Landmark Ruling in Canada Strengthens Corporate Accountability for Operations Abroad

By Enrique Boone Barrera, 27 April 2020

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Enrique Boone Barrera, Fellow at Centre for International Governance Innovation, CIGI

In a remarkable ruling, the Canadian Supreme Court has established that international customary law is part of Canadian law and that corporations can be held responsible for violations of such norms. In Nevsun Resources Ltd. v. Araya (NvA), the Court allowed a group of Eritrean workers to sue a Canadian mining company for allegedly violating international customary law while operating in Eritrea. In a decision that divided the Court, five of the nine justices determined that it was possible for international customary law to create new torts in Canada. It has long been known that customary international law formed part of the common law in Canada, but this ruling makes clear that the courts can be proactive to provide remedies for its infringement. This decision marks a watershed moment in the fight for a more just international business model.


The main characters in this case—members of a vulnerable population, an extractive industry from a developed country and the government of a country with weak institutions—may sound familiar to those involved in international human rights. This particular case arose out of the labour conditions under which the Bisha Mine in Eritrea was operating. This mine is operated by the Bisha Mining Share Company (BMSC), which is 40 per cent owned by an Eritrean corporation and 60 per cent owned by subsidiaries of Nevsun, which is based in British Columbia. The workers claimed that in addition to being forced to work in the mine under Eritrea’s National Service Program, they were treated violently and inhumanely. A group of workers were able to escape, and they eventually brought a class action suit against Nevsun in British Columbia on behalf of more than 1,000 workers who they claim were working under the same degrading conditions [para. 4, NvA].

The class action sought damages for breaches of both domestic torts and customary international law. Nevsun sought to end the proceedings on the following grounds: 1) forum non conveniens—in other words, Eritrea, not Canada, was the proper forum on which to resolve the claims; 2) the act of state doctrine, which prevents domestic courts from judging the sovereign acts of foreign governments; and finally, 3) the claims based on customary international law were “unnecessary and disclosing no reasonable cause of action.” Nevsun also sought to dismiss portions of the evidence but that will not be discussed here [para. 16, NvA].

The Supreme Court of British Columbia rejected all three grounds and the decision was reaffirmed on appeal by the British Columbia Court of Appeal (BCCA). Taken together, these two proceedings established, inter alia, the following: first, Nevsun had effective control over the company that operated the Bisha mine. Second, Nevsun did not prove that Eritrea was a better forum to solve these claims, and the risk for an unfair trial was high. Third, the act of state doctrine is already incorporated in legislation and did not apply in this case. Finally, it is not “plain and obvious” that international customary law cannot be the basis of a claim or create new torts [paras. 17–25, NvA]. These findings are key to the success of these types of actions, which I argue elsewhere.

Appeal Before the Supreme Court of Canada

Nevsun appealed this decision before the Supreme Court of Canada which concentrated on only two questions: 1) is the act of state doctrine part of the Canadian common law? and, 2) can customary international law create grounds for damages? Nevsun did not appeal the findings regarding the forum non conveniens [para. 26, NvA]. It was also not disputed in either of the previous proceedings that Nevsun had a stake in BMSC but rather to what extent BMSC was responsible for the alleged mistreatment and whether it created any sort of liability for Nevsun and its subsidiaries [paras. 9-13, BCAA]. However, these are not issues that were decided at this stage.

In terms of the act of state doctrine,  the Supreme Court decided, inter alia, that there is no impediment to analyze the laws or acts of a foreign state when incidental to resolve a case, that the act of state doctrine has never been used to decide a case in Canada but, rather, that its underlying principles already form part of the conflict of laws and judicial restraint jurisprudence; and, finally, that these principles do not present an obstacle to the Eritrean’s workers claim [paras. 48-59, NvA].

The questions related to the effects of international customary law in Canada were the ones that the Supreme Court of Canada spent more time analyzing. At issue was whether the previous proceedings were correct in determining that it was not “plain and obvious” that international customary law created causes of action against a corporation in Canada. In order to answer this question, the majority reached the following conclusions: 1) absent legislation to the contrary, customary international law is part of the Canadian legal system, 2) it is not “plain and obvious” that corporations cannot be held responsible for direct violations of mandatory and universal norms of international law or for indirect complicity in such violations, and 3) it is not “plain and obvious” that Canadian courts cannot develop civil domestic remedies to address corporate violations of customary international law that forms part of the domestic legal regime [paras. 94, 113 and 122, NvA].

The Reach of the Decision

The Supreme Court did not provide guidance regarding how to operationalize these new understandings. We will have to wait and see how other courts treat this decision. Also, these findings do not guarantee that the Eritrean workers will necessarily prevail in their claim or that Canadian courts will create new legal remedies to address violations of customary international law in every instance. What it does mean is that from now on, the bar for dismissing claims of violations of international human rights committed by Canadian corporations abroad is much higher. This development differs from the efforts that are being made south of the Canadian border to reduce the oversight of US extractive industries operating abroad. Canada, with this decision, sets a pathbreaking precedent that can be an example for other countries.


Tags: Business and global value chains, Sustainability
Published May 8, 2020 12:16 PM - Last modified Aug. 30, 2022 6:10 PM