TRANSNATIONAL TORTS AGAINST PRIVATE CORPORATIONS: A FUNCTIONAL THEORY FOR THE APPLICATION OF CUSTOMARY INTERNATIONAL LAW POST-NEVSUN.

• Author: Ahmad, Hassan M.

INTRODUCTION

About international law, Hans Morgenthau once remarked," [t]here can be no more primitive and no weaker system of law enforcement than this; for it delivers the enforcement of the law to the vicissitudes of the distribution of power between the violator of the law and the victim of the violation." (1) For political realists such as Morgenthau, judicial mechanisms to remedy international law violations--and more accurately the lack thereof--are epiphenomenal to state power. However, what happens when power and functions once within the exclusive purview of governments diffuse to non-state actors ? Does international law apply beyond the state ? And, if so, how?

This article considers one facet of international law's application to non-state actors. It concerns the diffusion of certain functions traditionally undertaken by the state to private corporations, meaning those that are not substantially owned, managed, or controlled by the state apparatus. After the Supreme Court of Canada's (SCC's) 2020 decision in Nevsun Resources Ltdv Araya, (2) Canadian courts can, in theory, apply customary international law (CIL) (3) to these private corporate actors for the purposes of a transnational tort claim. (4)

In a globalized economic order, companies routinely conduct business operations such as extractive or manufacturing activities outside of the state where they are headquartered--either directly or through foreign contractors or subsidiaries. (5) At times, these multinational corporations (MNCs) (6) have been implicated in fundamental civil and political human rights violations against host state inhabitants. (7) Violations include murder, torture, cruel, inhuman, or degrading treatment, forced labor, arbitrary detention, injury to health and personal well-being, and harm to a clean and health environment. (8) As victims are often barred from commencing claims in their own courts, they have increasingly decided to commence transnational claims in MNC home states, (9) Nevsun being one such example. (10)

Although the Nevsun Court acknowledged an overlap between CIL and domestic torts, (11) it concluded the former is "of a more public nature", (12) more heinous, (13) and symbolically different (14) than existingnegligent or intentional torts such that it garners a discrete cause or causes of action. (15) The Court did not explain the consequential effects of a symbolically distinct CIL tort. Compared with existing torts, a successful CIL claim presumably warrants a higher punitive damages award and bears greater reputational costs to a corporate actor since the cause of action would relate to a public wrong that "shock[s] the conscience of humanity." (16)

To respect CIL's distinctive nature that the Nevsun Court identified, I argue that subsequent Canadian courts should not universally adopt a CIL cause of action each and every time an MNC is alleged to have committed harm in the course of extraterritorial business operations. Rather, I advocate for a functional approach to CIL tort liability that would require courts to assess the manner in which a corporate defendant engaged with a host state's population. In short, a CIL cause of action would only be available when a corporate defendant has behaved abroad like a state actor by discharging public functions. Approaching transnational corporate tort claims in this fashion demarcates a bright line between CIL and related torts such as assault, battery, unlawful confinement, and negligence. Leaving personal jurisdiction issues aside, under a functional approach the latter set of claims would remain available to foreign plaintiffs even when a corporate defendant has not ostensibly imbibed a public persona to attract a CIL claim.

Pursuant to a functional approach, a CIL tort would be available against a private corporation in two discrete set of instances. (17) The first would be when MNCs discharge public or quasi-state functions in the absence of a host state government. These functions can include the provision of food, shelter, infrastructure, healthcare, and public security. (18) In the second category of instances, a CIL tort would be available when an MNC's investor-state arrangement specifically concerns the provision of public goods or services, generally defined among economists as being non-rivalrous and non-diminishable. (19) This category of the functional approach can manifest when investor-state agreements pertain to public utilities, infrastructure, transportation, or previously state-run services such as immigration control. (20) Although the result would be the same (the applicability of a CIL tort to a private corporation), I separate out the two categories that comprise the functional approach for completeness and because existing literature, discussed below, has parsed out underlying factual scenarios that, at times, can be quite distinct (for example, whether the provision of public goods/services takes place in a failed or fragile host state).

