Supreme Court of Canada Case in Depth: Nevsun Resources Ltd. v. Araya, 2020 SCC 5.

On February 28, 2020, the Supreme Court of Canada rendered its decision in Nevsun Resources Ltd. v. Araya. After a reserve of almost 13 months, the Court rendered judgment with a 5-2-2 split. The majority's reasons were delivered by Abella J., with Brown and Rowe JJ. dissenting in part, and Côté and Moldaver JJ. dissenting in full.

The case raises the following key question - can a private, non-state actor be held liable in Canada for its alleged breaches of international law abroad? According to the majority in Nevsun, the answer is yes. Not only can a private non-state actor be held liable for a breach of key customary international legal norms, these norms can also form the proper basis for novel claims in Canada. In reaching this conclusion, the majority also clarified that Canadian courts are free to decide matters relating to the actions of a foreign state as long as the foreign state is not a party to the proceedings in question.

The decision, however, features a strong dissent, with both of the minority opinions criticizing the majority for overstepping the proper institutional limits of a court. In so doing, the majority and minority reasons highlight two sides of the conceptual battle with respect to the relationship between domestic law and international law. For the majority, domestic Canadian law and international law are one and the same, each mutually reinforcing and influencing the other unless the Canadian legislature explicitly chooses to opt out. For the minority, it appears that international law is merely a source of Canadian domestic law, one that should not be assumed but rather reviewed and assessed in each circumstance. Further, in some cases, the minority seems to take the position that certain elements of international law are the exclusive jurisdiction of Canada's executive branch, and are therefore outside the purview of Canadian courts.

Facts and Background

The case arises from the experiences of three Eritrean refugees currently living in Canada, Gize Yebeyo Araya, Kesete Tekle Fshazion and Mihretab Yemane Tekle (collectively the "workers"), all of whom worked in the Bisha mineral mine in Eritrea. The mine is owned and operated by an Eritrean mining company (Bisha Mining Share Company, or "BMSC"), which in turn is 40 per cent controlled by another Eritrean mining company (Eritrean National Mining Corporation) and 60 per cent controlled by the Appellant, Canadian mining company Nevsun Resources Ltd. ("Nevsun"). Nevsun is a mining company incorporated pursuant to the laws of British Columbia.

As part of its operation of the Bisha mine, BMSC hired a South African company, SENET ("SENET"), to manage construction of the mine. On BMSC's behalf, SENET entered into subcontracts with two other Eritrean construction companies - Mereb Construction Company ("Mereb"), controlled by the Eritrean military, and Segen Construction Company ("Segen"), owned by Eritrea's only political party, the People's Front for Democracy and Justice.

Since 1995, Eritrea has implemented a national conscription program that requires all Eritreans, upon reaching the age of 18, to complete military training and service. Notably, military service can include assisting in the construction of public projects that are deemed to be in the national interest. In 2002, the previous 18 months service period under the national conscription program became indefinite, forcing conscripts to provide labour at low wages for various Eritrean companies which are owned by senior Eritrean military and/or party officials for an indefinite period of time. Mereb and Segen are among those companies which received military conscripts.

The workers, who were all conscripts within the national program, were sent to work in the Bisha mine at different points between 2008 and 2010. Each claimed that they were forced to provide labour in harsh and dangerous conditions (e.g. twelve-hour work days, six to seven days a week, in close to 50 degrees Celsius weather) for many years and subject to various forms of severe punishment. They further claimed that they were paid extremely low wages, which could be docked for failure to return to work following illness. For particularly long absences, the workers claimed that they risked especially severe punishment and the threat of retribution against their families.

Having escaped Eritrea to live in Canada, the workers initiated class proceedings in British Columbia against Nevsun for the alleged atrocities the workers experienced working in the Bisha mine. Representing individuals who have been compelled to work at the Bisha mine between 2008 and 2012, the workers sought damages for the following:

• Breaches of domestic torts including conversion, battery, false imprisonment, conspiracy and negligence; and
• Breaches of customary international law ("CIL") prohibitions against forced labour; slavery; cruel, inhuman or degrading treatment; and crimes against humanity.

