The Phoenix Shall Fly

• Published date: 05 May 2020
• Author: Ms Sana Ebrahimi
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Trials & Appeals & Compensation, Human Rights
• Law Firm: Siskinds LLP

On February 28, 2020 the Supreme Court of Canada released its decision in Nevsun Resources Ltd. v. Araya, 2020 SCC 5. By a narrow five-four majority, the SCC held Canadian companies may be sued for breaching of Customary International Law ("CIL"), abroad. Writing for the majority, Abella J. began her decision as follows:

[1]This appeal involves the application of modern international human rights law, the phoenix that rose from the ashes of World War II and declared global war on human rights abuses. Its mandate was to prevent breaches of internationally accepted norms. Those norms were not meant to be theoretical aspirations or legal luxuries, but moral imperatives and legal necessities. Conduct that undermined the norms was to be identified and addressed.

The decision represents a significant leap for corporate social responsibility and serves as a caution for Canadian corporations operating abroad. The recognition that there may be a private law duty to abide by peremptory norms of customary international law means Canadian multinationals can no longer turn a blind eye to human right violations occurring in their hosting states.

This potential new liability for corporations will have a global ripple effect as Canadian multinationals either avoid conducting business in and/or with states with gross human rights track records, or, alternatively, meaningfully enhance due diligence throughout such ventures. Companies operating abroad must now exercise extreme caution in their training programs, reviews, audits, and the implementation of any other measures necessary to ensure compliance with peremptory norms.

Questions still remain on where the CIL liability threshold lies and how damages are to be determined. Whereas the majority provided a method to determine when international practice has become a norm of CIL, how to test whether certain actions have violated such norms remains open. The SCC has left developing such a framework in the hands of the trial courts, creating deep uncertainty as such cases are inevitably brought forward. Similarly, the SCC did not provide a limit or range for damages, beyond stipulating it may be greater than normal tort damages. Leaving such a broad statement with the trial courts means unchartered territory and unbounded risk for operators and insurers, at least for the foreseeable future until case law develops.

Overview

Eritrea practices forced conscription into its National Service Program, which requires military training and service of all Eritreans over the age of 18. The term of service is indefinite. The plaintiffs are refugees and former Eritrean nationals who allege that as part of the National Service Program, they were used as labour to construct a gold mine in Eritrea, known as the Bisha mine ("Bisha").

Nevsun Resources Ltd., a Canadian mining company headquarter in British Columbia ("Nevsun"), owns a controlling interest of Bisha and worked with local sub contractors: government owned construction firms known to use forced labour. The...