Transnational Canadian Corporations Can Be Liable Under Customary International Law For Human Rights Abuses: The Phoenix Flies in Nevsun v Araya

Content warning: mention of slavery, torture, false confinement, murder, and rape

Can Canadian courts adjudicate international human rights violations committed by Canadian companies abroad? Usually, the spectre of limited corporate liability within an asymmetrical transnational legal regime precludes this and allows such abuses to continue. However, in an unprecedented decision released in February 2020, a narrow majority at the Supreme Court of Canada held customary international law to be part of Canadian common law, thus allowing Canadian courts to apply it to the actions of transnational Canadian corporations. As such, Nevsun Resources Ltd v Araya, 2020 SCC 5 [Nevsun v Araya] has opened the possibility for Canadian courts to hear and rule on the liability of private Canadian corporations complicit in human rights abuses overseas.

Factual and Procedural Background

Nevsun v Araya began with the courage of three Eritrean refugees—Gize Yebeyo Araya, Kesete Tekle Fshazion, and Mihretab Yemane Tekle (“workers”)—coming forward about their experiences of slavery, imprisonment, and torture. Through indefinite military conscription, they were forced to work at a copper, gold, and zinc mine in Eritrea and were subjected to violent, cruel, inhuman, and degrading working conditions. The mine was owned by Bisha Mining Share Company, a subsidiary of a British Columbian mining company, Nevsun Resources Ltd (“Nevsun”). In their initial claim in 2014, the workers filed for damages under Canadian tort law and customary international law, arguing that the Canadian corporation was benefitting from the forced labour regime in Eritrea.

Since then, Nevsun brought forth multiple procedural objections through pre-trial motions seeking to dismiss the workers’ claim. The motions included contesting the jurisdiction of British Columbian courts on the basis that Eritrea was the more appropriate forum (also known as forum non conveniens) and because of the act of state doctrine, as well as arguing that the workers’ claim under customary international law was not a reasonable cause of action. Counsel for the plaintiffs, James Yap, has previously recounted the legal challenges facing his clients before the hearing at the Supreme Court.

The strategy to bring forth multiple motions to strike complaints is reminiscent of tactics employed by another subsidiary of a Canadian mining corporation, Hudbay Minerals Inc (“Hudbay”) in Choc v Hudbay Minerals Inc, 2013 ONSC 1414, [Choc v Hudbay]. It was a domestic tort claim brought forth by Maya-Q’eqchi’ villagers in Guatemala who contested the mining project on their Indigenous lands and faced human rights violations including murder and rape perpetrated by the company’s employees. In 2013, the Ontario Superior Court dismissed all of Hudbay’s motions, allowing the merits of the case to be heard in Ontario courts—a process still ongoing today. Like in Choc v Hudbay, the lower courts in Nevsun v Araya dismissed the motions questioning the jurisdiction of Canadian courts.

On appeal to the Supreme Court, Nevsun did not raise the issue of forums non conveniens again. Instead, they primarily focused on their argument invoking the act of state doctrine. The doctrine argues that Canadian courts should respect the sovereignty of other nation states and their decisions—in this case, to respect the Eritrean’s government’s choices about the use of their military. However, Justice Abella, writing for the majority, cited that invoking the doctrine must not “distract attention” from the particular issues at hand—Nevsun’s profiting from the Bisha mine exploiting Eritreans workers [Nevsun v Araya, para 43]. Both Justice Abella’s majority decision and Justice Brown and Rowe’s partial dissenting opinion agreed that the act of state doctrine, while applicable in England and Australia, was not part of Canadian common law and hence did not bar the workers’ claim; Justice Côté dissented in full.

However, unlike in Choc v Hudbay, Nevsun v Araya focused on the additional question of whether the workers could bring a cause of action based on international law. This was the main issue that split the Supreme Court 5-4.

Application to Canada: Customary International Law  

Customary international law is derived from common international practices instead of written instruments. To be considered a customary international law, the laws must fulfill the twin principle of being a general practice and amounting to a legal obligation (also known as opinion juris). In this way, it is distinct from international treaty law, which is legislated through international law-making regimes. In order for treaty law to have effect in Canada, it must be legislatively implemented into Canada’s domestic regime. When international instruments are not legislatively adopted into the Canadian laws, they don’t have much force: ultimately serving as only persuasive instead of binding law in Canadian courts. The United Nations Declaration on the Rights of Indigenous People (“UNDRIP”) is one example of this difficulty in applying an international legal instrument in Canada without it having been adopted into Canadian legislation. Many Indigenous rights leaders have often criticized the Canadian government for avoiding its duty to obtain free, prior, and informed consent from Indigenous nations before initiating extractive or development projects domestically.

