In A Flash

A Warning for Canadian Companies regarding Scope of Liability for Potential Human Rights Claims

The Supreme Court of Canada’s February 28, 2020 decision in Nevsun Resources Ltd. v Araya demonstrates that Canadian companies can be sued in Canada for alleged complicity in forced labour and other human rights abuses of workers in and by a foreign state.

The case arises from the experiences of three former Eritrean nationals. Gize Yebeyo Araya, Kesete Tekle Fshazion and Mihretab Yemane Tekle claimed that they were indefinitely conscripted through their home country’s military service into a forced labour regime. They were required to work at the Bisha mine in Eritrea between 2008 and 2012 and alleged that they were subject to violent, cruel, inhuman and degrading treatment, including physical assault, threats, and torture. The Bisha mine is owned by Nevsun Resources Ltd., a Canadian company incorporated in British Columbia.

The three workers left their home country and came as refugees to British Columbia, where they began this action against Nevsun. In their pleadings, they sought damages for breaches of customary international law prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity. The workers also sought damages for breaches of domestic torts including conversion, battery, unlawful confinement, conspiracy and negligence.

Nevsun brought an application to strike the pleadings, which was dismissed by both the Supreme Court of British Columbia and the British Columbia Court of Appeal.

On appeal, the Supreme Court of Canada considered Nevsun’s applications to strike on two bases: the “act of state doctrine” and customary international law. Nevsun argued that the “act of state doctrine” precluded domestic courts from assessing the sovereign acts of a foreign government. It further argued that the claims based on customary international law should be struck because they had no reasonable prospect of success.

A five-judge majority agreed with the lower courts’ decisions to dismiss Nevsun’s applications to strike.

On the “act of state doctrine” issue, seven judges agreed with the chambers judge and concluded that the doctrine was not part of Canadian law.

On the issue of whether claims for breaches of customary international law would reasonably succeed, Justice Abella, writing for the majority, found that it was not “plain and obvious” that the claims would fail. In her reasons, Justice Abella concluded that customary international law is automatically adopted into domestic law without any need for legislative action; thus, breaches of customary international law can establish a cause of action under Canadian common law. Given that customary international law is part of Canadian law and Nevsun is a company bound by Canadian law, the workers’ claims should be allowed to proceed.  Moreover, Nevsun did not demonstrate that the claims of breaches of customary international law should be struck.

In their dissent and with Justices Côté and Moldaver concurring, Justices Brown and Rowe disagreed that a breach of customary international law was a valid cause of action in Canada and found that it was plain and obvious that the claims would not succeed.

Following the Supreme Court of Canada’s ruling, the case will proceed before the Supreme Court of British Columbia, which will hear and decide the workers’ claims on the merits.

This decision signals a shift in Canadian courts’ conception of the responsibilities and liabilities of Canadian corporations that operate internationally. It serves as a warning to Canadian companies that they may potentially be liable and become involved in costly litigation as a result of alleged human rights abuses by a foreign state within that state’s sovereign borders. It also strongly reiterates that Canadian businesses should be aware of the nature and scope of liability under customary international law. As part of their legal and business planning and risk-assessment discussions, Canadian business should always consider human rights standards both at home and abroad.

If you have any questions regarding this case or any other workplace law developments, please do not hesitate to contact a Mathews Dinsdale lawyer.

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