Nestlé & Cargill v. Doe Series: A Canadian Perspective – Takeaways from Nevsun Resources Ltd. v. Araya.

[Editor’s Note: This article is part of a Just Security series on the consolidated cases of Nestlé USA, Inc. v. Doe I and Cargill Inc. v. Doe I, which was argued before the Supreme Court on Dec. 1. The introduction to the series and all other articles can be found here.]

Canadians working to promote human rights accountability for multinational businesses have long looked to Alien Tort Statute (ATS) litigation in the United States with a mixture of admiration and envy. Canada is home to almost half of the world’s publicly listed mining and exploration companies, many of which are associated with allegations of human rights violations in connection with their overseas operations. Yet, early attempts in the 1990s and 2000s at bringing lawsuits in Canada against Canadian corporations for human rights violations linked to their activities abroad were unsuccessful. (See e.g. cases against Anvil Mining Ltd. and Cambior Inc.) As a result, while ATS litigation against corporations proliferated in the United States, Canadian courts for many years were conspicuously absent from the discussion on global efforts to develop mechanisms of transnational human rights accountability for western multinational corporations operating abroad. The most pessimistic observers even felt that such lawsuits simply were not possible in Canada.

In the last ten years or so, however, the outlook has shifted considerably. As we and our colleagues point out in the foreign lawyers’ amicus brief filed in Nestlé v. Doe I / Cargill v. Doe I, cases in courts across the country have been allowed to proceed after surviving initial motions to dismiss. Now, we believe that Canadian courts do have valuable contributions to make to the global discussion.

For example, the Supreme Court of Canada recently held, in Nevsun Resources Ltd. v. Araya, that rules of customary international law that are binding on individuals are also binding on corporations. (See earlier coverage here). We suggest that the approach taken by Canadian courts, and in particular the Nevsun decision, can be an instructive resource and persuasive authority for the U.S. Supreme Court as it considers the Nestlé and Cargill cases.

In this post, we primarily focus on the Nevsun case. However, the Canada section of the foreign lawyers’ amicus highlights other similar cases where lower Canadian courts upheld jurisdiction. Canadian courts have permitted cases to proceed to trial that have pled negligence claims and intentional torts against parent companies based in Canada for harms suffered by local inhabitants or workers in the foreign countries where the companies’ projects are located. See, e.g., Choc v. Hudbay Minerals Inc. and Garcia v. Tahoe Resources Inc. Another notable case is the Bil’in (Village Council) v. Green Park Ltd., where the Quebec Superior Court, applying civil law, found it could adjudicate an allegation that Canadian corporate defendants knowingly assisted a foreign state in committing war crimes, but dismissed the case on forum non conveniens.

The Facts of Nevsun v. Araya

In November 2014, three Eritrean nationals who had fled Eritrea and were living in Ethiopia as refugees filed a civil action in British Columbia against Canadian mining company Nevsun Resources. The plaintiffs alleged that as part of a collaboration between the defendant and the Eritrean government, plaintiffs – along with a large number of compatriots – were forced to work on the construction of Nevsun’s majority-owned Bisha mine in Eritrea, through a state-owned construction company they had been assigned to as part of a systemic, government-administered program of forced labor. They further alleged that as part of this program of forced labor, perceived disobedience was often met with severe punishments such as arbitrary detention and torture.

In addition to pleading traditional common law torts including conversion, battery, unlawful confinement, conspiracy, and negligence, the plaintiffs brought novel claims for breaches of customary international law rules prohibiting slavery, forced labor, torture, crimes against humanity, and cruel, inhuman, and degrading treatment. Just as in the Nestlé and Cargill cases, the plaintiffs also invoked modes of secondary liability, such as aiding and abetting.

The plaintiffs were the first in Canada to bring a claim against a corporation for causes of action based directly on customary international law. The Supreme Court of Canada has recognized that customary international law is automatically incorporated into domestic law through the common law, and so the plaintiffs argued that breaches of these international law rules must give rise to a civil remedy under domestic common law. At the time of filing, only one court in Canada, in dismissing a motion to strike in Abdelrazik v. Canada, had recognized the possibility of the common law recognizing a new private law cause of action based on a rule of customary international law, the prohibition of torture.

