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It is rare to have the opportunity to contribute to the development of the common law using human rights principles. Araya v Nevsun Resources Ltd., a case that I, colleagues at Camp Fiorante Matthews Mogerman LLP (CFM) and Toronto lawyer James Yap prosecute, is the rare opportunity to do so in the context of allegedly barbarous acts that, if proven, would be contrary to norms standing at the apex of our system of internationally-protected fundamental human rights. So far, the case has survived aggressive attack by the defendant, Nevsun Resources Ltd. (“Nevsun”). To borrow the words of a colleague and mentor, the case as framed is “a triumph of boldness and a sense of justice over timidity and the instinct to hold on to old doctrine, no matter how unjust.”[I]

In November 2014, three Eritrean refugees commenced a representative action in British Columbia against Nevsun. The plaintiffs allege that they were forced to labour in the development of a gold mine in Eritrea known as the Bisha mine (“Bisha”). Nevsun, a Canadian public company incorporated in British Columbia, indirectly holds a controlling interest of the mine. The gravamen of the plaintiffs’ claim against Nevsun is in forced labour and slavery. The plaintiffs allege their labour was provided to Nevsun and its operating subsidiary through two Eritrean companies related to Eritrea’s ruling party and its military. The plaintiffs allege those companies are slavers who rely on a supply of labour extorted under threat of torture, arbitrary detention, imprisonment in inhumane conditions and reprisals against family members. The action seeks to hold Nevsun accountable for its alleged role. A role, the plaintiffs plead, was conducted in Canada.

The plaintiffs assert rights of action against Nevsun in traditional common law torts (conversion, battery, unlawful confinement, negligence, conspiracy and intentional infliction of mental distress). They ground their claim in negligence on an allegation that Nevsun chose to enter into a commercial venture with the state of Eritrea, where there was a well-documented high risk of violations of human rights. They also claim that Nevsun has civil liability for complicity in forced labour, slavery, torture, cruel, inhuman or degrading treatment and crimes against humanity, all breaches of jus cogens norms of customary international law. Jus cogens norms are higher-order international law principles that have acquired the status of fundamental standards of the international community. No derogation is permitted. The plaintiffs argue that by entering into a commercial venture with the state of Eritrea and engaging with Eritrean contractors and the Eritrean military, Nevsun facilitated, contributed to and became an accomplice to human rights abuses at Bisha.

At this stage, none of the plaintiffs’ allegations have been proven; and, Nevsun has denied the allegations. The merits of the plaintiffs’ claims stand to be determined at a later stage.

The case is notable for two reasons:

First, the plaintiffs seek a civil remedy for corporate complicity in alleged breaches of jus cogens norms of customary international law (something not seen in Canada before).[ii] They plead such breaches are actionable at common law and argue it is within the Court’s common law powers to recognize a remedy. They rely on the Supreme Court’s finding in R v Hape that peremptory norms of customary international law are automatically incorporated into the domestic law of Canada in the absence of conflicting legislation.[iii] The plaintiffs argue, in this case, where there is no conflicting legislation, it is appropriate to recognize a new nominate tort for the alleged breaches because the amalgam of existing nominate torts does not fully capture the nature of the conduct at issue. In this respect, they rely on the principle that the common law must be incrementally adapted to reflect the expectations of the international community and the contemporary values of society.

Second, the plaintiffs advance a direct liability claim against Nevsun (a parent company) in negligence for conduct at the operations of its foreign subsidiary. The claim is based on, among other things, Nevsun’s alleged control of certain policies and operations at Bisha and control over the actions of the operating subsidiary. No Canadian court has yet fully considered such a claim.[iv] In contrast, appellate courts in the UK and other Commonwealth jurisdictions have found that a duty may be owed by a parent company to a third party directly affected by the operations of a subsidiary, in certain circumstances; and, where those circumstances exist, it neither offends nor disregards the principle of separate corporate personality established by Salomon v A. Salomon & Co. Ltd to find the parent company liable.[v]

The decision appealed: Araya v Nevsun Resources Ltd., 2016 BCSC 1865

In 2016, the BC Supreme Court heard several preliminary applications to have the plaintiffs’ claims dismissed, stayed or struck. Amongst other things, Nevsun sought to 1) stay the proceeding on the basis that British Columbia is forum non conveniens; and 2) stay or strike the claims on the basis that they are (a) barred by the act of state doctrine, and (b) based on alleged breaches of customary international law.