In response to the proposed class action, Nevsun brought an early motion to strike the workers' pleadings on the basis of the "act of state doctrine", which is a doctrine that denies domestic courts subject matter jurisdiction to rule on the acts of foreign governments. According to Nevsun, this prohibition includes a decision with respect to Eritrea's national conscription program.

Further, Nevsun's motion advanced the argument that the workers' claims based on CIL had no reasonable prospect of success, and therefore, should be struck as well.

The Chambers Judge Decision (2016 BCSC 1856)

Nevsun initiated a number of applications for orders to (a) deny the proceedings the status of a representative action; (b) stay the proceedings on the basis that Canada was forum non conveniens (i.e. Canada was not the appropriate legal forum for any such action and, rather, Eritrea was the more appropriate forum); (c) strike portions of the evidence filed by the workers; (d) dismiss or strike the pleadings on the basis that British Columbia's courts lacked the appropriate subject matter jurisdiction to try the action due to the act of state doctrine; (e) strike part of the pleadings on the basis that CIL was unnecessary to try the action; and (f) strike part of the pleadings on the basis that it disclosed no reasonable prospect of success.

The chambers judge, Abrioux J., held the following:

• Nevsun has both effective control of BMSC - because it controls the majority of the BMSC Board and Nevsun's CEO is the chairperson of the Board - as well as operational control;
• Eritrea is not a more convenient forum than Canada for the action;
• At least some of the evidence tendered by the workers is admissible (e.g. first-hand affidavit material and secondary reports) for the limited purpose of providing contextual information;
• This is not an appropriate action for a representative action on behalf of other individuals (i.e. the claim should not proceed as a class proceeding);
• While the act of state doctrine has never been applied in Canada, it forms part of Canadian common law. However, it does not apply to the instant case;
• Given that CIL is incorporated into and forms part of Canadian common law (unless there is some domestic law to the contrary), there is nothing that bars claims based on CIL in Canadian law. In other words, assuming the facts as pleaded by the workers are true, there is a reasonable prospect they may be successful and as such, while novel, their claims based on CIL principles should proceed to trial.

The British Columbia Court of Appeal's Decision (2017 BCCA 401)

With the exception of his ruling denying the action to proceed as a representative action, Nevsun appealed all of Abrioux J.'s findings to the British Columbia Court of Appeal.

On appeal, Newbury J.A., writing for a unanimous court, upheld Abrioux J.'s rulings with respect to appropriate forum and the admissibility of certain evidence.

On the issue of the act of state doctrine, Newbury J.A. acknowledged that, while never applied, the doctrine has been adopted by section 2 of British Columbia's Law and Equity Act. However, she also concluded that the doctrine did not apply in the instant case and, even if it did, it would not bar the workers' claim as one of the doctrine's known exceptions would be held to apply.

On the final issue pertaining to international law, Newbury J.A. noted that a private law cause of action has not been recognized in England or Canada due to concerns surrounding state immunity. However, because the action in question was not brought against a foreign state, but rather a private actor, such a claim is not automatically barred by the State Immunity Act in the instant case. In so doing, she emphasized the growing trend amongst domestic courts to address issues of public international law. Further, simply because the workers' claims could be addressed through existing private torts, this did not preclude the success of their claims on the basis of CIL. As such, the workers' claims held a reasonable prospect of success and should not be prematurely struck out.

Issues before the Supreme Court of Canada

On appeal to the Supreme Court of Canada, Nevsun did not appeal the lower court's findings on the issues of admissibility of evidence and appropriate forum.

Therefore, the two issues addressed by the Court are:

• Does the act of state doctrine form part of Canadian common law?
• Can CIL prohibitions against forced labour; slavery, cruel, inhuman or degrading treatment; and crimes against humanity ground a claim for damages under Canadian law?

