Northern Exposure

You don’t necessarily have to be Canadian to be a plaintiff in a securities class action filed in Canadian courts. Global classes have recently been certified in Canada in a variety of securities class actions, including some against U.S.–listed companies. Most recently, Chinese forest products company ­Sino-Forest Corporation and two other Chinese companies have been the target of claims on behalf of putative classes of global investors. Is Canada emerging as a haven for wronged investors worldwide?

Despite the increasingly busy class action docket up North, the correct answer is “maybe.” That’s because the law under which the record 42 ongoing securities class actions have been lodged is still so young that the limits of liability for corporate defendants have yet to be defined. (The law, the 2005 Ontario Securities Act, granted Canadian secondary market investors U.S.–style rights to seek class remedies for ­alleged corporate fraud.) But decisions by ­Canadian courts over the next few years should clarify whether Canada continues to open the door to global investor plaintiffs, or begins to close it, as the U.S. Supreme Court has done in Morrison v. Australia National Bank. (Morrison barred investors who purchased shares of companies listed only on non–U.S. exchanges from seeking damages in U.S. courts.)