Jun 2, 2020

Supreme Court of Canada allows B.C. case to proceed against Canadian mining firm involving allegations of slavery at Eritrean mine

Nevsun Resources Ltd. v. Araya, 2020 SCC 5 (CanLII)

The Facts:

When a group of workers who had been conscripted into the army under a national service program were forced to work in punishing conditions in an Eritrean mine, they sued the mine's Canadian owner.

The plaintiffs — Gize Yebeyo Araya, Kesete Tekle Fshazion, and Mihretab Yemane Tekle — were Eritrean nationals. Under a national service program established in 1995, all Eritreans were required at age 18 to complete six months of military training, followed by one year of "military development service," which entailed either service in the military or working on construction projects purporting to be in the public interest. After the one-year limit on military development service was lifted in 2002, conscripts were routinely forced to work as subsistence-waged labourers for employers associated with either the Eritrean military or the People's Front for Democracy and Justice (PFDJ), Eritrea's only political party. Among the businesses using Eritrean conscripts as labourers were two construction companies, Mereb and Segen, owned by the military and the PFDJ, respectively.

The Bisha Mining Share Company (BMSC) operated a mine in Bisha, Eritrea, producing gold, copper, and zinc. While the Eritrean National Mining Corporation owned 40 percent of BMSC, 60 percent was indirectly controlled by a B.C.-based company, Nevsun Resources Limited. Mereb and Segen were engaged as subcontractors at the Bisha mine.

Although Araya voluntarily joined the national service program, he was forced to continue his military development service indefinitely. Fshazion and Tekle were both conscripted. All three plaintiffs worked on various construction projects, including the Bisha mine. They were required to work six or seven days per week, on shifts lasting up to 13 hours and in temperatures approaching 50 degrees Celsius. When they were not working, the plaintiffs were confined to camps. For their labour, they were paid wages as low as $30 U.S. per month.

In order to enforce discipline among conscripts working at the mine, workers were beaten with sticks, forced to roll in hot sand or tied up and left outside in the sun. As well, the families of workers who attempted to leave the mine without permission were threatened.

All three plaintiffs eventually escaped Eritrea and settled in Canada as refugees. In 2014, the plaintiffs commenced a class action against Nevsun in the B.C. Supreme Court on behalf of more than 1,000 conscripts who alleged that they had been required to work at the Bisha mine between 2008 and 2012. In their claim they sought damages for common law torts, i.e. civil wrongs, including conversion, battery, false imprisonment, conspiracy and negligence, as well as conduct, including forced labour and slavery, that was illegal under customary international law.

Case History:

Nevsun denied the plaintiffs' claims, largely on the basis that its contracts with Mereb and Seren prohibited the subcontractors from using forced labour and engaging in violence against employees. Nevsun brought a motion to strike the claims on the basis that (1) B.C. was not the appropriate forum for the action, which should have been brought in Eritrea; (2) the plaintiffs' claims were barred by the "act of state" doctrine, a common law rule which precludes the court from standing in judgment of the lawfulness of the actions of a foreign state; (3) the claims should be struck because they were based on customary international law, which, it submitted, is not part of the common law in Canada, does not apply to private corporations, cannot be the basis for a private law cause of action for damages, and in any event deals only with crimes and not torts; and (4) the proceeding was not properly brought as a representative action.

In a decision dated October 6, 2016, 2016 BCSC 1856 (CanLII), reported in Lancaster's Labour Law News, February 2, 2017, eAlert No. 402, Justice Patrice Abrioux agreed with Nevsun that the plaintiffs' action did not meet the criteria for a representative proceeding, holding that the claim could proceed only through separate individual actions. However, he rejected Nevsun's argument that the appropriate forum would be the Eritrean courts, where there was a real risk that the plaintiffs would not be granted a fair trial. Abrioux also dismissed the strikeout application, holding that the action was not precluded by the "act of state" doctrine. In his view, the doctrine formed part of Canadian law. Although it had "yet to form the basis of a decision by any court in Canada," given the "uncertain application" of the doctrine, as well as the fact that it was not clear that it would apply to the facts of the case, Abrioux held that it should not "defeat the plaintiffs' claims at this preliminary stage of the proceedings." Similarly, he held that the application of customary international law both in general and in the circumstances of this case was "unsettled," and that this element of the claim also should not be dismissed at a preliminary stage.

