Mining @ Gowlings - March 7, 2012 - Volume 1, Number 1

Edited by David McIntyre

In this issue:

Bringing the Fight to Canada Bringing the Fight to Canada

By: Kyle Magee and Janet Howard

Overview

The recent decision of the Ontario Court of Appeal in the case of Piedra v. Copper Mesa Mining Corporation1 is of interest to Canadian mining companies with foreign operations, their boards of directors and the Canadian stock exchanges on which their securities are listed. Among other issues, the case raises an interesting question as to whether Canada is the proper forum to address wrongs in foreign jurisdictions by agents of Canadian corporations.

In the case of Piedra, the Court considered whether a duty of care was owed to local residents in a community neighbouring an Ecuadorian mine operated by Copper Mesa Mining Corporation ("Copper Mesa"), a junior mining company incorporated in British Columbia with its shares listed on the Toronto Stock Exchange.

Residents in the local community had actively opposed the initial exploration work, concerned that it would lead to the construction of a large-scale open pit copper mine on a site adjacent to the communities where they lived. The Plaintiffs claim they were subjected to a "campaign of intimidation, harassment, threats and violence" allegedly carried out by security forces controlled by Copper Mesa and its agents in response to "widespread and sustained local opposition" to the Ecuadorian project. The allegations included a shooting and repeated threats of death and physical assaults.

The decision of the Court leaves open the possibility that, in the right circumstances, where there are sufficient facts and advance notice to establish that harm to local residents is a foreseeable result of company conduct, the corporate directors may owe a duty to prevent such harm.

The Claims

In the case of Piedra, three Ecuadorian resident Plaintiffs commenced actions in Ontario against each of Copper Mesa, two of the corporation's Ontario resident directors (collectively, the "Copper Mesa Defendants") and the TSX Inc. and the TSX Group Inc. (collectively, the "TSX Defendants"). The Plaintiffs alleged they had been victimized by assaults committed in Ecuador in connection with the company's Ecuadorian mining project.

The total damages sought by the Plaintiffs amounted to approximately $1.6 billion. Following a motion by the defendants, the Ontario Superior Court of Justice dismissed the claims, without leave to amend, on the ground that they disclosed no reasonable...