of another Papua New Guinea mine at Bougainville (at 80 and 89). The government studies cost four times as much as OTML paid for the original environmental impact study and “raised substantial questions about the effects of mine waste dumping in the Ok Tedi River on downstream residents and subsistence life-styles.”

¹⁵⁸ white, supra note 104 at 324. The agreements provide that the agreements “have the force of law as if contained in the respective Act, and shall apply notwithstanding anything to the contrary in any other law in force in PNG.” The agreements preceded Papua New Guinea’s environmental legislation.

¹⁵⁹ Ibid, at 326. The destruction of the dam by the earthquake was attributed in part to the fact that no intensive geological tests were carried out before the work got underway.

¹⁶⁰ Ibid. At the time, it was decided that it was impractical to build a new tailings dam because of the expense involved, which would have threatened the mine’s financial future, and because of the heavy rainfall and frequency of earthquakes in the area. A tailings dam at risk of collapse may be more environmentally damaging than gradually depositing tailings direcdy into the river system. Ibid, at 313.

¹⁶¹ Ibid, at 326. The penalties would take the form of a reduced rate at which OTML could extract minerals from the mine.

¹⁶² Ibid. The temporary scheme for the operation of the mine without a tailings dam found in an “Interim Tailings Scheme” in 1984, was abandoned in 1988, with formal approval for the continued operations without a tailings dam allegedly granted by the government in 1989. It should be noted, however, that the operations of the mine changed during this time as well: from 1984 to 1986, gold was extracted; from 1986 to 1988 both gold and copper were extracted; and as of 1988, only copper has been extracted, which is expected to continue until 2008. Ibid, at 309. The difference is not significant, however, as the lawsuits filed against BHP did not allege environmental damage caused by cyanide as is often the case in gold mining. The tailings that are dumped into the river system as a result of the copper mining process contain 15 per cent of their original copper content as well as the heavy metals zinc, cadmium, and lead, and the environmental damages that has resulted has been widely condemned by environmental groups. Ibid, at 311.

¹⁶³ Ibid, at 325.

¹⁶⁴ Ibid, at 307. Up to 70 per cent of Papua New Guineans are illiterate, and life expectancy levels are five years below the average for middle-income countries. Economic instability has plagued the country as well, given the serious underlying structural imbalances, such as a lack of physical and social infrastructure.

¹⁶⁵ Ibid. at 308. In the early 1990s, copper comprised 62 per cent of the total exports from Papua New Guinea.

¹⁶⁶ Ibid. at 309. The various projects funded by OTML have included the construction of twenty classrooms, the provision of equipment to encourage commercial fishing in the area (ironically!), the provision of support for the development of a rubber processing factory, and a vegetable-growing project providing food for mine workers.

¹⁶⁷ Ibid. at 310.

¹⁶⁸ Ibid. at 322. See B.H.P. v. Dagi, [1996] 2 V.R. 117 (Sup Ct Vic).

¹⁶⁹ Cambior, supra note 38 at para. 69-70.

¹⁷⁰ See cl. 29.12 of the Ok Tedi Agreement, stating that OTML is obliged to compensate any person for loss suffered “as a result of its operation resulting from any damage (whether to land, anything on land, water or otherwise) or interference with any right to use land or water existing prior to the date hereof caused by disposal by OTML of the overburden, tailings or other waste.” Dagi, supra note 40 at 431.

¹⁷¹ See cl. 5 of the Ok Tedi Fifth Supplemental Agreement.

¹⁷² Dagi, supra note 40 at 341.

¹⁷³ The Act of State doctrine is often used to refer to two different principles that may arise where acts of sovereign states are at issue. According to one version, the doctrine is a conflict of laws rule, and the recognition of a foreign act of state is understood as an application of foreign law, thereby resurrecting various exceptions such as the public policy doctrine. The second version, which is found in Dagi, supra note 40, is a non-justiciability principle, according to which a court refuses to inquire at all into the legality of the act of the foreign state under the foreign law. For the history and an elaboration of these doctrines, see Anne-Marie Burley, “Law among Liberal States: Liberal Internationalism and the Act of State Doctrine” ( 1992) 92 Columbia L.Rev. 1907.

¹⁷⁴ Dagi, supra note 40 at 453.

¹⁷⁵ Ibid, at 453.

¹⁷⁶ Ibid. at 454. Even if this claim was justiciable, it is not entirely clear that the plaintiffs, at least in a Canadian jurisdiction, would be able to enforce the contractual obligation, due to considerations of privity of contract and the requirement of consideration. According to the third party beneficiary rule of contract law, only parties to the contract may sue to enforce it. See generally Waddams, S. M., The Law of Contracts, 3rd ed. (Toronto: Canada Law Book, 1993) at 181–93.Google Scholar It should be noted that some Commonwealth jurisdictions have abolished or modified this rule. In Dagi, supra note 40, Byrne J. indicated that reliance was placed on an exception of commercial convenience according to the principle of Trident General Insurance Co. Ltd. v. McNiece Bros. Pty. Ltd. (1988), 165 C.L.R. 107 (Aust. H.C.).

