NEVSUN RESOURCES LTD. V. ARAYA – SUPREME COURT OF CANADA ALLOWS ERITREAN MINERS’ CLAIM FOR VIOLATIONS OF CUSTOMARY INTERNATIONAL LAW TO PROCEED

On 28 February 2020 the Supreme Court of Canada in Nevsun Resources Ltd. v. Araya (2020 SCC 5) issued a 5-4 ruling allowing a claim by Eritrean miners against Nevsun Resources Ltd. (“Nevsun”), a Canadian mining company, to proceed. The miners had initiated proceedings in British Columbia against Nevsun alleging, among other things, breaches of customary international law prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity. Nevsun filed a motion to strike the miners’ pleadings, arguing that these customary international law claims had no reasonable prospect of success. Nevsun’s motion to strike was denied, and its appeals to the Court of Appeal and the Supreme Court were in turn dismissed.

The workers’ claims arose out of an expansion project between Nevsun and the State of Eritrea for the development of the Bisha gold-copper-zinc mine in Eritrea. Nevsun indirectly owns 60% of the company that owns and operates the Bisha mine, with the other 40% owned by the Eritrean National Mining Corporation. The miners alleged that they had been conscripted via the Eritrean military’s national service program into indefinite servitude in the mine, contrary to the customary international law prohibitions noted above and domestic torts of conversion, battery, unlawful confinement, conspiracy, and negligence.

In appealing against the dismissal of its motion to strike, Nevsun argued that the “act of state doctrine” barred the workers’ claims because the Canadian courts could not adjudicate upon the sovereign acts of a foreign State, including Eritrea’s national service program. Nevsun further argued that the miners’ claims based on customary international law had no reasonable prospect of success and should therefore be struck.

The Supreme Court considered two questions on appeal:

• Whether the act of state doctrine forms part of Canadian common law, and
• Whether the customary international law prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity may ground a claim for damages under Canadian law.

Majority

On the first issue, the majority of the Supreme Court, in an opinion authored by Justice Abella, concluded that the act of state doctrine was not part of Canadian common law. Rather than an all-encompassing act of state doctrine, the majority considered that Canadian law had developed its own approach to addressing the twin principles underlying the doctrine: conflict of laws and judicial restraint.  Accordingly, the act of state doctrine did not bar the miners’ claims.

On the second issue, the Court considered that, “Canada has long followed the conventional path of automatically incorporating customary international law into domestic law via the doctrine of adoption, making it part of the common law of Canada in the absence of conflicting legislation.” Specifically, the prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity were jus cogens, i.e., peremptory norms fundamental to the international legal order, from which no derogation is permitted. Consequently, these peremptory norms of customary international law were fully integrated into, and formed part of, Canadian law.

In response to Nevsun’s argument that, being a corporation, it was immune to the application of these customary international law norms, the Court considered that “international law has so fully expanded beyond its Grotian origins that there is no longer any tenable basis for restricting the application of customary international law to relations between states.” Given the evolution of international law to encompass individuals and private actors as subjects, it was not “plain and obvious” (the standard for a motion to strike) that corporations “today enjoy a blanket exclusion under customary international law” from liability. However, the Court recognized that the trial judge would have to determine whether the specific norms relied on in this case were of a strictly inter-State character, and if so, whether the common law should evolve to extend the scope of those norms to bind corporations. For the purposes of the appeal, and in the absence of any Canadian laws to the contrary, the Court concluded that the customary international law norms relied upon by the miners formed part of the Canadian common law and potentially applied to Nevsun.

In addition, the Court considered that there was nothing in Canadian law to preclude the “possibility of a claim against a Canadian corporation for breaches in a foreign jurisdiction of customary international law, let alone jus cogens.” The Court further opined that customary international law norms are inherently different from existing domestic torts, as their violation “shocks the conscience of humanity.” Accordingly, relying on existing domestic torts may not do justice to the specific principles in place with respect to the human rights norm.

