Landmark ruling: Canadian corporations may be held liable for breaches of international human rights law says the Supreme Court!

On February 28, 2020, the Canadian Supreme Court issued a landmark ruling in the Araya v. Nevsun Resources Ltd case, dismissing Nevsun’s motion to strike, considering that “it is not plain and obvious that corporations today enjoy a blanket exclusion under customary international law from direct liability for violations of obligatory, definable, and universal norms of international law”. 

The plaintiffs, Eritrean refugees and former workers at the Bisha mine in Eritrea operated by Bisha Mining Share Company, a subsidiary of Nevsun Resources, a Canadian company registered in Vancouver, started in British Columbia a class action against Nevsun on behalf of more than 1 000 individuals.

The claimants argue that they were conscripted into the Eritrean National Service Program and forced to work between 2008 and 2012, 12 hours a day, at least six days a week under extreme heat, and that they were beaten, deprived of food and housed in facilities lacking beds.

Hence, the claimants seek damages for breaches of domestic torts including conversion, battery, unlawful confinement, conspiracy and negligence. Furthermore, they seek damages for breaches of customary international law prohibiting forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity.

Nevsun brought a motion to strike, a preliminary procedural tool precluding the court from hearing a claim that lacks a reasonable prospect of success, based on the act of state doctrine and on the non-applicability of customary international law to corporations. Both the Chamber Judge and the Court of Appeal dismissed Nevsun’s motion to strike.   

Thus, the Supreme Court had to determine (1) whether the act of state doctrine forms part of Canadian common law, and (2) whether customary international law prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity ground a claim for damages under Canadian law.  

The majority of the Supreme Court found that (1) the doctrine is not part of Canadian common law, and neither it nor its underlying principles as developed in Canadian jurisprudence are a bar to the Eritrean workers’ claims, and (2) as customary international law is part of Canadian law, it is not plain and obvious that the claims based on breaches of customary international law cannot succeed. Hence, the claims are allowed to proceed.

The act of state doctrine

The act of state doctrine is known under English and Australian law as preventing domestic courts from assessing the lawfulness of the sovereign acts of a foreign government.

While noting that Canadian common law has grown from the same roots as English and Australian common law, the majority of judges underlined that Canadian law has developed its own approach, addressing separately the principles of conflict of laws and judicial restraint (§44). Furthermore, based on the jurisprudence, the Court found that “in certain circumstances, the adjudication of questions of international law by Canadian courts will be necessary to determine rights or obligations within our legal system, and in these cases, adjudicating these questions is “not only permissible and unavoidable”” (§49). 

Hence, the Court concluded that Canadian jurisprudence has addressed the principles underlying the doctrine however with no attempt to have them united as a single doctrine (§58). The act of state doctrine having been absorbed by the jurisprudence, the first grounds of Nevsun’s motion to strike was dismissed.

The applicability of customary international law

Moving on to the second argument raised by Nevsun, the Court recalled that under the doctrine of adoption, customary international law is automatically adopted into domestic law without any need for legislative action, in the absence of conflicting legislation. (§86-90). The Court also recalled the peremptory nature of the prohibition against slavery, crimes against humanity, and forced labour (§100-103).

Then, the majority of judges adopted an untraditional and very rare position, stating that Nevsun’s position, according to which corporations are immune from the application of customary international law, “misconceives modern international law” (§105). The judges noted that, considering the development of international human rights law leading to a shift from a traditional state-centric system to a system where individuals constitute an integral part, there is no longer reasonable basis for restricting the application of customary international law to relations between states (§107). Indeed, although international human rights are enforceable against the state, they are not defined by that relationship.

Furthermore, judges relied on the work of Professor Koh who, after canvassing the jurisprudence and academic commentaries, considers that the idea according to which domestic court cannot hold corporations civilly liable for violations of international law is a myth (§112).

Thus, the majority of judges asserted that “it is not “plain and obvious” that corporations today enjoy a blanket exclusion under customary international law from direct liability for violations of “obligatory, definable, and universal norms of international law”, or indirect liability for their involvement” (§113).

Considering the absence of contrary law preventing the adoption of the peremptory norms relied on by the claimants as part of Canadian common law, the judges concluded that these norms may apply to Nevsun (§116). 

