Nevsun Resources v Araya et al 2019. What just Happened?

This paper will exam the Supreme Court of Canada case Nevsun Resources v Araya et al 2019.  Nevsun Resources owned a mine in the country of Eritrea under their subsidiary company Bisha. The country is in northeast Africa located above Ethiopia right beside Sudan on the red seacoast.  It is one of the poorest countries in Africa and according to the BBC ‘the UN estimates hundreds of thousands of Eritreans have fled the country since the country became in perpetual state of war’[1].  At the age of eighteen, all Eritreans must enroll in military service that includes work in the public sector.  In this case that work included the construction of the Bishma mine.  Three Eritrean refugees took Nevsun Resources to Court in Canada claiming damages for breaches of international customary norms; for forced to work under harsh conditions on the mine owned by Bishma.  Nevsun responded through a motion to strike that made its way to the Supreme Court of Canada.   This paper will examine how the Court reached their decision in Nevsun ruling.  This paper will examine the decision that international customary law is automatically adopted into Canadian law.  It will then expand on the problems with their ruling.  Three separate commentaries will be examined to help show how these ramifications will impact the policies and economics of Canada.  Then a brief outline will be provided to highlight the pros and cons behind their decision making which may have moved the Court in their direction.  In conclusion this paper will show that the dissent’s view is much more in line with how the Court ought to have ruled in Nevsun.

Nevsun Resources was sued civilly by former military personal of Eritrea. The lawsuit was based on claims that Nevsun, through their subsidiary company Bisha, was complacent in breaching international customary laws or norms.  It began as a class action filed in the province of British Columbia; Canada where were the company Nevsun was registered[2].  The class action involved one thousand Eritrean’s claiming damages but was struck by the B.C. Appellate Court; ruling that the plaintiffs because they were not all residents of Canada could not initiate their class action suit.  Only three of the individuals, having refugee status in Canada were allowed to proceed.  Nevsun sought a motion to strike the plaintiffs claim pursuant to two main issues that the ‘act of state doctrine’ applied and that the claim had no real prospect of success and ought to be struck.  Rendering their decision in 2019, the Court found that Nevsun could not rely on their motion.  The civil suit was therefore allowed to proceed which later settled out of court[3].  For the first time the Supreme Court of Canada took this opportunity to officially recognized that international customary norms were automatically adopted into Canadian domestic law.  This decision of Canada’s highest Court is a turning point in Canadian history that will have profound repercussions to Canadian politics, litigation and economics.   

Another striking feature was that central to the civil suit were the actions of the Eritrea government.  Through Nevsun’s subsidiary company Bishma, the plaintiffs argued that Nevsun was complicit in breaching of customary international law[4]. The three plaintiffs were military personnel, paid by the military through a military and politically owned company that was contracted by Bisha to build a gold and copper mine in the country from 2006 – 2012.  The workers were state actors (military personal) who were claiming that they were subjected to the inhuman treatment by the government owned company who employed them.  “In 2002, the period of military conscription in Eritrea was extended indefinitely and conscripts were forced to provide labour at subsistence wages for various companies owned by senior Eritrean military or party officials, such as Mereb and Segen.  For those conscripted to the Bisha mine, the tenure was indefinite.”[5]  The workers claimed that they were forced to provide labour in harsh and dangerous conditions for years and that, as a means of ensuring the obedience of conscripts at the mine, a variety of punishments were used. Further they claim that they witnessed punishments including “being ordered to roll in the hot sand while being beaten with sticks until losing consciousness” and the ‘“helicopter’ which consisted of tying the workers’ arms together at the elbows behind the back, and the feet together at the ankles, and being left in the hot sun for an hour.”[6]  The plaintiffs did not claim that they were victims themselves of these particular punishments and their experiences were less harsh[7].  The actual experiences of the plaintiffs were that they had to ‘work long hours in 50-degree Celsius heat and could not leave.’[8]  “In their pleadings, they sought damages for breaches of domestic torts including conversion, battery, “unlawful confinement” (false imprisonment), conspiracy and negligence.  They also sought damages for breaches of customary international law prohibitions against forced labour; slavery; cruel, inhuman or degrading treatment; and crimes against humanity.”[9]  The Court took it upon themselves to be very pro-active in the international realm rendering a decision in favor of the plaintiffs moving forward without any reference of guidance from the federal government[10].  Section 91 of the BNA of 1867 clearly outlines that the realm of foreign affairs belongs to the federal government.  Strikingly, the Court in a self-proclaimed justification; decided that it was the duty of the judiciary to uphold these international customary norms without the need for legislative action.