While framed in terms of Canadian common law, this claim is structurally very similar to an ATS claim, as both seek to apply customary international law through a common law cause of action. Similarly, Nevsun’s response was one that could have appeared in the playbook of corporate defendants in the U.S. ATS cases. Nevsun filed two motions to dismiss the action, one on the basis of forum non conveniens, and the other on the basis of the act of state doctrine (which at the time had been obliquely referred to in Canada, but never applied or definitively accepted as part of Canadian law). It also filed a motion to strike the novel causes of action based on customary international law. In this latter motion, Nevsun made some of the same arguments that are at play in the Nestlé and Cargill cases, raising the question of whether corporations can be held civilly liable under domestic law for violations of customary international law.

All three of these motions were dismissed at first instance. The company appealed to the British Columbia Court of Appeal, where it lost again. Nevsun then appealed the act of state and customary international law motions to the Supreme Court of Canada (SCC), where it lost for a third time (with the SCC rejecting the contention that the act of state doctrine was part of Canadian common law), paving the way for the case to proceed to trial. A few months after the SCC released its decision, the parties announced that they had reached an agreement to settle the case in October 2020.

The Supreme Court of Canada Rejects Corporate Immunity  

Much like Nestlé and Cargill (and many corporations involved in U.S. ATS litigation), Nevsun argued that it could not be held liable because such liability would require an affirmative customary international law obligatory norm of corporate liability, which it argued does not exist (p.29). The company argued, in the SCC’s summation, that “even if customary international law norms … form part of the common law through the doctrine of adoption, it is immune from their application because it is a corporation” (para. 104). A majority of the Court rejected this argument, finding that “Nevsun’s position, with respect, misconceives modern international law” (para. 105).

The Majority Recognized that Customary International Law Norms Can Apply to Corporations

The majority, led by Justice Rosalie Abella, held that “breaches of customary international law, or jus cogens, relied on by the Eritrean workers may well apply to Nevsun” (para. 114). Citing William S. Dodge, who also appeared as an amicus in Nestlé/Cargill on behalf of international law scholars, the majority recognized that international law “does not contain general norms of liability or non-liability applicable to categories of actors” (para. 105). Rather, customary international law contains norms of conduct. Some norms apply only to states, but there are others that “prohibit conduct regardless of whether the perpetrator is a state,” (para. 105) and “are to be respected by everyone” (para. 110) (internal citations omitted).

This view of international law recognizes that international law is not confined to what the SCC referred to as the “state-centric template” of international law, which was introduced by 19th-century positivists that had transformed international law and shaped its development for much of the 19th and 20th centuries. Citing Beth Stephens, Harold Hongju Koh, and others, the Court acknowledged that private actors, like states, can violate human rights and incur responsibility for those violations (paras. 107-112).

Based on this understanding of international law, the majority rejected the notion that “corporations today enjoy a blanket exclusion under customary international law from direct liability for violations of ‘obligatory, definable, and universal norms international law’, or indirect liability for their involvement in … ‘complicity offenses’” (para. 113). The Court held that when determining whether a norm of customary international law applies to corporations, the trial judge will have to look at the norm in question to determine whether it is of strict interstate character or not. Even if it is one of the norms that applies strictly to states, the court can decide whether to extend the scope of the norm to apply to corporations (para. 113). Should the trial judge find a breach of customary international law (which is part of Canadian law), it will be up to that judge to also decide the appropriate civil remedy in Canadian law (paras. 122, 127, 131-32).

The majority’s analysis and conclusion directly address the question of corporate liability raised in the Nestlé and Cargill cases. The majority rejected the argument – put forward by many corporate defendants, including Nestlé, Cargill, and various amici – that courts have to look to customary international law not just for the norm but also for the categories of defendants who can be sued. The majority recognized, as the respondents in Nestlé and Cargill argue, that courts need not identify a customary international law norm of corporate liability. Customary international law provides norms of conduct which may apply to corporations. Further, corporate liability for a customary international law violation may arise either as a primary author of the violation, or from complicity in the violation.

Right to Effective Remedy Prioritized Over Arguments about Theoretical Competitive Disadvantage  

Aside from the question of corporate liability, other aspects of the decision may also be instructive. For instance, like Nestlé and Cargill, Nevsun argued that permitting “claims like this one” to proceed against Canadian companies would discourage foreign investment (para. 36). The Mining Association of Canada, who intervened in the Nevsun case before the Supreme Court of Canada, argued that applying “customary international law to private companies would be a competitive disadvantage for mining companies and businesses in Canada,” and may deter companies from doing business in Canada (para. 27).