¹⁷⁷ Dagi, supra note 40 at 454. It should be noted that a line of cases in the United States presents the possibility of a different approach to environmental violations that can be characterized as violating the law of nations. The Alien Tort Claims Act, 28 U.S.C. 1350 (1994) [hereinafter ATCA], has been invoked in several cases, including Beneal v. Freeport-McMoRan, Inc., 969 F. Supp. 362 (E.D.La. 1997), in which it was alleged that Freeport’s mining operations, including the discharge of tailings drainage, violated the law of nations. However, the court held that neither the “polluter pays” principle, the “precautionary” principle, nor the “proximity” principle could be said to rise to the level of an international tort and that Beneal had failed to allege an international environmental tort as required under the ATCA. See also Anastaria Khokhryakova, “Beneal v. Freeport-McMoran, Inc.: Liability of a Private Actor for an International Environmntal Tort under the Alien Tort Claims Act” (1998) 9 Colorado J. Int’1 Env’1 L. & Policy 463.

¹⁷⁸ The economic pressures described here in the context of developing countries lead to a sense that regulation of environmental standards by the host state is difficult if not impossible. The argument may also be made that in the world of globalization, where government regulatory policy is the subject of competition between jurisdictions that results not only in the relocation of firms to other jurisdictions but also in the threat of exit being used to extract regulatory benefits, the reality is that increasingly standards are set internationally — all too often as a result of a mutually destructive race-to-the-bottom in the international marketplace. In this light, the role of public international law standard-setting institutions becomes crucial to both developed and developing countries. For a discussion of these issues in the context of labour standards, see Brian Langille, “General Reflections on the Relationship of Trade and Labor (Or: Fair Trade is Free Trade’s Destiny),” in Bhagwati, J. N. and Hudec, R. E., eds. Fair Trade and Harmonization, Prerequisites for Free Trade? (Cambridge, MA: MIT Press, 1996) at 231–66.Google Scholar

¹⁷⁹ For a recent pronouncement of this principle, see La Forest J. in Tolofson, supra note 88 at 1047, who states: “[T]he underlying postulate of public international law is that each state has jurisdiction to make and apply law within its territorial limit, which other states would ordinarily respect, absent a breach of some overriding norm.”

¹⁸⁰ See Brownlie, supra note 30 at 303–9. This discussion of prescriptive jurisdiction is derived from Brownlie, and the traditional Anglo-Canadian bases of jurisdiction. Brownlie notes (at 313) that in the case of substantive or legislative jurisdiction, there is no major distinction between the types of jurisdiction (that is, criminal, civil, or fiscal). The word “criminal” will be used loosely, including a reference to regulatory measures.

¹⁸¹ Brownlie, supra note 30. See also Lotus case (1927), PCIJ, Ser. A, no. 10, p.23.

¹⁸² Brownlie, supra note 30 at 306. Other commonly recognized principles include the nationality principle, according to which jurisdiction may be exercised over criminal acts of a national abroad; the passive personality principle, which allows aliens to be punished for acts abroad which are harmful to nationals of the forum; the protective principle, which permits jurisdiction over aliens for acts committed abroad which effect the security of the state, and universality, which is often associated with punishment for a breach of international law. Note that Brownlie considers the universality principle to allow jurisdiction over acts of non-nationals as a matter of international public policy where international law has not itself declared criminal the acts, but gives liberty to all states to punish them, as opposed to the separate principle of crimes under international law that may be punished by any person that obtains custody of persons suspected of responsibility.

¹⁸³ Libman, supra note 34 at 210.

¹⁸⁴ Ibid. at 232. La Forest J. dismisses concerns regarding the possibility of concurrent jurisdiction of different states over the same acts, finding that Canadian courts may use the principles of autrefois acquit and autrefois convict to take cognizance of the decisions of other countries. A parallel concern in the context of civil jurisdiction for tort actions could be met by the anti-suit injunction.

¹⁸⁵ Ibid. at 233. These principles and concerns accord with Brownlie, supra note 30 at 313, who states that extra-territorial acts can only lawfully be the object of jurisdiction if certain general principles are observed.

¹⁸⁶ Cook, supra note 32 at 51–52.

¹⁸⁷ Ibid. at 60. Bastarache J. notes (at 59) that while the objective principle is unimpeachable as a matter of principle, it is recognized that when the interest of the forum state is less significant than the interest of the state in which “the events” take place, the objective principle no longer authorizes asserting jurisdiction, and the forum state engages in an impermissible extraterritorial application of its laws.

¹⁸⁸ Libman, supra note 34 at 233.