Civil remedies

Concluding that customary international law potentially applies to Nevsun, the judges assessed whether Canadian law could provide remedies.

Judges explained that the development of common law depends on the necessity to clarify a legal principle, to resolve an inconsistency or to keep the law aligned with the evolution of society. Based on this, it appeared that recognizing the possibility of a remedy for a breach of norms forming part of common law was a necessary development (§118) and that there was no procedural bar preventing the development of a civil remedy for corporate violations of customary international law adopted in Canadian law (§122).

Then, regarding Nevsun’s argument according to which the harms suffered could be addressed by already existing torts, the Court disagreed, underlying the different nature of the norms of customary international law allegedly breached. In the judges’ view “refusing to acknowledge the differences between existing domestic torts and forced labour; slavery; cruel, inhuman or degrading treatment; and crimes against humanity, may undermine the court’s ability to adequately address the heinous nature of the harm caused by the conduct.” (§125).

While the court did not answer the question on how the claim could potentially be remedied in domestic law, it nevertheless mentioned two mechanisms that could lead to such compensation.

First, new nominate torts may be recognised. Second, based on a direct approach, it can be argued that since customary international law is part of Canadian common law, a breach by a Canadian company can be directly remedied based on a breach of customary international law (§127). Then, the majority concluded that “it is not “plain and obvious” that our domestic common law cannot recognise a direct remedy for their breach” (§128).

A landmark approach contested in two dissenting opinions

Considering the sensitivity of the case and the novelty of the reasoning undertaken, it is not surprising that the judgement delivered by a majority of five judges was not unanimous and led to two dissenting opinions.

The first opinion partially dissented from the judgement on the matter of the use of customary international law in creating tort liability. Indeed, two judges disagreed on the content of international law in fact, how the doctrine of adoption operates, and the differences between the effect of international law on domestic criminal law and tort law (§136).    

According to the dissenting judges, the doctrine of adoption leads courts to recognise legal prohibitions that mirror the prohibitive rules of customary international law, but it does not lead courts to convert prohibitive rules into liability rules (§148). The judges considered that, by their nature, prohibitive rules of customary international law could not give rise to a remedy, unless Canadian law changes, which would require an act of Parliament (§153).

The judges found that “even if a plaintiff can prove that, (1) a prohibition lies on nation states at international law; and (2) that prohibition is jus cogens, these two considerations are nonetheless insufficient to support the proposition that international law requires every state to provide a civil remedy for conduct in breach of the prohibition” (§172). Furthermore, in their view, it is plain and obvious that corporations are excluded from direct liability under customary international law (§189).

Considering civil remedies, the judges contested on one hand the necessity (considering that existing torts encompass the violations alleged, §214-223) and feasibility of adopting torts based on a direct approach (§230), and on the other hand, the feasibility of recognising new nominated torts of cruel, inhuman or degrading treatment and crimes against humanity (§237-246). Finally, the judges considered that torts should not be recognised for the first time in a proceeding based on facts that occurred in a foreign country, where the alleged victims had no connection to British Columbia at the time of the alleged torts, to the extent that normally, tortious conduct abroad are not governed by Canadian law (§251-252).

The second opinion completely dissented from the majority’s judgement. While the last two judges shared the views found in the first dissenting opinion, they also addressed the act of state doctrine.

According to the judges, “although a court has the institutional capacity to consider international law questions, it is not legitimate for it to adjudicate claims between private parties which are founded upon an allegation that a foreign state violated international law. The adjudication of such claims impermissibly interferes with the conduct by the executive of Canada’s international relations” (§305). Arguing that the claims seeking to hold Nevsun liable of its complicity in the Eritrean authorities’ alleged internationally wrongful acts require a determination that Eritrea has violated international law, the judges considered that such claims are bound to fail, and so the appeal should have been allowed.

What’s next?

By dismissing Nevsun’s motion to strike, and authorising proceedings to continue, the Canadian Supreme Court set a landmark precedent, which may have very important consequences for all Canadian businesses. While the facts need to be assessed by British Columbia courts, this judgement opens the door to a new customary international law action in Canada. Although proving the claims will not be an easy task, if the claimants succeed it will be a major step in the fight against corporation impunity for crimes committed abroad.

To be continued!

Update: On late October 2020, the case was terminated by an out-of-court settlement for an undisclosed but “significant” amount.