This is Major: Canadian Companies Can Be Sued in Canada for Breaches of Customary International Law that Occur Abroad

No, this post is not about force majeure. But it’s still worth reading for anyone who advises Canadian companies operating abroad or anyone with an interest in international law.

On February 28, 2020, the Supreme Court of Canada rendered its decision in Nevsun Resources Ltd. vs. Araya, 2020 SCC 5. The decision had been under reserve for just over a year.

By a 5-4 majority, the Court decided that B.C. courts could hear a claim brought by three Eritrean refugees against a B.C. company alleging breaches of customary international law that occurred in Eritrea.

The workers alleged that through Eritrea’s “National Service Program”, which requires Eritreans to do military training and service, they were forced to work for years in deplorable conditions on projects supported by the military or political party officials. One of these projects was the Bisha mine, which began construction in 2008. The Bisha mine is owned by a company that is in turn owned by B.C.-based Nevsun.

The workers alleged that they were forced to work at least 12 hours a day, 6-7 days a week, in temperatures of up to 50ºC, and routinely subjected to beatings and other cruel punishments. They filed suit against Nevsun seeking damages for breaches of domestic torts including battery, unlawful confinement, conspiracy and negligence. They also sought damages for breaches of customary international law prohibitions against forced labour, slavery, crimes against humanity and cruel, inhuman and degrading treatment.

Nevsun brought a motion to strike the pleadings on the basis of the “act of state doctrine” which precludes domestic courts from assessing sovereign acts of a foreign government. Nevsun argued that the National Service Program was covered by this doctrine. It also argued that the claims based on customary international law should be struck, because even if the particular norms invoked are part of the common law, corporations are immune from their application. It was therefore “plain and obvious” that these claims had no reasonable chance of success.

The majority (Wagner, C.J. Abella, Karakatsanis, Gascon and Martin JJ.) held that:

(i) the act of state doctrine had never been applied in Canada and is not part of Canadian law;

(ii) customary international law norms, including those invoked, are part of Canadian law through the process of automatic adoption without the need for legislative action; and most importantly

(iii) it was not “plain and obvious” that corporations are excluded from civil liability for direct violations of customary international law.

Whether corporations can be held directly liable for breaching customary international law has been the subject of debate for decades. All nine judges could agree (i) that international law prohibits crimes against humanity, slavery, the use of forced labour and cruel, inhuman degrading treatment; (ii) that these prohibitions have the status of jus cogens or customary international law; and (iii) that individuals and not just states must obey at least some customary law prohibitions. However, the majority and the minority disagreed as to whether corporations could be held directly liable for their breach through an action in civil liability.

Justice Abella, writing for the majority, emphasized that the Court was not required to determine definitively whether the workers should be awarded damages for the alleged breaches of customary international law. She acknowledged that the law remained unsettled.

The majority’s reasons do however provide a strong indication as to the direction in which the law is moving. As Justice Abella explained, while states were classically the main subjects of international law, this is no longer the case. Human rights are “discrete legal entitlements, held by individuals, and are to be respected by everyone” [110]. They can be violated by private actors, and there is “no reason, in principle, why “private actors” excludes corporations [111].

Justice Abella moreover cited to academic commentary that has long advocated that since corporations can be held responsible for violations of international criminal law, it would be incongruous to hold that corporations are immune from civil liability [112]. At this stage, it was enough to conclude that the breaches of international law relied on by the workers “may well” apply to Nevsun” [114]. No Canadian laws conflicted with their adoption as part of Canadian common law; to the contrary, the Canadian government has adopted policies to ensure compliance with these norms [115].

But does this mean there is a civil law remedy for their breach? According the majority, “recognizing the possibility of a remedy for the breach of norms already forming part of the common law is […] a necessary development” [118]. Justice Abella cited to the International Covenant on Civil and Political Rights, which requires state parties to ensure an effective remedy to victims of violations of those rights. She also invoked the “general principle” that “where there is a right, there must be a remedy for its violation” [119-120].

Nevsun had also are argued that existing common law torts such as battery and unlawful confinement were sufficient to address the workers’ claims. The majority dismissed this argument, explaining that “[t]he objectives associated with preventing violations of jus cogens and norms of customary international law are unique” and may require “different and stronger responses” than traditional tort claims [129].

Since the decision is on a motion to strike, the trial judge will still need to decide whether the facts of this case justify finding breaches of customary international law and, if so, what remedies are appropriate. While the majority’s reasons are undoubtedly a major step in the direction of direct corporate liability for breaches of customary international law, all four dissenting judges were of the view that it was “plain and obvious” that corporations are excluded from direct liability at customary international law. (Justices Côté and Moldaver further dissented with respect to the act of state doctrine.) In any event, we should expect to hear about this case again when it reaches the merits.

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A final note: Nevsun is not a class action. It was originally brought as a “representative action” on behalf of more than 1,000 other workers. It could not be brought as a “class action” under B.C.’s Class Proceedings Act because none of the plaintiffs or proposed class members are B.C. residents. The motion judge decided that the action did not meet the requirements of a “representative action” under the B.C. Rules or the requirements of a common law class action. The plaintiffs did not appeal that aspect of the decision (2016 BCSC 1856). Nonetheless, we should expect Nevsun to have an impact in the class actions context as well.

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On behalf of everyone at IMK, we hope you are doing as well as possible and wish you all the best for your continued health, safety and well-being.