The Act of State Doctrine is Not Canadian Law

The act of state doctrine is regarded as "a rule of domestic law which holds the national court incompetent to adjudicate upon the lawfulness of the sovereign acts of a foreign state".^[1] As such, the doctrine relates in many ways to the concept of state immunity, which prevents a state from being sued in the courts of other states. Importantly, state immunity is formally adopted into Canadian law, as evidenced by the federal State Immunity Act.^[2] The question at the heart of the Nevsun case, however, was whether the act of state doctrine is also a part of Canadian law.

Writing for the majority, Abella J. begins her approach to answering this question from a historical standpoint, mapping the evolution of the doctrine through the English and Australian courts. In so doing, she notes that while the act of state doctrine arises from the same premise as the principle of state immunity (i.e. mutual respect for the equality of sovereign states), the doctrine is largely a creation of the common law. As such, the two concepts cannot be equated - while state immunity is required by international law, it does not require states to limit their subject matter jurisdiction in circumstances where foreign states are not parties to the litigation. This means that the application of the act of state doctrine in Canada cannot be inferred from the principle of state immunity.

In reviewing the history of the act of state doctrine, Abella J. notes that the doctrine is heavily criticized and lacks a single, coherent definition. Rather, due to its sweeping nature, English and Australian courts have developed a number of qualifications and limitations to the doctrine. Attempts to group/categorize these limitations have simply inspired further criticism.

Rather than inferring the applicability of the doctrine in Canada from this history, Abella J. reviews the development of the underlying principles of the doctrine (i.e. conflict of laws and judicial restraint) within Canadian jurisprudence. She observes that, while English courts have routinely reaffirmed and reconstructed the existence of the doctrine, Canadian courts have developed these principles of conflict of laws and judicial restraint very separately. Notably, Canadian courts have chosen to address issues relating to the enforcement of foreign laws using ordinary private international law principles (which generally call for deference), allowing for judicial discretion to decline enforcement in circumstances where the laws are contrary to public policy. While Canadian courts exercise judicial restraint when considering foreign law questions, Canadian courts have not shied away from making decisions in circumstances of clear violations of international law and fundamental human rights.

In light of this distinct history, Abella J. concludes that the act of state doctrine does not form part of Canadian common law, nor do its underlying principles bar the workers' claims.

Customary International Law is Canadian Law

In assessing the strength of the workers' claims based on CIL, the majority notes that it is only required to determine whether the workers' claims could survive the applicable test for striking pleadings - i.e. whether it was plain and obvious that the workers' claims had no reasonable prospect of success. In particular, the majority broadly considers two theories advanced by the workers regarding a claim based on CIL:

1. The workers would seek to have the Canadian courts recognize a cause of action specifically for breach of CIL; or
2. The workers would seek to have the Canadian courts recognize four new torts inspired by CIL principles  (i.e. use of forced labour; slavery; cruel, inhuman or degrading treatment; and crimes against humanity).

Concluding that the claims held a reasonable prospect of success, Abella J. emphasizes the mutually influential relationship between domestic Canadian law and international law. In the case of CIL, which is effectively the common law of the international system, Abella J. acknowledges that it may sometimes be difficult to articulate and define CIL principles. This stems from the fact that, to be recognized as a norm of CIL, two elements are generally required:

1. universal state practice (i.e. the norm must be sufficiently general, widespread, representative and consistent); and
2. opinio juris (i.e. there must be a belief within the international community that the practice in question amounts to a legal obligation, rather than mere habit).

Identifying when a practice becomes a norm can be a difficult exercise; but once a practice becomes a norm of CIL, by its very nature it must have equal application for all members of the international community. However, there is a certain subset of norms of CIL which are broadly and fundamentally accepted by the international legal order and from which opting out is not possible. The only way to modify the character of these norms is through the development and recognition of a legal norm of the same character. This special subset of norms is referred to as jus cogens or peremptory norms.

While different states have different approaches for incorporating international law into their domestic legal and political structures, Canada has always automatically adopted CIL into domestic law by virtue of the common law (subject to any conflicting legislation). As a result of this doctrine of adoption, CIL norms in fact constitute Canadian domestic common law absent any conflicting domestic laws. In other words, CIL is not separate to Canadian law - rather, it is Canadian law.