For some critical (21) and feminist (22) scholars, a distinction between public and private corporate functions may seem arbitrary. And to them it may already have or soon become non-existent as corporations encroach on activities once within the exclusive purview of the state. However, as seen later, the current status of CIL as it has evolved in international and domestic spheres militates in favour of maintaining the public/private divide when it comes to a related tort claim. (23) Moreover, historians that focus on the corporate form acknowledge the existence of a public/private distinction in which the corporation over the past two centuries has increasingly become synonymous with private enterprise. (24) Adopted from the Roman societias and commenda, the Anglo-American corporation (or rather its predecessor joint stock chartered company) initially required a public purpose and was thus restricted to churches, universities, and municipalities as opposed to any commercial activity that yielded profits. (25)

For CIL tort liability, a corporation's stock being traded on a public exchange is not determinative of a public function. The bright-line (if that) I employ throughout this article to distinguish between a public and private function is a corporation's engagement with the host state's population. If a corporation is not widely supplying goods and/or services to that population--either in place of, or alongside, a host state government--it will not be subject to a CIL tort in a Canadian court. The assertion of a public/private division, even if it is dwindling, is not alien to existing Canadian law as it is entrenched within the realm of constitutional application and protections (albeit with different indicators and consequences). (26)

To delineate the functional approach to corporate CIL claims, I proceed as follows. Part I describes salient aspects of the pre-Nevsun debate in which there was an academic push forward to include non-state actors within CIL's purview and a commensurate push back by United States (US) courts that, in many ways, bound themselves to a functional approach without saying as such. Part II lays out the Nevsun majority's logic for extending CIL to private corporations. I argue in that part that the American academic and judicial sources upon which the majority relied actually employed a functional approach. Part III then focuses on this article's functional theory. I describe the two categories when a CIL tort would apply to violations committed by a Canadian corporation in the course of foreign investment operations. In that part, I also surmise whether a CIL claim would have succeeded against Nevsun Resources pursuant to a functional approach. Part IV rebuts potential critiques.

Analysis on CIL's applicability to corporate actors under Canadian tort law remains an area open for exploration. As such, this article makes a number of contributions. First, previous work on the use of international law in Canadian courts primarily focused on the doctrine of adoption. (27) For CIL norms, authors grappled with whether Canada is a dualist state (as is the case with treaty integration) or if norms automatically become part of Canadian common law upon crystallization. Much of that literature preceded the SCC's decisions in R v Hape (28) and Kazemi Estate v Islamic Republic of Iran, (29) which resolved that customary and peremptory norms are automatically incorporated into Canadian common law, absent legislation to the contrary. (30) Even so, past literature relegated CIL to a traditional "statist" notion. As Nevsun appears to have solidified that CIL applies to private corporations in tortious claims, I tackle one aspect of how to craft such claims going forward.

Second, for non-state actors in international law, legal realists have focused on norm formation rather than obligations and enforcement. (31) For Ochoa, one of CIL's "legitimizing premises was that it was thought to originate in the actions and beliefs of those whom it later comes to bind--the subjects of the law." (32) As such, correlative to the ability of non-state actors to form CIL norms, there should be some consideration as to judicial mechanisms that can then enforce those norms. Previous work on CIL enforcement against corporate actors has centred around the parameters of the Alien Tort Statute (ATS) in the US. (33) With this existing gap, I endeavour to contribute to Canadian-specific scholarship around the enforcement of CIL obligations.

Third and perhaps somewhat premature given Nevsun's recency, there is little guidance as to the parameters of a CIL cause of action under Canadian tort law. The majority outlined two potential theories of how CIL can be invoked by foreign plaintiffs in a Canadian court. Under one theory, there would be a specific tort named "customary international law". (34) Under a second theory, there would be four new nominate torts: slavery; forced labour; cruel...