Abrioux J. dismissed all applications, except for Nevsun’s application for an order preventing the plaintiffs’ claim from proceeding as a representative action. In doing so, he found that:

  1. Nevsun had failed to establish that Eritrea is the more appropriate forum. According to Abrioux J., there was sufficient cogent evidence to conclude that there is a real risk that the plaintiffs could not be provided with justice in Eritrea due to the Eritrean judiciary’s lack of independence and the plaintiffs’ potential status as “traitors” in Eritrea;[vi]
  2. The act of state doctrine forms part of Canadian law and is “… a subject matter immunity [which prevents] the official and governmental acts of one state from being called into question in proceedings before the courts of another …”. Abrioux J. reviewed the act of state doctrine, as referred to in appellate U.K. and Australian authorities, as the doctrine has not yet been applied in Canada. He noted the doctrine’s many limitations and found that in both the U.K. and Australia the act of state doctrine is of uncertain scope and application. He found that the doctrine could not be invoked to stay or dismiss the plaintiffs’ claims; [vii] and
  3. Customary international law’s place in Canadian law, including its applicability to corporations, remains unsettled. According to Abrioux J., it was not plain and obvious that the plaintiffs’ customary international law claims would have no reasonable prospect of success. Abrioux J. instead found that a real issue existed as to whether such claims are permitted at common law or could constitute a “reasonable development” of the common law. Abrioux J. held that the claims should proceed to trial so that they could be considered in their proper factual and legal context, a necessary exercise for the reasonable development of the common law.[viii]

While the plaintiffs did not prevail in maintaining their representative action, the matter is now proceeding as a mass tort. To date, a further six actions have been filed in which a further 58 claimants advance materially similar claims.

The Appeal: Araya v Nevsun Resources Ltd., 2017 BCCA 401

On appeal, Nevsun sought to set aside Abrioux J.’s orders. The issues engaged on the appeal were substantially the same as those addressed at first instance; namely, whether Eritrea is the more appropriate forum for the plaintiffs’ claims, and the scope and application of the act of state doctrine and customary international law to the plaintiffs’ claims against Nevsun.[ix]

On November 21, 2017, Newbury J. (Willcock and Dickson JJ. concurring) dismissed the appeal, concluding that the chambers judge had not erred in dismissing the three applications.

On the question of whether Eritrea was clearly the more appropriate forum, Newbury J. found no error. She reviewed the evidence on Eritrea’s judicial system. This included the plaintiffs’ evidence of former Eritrean judges describing executive interference in judicial function, the kidnapping and disappearances of judges, incommunicado detention of judges without charge, expulsion from the judiciary for seeking to enforce the rule of law, the effective abandonment of the rule of law and the descent of the nation into authoritarianism. The Court agreed with the dire assessment of the court below, noting that the chambers judge “was faced with a stark choice: the expense, inconvenience and practical difficulties of mounting a trial in British Columbia concerning conduct in a faraway and inaccessible country, as against the prospects of no trial at all, or a trial in an Eritrean court, possibly presided over by a functionary with no real independence from the state (which is implicated in the case) and in a legal system that would appear to be actuated largely by the wishes of the President and his military supporters (also implicated). Underlying all of these was the fact that grave abuses of human rights are alleged…”[x]

In discussing the evidence considered in determining the proper forum, the Court found that the type of “social” evidence contained in various secondary reports relied upon by the plaintiffs could only be adduced by reports of this kind (for example, the Report of the United Nations Commission of Inquiry on Human Rights in Eritrea). Rejecting Nevsun’s argument that various governmental and quasi-governmental reports submitted by the plaintiffs were inadmissible, Newbury J. observed that Canadian courts have recently shown a willingness to decide admissibility on the basis of principle rather than hard and fast rules, leaving it to trial judges to assess the weight to be given.[xi] The Court further reasoned that the secondary evidence admitted had not been used to determine substantive issues at trial, but rather had been used on an interlocutory motion.[xii]

On the question of whether the act of state doctrine was engaged on the facts, the Court found that it was not applicable. Newbury J. acknowledged that the chambers judge had erred in applying the “plain and obvious” test to the question of whether the act of state doctrine applied. The Court found that the chambers judge ought to have asked whether the doctrine applied, as opposed to whether it might apply.[xiii] The Court undertook its own analysis of the applicability of the act of state doctrine, finding that whichever formulation of the doctrine the Court chose, the doctrine would not apply because the plaintiffs sought to challenge neither the laws nor the effect of any act of a foreign state.[xiv]

The Court further found that in the event the act of state doctrine were engaged in this case, the “public policy” exception and “Kirkpatrick limitation” to the doctrine would apply. According to the Court, the public policy exception precludes the application of the act of state doctrine where a state’s actions cannot be justified by legislation or official policy. In contemplating the public policy exception, Newbury J. reasoned that due to the grave nature of the wrongs alleged in this case, a state could not rely on the act of state doctrine to claim immunity from the consequences of violating peremptory norms of customary international law.[xv] Similarly, the Court reasoned that the “Kirkpatrick limitation”- which provides that where the effect of official action by a foreign sovereign is not at issue, the act of state doctrine does not apply – would equally apply in this case because the plaintiffs were not attempting to undo or disregard any act of government. Rather, as the Court noted, the plaintiffs were merely trying to obtain damages from a private party who they allege were complicit in those acts.[xvi]

