12 April 2017
In October last year, in the case of Araya v. Nevsun Resources Ltd., the Canadian Supreme Court granted jurisdiction on a civil liability case against a corporation for the overseas actions of its subsidiaries. It was the first time the Canadian court permitted a corporation to be brought to trial for alleged violations of customary international law, specifically for the prohibition of torture, slavery and forced labour.
Three Eritrean nationals had brought the claim against the Canadian mining company Nevsun, which owns Bisha Mining Share Company (BMSC), the company that operates the Bisha Mine in Eritrea. BMSC had contracted its operations to the South African company SENET, which in turn entered into sub-contracts on behalf of BMSC. Two of its sub-contractors, Segen and Mereb, both Eritrean construction companies, were accused by the plaintiffs of engaging with the Eritrean military and its use of forced labour through the Eritrean National Service Program (NSP). The NSP is a governmental conscription program, which includes 12 months of taking part in the ‘military development service program’. Several reports, including reports by Human Rights Watch and by the UN Human Rights Council, confirmed that large numbers of Eritreans have been conscripted through the NSP and subjected to forced labour for public construction, the agricultural sector and in the Bisha mine, for an indefinite period of time.
All three plaintiffs in the case claim to have been working at the Bisha mine, deployed by Segen through the NSP for over 18 months. They claim that they were forced to work for 10-12 hours every day under harsh physical conditions, including being subjected to punishments, despite illness and without being allowed sufficient food. They argue that Nevsun’s failure to prevent or stop these activities in the Bisha mine has made it directly liable for aiding and abetting the use of forced labour by its subcontracted companies. The plaintiffs brought an action for damages against Nevsun under customary international law for forced labour and torture.
Nevsun Resources denies all the allegations and filed several preliminary applications. Nevsun requested the Canadian court, among further applications, to dismiss the lawsuit based on (i) forum non conveniens; (ii) the act of state doctrine; and (iii) that it was improperly based on breaches of customary international law. These applications had the purpose of establishing that Canada would not be the competent jurisdiction to decide this case. However, on the 6th of October 2016, the Supreme Court of Canada dismissed these three applications and in doing so, allowed the case to proceed in Canada.
Nevsun also filed a further two applications, arguing against the admissibility of evidence and the representative action (class action) raised by the plaintiffs. The Court found that the majority of the evidence objected by Nevsun was admissible, with the exception of the clearly unattributed hearsay evidence contained in some of the affidavits. It ruled that a representative action was non-applicable in this case, since neither the plaintiffs nor the class they wish to present are residents of British Columbia.
The Supreme Court has considered that the political culture in Eritrea’s judicial procedures and the refugee identity of the plaintiffs would lead to a real risk of receiving an unfair trial in Eritrea. As a result, the Supreme Court has decided to dismiss Nevsun’s application of forum non conveniens.
In the application of the act of state doctrine, Nevsun argued that based on the rule of non-intervention the Canadian court would be incompetent to adjudicate on whether the Eritrean National Service Program (NSP) is a ‘system of forced labour’ or whether it constitutes a crime against humanity by the Eritrean state. The Supreme Court held a different view, stating that the act of state doctrine is still in an uncertain state of law and that there is uncertainty on its application. The judgment also discussed whether the act of state doctrine would be inapplicable on grounds such as the allegation of grave infringements of human rights.
According to Nevsun Resources, customary international law would not impose obligations on corporations, hence it would not be a proper legal basis for claims. The Supreme Court noted that although there are no previously successful customary international law claims in Canada, this does not mean that such claims were bound to fail. Thus the Court would not, at the preliminary stage, foreclose the possible development of the law to permit such claims.
As one of the few cases in Canada which have successfully overcome the question of jurisdiction, it is expected that the follow-up decisions of Canadian courts will bring more light into questions of duty of care of corporations towards its subsidiaries and in its supply chains. As such, this is already an important case to watch, with the potential to bring about significant development in international business and human rights law.
Note: Julia Planitzer and Hsin-Yu (Cynthia) Wang, Ludwig Boltzmann Institute of Human Rights (Project on corporate liability for human trafficking, supported by funds of the Oesterreichische Nationalbank/Anniversary Fund, project number: 16101)