In contrast, customary international law does not require legislative implementation to be binding—it is like the common law of the international legal regime. Therefore, it can be incorporated into Canadian common law automatically through the doctrine of adoption. The main requirement for customary international law to be incorporated is to ensure there is no conflicting legislation that exists. The Eritrean workers claimed damages under customary international prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity. The majority and dissenting opinions found that these prohibitions met the twin principle of being general practices that were opinion juris. Further, most of them are also considered peremptory norms of fundamental importance (also known as jus cogens) from which there can be no derogation. Justice Abella argued that since customary international law was a part of the Canadian common law, Canadian courts could adjudicate on these human rights prohibitions. She drew on a long history of non-statutory international legal norms being incorporated into Canadian law, as far back as the early twentieth century and recently affirmed in R v Hape, [2007] SCR 292.

However, Nevsun argued that even if customary international law norms were a reasonable cause of action in Canadian courts, they could not apply to a private corporation like Nevsun. Justices Brown and Rowe agreed with these arguments. They reasoned that corporations cannot be held liable based on customary international law—they outlined that such corporate liability did not meet the twin principles of being a general practice that were opinion juris. However, Justice Abella maintained that while international treaty law is distinctly applied to states, seeking civil remedy against a private entity under customary international law is not restricted as such. Underlying Justice Abella’s argument is the recognition of an inadequate legal regime complicit in human rights violations by transnational corporations like Nevsun. By asserting that not only is corporate liability not prohibited by precedent but also required in this case, Justice Abella made a bold and deliberate statement against corporations committing internationally recognized human rights violations.

Nevsun also argues—and Justices Brown and Rowe in their partial dissent agreed—that the available torts of conversion, battery, unlawful confinement, conspiracy, and negligence are sufficient to address the workers’ alleged claims. Domestic torts were at issue in Choc v Hudbay. Justice Abella however maintained that customary international laws including jus cogens are distinct from domestic torts due to their public nature that “shocks the conscience of humanity” [Nevsun v Araya, para 124]. In addition, given that there are no domestic torts for forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity, Justice Abella’s point is compelling. She repeatedly grounded international law to be a result of the “phoenix that arose from the ashes of World War II”—referring to the need for international consensus that gross human rights abuses, such as those committed by Nazi Germany, were legally unacceptable [Nevsun v Araya, para 1].

Ultimately, the majority found that Nevsun did not meet their high burden to prove that it is “plain and obvious” that the workers’ claim has “no reasonable prospect of success” when advancing their argument on the basis of customary international law [Nevsun v Araya, para 64]. Therefore, the Supreme Court did not strike the workers’ claim as per Nevsun’s pre-trial motion. Justices Brown and Rowe in their dissent however characterized the test of striking a motion a little differently: whether it is plain and obvious that the workers’ claim is “doomed to fail.” Using Justice Abella’s metaphor, they said if the facts of the workers’ case are proven then “the phoenix will fly,” meaning their claim of customary international law should be heard [Nevsun v Araya, para 146]. Through contesting that customary international law has not and can not be incorporated into Canadian common law, they conclude that the workers’ claim is indeed doomed to fail.

Ultimately, both Justices Brown and Rowe and Justice Côté’s dissents agreed that the motion to strike should be granted and that the majority’s approach in rooting the workers’ claim in customary international law was too expansive and inconsistent with the Canadian doctrine of incrementalism and legislative supremacy. Yet, while it may have been inconsistent with existing common law doctrines in Canada, the majority’s landmark decision almost a year ago has put the Canadian mining industry and extractive corporations on notice. Absent legislation, it is within the Justices’ power to interpret and expand the common law. It is clear that the courts are aware of the contemporary landscape where holding corporations accountable is a difficult task given governance gaps within transnational legal regimes. Within this context of holding corporations accountable, Justice Abella has demonstrated that she takes Canada’s role as a leader in international law seriously—this is something she affirmed later on in 2020 when she penned the majority decision of Québec (Attorney General) v 9147-0732 Québec Inc, 2020 SCC 32.

Recent Update: Settlement

In their decision in Nevsun v Araya, the Supreme Court resolved the question of whether Canadian courts are allowed to hear and rule on violations of customary international law by Canadian private actors. Yet, the merits of the case—whether Nevsun did indeed violate customary international law, and if so, the appropriate remedy—was remitted back to the trial court. Recall that after over seven years since the Supreme Court granted Choc v Hudbay the ability to be heard by Canadian courts, it is still actually being heard on its merits by the trial court today. However, the Eritrean workers of Nevsun v Araya will not have to wait that long. In October 2020, a mere ten months after the Supreme Court’s decision, the parties reached a settlement. The out-of-court negotiations strengthen the underlying message of the majority’s decision: that Canadian corporations must be accountable for their perpetration of, and complicity in, international human rights abuses under customary law.