Partial dissent

Justices Brown and Rowe agreed with the majority’s dismissal of Nevsun’s appeal in relation to the act of state doctrine, but disagreed that the workers had made out a reasonable cause of action based on violations of customary international law. In their partial dissent, the Justices considered that the two theories on which the pleadings of the workers were based were fundamentally flawed.

In particular, on the first theory of the workers’ claims for breach of customary international law, the partial dissent considered that these claims were viable only if international law were “given a role that exceeds the limits placed upon it by Canadian law…. These prohibitive rules of customary international law, by their nature, could not give rise to a remedy.”

The partial dissent further considered that, as a matter of law, corporations cannot be liable at customary international law for human rights violations; at most, the proposition that such liability had been recognised was equivocal, rendering any such norm non-binding. Accordingly, the claims were doomed to fail.

Dissent

Justices Moldaver and Cote agreed with the partial dissent that the miners’ claims were bound to fail, and considered in addition that the extension of customary international law to corporations represented a “significant departure in this area of law.”  They further dissented from the majority opinion in relation to the act of state doctrine, opining that the workers’ claims were within the realm of international affairs and therefore not justiciable.

Does Canadian common law present more fertile ground for international human rights claims than the U.S. Alien Tort Statute?

The Supreme Court of Canada’s ruling in Nevsun raises the potential of Canadian courts as a forum for international human rights claims grounded in jus cogens norms—particularly in the context of recent United States Supreme Court jurisprudence limiting the scope and reach of the Alien Tort Statute (“ATS”), which provides that “[t]he district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”  28 U. S. C. §1350.

Nevsun presents an interesting contrast with the U.S. Supreme Court cases in two regards: extraterritorial application and corporate liability.  However, it should be noted that, unlike the foreign corporate defendants involved in the U.S. cases discussed here, Nevsun is a Canadian company bound by Canadian law and subject to the jurisdiction of the Canadian courts.  Given the nature of the ATS as a “jurisdictional statute” that creates no cause of action, this distinguishing factor alone may account for the different holdings reached by the Supreme Court of each jurisdiction—if not the Courts’ specific lines of reasoning, which no doubt merit further analysis.

In Kiobel v. Royal Dutch Petroleum Co. et al, 569 U.S. 108 (2012), the petitioners, Nigerian nationals residing in the U.S., filed suit alleging that respondents—certain Dutch, British, and Nigerian corporation—aided and abetted the Nigerian Government in committing violations of customary international law in Nigeria.  The U.S. Supreme Court affirmed the dismissal of the entire complaint by the U.S. Court of Appeals for the Second Circuit, holding that there was nothing in the ATS or its legislative history to rebut the presumption against extraterritorial application. The Court noted, further, that there was “no indication that the ATS was passed to make the United States a uniquely hospitable forum for the enforcement of international norms.”

More recently, in Joseph Jesner et al. v. Arab Bank, PLC, 584 U.S. (2018), the Court held that foreign corporations may not be defendants in suits brought under the ATS. The Court, however, did not foreclose the possibility that U.S. corporations could potentially face liability under the ATS: the portions of Justice Kennedy’s opinion on corporate liability were joined only by Chief Justice Roberts and Justice Thomas, whereas Justices Alito and Gorsuch joined only the parts of the opinion concerning the liability of foreign corporations.

As the first case decided by the Supreme Court of Canada on the issue of corporate liability for human rights violations under customary international law, Nevsun arguably reflects an expansive approach to customary international law as a source of rights and remedies as part of Canadian common law, in contrast to the U.S. Supreme Court’s relatively conservative approach to the scope and reach of the ATS.

