On February 28 this year, in the case ‘Nevsun Resources Ltd vs Araya’ the supreme court of Canada held that corporations may be liable for breaches of customary international law. Here, the Supreme Court held that Nevsun, a company that owns the Bisha Mining Share Company in Eritrea, was liable to its workers for breaches such as slavery, forced labour, and cruel, unusual, or degrading treatment, among other violations of human rights.

Certain legal systems the world over adhere to the act-of-state doctrine, which implies that all sovereign states need to respect the sovereignty and independence of others. Nevsun contended that the Canadian court lacked jurisdiction over the case on account of this doctrine. To this, a majority of the judges responded that this doctrine did not form a part of Canadian law and held it inapplicable. Further, the court averred that since the international legal customs form a part of Canadian law, the Court could, by employing its discretion on a case by case basis, hold companies liable for non-compliance.

Why this case is important

The act of state doctrine is inapplicable in Canadian jurisprudence in that this doctrine has developed distinctively in its own fashion responding to addressing its two fundamental principles; namely, the conflict of laws and judicial restraint. As opposed to forming part and parcel of this doctrine, these two principles have developed independently in the Canadian legal system. Canadian courts have judicial discretion in deciding whether to implement foreign laws or whether to decline their enforcement. By and large, the courts reject or decide cases based on whether they go against public policy. And, in cases where the court does take these cases, it relies on private international law which requires deference while simultaneously permitting judicial discretion.

Nevsun had argued to strike the plaintiff’s pleadings stating it was ‘plain and obvious’ that customary international law is not inclined to succeed. The court dismissed this view outright arguing that international law has changed a lot over the years; its ambit has expanded, no longer limiting itself to protecting states, but also to protecting individuals. Under these circumstances, the manner in which international human rights must be read and interpreted is in a way that typically applies to private individuals. So it is not ‘plain and obvious’ to extend immunity to corporations.

The majority of judges at the supreme court of Canada opined that since the alleged violations by Nevsun on the Eritrean workers were contrary to international legal customs, and since customary international law ipso facto forms a part of Canadian law, by the doctrine of adoption, the violations could be tried by Canadian courts.

Analysing the judgment

The decision raises questions on a number of issues. For one, it leaves gnawing doubts on how the doctrine of adoption could possibly impose civil liability for the commission of acts that run contrary to customary international law on states and criminal prohibitions on individuals. This is all the more problematic in light of Section 9 of the Criminal Code of Canada that does not allow courts to create criminal law via common law. Secondly, with the exception of the United States, the existence of international law does not necessitate the creation of domestic tort law (which are civil wrongs for which damages can be granted when they are committed). Finally, the majority does little to define torts based on breaches of international law in Canadian courts.

Canada owns half of the world’s publicly listed mining and exploration companies and there has been a great deal of abuse by these companies in the countries of operation. In Latin America alone, there were 28 alleged cases of violence and criminal acts from 2005-2015.

In the past, Canadian courts were unwilling to try these cases in their courts. But lately, this unwillingness has dissipated. Currently, Hudbay Minerals in Guatemala (owned by a Canada-based Skye Resources) faces three allegations of rape. In another case in Guatemala, an employee of Tahoe Resources opened fire on demonstrators in Guatemala in 2013. This case has been allowed to proceed in the British Columbia court of appeals in Canada.

The Nevsun case assumes more importance in light of Canadian corporate presence in many countries and in challenging the notion of ‘blanket immunity’ to corporations for grave human rights abuses. Specifically, in countries with poor justice systems, this decision is critical in deterring unethical practices by foreign companies in the future. Will this induce greater accountability by companies in the days to come? This case is a crucial landmark decision in defining the ambit of claims for breaches of international human rights laws for companies operating abroad. It is anticipated that Canadian courts will define the purview of these claims over time.