CANADA Law and Practice Contributed by: Claudia Feldkamp and Chris Pigott, Fasken
based human rights due diligence process when partnering with Canadian companies operating abroad. EDC has a standalone human rights policy supported by its Due Diligence Guideline: Human Rights, which sets out EDC’s approach to identifying and addressing the human rights impacts of its customers’ operations. 2.2.8 Regulatory Change Canada has committed to enact further legisla - tion to mitigate and prevent the risk of forced labour and child labour in the global supply chains of Canadian businesses and ensure that Canadian businesses operating abroad do not contribute to human rights abuses and viola - tions. With a new Liberal government following elec - tions in April 2025, the timing of advancing leg - islation in this area remains unclear. However, it remains likely that the Canadian government will continue to pursue business and human rights- related legislative initiatives motivated by inter - national and domestic pressures. 3. Corporate Liability 3.1 Criminal and Civil Corporate Liability Canadian corporations are subject to the federal Criminal Code. There are no specific offences under the Criminal Code for which corporations can be held criminally liable for human rights abuses conducted in foreign jurisdictions. The Criminal Code does not have general extrater - ritorial application. Civil claims brought in Canada against corpo - rations for human rights violations committed abroad, particularly when committed by a for - eign subsidiary of the Canadian company, have been considered by Canadian courts on a pre -
liminary basis as viable. These new claims for corporate liability, however, remain to be tested on the merits at trial in Canadian courts. 3.2 Director and Officer Liability There are no specific offences under Canada’s Criminal Code for which directors and officers can be held criminally liable for human rights abuses conducted by corporations in foreign jurisdictions. Directors and officers can be held criminally liable as senior officers, alongside the corporation they serve, when they participate in the organisation’s commission of or involvement in offences under the Criminal Code. 3.3 Parent Company Liability Although no transnational human rights cases have yet been decided on the merits, Canadian courts have shown a willingness to permit these cases to proceed to trial. This includes cases seeking to establish liability of a parent company for the actions of a foreign subsidiary by piercing the corporate veil. The principle that a corporation is a separate legal entity – distinct from shareholders, direc - tors, officers and employees, and distinct from affiliated corporations and subsidiaries of a cor - poration – is well established in Canadian law and is one of the foundations of Canadian cor - porate law. As such, a parent corporation can - not generally be held liable for their subsidiaries’ activities. Canadian courts will only pierce the corporate veil under very limited circumstances, which are: • where the corporation is both completely dominated and controlled by the parent and is being used as a shield for fraudulent or improper conduct;
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