Specifically, the fact that the alleged jus cogens violations in Nevsun occurred outside Canada’s territory presented no bar to jurisdiction, whereas the U.S. Supreme Court has upheld the presumption against extraterritoriality in the context of the ATS.  Given that extraterritoriality was not discussed in Nevsun, it is not clear to what extent Nevsun’s Canadian nationality may have influenced the Court’s decision. South of the border, the U.S. Supreme Court has foreclosed foreign corporate liability under the ATS, leaving a definitive holding as regards domestic corporations for another day—at which point, there may yet be occasion for the U.S. Supreme Court to consider the modern approach to international law advocated by the majority in Nevsun.

Substantively, in considering the extent to which customary international law norms form part of U.S. common law (in other words, in respect of which violations of the law of nations shall the U.S. district courts have original jurisdiction pursuant to the ATS?), courts in the U.S. would apply the analytical framework set out by the U.S. Supreme Court in Sosa v. Alvarez-Machain, 542 US 692 (2004).

In Sosa, the U.S. Supreme Court inferred from the legislative history of the ATS that “the ATS was meant to underwrite litigation of a narrow set of common law actions derived from the law of nations,” such as offenses against ambassadors, violations of safe conduct, and piracy.  The Court cautioned that, while nothing “categorically precluded federal courts from recognizing a claim under the law of nations as an element of common law,” there were “good reasons for a restrained conception of the discretion a federal court should exercise in considering a new cause of action of this kind.”  Such reasons included the need to seek legislative guidance before exercising innovative authority over substantive law, the potential implications for foreign relations of recognizing private causes of action for violating international law, and the lack of any congressional mandate to seek out and define new and debatable violations of the law of nations.

Accordingly, “federal courts should not recognize private claims under federal common law for violations of any international law norm with less definite content and acceptance among civilized nations than the historical paradigms familiar when [the ATS] was enacted.”  In addition, “the determination whether a norm is sufficiently definite to support a cause of action should (and, indeed, inevitably must) involve an element of judgment about the practical consequences of making that cause available to litigants in the federal courts.”

It should be noted that the breach of international law alleged in Sosa was arbitrary arrest—a norm the Court described as expressing “an aspiration that exceeds any binding customary rule having the specificity we require.”  U.S. courts have found that jus cogens violations such as torture meet the Sosa standard.  See e.g., Filártiga v. Peña-Irala, 630 F. 2d 876 (2d Cir. 1980).

In recognising customary international law norms that meet the twin requirements of widespread State practice and opinio juris, therefore, Nevsun is not inconsistent with the jurisprudence of the U.S. Supreme Court, although U.S. courts might exercise greater judicial restraint and deference to the legislative and executive branches of government—themes echoed by the partial dissent and dissent in Nevsun.  Further, given that Nevsun is a Canadian corporation, whereas the U.S. Supreme Court has only precluded the liability of foreign corporate defendants, there currently exists no conflict as regards the nationality of corporate defendants.

The key point of divergence therefore lies in the question of extraterritoriality, and in particular in the two Supreme Courts’ contrasting approaches to this issue.  In Nevsun, the discussion was minimal, in the context of the partial dissent’s argument that the proposed torts of cruel, inhuman and degrading treatment should not be recognized for the first time in a proceeding based on conduct that occurred in a foreign territory. The majority did not reach the question of extraterritoriality in dismissing Nevsun’s appeal on its motion to strike. In contrast, the significance of the U.S. Supreme Court’s decision in Kiobel is difficult to overstate: as Justice Breyer’s concurring opinion put it, the majority’s use of the presumption against extraterritoriality risked “placing the statute’s jurisdictional scope at odds with its substantive objectives, holding out ‘the word of promise’ of compensation for victims of the torturer, while ‘break[ing] it to the hope.’” Any hope of extraterritorial application would rest upon a showing that the claim “touch[es] and concern[s] the territory of the United States … with sufficient force to displace the presumption”—a slim hope, perhaps, but a hope nonetheless.

For more information please contact Andrew Cannon, Partner, Christian Leathley, Partner, Stephane Brabant, Partner Antony Crockett, Of Counsel, Liang-Ying Tan, Associate, Aseel Barghuthi, Associate, or your usual Herbert Smith Freehills contact.