¹⁸⁹ I will leave aside for the moment the reality that there would be no political will for the assertion of this type of extraterritorial prescriptive jurisdiction, given the desire for Canadian corporations to be economically “successful” abroad, rather than hampered by regulatory requirements that are in reality less and less enforced even in Canada. See Mittelstaedt, Martin, “Criminal Polluters Finding Canada’ the Promised Land,” Globe and Mail (March 23, 1999) A7Google Scholar; Mittelstaedt, Martin, “Group Flays Ontario’s Record on Pollution,” Globe and Mail (April 12, 1999) A4.Google Scholar

¹⁹⁰ Benidickson, Jamie, Environmental Law (Concord: Irwin Law, 1997) at 83–109.Google Scholar

¹⁹¹ See Swaigen, supra note 29.

¹⁹² por exampie; the CEPA, 1988, supra note 7, contains some rather interesting mens rea provisions in s. 115, which provide for criminal prosecution for someone who “(1) (a) intentionally or recklessly causes a disaster that results in a loss of the use of the environment, or (b) shows wanton or reckless disregard for the lives or safety of other persons and thereby causes a risk of death or harm to another person.” Section 115(2) provides that criminal negligence may be prosecuted under the Criminal Code. A version of a due diligence defence is granted in s. 125(2). There have to date been no prosecutions under either of these sections. However, in theory, they could be applied to criminally irresponsible decisions taken in Canada with regard to mining operations in another country. The comparable provision in the CEPA, 1999, supra note 7, is s. 274, although the due diligence defence in s. 283 is no longer available to the mens rea provisions, representing a clear improvement over the CEPA, 1988.

¹⁹³ Note that in the context of interprovincial environmental legislation, Inter-provincial Co-operatives Ltd. v. The Queen (1975), 53 D.L.R. (3d) 321, held that a provincial statute that imposed liability for contamination offish by discharge of pollutants into waters that were then carried into waters in Manitoba was constitutionally ultra vires, as it purported to have extra-territorial effect by being directed to acts done outside the province.

¹⁹⁴ Cohen, supra note 149 at 173, note 187, points out that Indonesia has consulted Canada in the drafting of new environmental laws. See Hobson, Simon, “The 1990s: The Environmental Decade” (1993) Eng. & Mining J. at 60.Google Scholar

¹⁹⁵ See Cohen, supra note 149 at 150; National Environmental Policy Act, 42 U.S.C. 4321–4347.

¹⁹⁶ Canadian Environmental Assessment Act, R.S.C. 1992, c. 37 [hereinafter CEAA]. The act applies where a federal authority issues a permit or license or grants an approval under federal legislation or where federal lands or federal financial assistance are involved. Regulations to the CEAA specifically contemplate their application to projects outside Canada. See Projects outside Canada Environmental Assessment Regulations, SOR/96–491, in force Nov. 7, 1996. Note also ss. 46–53 “Transboundary and Related Environmental Effects.” The process of assessment includes public scrutiny and input through a review panel. See Jeffrey, Michael I., Environmental Approvals in Canada: Practice and Procedure (Toronto: Butterworths, 1989) at para. 1.12.2.Google Scholar

It is interesting to note in this context the development of voluntary environmental measures by the Mining Association of Canada [hereinafter MAC]. The MAC unveiled A Guide to Management of Tailings Facilities on November 25, 1998; it is available online at <http://www.mining.ca/english/publications/tailingsguide.pdf>. It was designed to give mining companies the tools to consistendy integrate environmental and safety considerations into tailings operations, from beginning to end. It covers site selection, design, construction, operation, decommissioning, and closure. According to the president and CEO of the MAC, the guide covers global issues and working to improve mining both at home and abroad. See Press Release, “Canadian Mining Industry Seeks to Improve Safe Environmental Management of Mine Waste Storage Facilities,” on the MAC website at http://mining.ca.

¹⁹⁷ An example of Canadian legislation that disregards the legal independence of the parent and subsidiary are provisions in the Income Tax Act, R.S.C. 1985 (5^th Supp.), which provides incentives for adequately capitalizing subsidiaries. See the thin capitalization provisions in s. 18(4)–(8).

¹⁹⁸ Foreign Corrupt Practices Act, U.S.C, paras. 78a, 78dd-1, 78dd-2, 78ff (1994). See Muchlinksi, supra note 10 at 108; Murase, supra note 10 at 391; see also H. Lowell Brown, “Parent-Subsidiary Liability under the Foreign Corrupt Practices Act” (1998) 50 Baylor L. Rev. 1. Canada has recently implemented a weaker version of the anti-bribery part of this legislation in order to implement the Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions. The Canadian legislation is known as the Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, and was brought into force February 14, 1999 by SI/99–13 (Can. Gaz., Part II, March 3, 1999). The basic offence provision in the Canadian legislation provides: “Every person commits an offence who, in order to obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official (a) as consideration for an act or omission by the official in connection with the performance of the official’s duties or function; or (b) to induce the official to use his or her portion to influence any acts or decisions of the foreign state or public international organisation for which the official performs duties or functions.” Breach of this provision is an indictable offence, however, there are various savings provisions (s. 3(1)).

