You may or may not have heard, but a ground-breaking case is making its way through the Supreme Court of Canada right now. While Nevsun Resources Ltd. v. Gize Yebeyo Araya, et al. might seem like a sleeper controversy alongside the spicy SNC-Lavalin affair, this case has the potential to completely change the way that Canadian businesses operate abroad.
The Canadian government proudly champions human rights rhetoric in the international arena, but it seems that the actions of some Canadian businesses are at complete odds with this rhetoric. This is especially true in the mining sector, which Canada is a global leader in. On the issue of forced labour – the key issue in this case – the dissonance is clear. The Government of Canada recently announced a plan to address forced labour in corporate supply chain legislation but serves as home to an organization alleged of profiting off forced labour abroad.
Nevsun Resources Ltd. is a base metals mining company that, until recently, was headquartered in Vancouver, British Columbia. Incorporated in 1965, the company has steadily grown and now operates its two principle properties in Serbia and Eritrea.
Nevsun opened its Bisha Mining Operation in Eritrea in 2011, after a “volcanogenic massive sulfide” deposit was discovered about 150 kilometres west of Asmara.
The company produced gold from 2011-2013 and began producing copper in 2013 and zinc in 2016. Today, copper and zinc extraction are the primary operations of the Bisha Property; trade industries valued at $1 billion and $10.9 billion (respectively) in Canada in 2017.
Eritrea is a small country in the Horn of Africa. You may have heard of the country as there are a relatively large number of Canadians of Eritrean descent. In fact, there are 6,050 Eritrean immigrants living in Canada today, 740 of whom live in Winnipeg! With them, these immigrants have brought rich culture and food (Check out Massawa on Osborne for some phenomenal Eritrean food).
Unfortunately, the country does not have a clean human rights record. Eritrea is a one-party state whose government had been identified by Human Rights Watch as having a human rights record among the worst in the world. After years of conflict with its neighbours, however, the country has improved diplomatic relations with nearby countries and pledged to usher in a new era of peace and friendship. Unfortunately, the oppression of rights has still not come to an end.
The country practices forced conscription into “national service” that is, in some cases, indefinitely prolonged beyond the mandated 18-month limit. This conscription, which has been described by the UN Commission of Inquiry as “enslavement”, generally puts citizens in the labour positions. These assignments have included positions at government-owned construction firms that work on building infrastructure at foreign-owned mineral mines. The UN Special Rapporteur on Eritrea recognized these types of positions and warned that they constitute systematic, widespread and gross human rights violations.
The Nevsun case began in November 2014, when three Eritrean refugees filed a lawsuit against Nevsun in the Supreme Court of British Columbia. It might seem strange that the lawsuit was filed in British Columbia – and it is. We’ll discuss this later, but the main reason the lawsuit went before the BC Supreme Court was due to the fact that Nevsun was headquartered in Vancouver. The allegations pointed at the company for complicity in torture, forced labour, and crimes against humanity (a phrase used to describe certain grave acts like murder or enslavement that are deliberately committed against civilians in a systematic or widespread way).
Nevsun denied the allegations and motioned for the BC Supreme court to dismiss the case because the alleged crimes took place in Eritrea. The Court ruled against Nevsun and decided that the case could continue in Canada. In response, Nevsun filed an appeal to the BC Court of Appeal in 2017, again arguing that the case is not admissible in Canadian courts. The Court of Appeal rejected this appeal.
Unsatisfied with this decision, Nevsun sought leave to appeal to the Supreme Court of Canada in 2018 and now the Court is in the process of making its judgment on whether the case can be heard by the High Court. As it stands, the Court is deliberating about whether or not the lawsuit is admissible and the original allegations remain unjudged.
These allegations have garnered widespread international attention. The British government met with the company to discuss the complaints and the UN Commission of Inquiry on Human Rights in Eritrea recognized the allegations in its most recent report. Non-governmental organizations like Human Rights Watch have also taken note of these complaints and have urged businesses to ensure that they are taking steps to ensure that human rights are respected in their operations.
Nevsun has publicly responded to the allegations by pointing to their operational contract, which restricts employment of national service conscripts. They argue that the Eritrean military has never provided labour to the mine. If it did, Nevsun has stated that they were never directly responsible for employing the workers. At face value, this doesn’t seem to rule out the possibility that Nevsun knowingly contracted government-owned construction firms (which use forced labour) to work at the mine.
Nevsun has also pointed to their Corporate Social Responsibility program as evidence of their human rights-compliance. This program has involved the production of annual reports based on global standards, three independent human rights impact assessments, and community investment programs. A point worth noting is that Corporate Social Responsibility programs are not legally binding and findings of reports do not carry obligations.
With both parties at odds and a complex web of legal factors at play, the case seems more confusing than ever.
