Corporate civil liability for breaches of customary international law: Supreme Court of Canada opens door to common law claims in Nevsun v Araya

In a landmark judgment for transnational human rights litigation, the Supreme Court of Canada in Nevsun Resources Ltd v Araya, 2020 SCC 5 has opened the door for litigants seeking redress for human rights violations in Canadian courts. Significantly, the Supreme Court held that customary international law can give rise to a direct claim in Canada with respect to allegations of forced labour; slavery; cruel, inhumane and degrading treatment; and crimes against humanity. The Court also held that corporations may be liable for violations of customary international law. In this article, we examine the judgment in detail and consider the practical consequences for businesses.

Procedural history

The case was brought before the courts of British Columbia by three Eritrean workers against Nevsun, a BC-incorporated company. The plaintiffs alleged a number of human rights breaches in connection with the construction of the Bisha mine in Eritrea, which was owned and operated by the Bisha Mining Share Company, which itself was 40% owned by an Eritrean state entity and 60% owned by Nevsun through its subsidiaries). The plaintiffs claimed damages for various common law torts and, significantly, for breaches of customary international law.

Nevsun brought a motion to strike out the pleadings on various grounds, including on the basis that the act of state doctrine rendered the plaintiffs’ claims non-justiciable and that the claims in relation to customary international law had no reasonable prospect of success. Those two applications were dismissed in the lower courts. Nevsun appealed to the Supreme Court, which considered two questions:

• Did the act of state doctrine form part of Canadian common law?; and
• Can the customary international law (“CIL”) prohibitions against forced labour; slavery; cruel, inhuman or degrading treatment and crimes against humanity ground a claim for damages under Canadian law?

The Supreme Court’s decision

In short, the Court determined that: (i) no, the act of state doctrine does not form part of Canadian common law; and (ii) yes, CIL can provide a ground for a claim for damages under Canadian law. A substantial majority of the Court (7-2) determined that the act of state doctrine, a legal doctrine rooted in the English common law, was not part of the Canadian common law. The Court was more narrowly divided (5-4) on the CIL question. Justice Abella, writing for the majority, considered that because CIL was automatically a part of the Canadian common law by operation of the doctrine of adoption, a breach of CIL norms could, in principle, give rise to a remedy for such breach (para 122). The Court also determined that it was “not plain and obvious that corporations today enjoy a blanket exclusion under customary international law”, either for direct or indirect liability for “‘violations of ‘obligatory, definable, and universal norms of international law’” (para 113).

The Court deferred consideration of the detail of how those principles should be applied to the judge at first instance. While the Court opened the possibility for plaintiffs to claim for a breach of CIL, it suggested that “[t]he mechanism for how these claims should proceed is a novel question that must be left to the trial judge” (para 128). Similarly, while it recognized that a civil remedy could in principle be developed for violations of CIL, the Court concluded that “it will ultimately be for the trial judge to consider…what remedies are appropriate.” (para 131).

Characterization of the cause of action

The Supreme Court thus leaves some of the most important issues untouched. What might we expect to see plaintiffs plead in respect of conduct it alleges is a breach of CIL norms? Do they make a claim for “breach of CIL at common law” or a claim in tort, based on new nominate torts that are inspired or otherwise rooted in CIL? Or something else entirely? The majority did not give a definitive answer, but there is a hint in its reasoning that it preferred to view a claim for breach of CIL as a stand-alone cause of action. A CIL claim “need not be converted into newly recognized categories of torts in order to succeed”, the majority noted, and in the same paragraph, cautioned that:

“[r]equiring the development of new torts to found a remedy for breaches of customary international law norms automatically incorporated into the common law may not only dilute the doctrine of adoption, it could negate its application.” (para 128).

On the other hand, the Court noted that:

“[a] compelling argument can also be made for a direct approach…[whereby] a breach by a Canadian company can theoretically be directly remedied based on a breach of customary international law” (para 127).

Assuming that lower courts take on the mantle of crafting a new common law claim for breach of CIL, there are some knotty issues to consider. Unlike tort, which enjoys the benefit of well-trodden principles such as “duty”, “breach”, “causation” and “loss”, the contours of a CIL claim at common law are significantly less certain. In particular, the lower court in Nevsun will necessarily have to address difficult issues of attribution and liability in crafting a common law claim. In their pleadings, the plaintiffs allege that Nevsun not only directly breached norms of CIL, but that it was also indirectly liable, referring to a number of different possible theories of attribution, including aiding and abetting, inducement, knowing and intentional contribution, among others (see para 4 of the BC Court of Appeal’s judgment in Nevsun). Attribution in international law has been considered as it applies to States (e.g. under the International Law Commission’s Articles on the Responsibility of States for Internationally Wrongful Acts) and to some extent for individuals (e.g. modes of liability in international criminal law), but attribution with respect to corporations remains a hotly contested and highly uncertain field. Future judicial decisions on this point will have immediate practical consequences for businesses with operations in high risk sectors and geographies.