As to the plaintiffs’ customary international law claims, the Court distinguished the plaintiffs’ case from other Canadian cases that had declined to recognize private causes of action for breaches of peremptory international norms, as those cases involved claims against foreign states. Newbury J. found that unlike Kazemi Estate v. Islamic Republic of Iran and other cases in which Canadian courts had denied such a cause of action, the plaintiffs in this case had not brought any claims against the state of Eritrea itself.[xvii] The Court rejected the proposition that the plaintiffs’ claims were bound to fail, finding instead that in light of recent changes in transnational law with respect to human rights, the plaintiffs’ novel argument may form the basis of an incremental change in the common law.[xviii] Newbury J. noted that “international law is ‘in flux’ and that transnational law, which regulates ‘actions or events that transcend national frontiers’ is developing, especially in connection with human rights violations that are not effectively addressed by traditional ‘international mechanisms’”.[xix] Newbury J. also acknowledged other jurisdictions’ willingness to hold corporate actors accountable for violations of jus cogens and observed that, over time, the doctrine of act of state has been limited by public policy considerations said to form part of domestic law.[xx]

The Court’s decision is precedent setting in two key respects. It is the first Canadian appellate decision to rule on the act of state doctrine, holding it does not apply to the plaintiffs’ case. It is also the first time an appellate court in Canada has considered the question of whether a breach of peremtory norms of customary international law can give rise to a private right of action for damages. Separately, it is also an important decision in that it can be seen as part of a trend in which Canadian courts are retaining jurisdiction to determine important questions about the alleged conduct of Canadian companies abroad. Historically, cases involving overseas conduct were dismissed at a preliminary stage on the basis that it was more appropriate to determine the issues in the foreign courts.[xxi]

Siskinds LLP’s humanitarian practice group, together with Vancouver law firm Camp Fiorante Matthews Mogerman LLP (CFM) and Toronto lawyer James Yap, are counsel to the plaintiffs.

 

Nick Baker, Siskinds LLP, Associate and co-counsel to the plaintiffs; with great thanks to Chantal deSereville, Student-at-Law, for her assistance in writing this.

[i] Stephen Keim SC, “What Does a Human Rights Lawyer Do?” (July 31, 2013). I am grateful for Stephen’s inspiration and tireless publications. His words were used to describe the landmark decision of the High Court of Australia in Mabo v Queensland (No. 2), (1992) 175 CLR 1.

[ii] Canadian courts have declined to recognize private causes of action for breaches of peremptory norms of customary international law. However, those cases involved claims against foreign states. See, for example: Kazemi Estate v. Islamic Republic of Iran, 2014 SCC 62.

[iii] R. v. Hape, 2007 SCC 26, at para. 39.

[iv] Canadian courts of first instance, on interlocutory motions, have indicated that a parent company may be directly liable for its own negligent conduct with respect to managing or failing to properly manage the actions of its subsidiaries. See: Choc v Hudbay Minerals Inc., 2013 ONSC 1414; United Canadian Malt Ltd. v. Outboard Marine Corp. of Canada, (2000) 48 O.R. (3d) 352 (Sup. Ct.); Dreco Energy Services Ltd. v. Wenzel Downhole Tools Ltd., [2008] A.J. No. 758 (QB).

[v] See, for example: Chandler v Cape Plc, [2012] EWCA Civ 525; Lungowe and Ors. v Vedanta Resources Plc and Konkola Copper Mines Plc, [2017] EWCA Civ 1528; CSR Ltd v Wren, (1997) 44 NSWLR 463 at 485 (CA); CSR Ltd v Young, (1998) Aust Torts Reports, 81–468.

[vi] Araya v Nevsun Resources Ltd., 2016 BCSC 1856, at paras 283-284.

[vii] Id. at paras 375, 382.

[viii] Id. at para 484.

[ix] Araya v Nevsun Resources Ltd., 2017 BCCA 401.

[x] Id. at para 118.

[xi] Id. at para 99.

[xii] Id. at para 100.

[xiii] Id. at para 129.

[xiv] Id. at paras 166-168.

[xv] Id. at para 169.

[xvi] Id. at paras 170-173.

[xvii] Id. at para 188.

[xviii] Id. at paras 196-197.

[xix] Id. at para 197.

[xx] Id.

[xxi] See, for example: Anvil Mining Ltd. c. Association canadienne contre l’impunité, 2012 QCCA 117, aff’’d, 2012 CanLII 66221 (SCC).

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