Renewed CSR strategy for Canadian Mining and Oil & Gas industry brings new consequences

A renewed CSR strategy for the Canadian mining sector was announced by the Government of Canada on November 14, 2014 that will create consequences for companies who refuse to adhere to endorsed CSR best practices and dispute resolution processes. See Canadian Mining Journal.

The Challenges of Running Responsible Supply Chains

NYT blog post by Laura D'Andrea Tyson discussing some of the leading initiatives and challenges for the promotion of labour and health and safety standards through supply chains. Of particular interest to those grappling with the application of the Guiding Principles on Business and Human Rights in the supply chain context.

Equator Principles Financings – Mitigating Potential Legal Risks for Canadian Banks

Alison FitzGerald and Michael Torrance of Norton Rose Fulbright Canada discuss the legal risks for Canadian Financial Institutions associated with the recently revised Equator Principles (“EP”), whose third iteration (“EP III”) took effect on June 4th, 2013. The new EP appears to have caused little stir in the Canadian financial services sector or the legal community that serves it. The muted reaction might lead one to believe that EP III presents no significant legal risks for financial institutions (“FIs”). Alternatively, it may suggest that many of the risks inherent to the EP are poorly understood. This article looks at the EP framework and innovations to this framework adopted in EP III. We consider the potential legal risks presented by EP III for Canadian FIs and their clients, and offer some simple strategies to mitigate these risks.

Escalating Social Risk for Mining Sector

Canada's CSR Counsellor for the Extractive Sector, Marketa Evans, writes in the Canadian Mining Journal about social risks affecting the mining industry globally.  In the management of social risk, including the risks of community conflicts and social opposition, Ms. Evans states that the industry has so far taken more limited measures than have been taken for environmental risks, even though increasing evidence suggests that social risk constitutes a material risk to mining operations. Full article can be read here.

New Case May Affect Whether Equator Principles Adoption Creates a Global Duty of Care on Canadian Banks

The recently revised Equator Principles (EP), whose third iteration (“EP III”) took effect on June 4th, 2013, appears to have caused little stir in the Canadian banking legal counsel community. Many legal counsel have never even heard of the EP, even those who structure the deals that the EP apply to. The muted reaction might lead one to believe that the new EP or its predecessors present no significant legal risks for the industry. Alternatively, it may suggest that many of the risks inherent to the EP are poorly understood and risk becoming the next “black swan” that catches legal counsel flat-footed. A case currently being considered in an Ontario court, Choc v. Hudbay 2013 ONSC 1414 could have bearing on those questions and affect the potential legal risks of EPFI and is worth monitoring by banks and their counsel.

Consultants to Banking Industry Come Under Scrutiny

The New York Times reports that regulatory scrutiny of the consulting industry is intensifying.  The US Government is investigating the consulting industry which, as one government regulator says, has been infected by an ‘I’ll scratch your back if you scratch mine’ culture and a stunning lack of independence.” A senior federal banking regulator said he was exploring new ways to curb the use of consultants by the banking industry. These developments should give Equator Principles Financial Institutions (EPFI) pause when deciding whether to work with consultants to advise on Equator Principles compliance. As we have discussed, no legal professional privilege attaches to the advice of consultants, which could be very valuable in the event of a regulatory investigation.

Corporate liability for human rights violations in Canada?

Can a Canadian parent company with a subsidiary operating in a foreign jurisdiction be liable for human rights violations in the foreign jurisdiction that occur at the level of the subsidiary? Janne Duncan, Michael Torrance and Janet Howard discuss a recent decision in which a Canadian court has allowed this issue to proceed to trial. Whatever the outcome at trial where issues of liability will ultimately be determined, one thing is clear: international public expectations are changing, and directors and officers of Canadian companies need to be aware of the potential risk of claims by foreign plaintiffs seeking redress for alleged harm committed beyond Canada’s borders.

UN Global Compact: Canadian launch of the Guiding Principles

Janne Duncan writes about the the UN Global Compact (UNGC) Canadian launch this year and how it fits into related sustainability initiatives of the Government of Canada.

Export-Import Bank Sued by Environmental Groups for Coal Export Loan Guarantee

Columbia Law School's Climate Law Blog discusses a recent lawsuit by the NGO Earthjustice against US Ex-Im, regarding the Defendant's alleged failure to conduct an environmental assessment for a coal production related loan.

First trial and conviction under Canadian corruption of foreign officials law

Stephen Natrass writes about the the first trial under Canada's Corruption of Foreign Public Officials Act (CFPOA) which recently concluded with a conviction on August 15, 2013.

