National Post (National Edition)
Human rights case could upend Canada resource sector.
HUMAN RIGHTS CASE COULD UPEND RESOURCES SECTOR
The future of the Canadian resource industry hangs in the balance as the Supreme Court of Canada prepares to hear a high-profile case accusing Canadian miner Nevsun Resources Ltd. of human rights abuses in Eritrea.
At the heart of the hearing, set for Jan. 23, is whether customary international law (CIL) — a fairly undefined and shifting body of law that has, to date, only been applied to sovereign states — will now apply to Canadian companies. Traditionally, Canadian courts have been loath to deal with violations of international law that have occurred abroad.
The Nevsun case could change that — an unappealing outcome for Canadian multinationals, especially resource-extraction companies who must often enter into arrangements with foreign governments regarding their exploration and development initiatives.
“The prospect of customary international law applying to Canadian businesses, and particularly the mining sector, creates unpredictability that will compromise our competitiveness if not properly thought out,” said Ben Chalmers, the Ottawa-based senior vice-president of the Mining Association of Canada, to which the SCC has granted intervener status in the Nevsun case.
Driving the case are Eritrean refugees who allege that the company, through a chain of subsidiaries, joined with Eritrea in developing a gold, copper and zinc mine in the country.
The refugees claim that they endured slavery, torture and other inhumane treatment at the hands of the Eritrean military and militarycontrolled corporations after being forced to work at the mine under Eritrea’s National Service Program.
Nevsun asked the B.C. Supreme Court to throw out the case, which it refused to do. Nevsun appealed to the B.C. Court of Appeal but lost. The company did, however, convince the SCC to grant leave to appeal.
At the January hearing, the high court will not be tasked with determining the case on the merits. It must only decide whether the case should proceed to trial at all.
Nevsun’s argument is that it should not because, among other things, Canadian law does not recognize that breach of CIL is an actionable wrong when asserted against the private sector.
“Customary international law is directed at the behaviour of sovereign states and does not constitute part of Canadian domestic law unless it is adopted as such by an Act of Parliament,” says Luis Sarabia in Davies Ward Phillips & Vineberg LLP’S Toronto office, who represents the Mining Association at the SCC.
Complicating the issue is the fact that even from an international perspective, CIL is established by conduct, not legislation. Generally speaking, a CIL norm is established when it can be demonstrated that most states act in accordance with a specific rule and that they do so out of a sense of legal obligation.
This having been said, it’s fairly clear that torture, slavery, forced labour and crimes against humanity qualify as CIL norms. What business fears, however, is that if the SCC opens the door to using CIL in the Nevsun case, it will be a forceful precedent to courts imposing CIL and all its vagaries on the private sector.
And that, Sarabia believes, will create great uncertainty.
“One of the main problems is that customary international law can be unpredictable, partly because not everyone agrees on the norms and partly because it is constantly evolving as state conduct evolves,” the lawyer said. “So how do you incorporate customary international law into Canadian law absent certainty as to what customary law is or will be?”
According to the MAC’S Chalmers, incorporating CIL into Canadian law will make it harder for multinational businesses and the financial institutions that back them to assess risk and determine what’s coming down the road.
“It’s not clear how or whether the changes to which customary international law is subject would be incorporated into domestic law going forward, what remedies will be available domestically for breaches of customary international law, whether any exceptions will be created for domestic purposes, and what the overall framework will look like,” he said.
Australian courts, for example, have refused to go down this road precisely because of the inherent uncertainties.
By way of contrast, U.S. law features the Alien Tort Claims Act, legislation going back to 1789 that grants courts jurisdiction over any civil action brought by foreign nationals for wrongs committed in violation of international law.
Since 1980, U.S. courts have allowed foreign citizens to sue in the U.S. for human rights violations committed outside the country. But whether or not U.S. corporations (as opposed to individuals) can be subject to lawsuits under the statute remains an open question.
Also at stake in the Nevsun case is the “act of state” doctrine.
“‘Act of state is a concept that says Canadian courts should not sit in judgment of the action of foreign governments,” Sarabia explains.
Here, the plaintiffs have alleged that Nevsun aided and abetted the Eritrean government. It follows, Nevsun’s lawyers argue, that the company cannot be held responsible unless there are findings against the Eritreans.
The British Columbia Court of Appeal, however, held that act of state did not apply in this case because the claims were based on Nevsun’s actions, not those of the Eritrean government. The court reasoned that there was no need to sit in judgment on the Eritreans’ conduct because the alleged behaviour was clearly illegal under Eritrean law.
Finally, the Court of Appeal noted that act of state was subject to exceptions, including cases where the wrongs alleged were so serious as to offend Canadian public policy.
And if all that doesn’t seem complicated enough, Zijin Mining Group Co. Ltd., a Chinese entity, seems poised to buy Nevsun by the end of the month pursuant to a $1.86 billion agreement signed in September.
The resulting corporate structure could well raise even more issues regarding the jurisdiction of Canadian courts and the liability of the country’s multinationals.