The American legislation includes accounting and controls provisions as well as the anti-bribery provisions, and an interesting circularity arises in the context of the parent-subsidiary relationship. As explained by Brown (at 18–19): “[T]he FCPA, particularly the accounting and controls provisions, mandates a degree of parental involvement in the subsidiary’s operations that may be viewed as being antithetical to the corporate separateness necessary to insulate the parent from liability arising from the crimes of the subsidiary. Not only may the parent be directly responsible for the subsidiary’s compliance with the accounting and controls provisions, but the knowledge that may also be attrib-uted to the parent by virtue of the accounting provisions, together with the intent of its ‘agents’ that may be attributed to the parent, may serve as the predicate for parental liability under the anti-bribery provisions, as well. As a result, a parent corporation may be compelled to relinquish the protection afforded by the separate incorporation of a subsidiary in order to take the steps reasonably necessary to avoid liability under the FCPA.” There is no comparable requirement in the Canadian legislation.

¹⁹⁹ Murase, supra note 10 at 384, citing the Organization for Economic Cooperation and Development’s Recommendation of the Council on Principles concerning Transfrontier Pollution of 14 November 1974, Title C (Principle of Non-Discrimination), 14 I.L.M. (1975), 242 at para. 4: “Countries should initially base their action on the principle of non-discrimination, whereby: (a) polluters causing transfrontier pollution should be subject to legal or statutory provisions no less severe than those which would apply for any equivalent pollution occurring within their country under comparable conditions and in comparable zones, taking into account, when appropriate, the special nature and environmental needs of the zone affected.”

²⁰⁰ See Stockholm Declaration on the Human Environment, Report of the United Nations Conference on the Human Environment, UN Doc. A/Conf. 48/14/Rev.1 (1972), Principle 23 [hereinafter Stockholm Declaration].

²⁰¹ See Rio Declaration, Report of the United Nations Conference on Environment and Development, Distr. General, A/CONF.151/26 (1992), Principle 11. The last sentence reads: “Standards applied by some countries may be inappropriate and of unwarranted economic and social cost to other countries, in particular developing countries.”

²⁰² Murase, supra note 10 at 385.

²⁰³ Ibid. at 385.

²⁰⁴ Ibid. at 386. This point raises the question of the forum in which this state responsibility could be vindicated. One possibility would see transnational public law plaintiffs using domestic courts to enunciate a public international norm of state responsibility over environmental decisions within the parent company’s control. Such a judgment would empower the plaintiff by creating a bargaining chip to use in the home state forum where negotiations over environmental standards may be in progress. See Koh, Harold Honju, “Transnational Public Law Litigation” (1991) 100 Yale L.J. 2347.CrossRef Google Scholar

²⁰⁵ This was either due to the fact that the host state had already granted them provisional compensation or had assumed the role of a parens patrice for its injured citizens. See Murase, supra note 10 at 386, in reference to Bhopal, supra note 23, and Amoco Cadiz, supra note 23, and citing Scovazzi, Tullio, “Industrial Accidents and the Veil of Transnational Corporations,” in Francioni, Francesco and Scovazzi, Tullio, eds., International Responsibility for Environmental Harm (London: Graham and Trotman, 1991 ) at 421.Google Scholar

²⁰⁶ Murase, supra note 10 at 387–89, citing, among others, Convention on the Protection of the Marine Environment of the Baltic Sea Area, Helsinki, March 22, 1974, 13 I.L.M. (1974) 546, Article 17; 1982 United Nations Convention on the Law of the Sea, 21 I.L.M. (1982) 1261, Article 235, para. 3; Convention on the Liability of Operators of Nuclear Ships, Brussels, May 25, 1962, not in force; Convention on International Liability for Damage Caused by Space Objects, March 29, 1972, 061 U.N.T.S. 187. Murase further suggests that attempts by international bodies, such as the United Nations and the Organization for Economic Cooperation and Development, to elaborate codes of conduct for TNCs from the perspective of providing environmental protection would have indirect influence on changing the law of state responsibility (at 389). Efforts to make these into binding instruments of international law have not been successful. See, for example, the United Nations ECOSOC Draft Code of Conduct on Transnational Corporations, which provides for “environmental protection” in paragraphs 41 to 43 (UN Doc. £/0.10/1984:8/5), reprinted in 23 I.L.M. (1984) 626.

²⁰⁷ Murase, supra note 10 at 389, referring to the work of Francesco Francioni, “Exporting Environmental Hazard through Multinational Enterprises: Can the State of Origin Be Held Responsible?” in Francioni, F. and Scovazzi, T., eds., International Responsibility for Environmental Harm (London: Graham and Trotman, 1991) at 275–98.Google Scholar This traditional view is exemplified in the Trail Smelter (United States v. Canada) arbitration, April 16, 1938 (11 March 1941) 3 Reports of International Arbitral Awards 1905 at 1907f [hereinafter Trail Smelter]. Murase points out that states have come to assert their authority to “control” TNCs even in the absence of “jurisdiction” over their activities in such fields as antitrust and export control (at 390). See text accompanying note 193.

