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A truck carries mineral concentrate from the Bisha mine in Eritrea – the location at which the alleged human rights abuses occurred during its construction – which is majority-owned by Vancouver-based Nevsun Resources.Geoffrey York/The Globe and Mail

The Supreme Court of Canada heard oral arguments on Wednesday in a historic case that could have broad legal ramifications for any domestic company that operates abroad.

At issue is whether a group of African refugees has the right to sue former Canadian base metals miner Nevsun Resources Ltd. in Canada for alleged human-rights abuses overseas. (Vancouver-based Nevsun was recently acquired by Chinese company, Zijin Mining Group Co. Ltd. for $1.9-billion.)

The case was launched a number of years ago in the B.C. Supreme Court by three Eritrean refugees who accused Nevsun of violating international law pertaining to forced labour, slavery and torture during the construction of its Bisha mine in Eritrea from 2008 to 2010.

The individuals say they were conscripted under Eritrea’s national service program to work for state-controlled entities that built the mine under a contract from Nevsun. (Nevsun owns a 60-per-cent stake in Bisha with the remainder held by the Eritrean government.)

Nevsun has argued that the case should be heard only in Eritrea and not in Canada. Two lower B.C. courts already have ruled in favour of the refugees. The B.C. Court of Appeal ruled against Nevsun in part because of the lack of a functioning court system in Eritrea. The east African country has operated under a dictatorship for the past 25 years.

At the Supreme Court hearing on Wednesday, lawyers for Nevsun argued the case should be dismissed based on a legal principle called the Act of State doctrine, which in theory prevents one country from legally questioning the conduct of another state within its own borders.

“The counterargument is there is no such rule,” said Joe Fiorante, lawyer with Camp Fiorante Matthews Mogerman LLP, who is representing the Eritreans. “And especially there’s no rule if the subject matter of the case creates human-rights violations.”

The Nevsun case is being watched closely by the legal profession in Canada as it is the first time the Supreme Court has heard a case based on the Act of State doctrine.

Mr. Fiorante said that the highest courts in both Australia and Britain have tested the Act of State doctrine, and rejected the argument that it barred claims based on alleged serious human rights abuses abroad.

The Mining Association of Canada, which also presented arguments to the Supreme Court on Wednesday, expressed concern in written submissions that a ruling against Nevsun could create investment uncertainty for Canadian mining companies abroad if they are unable to to assess potential liabilities.

Many of Canada’s largest mining companies, including Barrick Gold Corp., Goldcorp Inc. and Kinross Gold Corp. have extensive operations abroad.

The three Eritrean refugees attended Wednesday’s proceedings in person. Should the Supreme Court rule in favour of the refugees they will be allowed to sue Nevsun for damages in the lower B.C. courts.

The Supreme Court is expected to take a few months before issuing its judgement.

A lawyer representing Nevsun did not respond to a request for comment.

With files from Geoffrey York