As we and our colleagues point out in the foreign lawyers’ amicus brief in Nestlé/Cargill, “in allowing the [customary international law] claims to move forward, the court was apparently unpersuaded” by this argument, which was unsupported by any evidence (p.19). Moreover, instead of focusing on theoretical business deterrence, the majority in Nevsun focused on the importance of allowing claims for breaches of customary international law, recognizing that the traditional common-law torts do not capture the severity of their harm and that states’ obligations to provide effective remedies may “demand” such recognition (paras. 119, 124-26, 129). The majority argued that adequately redressing customary international law violations “requires different and stronger responses than typical tort claims, given the public nature and importance of the rights involved, the gravity of their breach, the impact on the domestic and global rights objectives, and the need to deter subsequent breaches” (para. 129). These reasons should apply equally to the considerations at play in the Nestlé and Cargill cases, and should take priority over theoretical concerns of competitive disadvantage, which in any case have been refuted by other amici in the case.

Canada was the Only Forum for Justice

Further underscoring the importance of asserting home state jurisdiction over multinational corporations in such cases, the motion judge dismissed the defendant’s forum non conveniens motion in part because after reviewing the available evidence pertaining to the independence of the Eritrean judiciary, he was not convinced that a fair trial would be possible in Eritrea. If the Canadian court had not heard the case, there would have been no recourse anywhere in the world against a company operating in Canada accused of complicity in slavery abroad. Importantly, while the alleged harms occurred overseas, the plaintiffs alleged that the company’s board of directors and senior management in Canada were responsible for decisions regarding the development of the mine and exercised authority over the parastatal subcontractors for whom the plaintiffs were forced to work. It would be disturbing if a Canadian company could actively participate in international crimes in such a way with total impunity.

Implications of Nevsun’s Reasoning to the Questions Raised in Nestlé/Cargill

The issues at play in Nevsun closely parallel those in the Nestlé and Cargill cases. The ATS, as the U.S. Supreme Court held in Sosa v. Alvarez-Machain, is a jurisdictional statute allowing federal courts to “recognize a common-law cause of action for claims based on the present-day law of nations.” Therefore, like the Supreme Court of Canada, the U.S. Supreme Court will consider whether to allow a common law claim to proceed against a corporation for a breach of customary international law – including the same breaches at issue in Nevsun, forced labor and slavery –  with claims based on aiding and abetting liability. As noted, Nestlé and Cargill in their respective briefs advanced similar arguments in favor of corporate immunity, arguing that customary international law lacks a consistent norm of corporate liability in these types of cases.

With these similarities in mind, the Nevsun decision can be instructive. As the majority in Nevsun recognized, national courts “play an important role in the ongoing development of international law” (para. 70). The majority further noted, “[i]n implementing and advancing customary international law,” national courts contribute “to the ‘choir’ of domestic court judgments around the world shaping the ‘substance of international law’” (para. 72). Like the Supreme Court of Canada, the U.S. Supreme Court should reject corporate impunity and instead allow the case to proceed, recognizing domestic corporate liability for customary international law violations.

The authors are  amici in the foreign lawyers’ brief filed in Nestlé/Cargill.

Image: A pile of copper dust at Bisha Mine, Eritrea’s first major international mine, 150 kilometres west of Asmara is pictured on July 17, 2013. The Eritrean government, which owns 40 percent of the gold, copper and zinc mine, says it is committed to using profits from the mining sector to boost other industries and to avoid the resource curse of many other African nations. Critics accuse the government of gross rights violations, and warn foreign companies against working in the Red Sea nation, but there are currently four more international mines set to open in Eritrea over the next two years, and 17 foreign companies exploring potential sites. AFP PHOTO/JENNY VAUGHAN ( (Photo credit: JENNY VAUGHAN/AFP via Getty Images)

 

About the Author(s)

Tamara Morgenthau

Tamara Morgenthau is a lawyer admitted to practice in Canada and the U.S. (Ontario and New York). She was counsel for the interveners, EarthRights International and the Global Justice Clinic at NYU School of Law, in the Nevsun appeal at the Supreme Court of Canada and joined the foreign lawyers’ amicus brief filed in Nestlé/Cargill.Follow her on Twitter at (@tammorgenthau

James Yap

James Yap is James is a litigator in Toronto specializing in business and human rights. He was co-counsel for the plaintiffs in the Nevsun litigation and amicus in the foreign lawyers' brief filed in Nestlé/Cargill. Follow him on Twitter at (@realjamesyap