Problematically this constructive mannerism in which the Court established their presence as international actors dislodges the idea of checks and balances between the branches of government.  There were two issues that the Court agreed to weigh in on regarding Nevsun’s motion.  First was the ‘act of state doctrine’ which precludes domestic courts from assessing the sovereign acts of a foreign government.  The second issue was that claims based on customary international law should be struck because they have no reasonable prospect of success.’[11] Both were dismissed by the Court.   Essentially the Court based their ruling on the idea on an ever-changing landscape of international law that their may exist a possible civil tortious action based on the pleadings.  The majority did not rule out the possibility that such a claim may succeed opening the floodgates to such litigation in Canada[12].   Splitting the Court was that the partial dissent and dissent, making up the four of nine judges, which found that based on what was plead, the claim had no reasonable prospect of succeeding.  These dissenting Justices pointed to the fact that what was central to this case were the actions of the government of Eritrea.  Without the ability to dispose that government for their actions; it placed the defence at a severe disadvantage.  As a result of this ruling Canadian multinational corporations will have to re-consider doing business in certain countries.  Problematically for Canadian multinational corporations is the real threat is of costly litigation and the act of state doctrine, as recognized in the UK, would have been the lifeline if it was found applicable in Canada.

It is controversial whether the Court had the power under the Canadian constitution to decide the case in the manner they did.   The Canadian constitution is to be like that of the U.K.  Established by the preamble of the BNA of 1867 states “our constitution in Canada will be similar in principle to that of the United Kingdom”[13] therefore almost identical in legal content.  First a finding that the ‘act of state doctrine’ did not apply in Canada is stark departure from the jurisprudence in the U.K as noted in the Courts decision in Nevsun[14].  The Court found that the act of state doctrine’s two underlining principles developed differently in Canada in relation to the U.K., thus making it unapplicable; called the twin principles: conflict of law and judicial restraint.  Nevsun signals that Canadian jurisprudence steered itself away from English influence becoming judicially active.  A second point of departure is that the Canadian constitution, BNA 1867, recognizes the supremacy of parliamentary sovereignty; like the U.K.  Indirectly addressing this issue, the Court in Nevsun, mainly in the partial dissent, noted that the legislative branch of government had to specifically opt out of international customary laws through legislation initiatives.  Clearly this mandates that the legislative branch be diligent and abreast of what international customary norms are and how they evolve.  Further, the Court said that legislative mandate is not necessary and that international customary norms are automatically adopted into Canadian domestic law if they do not conflict with existing Canadian domestic law.  The Court is showing defence to international law over Canadian law and implies that parliament ought to do the same[15].  This would support scholarly articles such as National Courts, Domestic Democracy, and the evolution of international Law, by Eyal Benvenisti and George W. Downs who support the idea that the Courts must be pro active resisting the national legislative branches having a state centric interest in mind.[16]  But, such judicial activism removes the checks and balances inherent in the Canadian constitution where unelected officials like the Courts are not to over step the will of the Canadian people.   

The Court outlined the process by which parliament has the power to opt out of these internationally recognised norms.  But, if the legislative branch does not specifically opt out of these norms, then they will be considered to have acquest to them.  As such most of these internationally recognized norms, at least ones the Court referenced in Nevsun are embedded in our domestic law with some applying broadly in their potential application.  For example, the EU is taking Hungary to court under a violation of human rights norms for banning foreign funding to political campaigns.  Unusually, when one thinks of human rights; voting does not come to mind, but this case involves Hungary’s attempt to stop foreign campaign funding in an effort to curtail election interference.  The ability of constructing arguments of this broad nature, add to the reasoning why Canadian corporations will refrain from doing business in certain countries as a result from Nevsun.  “International law is usually open to multiple interpretations, and companies may be expected to justify their decisions by choosing and cite the interpretation of international law that is most beneficial to their own interests.”[17]  In Nevsun, the Court’s by setting their own standards and are not bound by a corporation’s interpretations of a customary international norm.  On one hand it is good that the government can establish their own strict standards to enforce good law such as the denouncement of inhuman actions. On the other hand, how is a corporation to clearly identify what would constitute a breach of international customary norms when some of their interpretations are broad.[18] 

