The Canadian Oppression Remedy Judicially Considered: 1995 - 2001

Under the Canada Business Corporations Act, the oppression remedy allows corporate stakeholders to bring an action against a corporation for unfairly prejudicial and oppressive behaviour. Since the Dickerson Report recommended such a remedy in Canada, there has been much discussion in academic literature about how it has been applied by the courts. The authors empirically tested the following assertions: (1) that the oppression remedy has been use frequently by Canadian courts, (2) that it is available to non-minority shareholders, (3) that its use among non-shareholder creditors and minority shareholders is increasing, (4) that allowing derivative claims under the oppression remedy would inflate the number of lawsuits, and (5) that judges are permitted a great deal of creativity in granting remedies for oppression. Based on their analysis of 71 applications of the oppression remedy during a seven year sample period, the authors conclude that Canadian courts have made only limited use of it. Non minority shareholders have used it infrequently, and with less success than minority shareholders. Non-shareholder creditors and minority shareholders in widely held corporation have not made extensive use of it either, but the authors predict more successful claims by these groups in the future. Oppression actions are still predominantly personal actions, and the number of derivative actions remains low. Canadian courts have been innovative in creating remedies for successful applicants. The authors argue that these results show that Canadian courts have applied the oppression remedy in a way that reflects the primacy of shareholder interests and the contractual nexus view of corporate law. However, some signs, such as the increasing success of creditors as non-shareholder applicants, point to a possible change in attitude that reflects the communitarian critique of the contractual nexus model. The authors conclude that although the oppression remedy holds promise in providing relief to non-shareholder stakeholders and in recognizing corporate interests beyond wealth maximization, the cautious approach taken by the courts is likely to continue in the near future.

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