Nevsun's appeal to the B.C. Court of Appeal was dismissed on November 21, 2017, 2017 BCCA 401 (CanLII), reported in Lancaster's Labour Law News, August 27, 2018, eAlert No. 437. Regarding the appropriate forum, Justice Mary Newbury, with whom Justices Peter Willcock and Gail Dickson agreed, held that although trying the plaintiffs' claims in B.C. would entail considerable practical and logistical difficulties, the judge below had not erred in finding a "real risk" of corruption and unfairness in the Eritrean legal system. Similarly, Newbury upheld the lower court judge's ruling that the customary international law claim was not "bound to fail," stating that "international law is 'in flux' and that transnational law… is developing, especially in connection with human rights violations that are not effectively addressed by traditional 'international mechanisms'…." The Court of Appeal acknowledged that the plaintiffs "[faced] significant legal obstacles" in pursuing private law claims under customary international law, but held that such claims were not foreclosed in light of incremental developments occurring in this area of law. Finally, the appellate court held that although the judge below applied the wrong test to whether the "act of state" doctrine applied, he nevertheless correctly concluded that the doctrine did not operate to block the claims.

On June 14, 2018, the Supreme Court of Canada granted Nevsun's application for leave to appeal. A number of groups, including Amnesty International Canada, MiningWatch, and the Mining Association of Canada, were granted intervenor status.

The Arguments:

Nevsun argued that the plaintiffs' claims should be dismissed. The company accepted that B.C. was a proper forum in which to bring the proceedings. However, in its submission the plaintiffs were barred from challenging actions of the Eritrean government under the "act of state" doctrine, which prohibits Canadian courts from ruling on the legality of official acts of foreign states within their own territory. Nevsun also maintained that the plaintiffs' claims for damages under customary international law had no reasonable prospect of success. Customary international law did not form part of the common law in such a way that would entitle the plaintiffs to bring free-standing claims against non-state defendants such as corporations. Further, the claims essentially sought to create new torts, a significant shift in the law that was more appropriately left to Parliament. In any event, the plaintiffs' claims could be addressed adequately through existing torts including conversion, battery, and negligence.

The plaintiffs argued that the courts below had properly refused to strike out their claims. In their submission, the "act of state" doctrine had no application in this case. As applied in England and Australia, the doctrine did not prohibit claims flowing from serious human rights violations. To permit the "act of state" doctrine to immunize Nevsun from liability on the facts of this case would, they asserted, represent a significant expansion of its scope. Regarding their claims under customary international law, the plaintiffs contended that it was appropriate to allow such claims, pursuant to the principled development of the common law, which was consistent with the Canadian Charter of Rights and Freedoms. There was therefore no reason to limit the plaintiffs from pursuing their claims under existing nominate torts recognized at common law.

Amnesty International Canada supported the plaintiffs' position that the "act of state" doctrine did not operate to deny the plaintiffs a remedy for grave violations of their fundamental human rights, and also argued that the common law should recognize civil claims based on violations of international human rights norms. MiningWatch maintained that plaintiffs harmed by the actions of Canadian companies overseas should have access to Canadian legal proceedings as a means of holding those companies accountable for human rights violations. By contrast, the Mining Association of Canada cautioned that recognizing the novel causes of action pleaded by the plaintiffs would constitute an unnecessary development in the common law that would expose companies to unacceptable levels of uncertainty as to their legal obligations.

The Majority Decision:

A 5-4 majority of the Supreme Court of Canada dismissed the appeal, holding that the "act of state" doctrine was not part of Canadian law, and that Nevsun had failed to establish that it was plain and obvious that the claims under customary international law had no reasonable prospect of success.

Justice Rosalie Abella, with whom Chief Justice Richard Wagner and Justices Andromache Karakatsanis, Clément Gascon, and Sheilah Martin agreed, commented that the "act of state" doctrine is an "unwieldy collection of principles, limitations and exceptions" under English law, with "no single definition." The principal theme of the doctrine is that the English courts are not permitted to determine the lawfulness of a foreign state's official acts committed within its territory. The doctrine, also recognized under Australian law, often arises as a defence to a claim challenging the validity of the acts of a foreign state. As the England and Wales Court of Appeal noted in Yukos Capital SARL v. OJSC Rosneft Oil Company, [2012] EWCA Civ 855 (BAILII), the doctrine is subject to a number of exceptions, including that it does not apply to an act of a foreign state that constitutes a "grave infringement of human rights."