It should also be noted that the case at bar concerned the prohibitions against crimes against humanity; slavery; use of forced labour; and cruel, inhuman, and degrading treatment, which a 7-2 majority agreed had the status of jus cogens. Although the Court’s reasoning was framed more broadly, such that it referred generally to breaches of customary international law, it remains to be seen to what extent claims for breaches of other customary norms, particularly those which cannot be said to have reached the status of jus cogens, will be entertained by Canadian courts.

Ultimately, whatever characterization plaintiffs choose to adopt, the judgment in Nevsun v Araya offers plaintiffs a degree of latitude to argue before Canadian courts an alternative legal basis with which to vindicate claims for breaches of human rights: they are not necessarily restricted to the conventional actions based in tort, which we have seen in Canada and other jurisdictions overseas.  

Corporate civil liability for breaches of CIL

The notion of corporate liability for human rights harms, in particular those which amount to crimes under international law, is not new. In the criminal context, the Special Tribunal for the Lebanon determined in 2014 that it had jurisdiction to consider whether legal persons could be held liable for contempt (see New TV S.A.L and Akhbar Beirut S.A.L.). The Office of the Prosecutor at the International Criminal Court has also expressed an interest in investigating corporate executives associated with land grabs and environmental damage. And the proposed binding UN Treaty on Business and Human Rights would, if the current iteration were ever to come into force, oblige States to provide for corporate liability for certain crimes in international law.

In respect of civil liability, courts in other common law jurisdictions have increasingly shown a willingness to expand and adapt conventional common law doctrines such as negligence so as to provide a way for victims of human rights harms to bring civil claims against corporations for a failure to discharge some form of duty (see for example the UK Supreme Court’s decision in Vedanta Resources plc & Anor v Lungowe & Ors [2019] UKSC 20). However, recognition of corporate civil liability specifically for breaches of international law has been highly contentious, as demonstrated by the jurisprudence of the U.S. courts applying the Alien Tort Statute (28 U.S.C. § 1350). The question of whether corporate liability was recognized in customary international law was recently addressed by the U.S. Supreme Court in Jesner v Arab Bank plc, 138 S. Ct. 1386 (2018). Although a majority of the justices in Jesner decided the case on different grounds, the plurality opinion of Justice Kennedy left this question unanswered, determining that “the Court need not resolve the questions of whether corporate liability is a question that is governed by international law, or, if so, whether international law imposes liability on corporations”.

In Nevsun, for the first time, the majority of the apex court of a major common law state has expressly recognised the possibility of corporate civil liability for violations of human rights norms provided for in customary international law. This will have significant consequences for rights holders and businesses alike and we anticipate that there will be significant further litigation in relation to the (highly consequential) issues referred back to the trial judge. Commenting on this aspect of the decision, Dr Guénaël Mettraux, Professor of International Criminal Law at the University of Amsterdam, commented to the authors that:

“the law on this point had been at a cross-road for some time. A majority of the Canadian Supreme Court have decided that it should follow the progressive side of the path rather than to stay stuck with directional uncertainty. This may have a domino effect in other jurisdictions which are wondering whether to go right or left on that issue.”

As the Canadian courts develop the jurisprudence in this area, it is crucial that they balance the legitimate interests of rights holders in accessing justice with a measure of legal certainty for businesses. In doing so, it is hoped that the Canadian courts, unlike their counterparts elsewhere, take into consideration existing international soft law standards on business and human rights and responsible business conduct such as the UN Guiding Principles on Business and Human Rights. Responsible businesses in Canada and beyond have used these standards to frame and develop systems and processes to identify and address human rights issues in their operations and supply chains. The jurisprudence must develop in such a way as to consolidate and encourage such processes, rather than undermine them. This is in the interests of businesses and rights holders alike.

Looking ahead

The Court has described itself as an active participant in the “‘choir’ of domestic court judgments around the world shaping “‘the substance of international law’” (para 72). With its ground-breaking judgment in Nevsun, the Supreme Court of Canada is currently singing solo in respect of a number of the issues addressed by the majority of the Court. We can expect, however, that other courts in Canada and elsewhere will soon begin to add their voices to the corpus of judgments in this developing area of international human rights law.