Corporations can be civilly liable for international law breaches; act of state doctrine not a bar
A Canadian mining company that is a majority owner in a mine in Eritrea may be sued for alleged abuses that occurred in that country, the Supreme Court of Canada ruled on Friday.
The Court’s ruling holds that corporations can be held liable in civil law for breaches of international law, and that the act of state doctrine is not a bar to the claim.
The decision stands to have implications for Canadian companies with operations abroad, notably in the resources, technology and armaments sectors.
“It’s important, because there are a number of corporate accountability lawsuits that are proceeding in Canadian courts right now,” says Cory Wanless of Waddell Phillips PC in Toronto, who was lead counsel for the intervener International Human Rights Program of the University of Toronto Faculty of Law before the Supreme Court.
In Nevsun Resources Ltd. v. Araya, the majority of the court found that the norms of customary international law (which is, in essence, the common law of international law) raised by the Eritrean workers, who allege breaches of it in this case, form part of Canadian law. As a Canadian company, Nevsun Resources Ltd. is bound by Canadian law, and customary international law becomes part of Canadian law automatically, the majority found.
“If you breach customary international law, … states could be held liable under domestic law principles,” says Hassan Ahmad, a Doctor of Juridical Science candidate at the University of Toronto’s Faculty of Law whose research focus is corporate human rights violations.
“What this case says is that we don't live in a world anymore that's just dominated by state-to-state interaction,” Ahmad says. “We live in a world where non-state actors – so, corporations in this case -- do commit violations that are so grave that they impinge on what's called peremptory norms.” Violations of these norms include crimes against humanity and torture.
“These are the grave human rights violations that the Court says that corporations can also be taken to account,” he says. “And what they can be liable for under Canadian law is to pay compensation to victims [who] allege that they have been treated unjustly by these corporations.”
Three Eritrean refugees brought a claim against the Nevsun Resources Ltd., a publicly-held British Columbia corporation. They alleged that through a chain of subsidiaries, Nevsun entered into a commercial venture with Eritrea for the development of a gold, copper and zinc mine in Eritrea, and that they were conscripted to work at the mine under Eritrea’s National Service Program, which all Eritreans must enter at the age of 18 for a period of 18 months, but which may be extended indefinitely.
The workers allege that they were forced to work in the Bisha mine, in which Nevsun has a majority stake, for 12 hours a day, six days a week, in temperatures close to 50 degrees Celsius and without cover. They sought damages from Nevsun for breaches of customary international law prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity. They also sought damages for breaches of domestic torts including conversion, battery, unlawful confinement, conspiracy and negligence.
Nevsun brought a motion to strike the pleadings on the basis of the act of state doctrine, which precludes domestic courts from assessing the sovereign acts of a foreign government. The company also argued that the claims based on customary international law should be struck because they have no reasonable prospect of success. The chambers judge dismissed Nevsun’s motion to strike, and the Court of Appeal agreed.
In today’s judgment the majority of the Supreme Court dismissed Nevsun’s appeal, allowing the case to proceed before the courts in British Columbia.
“[I]n my respectful view, 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 in … ‘complicity offenses’,” wrote Justice Rosalie Abella in her majority reasons, with Chief Justice Richard Wagner and Justices Andromache Karakatsanis, Clément Gascon and Sheilah Martin concurring.
“Ultimately, for the purposes of this appeal, it is enough to conclude that the breaches of customary international law, or jus cogens, relied on by the Eritrean workers may well apply to Nevsun,” Justice Abella continued. “The only remaining question is whether there are any Canadian laws which conflict with their adoption as part of our common law. I could not, with respect, find any.”
In reasons that dissented in part, Justices Russell Brown and Malcolm Rowe agreed that the act of state doctrine did not apply in Canada, but disagreed that customary international law was automatically a part of Canadian law.
And in dissenting reasons Justice Suzanne Côté, also writing for Justice Michael Moldaver, found that international human rights law does not apply between individuals and corporations, and that Canadian courts should not hear cases where it is alleged that a foreign state acted contrary to international law.
The doctrine of act of state has never been applied in Canada.
“The decision of the Supreme Court today makes Canada a bit of an outlier in the common law world,” says Wanless. “All the other common law jurisdictions have act of state [doctrine]. And the Supreme Court today decided that the Canada has gone a different route, … which is very different than the approach in Australia, the U.K. and in the U.S.,” he told Canadian Lawyer, adding that the act of state doctrine “is not necessary in the Canadian context, … and that's what the majority held.”
But a “big takeaway” from this decision “is that the Supreme Court showed a real willingness to take seriously international human rights law,” Wanless adds, and “a real willingness to engage in these novel questions of how international human rights law should be applied against corporations for breaches of international law.
“This court has gone further than any other court in recognizing that there could be a private cause of action for a corporation that participates in the violation of international human rights law,” he says, “and how Canadian courts should deal with those.”
For corporations doing business in a country such as Eritrea, “particularly if you’re partnering with the government” (Eritrea owns 40 per cent of the Bisha mine through state-owned companies), “then you’re entering into an extremely high-risk zone,” and a high level of diligence will need to be exercised “to ensure that you are not implicated in human rights abuses.”
“It’s a landmark, watershed moment in Canadian law,” says Ahmad, which “signifies the increasing globalization of our world, and how trade and commerce cross national frontiers. I think the law is finally catching up to that.”