In Abella's view, Canadian common law, despite its English roots, has removed any scope for an "act of state" doctrine by addressing the concerns animating it, namely conflict of laws and judicial restraint, as separate doctrines. In Laane & Baltser v. Estonian S.S. Line, 1949 CanLII 37 (SCC), the Supreme Court of Canada applied conflict of laws principles, sometimes referred to as private international law, in declining to enforce a Soviet-era law nationalizing Estonian merchant vessels. Similarly, in Hunt v. T&N plc, 1993 CanLII 43 (SCC), the Supreme Court held that courts may consider questions concerning the constitutionality of foreign legislation where such questions arise incidentally, without violating the principle of judicial restraint. Likewise, judicial restraint had not prevented the Supreme Court from scrutinizing foreign states' respect for human rights in deportation and extradition cases. In none of this jurisprudence had the courts relied on the "act of state" doctrine, which was, therefore, plainly not part of Canada's common law. Abella summarized:

While the English common law, including some of the cases which are now recognized as forming the basis of the act of state doctrine, was generally received into Canadian law at various times in our legal history, as the preceding analysis shows, Canadian jurisprudence has addressed the principles underlying the doctrine within our conflict of laws and judicial restraint jurisprudence, with no attempt to have them united as a single doctrine. The act of state doctrine in Canada has been completely absorbed by this jurisprudence.

To now import the English act of state doctrine and jurisprudence into Canadian law would be to overlook the development that its underlying principles have received through considered analysis by Canadian courts.

Accordingly, the "act of state" doctrine did not operate to bar the plaintiffs' claims.

Turning to the plaintiffs' claims for damages based on breaches of customary international law, Abella pointed out that a motion to strike a claim based on a novel cause of action must not be granted where, "assuming the facts pleaded are true, there is a reasonable prospect that the claim will succeed." Further, if they err, the courts must do so in favour of permitting the claim to proceed.

Customary international law is a collection of norms that are both generally practised and believed to be binding, as evidenced in part by their enforceability in national courts. As the Supreme Court confirmed in R. v. Hape, 2007 SCC 26 (CanLII), in the absence of Canadian legislation to the contrary, customary international law is automatically adopted into Canadian law, without the need for domestic legislation affirming its applicability.

Certain customary law norms, known as peremptory norms or jus cogens, were of sufficiently fundamental importance and universal application, Abella observed, that any derogation from them was prohibited. She cited official documents of the United Nations High Commissioner for Human Rights and the International Labour Organization recognizing the prohibitions of crimes against humanity, slavery and related practices, forced labour and cruel, inhuman, and degrading treatment, all of which were relied on by the plaintiffs in this case, as rising to the level of peremptory norms. Abella concluded that, because there was no domestic legislation displacing or contradicting these fundamental norms, they formed part of the Canadian common law.

There was no reason to strike the claims on the basis that customary international law norms apply only to states, Abella held. Moreover, while the rights protected by the norms operated for the benefit of individuals and were undoubtedly enforceable against states, Abella rejected as "misconceived" Nevsun's argument that, as a corporation, it was immune from them:

[I]nternational law has so fully expanded beyond its [17th century] origins that there is no longer any tenable basis for restricting the application of customary international law to relations between states. The past 70 years have seen a proliferation of human rights law that transformed international law and made the individual an integral part of this legal domain, reflected in the creation of a complex network of conventions and normative instruments intended to protect human rights and ensure compliance with those rights.

As to whether the common law was capable of developing remedies for breach of customary international law norms, Abella viewed this as a "necessary development" in light of the well-established principle that "where there is a right, there must be a remedy for its violation." Abella also questioned whether the plaintiffs' claims could be addressed through existing torts or punitive damages:

Customary international law norms, like those the Eritrean workers allege were violated, are inherently different from existing domestic torts. Their character is of a more public nature than existing domestic private torts since the violation of these norms "shock[s] the conscience of humanity"….
...