The economical ramifications of this ruling will ultimately affect the Canadian economy.  The real-world ramifications of allowing this civil action in Canada may prove to be quite problematic.   According to Jay Butler’s article, Corporate Commitment to International Law, “corporations are creatures and creations of domestic law, whenever the international community wishes to regulate some aspect of corporate behavior globally, it usually does so through the intermediary of the state. The state incorporates that international legal instruction into domestic law, which then becomes binding on the company”.[19]  Future economics’ in Canadian, as explained by Jay Butler in the same article, “a company [will decline] a particular line of government business, refused state incentives to do business in a certain place, or engaged in other non-cooperative acts with government actors because of a determination that working with the government in such a way would undermine some norm of international law.”[20]  The Nevsun case, with the risk of litigation, will act as a deterrent for companies in Canada to do business with countries that may not act in line with these international customary norms.  If Canadian multinational corporations are set back from being competitive in the international realm then the funding and jobs, they provide to the Canadian economy will suffer. 

It maybe that the idea of the influential power of multinational corporations is overstated.  There are different scholarly articles that support this idea of the positive power of corporate influence.  Under the “ten principles of the Global Compact, these companies have promised to “support and respect the protection of internationally proclaimed human rights, make sure that they are not complicit in human rights abuses, uphold fundamental labor rights, support environmental protections including the “precautionary approach to environmental challenges,” and “work against corruption in all its forms . . .”[21]  ‘The Compact’s principles are silent as to whom corporations may rightly exercise their influence and exert pressure against to ensure the fulfilment of these obligations, but corporate opinio juris reveals the possibility of corporations utilizing the principles as inspiration and authority for ensuring state compliance.’[22]    If Bishma, for the purposes of their ability to obtain permits to mine, had to make a contract with these governmentally owned corporations then this seems to upset and limit their ability to influence.  What is being suggested is that by example, Bishma ought to have or did have the ability to exert pressure on the Eritrea government to ensure compliance to recognized international customary norms.  But if corporations lack this capability, then why subject them to civil liability for mere accusations of complacency in government actions?  It might be that there has been a shift in policies that corporations are now punished for not exerting such influence where it is expected of them.

These ideas of corporate influence represent a thought pattern that corporations will use their monetary power to influence both politics and economics of States.  This affects those Nation States who exist outside the countries who have accepted to follow these international customary norms that we speak of.  According to Julian Arato, Corporations as Lawmakers, “the act of privatization or even a company’s control of a significant share of a market important to the state allow the company a degree of responsibility or leverage to ensure human rights protections in a way that the state itself has not or does not seem inclined to do/”[23]  By adding this additional threat of litigation to Canadian multinational corporations; it is likely to undermine this idea that corporations, if they could, will exert any influence.  On one hand, the revenues generated by international companies who do business in Eritrea are very important to the Eritrean economy.  But their will be other players to take the Canadian company’s place.  Another possibility is that the stage could be set where existing Canadian multinational companies working in countries such as Eritrea, could be subject to false claims by their competition.  Many other countries are laxed in enforcing internationally recognized norms and if the threat of litigation is too great for Canadian multinational corporation, then operations in these countries would potentially be too risky a venture.