One question raised by a lot of Canadians was why the victims brought the case forward in the Canadian courts. After all, the case involves Eritrean citizens and human rights abuses in Eritrea allegedly committed (at least partially) by the Eritrean government. To put it plainly, the answer is in the question. In the legal sense, the case could go before the courts of Eritrea, but the context is important. If the judiciary in Eritrea has not enforced the 18-month limit on conscription, why would a citizen expect them to recognize their right to freedom from forced labour?
If it wouldn’t be effective for the case to go before Eritrean courts… is a Canadian court allowed to hear it? The short answer: yes. The long answer, however, begs a deep-dive into international business and human rights law.
The current international business and human rights system is rooted in the United Nations Guiding Principles on human rights, a set of voluntary standards that have improved little and left more questions than answers. Under the Guiding Principles, businesses have no human rights obligations. Instead, they have the responsibility to respect human rights. This importantly sidesteps binding language and clearly implies that businesses are not even morally responsible for the protection nor fulfillment of human rights, thereby meagerly laying out an expectation that companies should establish grievance mechanisms for receiving human rights-related complaints.
In the context of businesses and human rights, this means that states are obliged to protect people from human rights violation perpetrated by non-state actors like businesses. But which States are obligated to protect which people? Since human rights are universal, both the State where the business is registered (Canada) and the State where the business is operating (Eritrea) technically have jurisdiction.
So, can a Canadian court hear a case about Canadian companies violating rights abroad? Yes. In the Supreme Court’s famous Chevron case, the Court affirmed that it does have jurisdiction over cases where it has a “real and substantial connection” with the parties or with the subject matter. In fact, Canadian courts have agreed to hear lawsuits against Canadian companies Tahoe Resources and HudBay Minerals for violations in Guatemala.
But questions still remain for this case. Nevsun’s legal representative, Luis Sarabia of Davies Ward Phillips & Vineberg LLP, has already brought up two issues with the case: first, trying Nevsun in domestic courts for international crimes means applying customary international law domestically; second, is the concept that says that Canadian courts should not sit in judgment of the action of foreign governments.
With regard to the first issue, the Supreme Court has already confirmed in R v Hape (2007) that prohibitive rules of customary international law are part of domestic law, so long as they do not conflict with existing Canadian legislation. According to this, applying customary international law domestically is not a problem in the Nevsun case.
The second, so-called “act of state” issue has already been addressed by the BC Court of Appeal, who held that the victims’ claims are based on the action of Nevsun and not the Eritrean government. There is no need to judge Eritrea’s conduct because the behaviour was clearly illegal under Eritrean law.
The judgment is still pending but, as it looks now, the case is suited for Canada’s Supreme Court.
As if the case wasn’t complicated enough, however, Nevsun recently struck a deal to sell the company to Zijin Mining Group. Zijin is listed in the Hang Seng China Enterprises Index, a stock market index of The Stock Exchange of Hong Kong for companies that are majority owned by the central or regional Chinese government. This means that a Chinese government-owned company is poised to buy Nevsun by the end of the month.
If the Supreme Court of Canada finds the now-Chinese company guilty of complicity in human rights abuses, this likely won’t serve as a step towards mending the diplomatic rift that has arisen from the extradition controversy surrounding Huawei’s CFO, Meng Wanzhou. On top of this, Canada’s impending decision on whether it will allow the tech giant to expand its 5G network to Canadian markets will likely only complicate this already complicated web of relations further.
Unfortunately, this case might have the potential to become another pressure point in China-Canada relations.
What does this mean for the future?
Regardless of the outcome of the case, the Supreme Court’s decision will echo in domestic and international business and human rights law.
In the common law system of Canada, ruling in favour of the victims will mean that a precedent has been set that Canadian businesses can be domestically accountable for human rights abuses abroad.
In the international system, Canada’s decision to impose host-state obligations can shape the outcome of other international cases and future international laws.
Fewer international businesses are headquartered in Manitoba, but businesses are still responsible for respecting human rights domestically. This means that private and state-owned businesses like Manitoba Hydro should do due diligence to ensure that their operations are not causing the violation of people’s rights. In January of this year, Amnesty International expressed concern about accounts of violence and abuse of Indigenous women at Hydro labour camps in Northern Manitoba. These accounts are supported by a report released last year by the Manitoba Clean Environment Commission.
In our capitalist system, businesses offer communities and nations an opportunity to pursue a better future through innovations and dedication. Businesses are essential to sustaining the economic structure upon which our human rights system is procedurally and substantively supported. However, the reality is that the power of businesses to have an impact on human rights has far surpassed the legal capacity of domestic and international systems. Today, the annual revenue of many companies far surpasses the GDP of many developed countries. In fact, this World Bank article shows that Walmart has a higher annual revenue than Australia’s GDP, BP’s is higher than Norway’s and Samsung’s is higher than Turkey’s. Cases like Nevsun raise the question of whether a State-centric system of legal accountability can adequately address the potential impact of businesses, or perhaps whether businesses should have their own international legal obligations.