While courts can, of course, address the extent and seriousness of harm arising from civil wrongs with tools like an award of punitive damages, these responses may be inadequate when it comes to the violation of the norms prohibiting forced labour; slavery; cruel, inhuman or degrading treatment; or crimes against humanity. The profound harm resulting from their violation is sufficiently distinct in nature from those of existing torts that, as the workers say, "[i]n the same way that torture is something more than battery, slavery is more than an amalgam of unlawful confinement, assault and unjust enrichment". Accepting this premise, which seems to be difficult to refute conceptually, reliance on existing domestic torts may not "do justice to the specific principles that already are, or should be, in place with respect to the human rights norm"….

Abella left open the question of whether the claims ought best to proceed through the recognition of new nominate, i.e. legally recognized, torts or through the more direct route of awarding damages for breach of customary international law, noting that this was an issue to be determined at trial.

In the result, the appeal was dismissed. While it would ultimately be for the trial judge to determine the plaintiffs' claims on their merits, the majority of the Court held that it was not plain and obvious that they had no reasonable prospect of success.

The Minority Dissent

In joint reasons, Justices Russell Brown and Malcolm Rowe dissented in part. They agreed that the "act of state" doctrine did not form part of Canadian common law. However, in their view, it was plain and obvious that the plaintiffs' claims under customary international law could not succeed. Regarding the plaintiffs' ability to bring actions for damages directly on the basis of customary international law norms, Brown and Rowe agreed with the majority that peremptory norms prohibited crimes against humanity, slavery, the use of forced labour, and cruel, inhuman, and degrading treatment; and that some norms were binding on both states and non-state entities. However, they took the view that it was plain and obvious that corporations were not directly liable for breach of customary international law, noting that the majority had cited a single journal article in support of their conclusion to the contrary. The proposition that customary international law norms could form the basis for direct civil liability was supported by the same journal article, they noted, whereas the Ontario Court of Appeal had reached the opposite conclusion in Bouzari et al. v. Islamic Republic of Iran, 2004 CanLII 871 (ON CA), in which it refused to permit a civil claim for breach of the norm prohibiting torture.

Brown and Rowe also criticized the majority's conception of how norms are adopted into the common law, proposing instead a three-step process, under which a court must (1) identify the norm; (2) determine how best to give effect to the norm; and (3) give effect to the norm at common law unless legislation precludes that result. Applying this process, Brown and Rowe accepted the existence of the norms relied upon by the plaintiffs, but took the view that those norms were most appropriately given effect through the criminal law. Because s.9 of the Criminal Code of Canada prohibits the creation of new crimes at common law, it was not possible to give effect to them other than through legislation. In any event, Brown and Rowe considered the possibility of a private law action for breach of public customary international law to be "astonishing," given that no similar free-standing private action was permitted for breach of domestic public law. Finally, Brown and Rowe rejected the majority's assertion that existing domestic Canadian torts provided an insufficient remedy in the plaintiffs' cases, noting that the gravity of a tort such as battery may be reflected in both the quantum of compensatory damages and a denunciatory award of punitive damages.

The majority's acceptance of the possibility that new nominate torts could be inspired by the international law prohibitions relied on by the plaintiffs was also rejected by Brown and Rowe. Courts have been unwilling to recognize new torts where there are adequate alternative remedies or where the introduction of the new tort would amount to an indeterminate or substantial change to the legal system. A new tort of cruel, inhuman, or degrading treatment encompassed wrongs already covered by the existing torts of battery and intentional infliction of emotional distress, they asserted. Nor was it appropriate to create a new tort of crimes against humanity, which would represent an overly broad, "multifarious," category of conduct. While it might be theoretically possible to create new torts of slavery and use of forced labour, Brown and Rowe held that the plaintiffs' claims, which were based on conduct in a foreign state and involving examination of foreign laws, were not appropriate occasions for such an extension to the law.

Ultimately, Brown and Rowe opined, it was not for the courts to bring about such a significant change in the common law and its relationship with international law, which could also affect foreign relations, a matter best left to the government of the day:

It is not up to the Court to ignore the foundations of customary international law, which prohibits certain state conduct, in order to create a cause of action against private parties. Rather, it would be up to Parliament to create a statutory cause of action. And, where an issue has consequences for foreign relations, the executive, not courts, is institutionally competent to decide questions of policy. Fundamentally, it is this understanding and respect for the institutional competence of each order of the state that underlies the proper functioning of the domestic and international order.

