CANADIAN LITIGATION FOR VIOLATIONS OF CUSTOMARY INTERNATIONAL LAW: QUESTIONS REMAINING AFTER NEVSUN V ARAYA.

• Author: Zullow, Jeremy

INTRODUCTION

In February 2020, the Supreme Court of Canada (SCC) decided in Nevsun Resources Ltd v Araya(1) that a dispute involving allegations of forced labour and cruel and inhumane treatment at an Eritrean mine should proceed to trial in a Canadian court. The plaintiffs alleged that Nevsun Resources Ltd ("Nevsun"), a Canadian mining company, violated customary international law (CIL) prohibitions and, in the alternative, brought claims under domestic common law torts. The court faced two narrow questions: whether the act of state doctrine formed part of Canadian common law, and whether it was "plain and obvious" that customary international law prohibitions could not form the basis of a domestic law tort cause of action. In a 5-4 opinion, with two justices concurring with the majority on the act of state doctrine issue, the court held that the plaintiffs' alleged torts were not clearly bound to fail.

The Nevsun SCC majority devoted substantial space to analyzing whether Canadian courts have the capacity to recognize CIL-inspired common law torts, a central question before the court.(2) The court concluded that nothing automatically precluded lower courts from recognizing CIL-inspired torts. Though the majority devoted very limited space and analysis to the ultimate question of whether Canadian courts will recognize CIL-inspired common law torts,(3) the case nevertheless provides some guidance to lower courts. However, since the parties settled their dispute privately in October 2020,(4) the question of whether Canadian courts actually will recognize common law CIL torts in practice remains open.

This article argues that Nevsun SCC has not clearly demonstrated Canadian courts will advance CIL tort litigation post-Nevsun. While the Nevsun SCC majority encouraged trial courts to engage in tort-recognition analyses and give effect to CIL-based prohibitions and rights within domestic law, there are several reasons to be skeptical that the decision provided a sufficient basis for courts to integrate CIL norms into the common law of torts.

Existing scholarship on CIL tort development has largely focused on whether courts can and should recognize CIL-based torts. The Nevsun SCC decision has largely vindicated that scholarship, outlining why the common law can be receptive to CIL-based torts.(5) But neither existing scholarship nor the Nevsun SCC decision have thoroughly reviewed potential barriers to the development of corporate liability for CIL violations in practice.

In particular, the majority in Nevsun SCC failed to consider the framework for corporate liability under the Canadian common law. In Canada, companies are generally insulated from liability for the actions of subsidiaries and partners abroad under the corporate veil doctrine. Several plaintiffs in the past two decades have sought to skirt the corporate veil through the law of negligence and pleading novel duties of care. Nevsun SCC is the most recent example of this approach, but almost all of these cases, including Nevsun SCC, have ended in a settlement.

Accordingly, this article proposes that an alternative question is more relevant: not whether courts can and should recognize CIL-based torts, but whether courts' recognition of such torts is sufficient on its own to allows plaintiffs to access remedies against corporations involved in human rights abuses abroad. Although the development of CIL torts has often been considered independently from other barriers to redress,(6) this article proposes that the practical effect of recognizing CIL torts cannot be considered without considering those inter-related issues of law. Those issues include: corporate liability under domestic law (in contrast to the question of liability under international law at issue in Nevsun SCC), extraterritorial jurisdiction, and state immunity. Each one of these issues greatly restricts plaintiffs' access to Canadian courts for CIL violations when Canadian corporations, foreign states, or any other actors violate CIL norms abroad.

This article operates under the assumption that CIL tort recognition is a question independent from these inter-related issues of law. It does not attempt to address whether Canadian courts should consider domestic corporate liability, extraterritorial jurisdiction, and state immunity at the tort recognition stage because Canadian courts would likely resist making such a dramatic change to existing law.

The article proceeds in four parts. Part I begins by summarizing the factual and procedural background of the Nevsun SCC case. Part II considers the prospect of CIL-based common law torts after Nevsun SCC, anticipating how courts will resolve competing considerations when they must ultimately decide whether to recognize novel CIL-based torts. Part III examines rules governing veil piercing and negligence-based direct liability approaches to parent company liability, which present considerable barriers to litigation against Canadian corporations for extraterritorial CIL violations. Part IV surveys two other issues of importance for CIL tort litigation, and highlights the possibilities and limitations of these legal issues: jurisdictional questions and the state accountability gap.