²⁰⁸ Murase, supra note 10 at 391. See Nottebohm (Liechtenstein v. Guatemala), Merits (1955) I.CJ. Reports 4 at 23.

²⁰⁹ Murase, supra note to at 392-93. See Barcelona Traction, Light and Power Company, Limited (1970) I.C.J. Reports 3 at 42–44, paras. 56–58; 70. The International Court of Justice determined that the domestic law principle of lifting the corporate veil could play a similar role in international law.

²¹⁰ Murase, supra note 10 at 393, cidng Legal Consequences for States of the Continued Presence of South Africa in Nambia (South West Africa) Notwithstanding Security Council Resolution 276 (1970), I.C.J. Reports 1971 at para 118.

²¹¹ Murase, supra note 10 at 393.

²¹² Ibid. at 393-94.

²¹³ See the heading “Liability Principles” earlier in this article for a discussion of the principles. Note also the theory of enterprise liability as a solution to this dilemma.

²¹⁴ Murase, supra note 10 at 394, citing Stockholm Declaration, supra note 200.

²¹⁵ Murase, supra note 10 at 394–95, citing the 1967 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space Including the Moon and Other Celesdal Bodies, 610 U.N.T.S. 205 and the 1988 Permanently Manned Civil Space Station Agreement, reprinted in Böckstiegel, K.-H./Benkô, M., eds., Space Law: Basic Legal Documents, vol. 2, D.II.4.2. as well as the 1982 UN Convention on the Law of the Sea, supra note 206Google Scholar (see Article 194, para. 2; and Ardele 139, paras. 1 and 2) and the 1988 Convention on the Regulation of Antarctic Mineral Resource Activities, reprinted in Watts, A. D., International Law and the Antarctic Treaty System (Cambridge, UK: Grotius, 1992) at 344.Google Scholar In addition, Murase points to the work of the International Law Commission on “International liability for acts not prohibited by international law,” for the notion of effective control found in draft árdeles — the whole exercise of the Commission on this topic is described by Murase as “a disaster.”

²¹⁶ Murase, supra note 10 at 399. Thus, according to Murase, Stockholm Priniciple 21 may be recognized as established and applicable to the Trail Smelter situation, supra note 207, but it remains unsettled whether the principle can be applied to situations involving TNCs. He concludes: “We can finally characterize the content of Principle 21 as imposing ‘more than an obligation, but short of responsibility.’“ Murase suggests that the French text of Principle 21 indicates more of an ethical commitment than a legal obligation through use of the word “devoir.” Thus “As Principle 22 has declared, the question of establishing responsibility, or liability, beyond the mere recognition of an obligation has been left to “further developments of international law” (Murase at 399, note 246).

²¹⁷ For a more detailed examination of the principles of state liability in this context, see Lefeber, René, Transboundary Environmental Interference and the Origin of State Liability, volume 24 of Developments in International Law (The Hague: Kluwar Law International, 1996), in particular, at 12 and 253-54.Google Scholar While I would argue against this position, Lefeber claims that in the context of transnational corporadons in developing countries any exercise of extraterritorial control by developed countries would likely be regarded as a form of neocolonial interference in the domestic affairs of developing countries. In the context of the Bhopal litigation, supra note 23, Lefeber states that parent state liability “has never been a realistic option in this case.”

²¹⁸ Bourrie, supra note 1.

²¹⁹ Chatterjee, Pratap, “Environment: Canadian Mining Company Tries to Muzzle Activists,” Inter Press Service [San Fransisco] (August 24, 1997).Google Scholar

²²⁰ Damseil, Keith, “Inmet Gold Project Hits Major Roadblock in Turkey: Cyanide Ban Upheld,” National Post (December 30, 1998) atCo6.Google Scholar

²²¹ Ibid. Cyanide heap leaching involves the sprinkling of a diluted cyanide solution on top of the ore, which dissolves the gold as it trickles through the rock. A man-made pond collects the solution and the gold is then separated-this is the same process which was used in the Cambior disaster, as well as that of Placer Dome in the Philippines. It is interesting to note, however, that the focus on cyanide as the evil in gold mining tailings dam spills is largely due to the other heavy metals associated with the gold-mining process, such as mercury, copper, and iron, which do not dissipate rapidly in sunlight as cyanide is alleged to do. See Jacobson, supra note 6.

²²² Chatterjee, supra note 219. According to Dale Curcher, project manager at Vancouver’s Eldorado Gold Corp, mining firms receive mixed messages from Turkish authorities, with the government being a strong supporter, while the judiciary continues to discourage investment.

