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Mining firm in judicial tug of war
December 17 2008 | News Articles | Financial Post
Mining firm in judicial tug of war
Teck Cominco; Canadian and U. S. courts battle over environmental suit
Julius Melnitzer, Financial Post
Wednesday, December 17, 2008
With any luck, relations between Prime Minister Stephen Harper’s Conservative government and the administration of U. S. president-elect Barack Obama will get off to a better start than the ongoing battle raging between the legal systems of the two countries over control of an environment-related suit.
In late November, the Supreme Court of Canada heard oral arguments in Teck Cominco Metals Ltd. v. Lombard General Insurance Company of Canada, an environmental law dispute that is becoming a cross-border tug of war between U. S. and Canadian courts over which country’s courts should have control of the case.
“The key issue before the Supreme Court is whether there is an automatic rule that Canadian courts should defer to U. S. courts that have accepted jurisdiction over a parallel dispute,” explains Graeme Mew of Nicholl Paskell-Mede, who represents Lloyd’s Underwriters, one of the defendants in the litigation. “But the big difficulty in doing that is that there is such a wide range of judicial approaches to taking jurisdiction in the United States, and that’s compounded by the fact that some U. S. courts and legislatures have a very long-arm view of what jurisdiction is all about.”
The case involves a dispute between Teck Cominco, a mainstay of the B. C. mining industry since 1906, and its insurers over coverage for alleged damages arising from Teck’s discharge of waste into the Columbia River near its smelter in Trail, B. C.
The Columbia River runs south from Trail into Washington State. When waste emanating from Teck’s Trail operations showed up in Roosevelt Lake south of the border, the Confederated Tribes of the Colville reservation in Washington sued in a Washington state court for environmental damages. Teck objected to the jurisdiction on grounds there was an insufficient connection between Teck and Washington state to enable a U. S. court to take jurisdiction. However, both the District Court and the U. S. Court of Appeals for the Ninth Circuit denied Teck’s attempt to dismiss the U. S. case and it proceeds in the U. S. courts.
Teck had in place general and excess liability insurance policies with several insurers. The policies were negotiated in B. C. and paid in Canadian funds. However, the insurers denied coverage for the environmental claim that was the subject of the U. S. action.
In November, 2005, Teck sued the insurers in the State of Washington. Nine hours later the insurers responded by suing in B. C. Both actions sought declarations from the respective courts regarding the insurers’ obligations under the policies.
“You can see both sides of the jurisdictional argument here,” says Malcolm Ruby of Gowling Lafleur Henderson. “It’s natural for Teck to want the coverage question decided in the U. S., where the company’s liability lies. But from the insurers’ point of view, B. C. is the appropriate place for the litigation because Teck is a B. C. company to whom they issued coverage through their brokers or branches in the province and where the policies would certainly be interpreted under B. C. law.”
The insurers moved in the U. S. courts to dismiss Teck’s claim against them for want of jurisdiction and because Washington was not the convenient forum for the litigation. However, the district court denied the application in May, 2006, and allowed the Washington action to proceed.
Teck then moved to dismiss the action the insurers brought in B. C.
“Our position was that because the Washington court applied a test similar to our own, the B. C. court should decline jurisdiction over the coverage action in favour of the Washington court,” says Gordon Weatherill of Lawson Lundell, who with colleague Lisa Peters represents Teck. However, in August, 2006, the B. C. Supreme Court dismissed the application, allowing the action to determine insurance coverage issues to proceed as well. In April, 2007, the B. C. Court of Appeal upheld the ruling, refusing to apply a “simple rule of deference” to another court asserting jurisdiction.
“I do not regard such a conclusion as ‘disrespectful’ to the foreign court, or as negating the principle of comity—a principle based on mutual respect and on ‘justice, necessity and convenience,’ “ the appeal court ruled. The appeal court did say it was preferable to avoid parallel proceedings with the possibility of conflicting results. However, that wasn’t the only factor. “It’s rare that you see courts tolerating the possibility of conflicting results,” says Mr. Ruby. The potential for similar scenarios, however, is gaining steam.
“There are more choices about where to sue because the foreign judgment enforcement regime in Canada has become liberalized, which in turn gives people more choices about where to sue because of the increased confidence that their judgment will be enforceable in Canada,” Ms. Peters says. “And when you give people more choices, they will exercise those choices and that will lead to a growth spurt in parallel proceedings.”
The Supreme Court of Canada has reserved its decision on the case.
http://www.nationalpost.com/todays_paper/story.html?id=1083988
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