In a landmark decision issued by the Supreme Court of Canada (SCC) on February 28, 2020, the SCC permitted three plaintiffs to pursue claims in British Columbia (B.C.) against a B.C. corporation for its alleged complicity in the breach of customary international laws in a foreign state. The SCC's decision in Nevsun Resources Ltd. v. Araya could result in new claims in Canadian courts that seek to impose liability on companies and individuals for breaching international law, or even indirect liability for complicity in others' breaches of international law.
The plaintiffs are refugees and former Eritrean nationals. None of them were residents of B.C. or Canada. In November 2014, the plaintiffs commenced an action against the defendant, Nevsun Resources Ltd., a Canadian public corporation incorporated under B.C. law. The plaintiffs alleged that the Eritrean government had forced them to work for two subcontractors at the Bisha mine in Eritrea under its National Service Program, which they claimed was a forced labour regime. The mine was owned and operated by an Eritrean company, the shares of which were ultimately owned by the government of Eritrea (40 per cent) and Nevsun (60 per cent).
The plaintiffs alleged that they were forced to work for subsistence wages and that they were subjected to inhumane treatment by the two subcontractors and the Eritrean military. They sought damages from Nevsun based on existing Canadian torts, including conversion, battery, unlawful confinement, conspiracy and negligence, as well as for breaches of customary international law prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity.
Nevsun applied to have the claim dismissed on the basis that the Supreme Court of British Columbia (B.C. Supreme Court) lacked jurisdiction due to the act of state doctrine, which it argued precludes courts from adjudicating the lawfulness of sovereign acts of foreign states. Nevsun also argued that Canadian law did not recognize civil claims for breach of international law.
The B.C. Supreme Court dismissed those applications. The British Columbia Court of Appeal upheld that decision. Nevsun appealed to the SCC.
The SCC dismissed the defendant's appeal and allowed the plaintiff's claims to proceed by a five-to-four majority.
The majority decision, written by Justice Rosalie Abella, held that the act of state doctrine is not part of Canadian law. That doctrine has been subsumed within Canadian principles of conflict of laws and judicial restraint, none of which bars the plaintiffs' claims.
Next, the majority addressed the claims based on breaches of customary international law—the common law of the international legal system. The majority held that in the absence of Canadian legislation to the contrary, customary international law forms part of Canadian common law. As with domestic laws, courts are to take judicial notice of international law, by reference to international court decisions and other authorities.
Significantly, the majority held that corporations over which Canadian courts can assume jurisdiction could incur direct liability in Canada for violating international law, or even indirect liability for "complicity offences" relating to violations of international law by others, including foreign states, for actions in Canada or abroad. This potential increase in liability was justified by the majority on the basis of the public nature and importance of the rights involved, the gravity of their breach and the need to deter subsequent breaches. As an alternative, instead of recognizing a direct cause of action for breach of international law, the majority also held that a Canadian court may recognize new torts under Canadian common law based on such breaches.
The remaining four judges dissented and would have allowed the defendant's appeal in whole or in part. The dissenting judges wrote two sets of reasons. One focused on the risk and uncertainty generated by this potential new cause of action in Canada for breach of international law, especially when there is no available claim for breach of Canadian statutory law. The other dissenting reasons focused on the implications for Canadian foreign policy resulting from a claim that a foreign state has breached international law.
This case illustrates the growing willingness of courts in Canada and elsewhere to allow plaintiffs to pursue claims against corporations in their home jurisdictions, even when the acts complained of occurred in a foreign jurisdiction.
The SCC's decision to allow the case to proceed based on the application of customary international law suggests that, in such cases, the corporation may be held to higher legal standards than those being enforced in the jurisdiction in which the acts took place.
Customary international law may be generally consistent with existing Canadian law in many cases; for example, torture is not permitted under Canadian nor international law. However, this may not always be the case, as international tribunals issue rulings and develop international law without reference to Canadian statutes or legal principles. Those international rulings will now have potential force in Canada and impact the actions of Canadians wherever they conduct business.
The SCC's decision will likely result in plaintiffs—Canadian or otherwise—attempting to advance new and creative claims in Canadian courts based on alleged violations of the norms of international law. As a result, corporations need to be increasingly vigilant in supervising their foreign operations and subsidiaries, and the actions of contractors, subcontractors and joint venturers.
For permission to reprint articles, please contact the Blakes Marketing Department.
© 2019 Blake, Cassels & Graydon LLP.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.