²²³ Chatterjee, Pratap, “Environment: Montana Voters Nix the Use of Cyanide in Mining,” Inter Press Service [San Fransisco] (November 5, 1998).Google Scholar

²²⁴ Ibid. Indeed, the most expensive clean-up of cyanide pollution in the United States history was the US $150 million clean-up of the Alamosa river in Colorado below the Summitville mine after Canadian owners Galactic Resources Incorporated declared bankruptcy in 1992. See note 129 for a discussion regarding the Friedland litigations. Similar batdes to the Pegasus fiasco are being fought in South Dakota, where as of November 1998, the Wioux tribe was suing Homestake Mining Company for waste from gold mining operations. In Nevada, the Western Shoshone tribe had brought a number of complaints against companies for dumping cyanide waste, and, in Washington state, the Colville tribe was trying to prevent the arrival of a gold mining company.

²²⁵ A third example of access to public participation processes could be found in Canada in the form of the Intervenor Funding Project Act, R.S.O. 1990, c. I.13, which provides funding in proceedings before a Joint Board, the Ontario Energy Board, or the Environmental Assessment Board. The act was repealed in 1996, having been in effect for only a few years. See discussion in Jeffrey, supra note 196 at ch. 4, “Intervenor Funding, Costs and Public Participation.”

²²⁶ White, supra note 104 at 306. Another example of a clearly problematic situation is to be found in connection with the Texaco litigation. While the constitution of Ecuador provides a right to an environment “free from contamination,” this right lay dormant until actively seized by environmentalists and lawyers who challenged the government. The Constitutional Court initially agreed, then overturned itself without reasons. See Adriana Fabra, “Indigenous Peoples, Environmental Degradation and Human Rights,” in Anderson, Michael R. and Boyle, Alan, eds., Human Rights Approaches to Environmental Protection (Oxford: Clarendon Press, 1996) at 255, note 56.Google Scholar

²²⁷ White, supra note 104 at 317–20. The result at the Ok Tedi Mine Limited were protests, strikes, and violence, which at various times forced the closure of the mine. This violence is reminiscent of the civil war on the island of Bougainville, which ceded from Papua New Guinea in 1989. The civil war has been attributed in part to environmental damage caused by a copper mine on the island and the corresponding lack of compensation paid to landowners. The Bougainville mine was forced to close as a result, many lives were lost, and school, hospitals, or medical services are no longer available (White at 332–34); and Prince, supra note 113.

²²⁸ For an exploration of the significance of involving local Aboriginal peoples in environmental impact assessments, see Fry, Patricia, “A Social Biosphere: Environmental Impact Assessment, the Innu, and Their Environment” (1998) 56 U.T.F.L.R. 177.Google Scholar According to this article, the Aboriginal community was able to nominate candidates for two of five federally appointed environmental impact assessment panel members. While the panel asserted that it would not determine the scope of “aboriginal rights” that would arise in relation to the project, the legal directive indicated that the panel should take the right to cultural integrity into account (at 180–81).

²²⁹ See White, supra note 104, who argues that the involvement of the local communities in the negotiation of the Ok Tedi Agreements might have avoided many of the disputes that followed and, more generally, argues that local communities in developing countries should be involved in the negotiation of mining agreements.

²³⁰ See Anderson and Boyle, supra note 226 at 9–10. These procedural rights would include the right to information, including the right to be informed in advance of environmental risks; the right to participate in decision-making on environmental issues at both the domestic and international level; the right to environmental impact assessment; the right to legal redress, including expanded locus standi to facilitate public interest litigation; and the right to effective remedies in case of environmental damage. Advocates for substantive rights, on the other hand, may not trust procedural rights alone as even if procedural rights are perfectly distributed throughout civil society, it is possible that “a participatory and accountable polity may opt for short-term affluence rather than long-term environmental protection.”

²³¹ See Cameron, James and Mackenzie, Ruth, “Access of Justice and Rights,” in Anderson, and Boyle, , supra note 226 at 129.Google Scholar These rights can be understood as a refinement of civil or political human rights or as novel rights. A significant example of public participation rights in the environmental context can be found in the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention) of the Economic Commission of Europe, which was adopted at the fourth Ministerial Conference “Environment for Europe” in Aarhus, Denmark, on June 25, 1998. Thirty-nine countries and the European Community have signed it. Further information is available online: www.unece.org/env/pp.

²³² For example, rights to life, association, expression, political participation, personal liberty, equality and legal redress, help to enable groups to voice their objection to environmental damage. See Anderson and Boyle, supra note 226 at 4.

²³³ For example, the right to health, education, and cultural life could assist in different contexts. Ibid. at 5–6.

²³⁴ Cohen, supra note 149 at 184–85

²³⁵ Ibid. at 133–34. See “Berlin Guidelines” (September 20, 1991) 317 Mining J. (Envt. Supp.), at 2. The Mining Association of Canada’s Guide to Management of Tailings Facilities should be remembered at this point, as another voluntary initiative, see supra note 196. The guide adopts principles and approaches from, among other sources, the ISO 14000 essentials, the Canadian Dam Association draft Dam Safety Guidelines (September 1997), and “international guidelines and standards” (at preface).

