A new source of civil law rights in claims against multinationals?

In Nevsun Resources Ltd. v. Araya, 2020 SCC 5, the Supreme Court of Canada held that peremptory norms of international law could in principle be enforced against a corporate entity in a civil claim for damages. The decision – which can properly be described as groundbreaking – is well worth reading in full. Max Archer and James Beeton of 12 King’s Bench Walk consider its implications for cross-border litigation involving corporate entities in the courts of England and Wales.

Background

The claim was brought against Nevsun Resources Ltd, a Canadian mining company, by three Eritrean workers on behalf of more than 1,000 individuals. The workers claimed that they were indefinitely conscripted through Eritrea’s military service into a forced labour regime where they were required to work at a mine in Eritrea owned by Nevsun Resourced Ltd. They claimed they were subjected to violent, cruel, inhuman and degrading treatment.

The claimants started proceedings in British Columbia against Nevsun and sought damages for breaches of customary international law prohibitions against forced labour, slavery, cruel, inhuman or degrading treatment, and crimes against humanity. They also sought damages for breaches of domestic torts including conversion, battery, unlawful confinement, conspiracy and negligence.

Nevsun brought a motion to strike the pleadings on the basis of the act of state doctrine, which precludes domestic courts from assessing the sovereign acts of a foreign government. Nevsun also took the position that the claims based on customary international law should be struck because they had no reasonable prospect of success.

The chambers judge dismissed Nevsun’s motion to strike out the claim, and the Court of Appeal agreed. Nevsun appealed to the Supreme Court.

The Supreme Court

The Canadian Supreme Court dismissed Nevsun’s appeal such that the claim was allowed to proceed.

The Majority Judgment

The Majority held that the act of state doctrine as developed in Canadian jurisprudence was not a bar to the Eritrean workers’ claims. The act of state doctrine was found to have played no role in Canadian law. Whereas English jurisprudence may have reaffirmed the act of state doctrine, Canadian law has its own approach to addressing the twin principles underlying the doctrine: conflict of laws and judicial restraint. The Majority held that both principles have developed separately in Canadian jurisprudence rather than as elements of an all‑encompassing act of state doctrine. Under Canadian Law, the principles underlying the act of state doctrine have been completely subsumed within this jurisprudence. Canadian courts determine questions dealing with the enforcement of foreign laws according to ordinary private international law principles which generally call for deference, but allow for judicial discretion to decline to enforce foreign laws where such laws are contrary to public policy, including respect for public international law.

The Majority also upheld the Court of Appeal’s decision not to strike out the claims under customary international law, they did not find that these claims had ‘no reasonable likelihood of success’. In a powerful opening passage the Majority held as follows:

‘Modern international human rights law is the phoenix that rose from the ashes of World War II and declared global war on human rights abuses. Its mandate was to prevent breaches of internationally accepted norms. Those norms were not meant to be theoretical aspirations or legal luxuries, but moral imperatives and legal necessities. Conduct that undermined the norms was to be identified and addressed.’

The Majority was of the view that since 1945 human rights norms have developed into an international set of laws that work to protect the lives, liberty and health of individuals. Under customary international law there is no exclusion for corporations from direct liability for violations of these ‘obligatory, definable and universal norms’.

The Majority’s judgment contains a detailed discussion of customary international law. In order for a norm of customary international law to be recognised as such, it must satisfy two requirements. First, it must arise from general practice within states and second it must be recognised within practising states as law (the latter is known as ‘opinio juris’). They noted that there is a recognised subset of norms within customary international law known as ‘peremptory norms’ or jus cogens from which no derogation is permitted. The Majority considered that the prohibitions against slavery, forced labour, and cruel, inhuman and degrading treatment have attained the status of peremptory norms. The workers in Nevsun claimed breaches of both customary international law and peremptory norms.

The Majority held that customary international law has been incorporated into the Canadian common law. As such, there was no need for legislative action to render these rights enforceable. But the Majority did not stop there: they went on to hold that these rights could be relied on by individuals against corporations in a civil right of action. Accordingly, it was open to the claimants to argue that a breach of international law by a Canadian company could be remedied at common law. The Court held:

 ‘Appropriately remedying the violations of jus cogens and norms of customary international law requires different and stronger responses than typical tort claims, given the public nature and importance of the violated rights involved, the gravity of their breach, the impact on the domestic and global rights objectives, and the need to deter subsequent breaches.’

Accordingly, Nevsun failed to demonstrate that the claimants’ claims should be struck out.  It was enough to conclude that the breaches of customary international law, or jus cogens, relied on by the Eritrean workers may well apply to Nevsun. It was for the trial judge to decide on the effect of the relevant norms in civil proceedings between private entities.