Considering the economic and politic impact to Canada; better suited to be decision makers of international affairs is the legislative branch.  The Supreme Court’s judicial activism, in Nevsun. was identified in the dissenting opinion.  According to the dissent written by Justic Cote, “adjudication of such claims impermissibly interferes with the conduct by the executive of Canada’s international relations.  That interference is not justified without a mandate from the legislature or a constitutional imperative to review the legality of executive or legislative action in Canada.  In the absence of such a mandate or imperative, claims based on a foreign state’s internationally wrongful acts are allocated to the plane of international affairs for resolution in accordance with the principles of public international law and diplomacy.”[24] The dissent recognized the Courts judicial activism and the potential negative ramifications of this ruling. Judges are not experts in either economics or politics.  Simply put, other countries who do not have this threat of litigation placed on their home corporations will fill the void of doing business in countries such as Eritrea. Therefore, human rights violations are expected to continue in Eritrea regardless of this ruling.    

The Court’s judicial activism in Nevsun ought to be examined by the legislature for its likely detrimental effects on Canadian international foreign affairs policy and economical impacts.  There should be legislative action to curtail these ramifications, possibly by instituting the act of state doctrine and preventing the application of the adoption principle as it relates to international customary norms.  The dissent was on point when they found no prospect of success in the Nevsun case and that the decision of the Court to dive into the political arena was outside the scope of their judicial role.  While commentaries abound regarding the implications of state enforcement into international customary norms; the ramifications of such adoption are not without controversy.  The Court ignored key constitutional foundational doctrine that imply this ruling was a steep overreach of the judiciary’s powers.  This encroachment on our Canadian sovereignty creates an unrealistic pro-active legislature that is to be overly concerned or complacent with international customary law.  It places international customary law in a superior light despite the Courts inadvertent reference to parliamentary sovereignty.  Potentially and problematically, these norms can be broadly construed, representing a danger to Canadian jurisprudence.  Any outside legal influence that has a direct impact on Canada should not be allowed by the Court and curtailed by the legislative branch.  

[1] See https://www.bbc.com/news/world-africa-13349078 April 18, 2023.

[2] A similar case that was adjudicated in the USA involving the Canadian company shopify.  In this case shopify took information off the internet from residents in California and sold it. The residence of California brought a class action in California against shopify where the occurrence took place but were denied their claim in favor of shoplifty who argued that the case had to be argued in Canada specifically BC where they were registered

[3] Was not heard

[4] The Court recognized that because Bisha hired the company who employees these workers that they were liable for the actions of that company which they hired.   It is as if they were not at arms length and if but for hiring this company Bisha and thus Nevsun were liable for actions of another company employed by Bisha.

[5] Nevsun resources v Araya 2019 SCC

[6] Nevsun v Amaya 2019 SCC para 10-11

[7] They could be victims in the sense that because they witness these atrocities that they are now permanently emotionally scared.

[8] Nevsun resources v Araya 2019 SCC para 13-15

[9] Ibid para 4

[10] Section 91 of the Constitution Act, 1867 gives the Parliament of Canada the power to make laws for the peace, order, and good government of Canada, including matters related to foreign affairs

[11] Nevsun resources v Araya 2019 SCC para 5

[12] The issue of corporate immunity was struck by the Court. And whether the venue was better set to be argued in that country was also struck because the Court found that the workers would get a fair trial their (more shocking that they could conclude this without evidence)

[13] See Constitution of Canada 1867

[14] Nevsun v Araya 2019 SCC

[15] The Court relied on the case of R v Hape 2007 SCC, extensively in their decision making but as Noted in the have decision our Charter does not have a horizontal effect on other countries, nor does it apply to Canadian officials working abroad.

[16] National Courts, Domestic Democracy, and the evolution of international Law, by Eyal Benvenisti and George W. Downs. P 61

[17] Jay Butler, Corporate Commitment to International Law, \\jciprod01\productn\N\NYI\53-2\NYI203.txt unknown Seq: 1 1-MAR-21 14:05 p 496

[18] It may be the reason customary international norms were solely understood as between States.

[19]  Jay Butler, Corporate Commitment to International Law, \\jciprod01\productn\N\NYI\53-2\NYI203.txt unknown Seq: 1 1-MAR-21 14:05 p 440

[20] Ibid, p 441

[21] Julian Arato, Corporations as Lawmakers Volume 56, Number 2, Summer 2015 p 299

[22] Ibid., p 301

[23] Ibid., p 490

[24] Nevsun v Araya 2019 SCC