As Abella J. writes:

In the domestic context, the general principle that "where there is a right, there must be a remedy for its violation" has been recognized in numerous decisions of this Court ….The right to a remedy in the context of allegations of human rights violations was discussed by this Court in Kazemi, where a Canadian woman's estate sought damages against the Islamic Republic of Iran for torture. The majority did not depart from the position in Hape that customary international law, including peremptory norms, are part of Canadian common law, absent express legislation to the contrary.^[3]

Further, Abella J. highlights the fundamental and uncontroversial nature of the norms at issue in this case, prompting her to take judicial notice of their jus cogens quality. The seriousness of harm that these norms address are distinct from those addressed through existing domestic tort law, resulting in the inadequacy of the latter. As such, there may be a need for new torts based on CIL principles.

Abella J. also considers whether CIL should be held to apply against a private actor. In answering that question, Abella J. identifies a shift in modern international law over the last 70 years, whereby the global order has moved away from its historically state-centric approach towards a more humanistic outlook. This shift has created a great international focus on protecting individuals, their liberty, health and education, which may be violated by not only states but also by private actors. Abella J. observes that elsewhere in international law private/non-state actors have been held responsible for their actions (e.g. international criminal law).

As one relevant source of international law, Abella J. refers to the International Covenant on Civil and Political Rights (adopted by UN General Assembly in 1976), and underlines the international obligations that Canada is bound to ensure, not only for its citizens and permanent residents but also asylum seekers, refugees, migrant workers and other persons in Canada:

With respect specifically to the allegations raised by the workers, like all state parties to the International Covenant on Civil and Political Rights, Canada has international obligations to ensure an effective remedy to victims of violations of those rights (art. 2). Expounding on the nature of this obligation, the United Nations Human Rights Committee — which was established by states as a treaty monitoring body to ensure compliance with the International Covenant on Civil and Political Rights — provides additional guidance in its General Comment No. 31: The Nature of the General Legal Obligation Imposed on States Parties to the Covenant, U.N. Doc. CCPR/C/21/Rev.1/Add.13, May 26, 2004. In this document, the Human Rights Committee specifies that state parties must protect against the violation of rights not just by states, but also by private persons and entities. The Committee further specifies that state parties must ensure the enjoyment of Covenant rights to all individuals, including "asylum seekers, refugees, migrant workers and other persons, who may find themselves in the territory or subject to the jurisdiction of the State Party" (para. 10). As to remedies, the Committee notes:

[T]he enjoyment of the rights recognized under the Covenant can be effectively assured by the judiciary in many different ways, including direct applicability of the Covenant, application of comparable constitutional or other provisions of law, or the interpretive effect of the Covenant in the application of national law.^[4]

Dissent

The case features two sets of dissenting reasons, with Brown and Rowe JJ. dissenting in part and Côté and Moldaver JJ. dissenting in full.

Per Brown and Rowe JJ., while they agree with the majority's reasons with respect to the issue of the act of state doctrine, there is disagreement with the majority's approach to the application of CIL. In holding that the workers' claims are bound to fail, Brown and Rowe JJ. articulate what they believe to be the proper framework for applying CIL in Canada:

1. Identify the norm of CIL at issue and determine how the norm would best be given effect.
   1. This involves finding the facts of state practice and opinio juris (unless this is a norm that involves no dispute, and hence it is appropriate for the courts to take judicial notice).
   2. From there, the court must identify which, if any, norms of CIL must be recognized to properly explain the facts of state practice and opinio juris. This is a question of law.
2. Determine whether any domestic legislation prevents the court from changing the common law to create that effect.
   1. If no legislation does, courts should implement that change to the common law.
   2. If any legislation does, the courts should respect that legislative choice, and refrain from changing the common law.
3. Apply the norms, as recognized, to the facts in issue.