Justice Suzanne Côté, with whom Justice Michael Moldaver agreed, also dissented, agreeing with Brown and Rowe that the plaintiffs' claims under customary international law had no reasonable prospect of success. However, Côté also took the view that the "act of state" doctrine formed part of Canadian law and barred the plaintiffs' claims. For Côté, the doctrine incorporates two branches: one concerning conflict of laws, and a second branch under which civil actions alleging that a foreign state has violated its public international law obligations are not justiciable in Canada. This second branch, in her view, is based on important practical considerations:

Canadian courts have good reason to refrain from passing judgment on alleged internationally wrongful acts of foreign states. If Canadian courts claimed the power to pass judgment on violations of public international law by states, that could well have unforeseeable and grave impacts on the conduct of Canada's international relations, expose Canadian companies to litigation abroad, endanger Canadian nationals abroad and undermine Canada's reputation as an attractive place for international trade and investment. Sensitive diplomatic matters which do not raise domestic public law questions should be kept out of the hands of the courts.

In order for the plaintiffs' claims to succeed, Coté held, the courts would be required to conclude that Eritrea's national service program amounted to a breach of that country's obligations under international law. Accordingly, those claims were non-justiciable in Canada by operation of the "act of state" doctrine.

Comment:

The majority's judgment in this case is important in a number of respects. In refusing to strike the plaintiffs' claims on the basis that they were barred by operation of the "act of state" doctrine, the Supreme Court of Canada confirmed that the doctrine, which precludes domestic courts from judging the actions of foreign states, has no application in Canadian common law. The majority also rejected the proposition that customary international law norms are not enforceable against non-state actors, such as corporations. More broadly, the majority's decision has the potential to expand the role played by such norms in practice, such as those prohibiting crimes against humanity, slavery, the use of forced labour, and cruel, inhuman, and degrading treatment.

According to media reports, following the Supreme Court's judgment, Nevsun reiterated its denial of all allegations against it in the plaintiffs' claims: "There are contractual commitments in place that strictly prohibit the use of national service employees by Eritrean subsidiary Bisha Mining Share Company's… contractors and subcontractors." It stated that it intended to defend the claims at trial "vigorously".

The earlier case of Garcia v. Tahoe Resources Inc., 2015 BCSC 2045 (CanLII), echoes the B.C. Supreme Court's conclusion in the case under review to the effect that B.C. was an appropriate forum for the plaintiffs' claims, given the risk that a trial in Eritrea would not be conducted fairly. In Garcia, seven Guatemalan citizens brought proceedings against Canadian mining company Tahoe Resources Inc. for injuries resulting from an April 2013 shooting carried out by security personnel at the Escobal mine in Guatemala, indirectly owned by Tahoe. The shooting occurred during protests staged by local communities concerned about the environmental impact of the operation. The Garcia plaintiffs claimed that Tahoe expressly or implicitly authorized the security personnel's conduct or was negligent in its management of the security staff. The B.C. Supreme Court initially stayed the case on the basis that Guatemala was the proper forum to adjudicate the claim, but in a decision dated January 26, 2017 (2017 BCCA 39 (CanLII)), the B.C. Court of Appeal overturned the ruling, holding that the case could proceed in Canada, given that "there is some measurable risk that the appellants will encounter difficulty in receiving a fair trial against a powerful international company whose mining interests in Guatemala align with the political interests of the Guatemalan state." On June 8, 2017, the Supreme Court of Canada denied Tahoe's application for leave to appeal the Court of Appeal's decision. (See: Tahoe Resources Inc. v. Adolfo Agustin Garcia, et al., 2017 CanLII 35114 (SCC)). Another Canadian company, Pan American Silver Corporation, acquired Tahoe in February 2019, and on July 30 of that year announced that the Garcia proceedings had been settled. As part of the settlement, Pan American acknowledged "that the shooting… infringed the human rights of the protesters," and apologized "to the victims and to the community," becoming the first Canadian mining company publicly to acknowledge human rights abuses in its overseas operations.