Liability: how a new court ruling could put Canadian miners in the dock

Liability: how a new court ruling could put Canadian miners in the dock

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In a 5-4 decision back in February 2020, the Supreme Court of Canada gave the green light to Canadian courts to develop new forms of civil liability based on alleged breaches of customary international law. We speak to McMillan LLP litigation partner and international arbitration co-chair Robert Wisner to find out what the implications of this decision are, and what the landmark case could mean for Canadian mining companies.

Nevsun Resources was a Canadian diversified mining company that was acquired by the Chinese Zijin Mining Group in 2018. One of Nevsun’s principal assets, the Bisha zinc-copper mine in Eritrea, is the subject of the case Nevsun Resources Ltd. v. Araya. Construction began on the Bisha mine in 2008, using workers from the country’s National Service Program. The plaintiffs, three Eritrean workers who arrived at the mine between 2008 and 2010, allege that they were forced to work at least 12 hours a day, six days a week, in temperatures close to 50°C. The plaintiffs also allege that they were subject to abuse while working at the mine.

The decision means that corporate entities in Canada may now find themselves beholden to customary international law, an unwritten area of law that previously only had jurisdiction over the actions of nation states. For Canadian mining companies, it means that they may now be liable for the actions of their subsidiaries operating abroad on issues such as labour standards and human rights – even where no written legislation exists to regulate those issues. There’s a significant amount of concern surrounding the decision, which has left corporations in the dark over what they may now find themselves legally responsible for.

Understanding the Nevsun decision

“There’s no allegation that Nevsun was directly involved in the conscripted use of the labour but the contractors that built the mine were partly state-owned or controlled by the Eritrean military, it’s alleged, and therefore, the allegation is that Nevsun benefited from the use of slave labour,” Robert Wisner, litigation partner and international arbitration co-chair at McMillan LLP told MINE.

The plaintiffs allege that Nevsun bears vicarious liability for the human rights violations at the Bisha Mine, operated by Nevsun’s subsidiary, Bisha Mining Share Company. Previously, claims of this nature had little success in the Canadian judiciary, which has jurisdiction over parent companies resident in Canada, but also has discretion to decline to exercise their jurisdiction in favour of the plaintiff’s home jurisdiction. In other words, claims such as these would have to be pursued through the legal system of the country the alleged offence took place in.

A 2017 decision by the British Columbia Court of Appeal in Garcia v. Tahoe Resources, however, held that in countries with barriers to justice, or generalised allegations of corruption or bias against the judiciary, Canadian courts could find a “real risk” that plaintiffs would not obtain justice in their home jurisdiction. Wisner noted that the Canadian judiciary’s willingness to broadly condemn a foreign judiciary contrasts with a more careful approach of courts in the United Kingdom or the United States.

What makes the Supreme Court’s recent decision against Nevsun significant, though, is that a plaintiff may pursue litigation in Canadian courts for an alleged breach of customary international law by a corporate defendant.

Wisner explains: “Customary international law is by definition unwritten law, as opposed to a treaty between two states. It is one of the two main sources of international law, which are treaties and custom – that being widespread practice of states that is acknowledged to be followed out of a sense of legal obligation. And the classical understanding of customary international law is that it is the law that governs relationships between states.”

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