²³⁶ Cohen, supra note 149 at 138, notes that multinational corporations have been forced by rising natural resource costs to take into account environmental aspects since they must rely on public and private lenders who impose stricter conditions — unlike some medium and small-scale mining — while artisanal mining, potentially the most destructive, is often illegal and uncontrolled.

²³⁷ These are prepared by the prospective borrower, often with World Bank staff assistance, and include a lengthy series of consultations, public comment periods, and reviews.

²³⁸ The World Bank has developed specific environmental standards that are used primarily for providing regulatory-development guidance to developing countries and for evaluating environmental impact reports. See Cohen, supra note 149 at 156.

²³⁹ Ibid. at 156. A more positive development at the World Bank is presented by James Cameron and Ruth Mackenzie, supra note 231 at 147–49, regarding the creation of the World Bank Inspection Panel in 1993, which opened the activities of an intergovernmental financial institution to scrutiny by non-governmental actors for the first time. The panel was established for the purpose of providing people direcdy, materially, and adversely affected by a bank-financed project with an independent forum through which they could request the bank act in accordance with its own policies and procedures.

²⁴⁰ Cohen, supra note 149 at 157. See also Wagner, Daniel, “A New World for Political Risk Investment Insurance” (October 1994) Risk Mgmt. 30–38,Google Scholar for a concise discussion of these agencies.

²⁴¹ Cohen, supra note 149 at 150–51. Development of domestic environmental law and the growing regime of international environmental agreements depend significantly on engaging developing countries’ participation in addressing environmental problems. Partly driven by hopes of joining the North American Free Trade Agreement, at least half of the countries in Latin America are developing revised general environmental legislation. Indeed, many have embodied environmental protection in their constitutions (at 158).

²⁴² Ibid. at 158. Different approaches have been taken in developing environmental laws that affect mining activity in developing countries. Many developing countries have enacted framework laws that include environmental impact assessments. A few countries have incorporated stronger environmental provisions that acknowledge mining’s potential to inflict enormous environmental damage, which typically impose liability on mining operators for damage to private property, surface areas, and water supplies. Few have gone so far as to adopt specific discharge standards or tailings disposal requirements, or to require that all mining operators post reclamation bonds. See Ibid. at 153–54.

²⁴³ Ibid. at 154–55• See the discussion earlier in this article under the heading “The Reality of Host State Participation.”

²⁴⁴ See Mittelstaedt, supra note 189.

²⁴⁵ See Cohen, supra note 149 at 165–86, for a detailed look at her extensive proposals. Absent from Cohen’s proposals is the important role non-governmental organizations could play in overseeing such an arrangement.

²⁴⁶ Ibid. at 173.

²⁴⁷ Cook, supra note 32 at 60.

²⁴⁸ The result will inevitably be that the application of the foreign law will be informed by implicit premises of Canadian law, resulting perhaps in a hybrid or transnational law. While the results might differ from those that would arise were the litigation to take place in the foreign forum, this is a legitimate outcome given that Canada has a real and substantial interest in the action.

²⁴⁹ 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, O.J.C. 189, 28 July 1990, p. 2 [hereinafter Brussels Convention], as cited in McLachlin, Campell and Nygh, Peter, Transnational Tort Litigation (Oxford: Clarendon Press, 1996) at 3.Google Scholar

²⁵⁰ Handelskwerkerij GJ Bier BV v. Mines de Potasse d’Alsace, [1976] E.C.R. 1735,cited in McLachlin and Nygh, supra note 249 at 209 in ch. 12, “Environmental Damage” by Friedrich Κ. Juenger.

²⁵¹ In terms of general jurisdiction, the Brussels Convention, supra note 249, essentially abolishes the Moçambique principle as it would apply to tort actions for negligence. See Juenger in McLachlin and Nygh, supra note 250 at 209–10. Article 16(1) of the convention limits exclusive jurisdiction for actions dealing with immovables to those proceedings that involve rights in rem or tenancies, thus it does not encompass tort actions brought against polluters. Pursuant to Article 2, polluters can be sued in the state of their domicile or, in the case of a corporation, in the state in which they have their principal place of business (see Article 53). Even countries that recognize the doctrine of forum non conveniens are barred from applying it in actions that fall within the convention. Thus, “the victims of transborder pollution can sue the polluter, without any ifs and buts, in his home country.” Note that if the polluter is domiciled outside the Common Market, the plaintiff is not limited by these three “normal” bases of jurisdiction but may enhance his forum shopping opportunities by the exorbitant bases found in national laws, which the convention outlaws only against member states domiciliaries (Juenger at 213). See also the 1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, O.J.L. 319, 25 November 1988.

²⁵² McLachlin, ‘Transnational Tort Litigation: An Overview,” in McLachlin and Nygh, supra note 250 at ch. 1, stating: “The law of jurisdiction in this sense operates as a matrix of options within which litigants’ choices are exercised and where a number of states may potentially hold concurrent jurisdiction” (at 9).