Using this framework, Brown and Rowe JJ. analyze the majority's decision. While they agree with the majority that the norms implicated in the instant case have the elevated status of being jus cogens norms, they diverge on the question of whether a corporation may be civilly liable in Canada for a breach of CIL. In their view, it is plain and obvious that corporations are excluded from direct liability under CIL as this has not been explicitly recognized. Further, because the workers failed to plead the facts necessary to establish an argument for civil liability, the workers' claims are doomed to fail.

Brown and Rowe JJ. further find it inappropriate to recognize private law causes of action for harms that are more appropriately addressed in the context of criminal law. According to them, doing so is strictly prohibited under section 9 of the Criminal Code of Canada. However, even beyond this, Brown and Rowe JJ. emphasize the inappropriateness of recognizing a private law cause of action for a simple breach of CIL (i.e. workers' first theory) given the fact that Canadian law does not even recognize a private law cause of action for breach of statutory Canadian public law. As such, Brown and Rowe JJ. warn that the majority's approach constitutes an Americanization of Canada's historical approach to adopting international law.

Concluding that existing Canadian tort law is sufficient to address the harms complained of by the workers, Brown and Rowe JJ. note that the courts' role is to develop the law incrementally. Therefore, the majority's reasoning in this case is criticized for being overly bold, such that the majority is encroaching on the roles of both the legislature and the executive branches of Canadian government.

Adopting these dissenting reasons of Brown and Rowe JJ., Moldaver and Côté JJ. also take issue with the majority's conclusions with respect to the act of state doctrine. Echoing concerns that the majority is overstepping its bounds as the judiciary, in their view, the workers' claims are not justiciable by the mere fact their claims require resolution through diplomatic channels and the role of the executive. Further, Moldaver and Côté JJ. feel that the workers' claims centered on reaching a decision about the legality of a foreign state's actions (i.e. Eritrea). In light of this, Moldaver and Côté JJ. conclude that the workers' claims cannot proceed.

Implications

The majority's decision in Nevsun represents a bold statement from the Court regarding the relationship between international law and Canadian domestic law. At the same time, the Court identifies the limitations of turning to English and Australian legal precedent in this area of the law. Accordingly, we should expect to see an increasing number of novel claims and causes of action brought in Canadian courts concerning conduct by Canadian enterprise abroad, based on principles of international law.

This majority's decision is a substantial answer to the oft-criticized value of international law as being more conceptual than practical. Importantly, the majority's decision in Nevsun appears to challenge this criticism head on, providing a role for Canadian courts to interpret and apply broad international legal principles in specific private law cases. In effect, it forges a direct connection between legal accountability for specific individual experiences and the broader, macro-level promises of international law.

Justice Abella's opening paragraphs in her reasons stake an important role for Canadian courts to play in responding to breaches of international human rights law in the right cases:

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 process of identifying and responsively addressing breaches of international human rights law involves a variety of actors. Among them are courts, which can be asked to determine and develop the law's scope in a particular case….^[5]

Further, she urges that,

Since "[i]nternational law not only percolates down from the international to the domestic sphere, but . . . also bubbles up", there is no reason for Canadian courts to be shy about implementing and advancing international law….^[6]

The minority reasons of four Judges of the Supreme Court - each cautioning against the judiciary venturing too far - demonstrate a strong resistance to the winds of change embraced by the majority and the opening of Canadian courts to adjudicating breaches of international law perpetrated beyond our borders. Of course, the Nevsun case proceeded on a preliminary motion, and so there has yet to be a trial of the merits of the case to assess how successful the application of these principles may in fact be.

Still, one can certainly imagine that, due to this decision, Canadian corporations with active business operations abroad (perhaps under pressure of concerned shareholders, creditors and insurers) will be conducting legal risk assessments and re-evaluating disclosure obligations, particularly in relation to joint ventures with state-owned enterprise in higher-risk jurisdictions.

Note: Jeff is a partner in Gowling WLG's Supreme Court Practice Group, and acted as Ottawa Agent for the intervener, the International Human Rights Program, University of Toronto Faculty of Law. Wudassie is an associate in Gowling WLG's Ottawa office, practicing in the Advocacy Group, and a past Executive member of the Ethiopian and Eritrean Community Sisterhood in Toronto, Ontario.