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Monday, September 16, 2013

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.

Friday, September 13, 2013

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.

Tuesday, September 10, 2013

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.