²⁵³ This observation is taken from a discussion of the significance of foreign investment to Ecuador of Broderick USD], in the memorandum order Maria Aguinda v. Texaco, 1994 U.S. Dist. 4718 (April 11, 1994) [Lexis]. He noted that a disincentive to invest would only arise if the court were to find that the country’s own courts were unqualified to adjudicate relevant matters. But see Aguinda, supra note 71, where submissions of the Congress of Ecuador asking the court to disregard the submissions of the government of Ecuador objecting to the court’s retention of jurisdiction, led to this remark: “[T]he litany of conflicting submissions from these representatives and officials further evidences the need for this Court to resist intruding on matters that are already subject of intense political debate in the affected foreign country.” However, see also the appeal in Jota, supra note 71, for a discussion of Ecuador’s change of heart in support of the U.S. litigation.

²⁵⁴ Weinberg, supra note 46.

²⁵⁵ Jacobson, supra note 6, citing a United Nations report that harshly criticized the Omai Gold Mine for failing to adequately monitor the operation of the dam, even though the design chosen was one that required “extremely careful construction and monitoring.” The report concluded that the mine operated “without proper evaluation of groundwater levels in and around the dam, without evaluation of discharges in creeks ... and most important without capacity for oversight of the environmental monitoring program.”

²⁵⁶ “Cambior Environmental Management System Awarded Prestigious ISO 14001 Certification,” Business Wire [Montreal] (February 10, 1999) [Lexis]. According to this item, which is based upon a press release geared towards investors, the ISO 14001, referred to as “the green standard” is an outgrowth of ISO 9000, both of which were developed by the International Organization for Standardization, based in Switzerland.

²⁵⁷ with the exception of the Doyon mine acquired by Cambior in early 1998.

²⁵⁸ Ibid. Described as a company-wide process coordinated by the director of environment and research, the process of implementing the environmental management system involves “examining any process or procedure carried out by the company that has, or could have, an environmental impact, as well as all applicable laws and regulations. Once the risks are evaluated and a plan for minimizing or eliminating the risk is developed and implemented to ensure that the process can be tracked and improved on a continuous basis. Total employee involvement at each mine and office is a key to the success of the program, and training is a major component. An important element to the EMS is a series of on-going evaluations that examine not only compliance but also the systems and the technology used in the process. “ According to an Excerpt from Cambior Incorporated’s 1999 Annual Report, Ornai Gold Mines Limited has, over the past year, been in the process of implementing the ISO 14001 Environmental Management Standard for its Guyana operation, with certification anticipated in the 3^rd quarter 2000. This excerpt is available online: www.cambior.com/english/5_environment/frisco.htm.

²⁵⁹ Bourrie, supra note 1. Boliden Limited, the owner of the Spanish zinc mine that had a massive spill, lost 30 per cent of its value in the weeks after the accident, with the share prices since rising back to near their pre-pollution level. The stock of Kumtor, the company that caused the Kyrgyztan spill, lost only 15 per cent of its value. While Cambior Incorporated’s share price had dwindled from about Cdn. $22 to about $ 14 per share in the last two months (August 24, 1997), this may have been due more to the activities of the RIQ than the spill itself. These activities included writing letters to financial institutions that were considering giving loans to Cambior to develop the La Granja gold mine in northern Peru, stating that Cambior has demonstrated a serious disregard to the ecosystems in which it operates, as shown by the Guyana spill as well as by alleged violations in Alaska and Arizona. Travis of RIQ further warned that activists would seriously consider a full retail boycott of any financial institution that provided financing to Cambior unless the company settled the outstanding compensation claims in Guyana. Cambior hit back, unsuccessfully seeking a legal injunction to prevent Travis from talking to any financial institution because of “unlawful interference in its economic activities.” See Chatterjee, supra note 219. In addition, Travis allegedly planned to chastise company officials at their annual meeting for having an insurance policy that provided only US $1 million to cover Omai damage claims. See Kennedy, Peter, “Engineering Firm Named in Lawsuit over Cambior’s Guyana Spill,“ Financial Post (April 30, 1998).Google Scholar Travis phrased his question: “Is this the type of risk that shareholders want to be exposed to in a global economy?”

²⁶⁰ However, it is clear that mining disasters are costing mining companies some money: the spill in the Philippines cost Placer Dome Incorporated of Vancouver more than US $43 million, while the Guyana spill cost Cambior about US $21 million. See Damsell, supra note 220.

²⁶¹ Damsell, supra note 5. Cohen, supra note 149 at 174, notes that multinational corporations must meet (Securities Law) disclosure obligations and respond to public opinion at home. As public companies expand, their operations are more carefully scrutinized by more interested parties (institutional investors, for example). Thus, when environmental legislation of a developing country lags behind, the mining company may find itself trying to compromise between the environmental wishes of its shareholders and the legislative authorities at home and government departments in developing countries.

²⁶² Tolofson, supra note 88.

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Environmental Harm in Developing Countries Caused by Subsidiaries of Canadian Mining Corporations: The Interface of Public and Private International Law

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