Increased Risks of Liability for International Human Rights Claims Brought in Canada

On July 22, 2013, the Ontario Superior Court of Justice in Choc v. Hudbay Minerals Inc. 2013 ONSC 1414 (the “Hudbay Decision”) dismissed a preliminary motion of the Defendants, Canadian mining company, Hudbay Minerals (Hudbay), thereby allowing the lawsuit against the company to proceed. The claim, which is yet to be proven, alleges Hudbay is responsible for human rights abuses allegedly committed by mine security personnel at Hudbay’s wholly owned and controlled subsidiary, Compania Guatemala de Niquel (CGN), in eastern Guatemala.

As noted, the matter has yet to proceed to trial and none of the allegations raised have yet been proven. That being so, this case has important implications for Canadian businesses operating abroad. In essence, the finding means that a complaint

Business and Human Rights: The State of Play

Ruth Cowley, Jon Hari and Stuart Neely discuss the "state of play" of business and human rights.

New Sustainability Rules Requiring Legal Strategy Rethink

This article considers the legal implications of new rules of the recently revised Equator Principles (EP), whose third iteration (“EP III”) took effect on May 14th, 2013. The Equator Principles is a framework agreed upon by 79 global financial institutions to identify, assess and manage environmental and social risk in certain types of financings around the world.  The goal is to provide an overview of the EP III with discussion of steps that counsel to EP Financial Institutions (EPFI) might consider to minimize potential legal risks and update contractual documentation.

Human Rights Due Diligence in International Finance

Revisions to the Equator Principles (EP) have created new requirements for businesses to conduct human rights due diligence in order to qualify for financing from 79 of the world’s largest financial institutions. The EP apply globally to all project financing with a value of over $10 million and to certain types of corporate loans, bridge loans and project finance advisory services. This development brings the importance of human rights due diligence beyond reputational risk management and ties it directly to access to capital for many companies. It also significantly increases the significance of human rights considerations for the financial industry.

Corporate Criminal Liability for Bribery of Foreign Public Officials by Employees

This article looks at the nature of corporate liability for corrupt acts of employees in international business operations, in the context of the Canadian anti-bribery legislation, the Corruption of Foreign Public Officials Act [CFPOA].

U.S. to Suspend Trade Privileges With Bangladesh Over Labour Safety Standards

The NYT reports that the Obama administration on Thursday will suspend trade privileges for Bangladesh over concerns about safety problems and labor rights violations in that country’s garment industry, according to administration and Congressional officials. This follows a factory building  collapse there in April, killing 1,129 workers, and a factory fire killing 112 workers last November. See full article here.

Canada to mandate disclosure of payments to foreign governments

Canada has announced its intention to introduce new legislation mandating the disclosure of payments made
by mining companies to domestic and foreign governments. This article provides an overview of the new requirements.

Managing Lender Liability in Equator Principles Implementation - Regulatory Offences

The Equator Principles III ("EP III") states that: "As financiers and advisors, we work in partnership with our clients to identify, assess, and manage environmental and social risks and impacts in a structured way, on an ongoing basis." It is well known that lender liability for environmental and social matters may arise from operational or managerial control by a lender over a project, or where a lender aids and abets regulatory offences of their borrowers. This article considers the risks associated with regulatory prosecutions of an Equator Principles Financial Institution (EPFI), acting as auditors and possibly co-managers of environmental and social risk management of their borrowers. We also consider management strategies, including the role of legal professional privilege. This article is part three of a three part look at managing lender liability in EP implementation.  The first article looked at post-loan legacy liabilities, and the second at third party beneficiary rights in the EP context.

Managing Lender Liability in Equator Principles Implementation - Third Party Beneficiary Rights in Contract Law

I read an interesting and provocative journal article by Marissa Marco, published in the Fordham International Law Journal in 2011, entitled "Accountability in International Project Finance: The Equator Principles and the Creation of Third-Party Beneficiary Status for Project-Affected Communities".  The article discusses the law on third party beneficiary rights under US contract law and considers whether the provisions of the Equator Principles (EP) relating to Affected Communities might create enforceable rights for those communities under those principles.

This article will discuss this issue and suggest a risk management strategy for EP Financial Institutions (EPFI - i.e. EP signatories) addressing and managing such risks in Equator Principles implementation.

Managing Lender Liability in Equator Principles Implementation - Legacy Liabilities (Post-Loan following Repayment or Default)

This post will consider a rather controversial topic - the possible existence of liabilities linked to Equator Principles (EP) implementation that may extend beyond the life of the underlying loan or activity to which the EP were originally applied.

The purpose will be to consider whether there are plausible legacy liability risks affecting EP implementation and, if so, how such risks could be managed by Equator Principles Financial Institutions (EPFI) before they materialize.

Please note that, as this is a blog post, the analysis is high level and intended to raise points for reflection and thought rather than to be an exhaustive review of the law on these subjects. Hopefully it raises some useful considerations and I am very much open to comment (and criticism) of the topic and ideas put forward. The goal is to generate a dialogue that may help push the boundaries of our understanding of these issues.