I NEVSUN V ARAYA'S PROCEDURAL HISTORY

1. BACKGROUND

   Nevsun, a publicly-held Canadian mining corporation incorporated in British Columbia, owned the Bisha Mine in Eritrea, which produced gold, copper, and zinc.(7) To comply with Eritrean law governing mining operations,(8) Nevsun entered into a commercial venture called the Bisha Mining Share Company (BMSC) in October 2007, in partnership with the Eritrean National Mining Corporation (ENAMCO).(9) ENAMCO owned 40 percent of BMSC, which owned and operated the Bisha mine, and Nevsun owned 60 percent of BMSC through subsidiaries.(10) In addition, BMSC entered into mining operation subcontracts with companies that operated under the control of Eritrea's sole political party and military.(11)

   The Eritrean government then funneled conscripts to work at the Bisha Mine via subcontracting organizations.(12) Those who were conscripted to work at the Bisha Mine did so without a defined length of service, at subsistence wages, and under harsh and dangerous conditions.(13)

   The three plaintiffs in Nevsun SCC were conscripts sent to the Bisha Mine who eventually managed to flee Eritrea.(14) In 2014, the plaintiffs, then residing in Ethiopia, filed a lawsuit against Nevsun in British Columbia,(15) sought damages under customary international law, as incorporated into the law of Canada, for the use of forced labour, torture, slavery, cruel, inhuman or degrading treatment, and crimes against humanity.(16) The plaintiffs also sought damages "under domestic British Columbia law against Nevsun for the torts of conversion, battery, unlawful confinement, negligence, conspiracy, and negligent infliction of mental distress."(17)

   The plaintiffs filed their lawsuit at the Supreme Court of British Columbia (BCSC).(18) At the time of filing, Nevsun had three foreign-incorporated subsidiaries: Nevsun (Barbados) Holdings Ltd., Nevsun Africa (Barbados) Ltd., and Nevsun Resources (Eritrea) Ltd.(19) Nevsun wholly owned these three subsidiaries, all of which were inactive, had no employees, and had the same director: Clifford T. Davis, CEO of Nevsun and Chairman of the Board of BMSC.(20) In addition, the Bisha Mine was the only income-producing asset in the Nevsun corporate structure.(21)

2. PRELIMINARY ISSUES AT THE TRIAL LEVEL

   In October 2016, Justice Abrioux of the British Columbia Supreme Court (BCSC) issued a lengthy decision addressing the parties' preliminary objections and motions. With respect to a forum non conveniens application from Nevsun, Abrioux J ruled that the company had not demonstrated that Eritrea was a more convenient forum on the basis of compelling evidence from the plaintiffs that they would suffer a real risk of an unfair trial if the litigation took place in Eritrea.(22)

   Abrioux J also rejected Nevsun's motion to strike the pleadings on the basis of the act of state doctrine. This common law doctrine generally bars domestic courts from hearing cases in which they would be required to adjudicate and rule on the "lawfulness of the sovereign acts of a foreign state."(23) Although the act of state doctrine had never been applied in Canada before,(24) Nevsun argued that it barred the present action because the plaintiffs' claims obligated the court "to inquire into the legality of the conduct and motives of [Eritrea]."(25) Finding support in foreign legal decisions, Abrioux J determined that the Canadian common law included the act of state doctrine but it would not bar the present action.(26) His decision relied on normative concerns: it would be unfair to the plaintiffs to have their case dismissed at a preliminary stage on the basis of a doctrine with an uncertain scope that had never been applied before "at any level of court in Canada."(27) Alternatively, Abrioux J noted that there were several exceptions that might apply even if the doctrine would otherwise act to bar the plaintiffs' claims.(28)

   Finally, Nevsun's motion to strike some of the plaintiffs' claims on grounds that they disclosed no discernable cause of action or were superfluous failed as well.(29) Abrioux J held that Nevsun had not established that it was "plain and obvious" that the plaintiffs' claims based on violations of CIL norms would fail at trial: the law was not settled, and Abrioux J found merit to both sides' argument.(30) In particular, Abrioux J concluded that the doctrine of adoption arguably incorporates the four CIL norms pleaded into Canadian common law, Canadian corporations may be liable under international or domestic law for violating at least some CIL norms, and the trial court may arguably consider recognizing torts based on the four CIL norms pleaded.(31)

3. ISSUES RAISED AT THE BRITISH COLUMBIA COURT OF APPEAL

   Nevsun challenged...