The Minority Judgment

In a partly dissenting judgment, two members of the Supreme Court (Brown and Rowe JJ) agreed that there was no place for the act of state doctrine in this case but disagreed with the Majority’s approach to customary international law. The two remaining members of the Court disagreed with the Majority’s conclusion on the act of state doctrine and also with their approach to customary international law (Moldaver and Côté JJ). They held that the Majority’s approach gave international law a role that ‘exceeds the limits placed upon it by Canadian law’. The ultimate success of the appeal was therefore based on a bare majority of 5-4.

They agreed with the Majority’s characterisation of the substantive composition of customary and peremptory norms of international law (namely state practice and opinion juris). They felt that these two requirements were a high bar that reflected the ‘extraordinary nature of customary international law’. They also agreed that once a norm of customary international law has been established, it becomes part of the Canadian common law. They agreed that there were prohibitions against forced labour, cruel, inhuman and degrading treatment that had attained the status of peremptory norms. They also agreed that individuals are beneficiaries of these prohibitions and that it was a question for the trial judge whether a defendant must obey these specific prohibitions.

The substance of their disagreement with the majority lay in the path to civil liability. The Minority held that liability for human rights violations has not been recognised under customary international law. the norms themselves may be recognizable, however, civil liability is not:

 ‘It is unclear how the majority deduces the potential existence of a liability rule from an uncontroversial statement of a prohibition. Perhaps it sees a prohibition of customary international law as requiring Canada to provide domestic liability rules; perhaps it sees the prohibition as itself containing a liability rule; or perhaps it sees the doctrine of adoption as producing a liability rule in response to a prohibition. None of these options provide an interpretation of the majority’s theory of the case that makes the claims viable’

The Minority held that the Majority’s approach was tantamount to the European doctrine of ‘horizontal effect’. They held that it was ‘extraordinary’ to hold that customary international law had horizontal effect where the Canadian Charter of Rights and Freedoms does not. The Minority felt that Majority’s approach amounted to recognizing a private law cause of action for simple breach of customary international public law. They held that this was also unacceptable as there is no private law cause of action for a breach of statutory Canadian public law. The minority held that only a competent legislature could generate the rights necessary for the claimants to rely on directly against Nevsun. Accordingly, the case was doomed to fail and must be struck out.

Discussion

This judgment provides a fascinating discussion of the possible application of peremptory norms of international law in civil proceedings. It is worth emphasising that, as with all judgments on strike out applications, the court has not definitively ruled on these issues. The Majority emphasised throughout the judgment that the question of the proper scope and application of the principles in issue was a matter for the trial judge; they simply were not prepared to find that the arguments advanced had no realistic prospects of success. That said, the judgment clearly has much force on the principles in issue.

What are the implications for litigation in England and Wales? The starting point is that there is authority for the proposition that norms of customary international law become part of the domestic law of England and Wales without the need for further implementing legislation: see Trendtex Trading Corpn v Central Bank of Nigeria [1977] QB 529, 553–554 per Lord Denning MR; see also the approach in Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, 1081–1082. In the context of criminal law, the Crown conceded in R v Jones [2006] UKHL 16 that customary international law could form part of the domestic law of England and Wales (but the Lords did not give a concluded view on the subject because of that concession). The detailed historical analysis of the authorities and decision in Nevsun itself is now likely to be highly persuasive in this respect.

Peremptory norms of international law have also been cited as being of at least potential relevance by the Supreme Court of the United Kingdom. In Stott v Thomas Cook [2014] UKSC 15, Lady Hale wondered in an obiter passage whether the conduct in question in that case (discrimination that could not be remedied due to the Montreal Convention 1999) could be said to have violated peremptory norms of international law. But, as she noted, “None of this was ventilated before us, no doubt for the good reason that Thomas Cook is not a state airline.”

This comment reflects the fact that the majority’s finding that customary international law norms may have horizontal effect is likely to be most controversial aspect of the decision in Nevsun. It is significant that the Majority’s discussion and total rejection of Nevsun’s position that it was immune from suit as a private entity (at [104]–[116]) does not rely on any previous authority but only on the academic writings of leading international jurists. The fact that this was a decision of the bare majority with powerful dissenting opinions by the Minority suggests that the matter is far from settled – at least as far as the comparative position in English law is concerned. We have found while writing this blog that we disagree on which side was right!

Notwithstanding the many practical distinctions between the Canadian and English approaches to human rights law, the Majority’s groundbreaking recognition of a new source of substantive rights for individuals in cases against multinationals is of obvious relevance to English lawyers litigating cases concerning the actions of corporate entities abroad. We await the outcome of the trial on the merits with great interest.

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