Supreme Court rules mining company Nevsun can be sued in Canada for alleged abuses abroad

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The Supreme Court of Canada has ruled that Canadian mining company Nevsun Resources Ltd. can be sued in Canada for alleged human-rights abuses abroad, a decision that is being welcomed by rights activists but broadens the potential legal liability for many Canadian corporations.

Previously, Canadian companies with foreign operations could mostly only be sued in the jurisdiction in which alleged infractions occurred.

Joe Fiorante, lawyer with Camp Fiorante Matthews Mogerman LLP, who represents three Eritreans suing Nevsun in the Supreme Court of British Columbia, said it was a “huge victory” for his clients and an important case for the advancement of human rights.

Nevsun appealed the case to the Supreme Court, after both the Supreme Court of British Columbia and the B.C. Court of Appeal ruled that it could go forward.

“It’s a very emphatic statement that these principles of international human-rights law are part of the law in Canada, and Canadian companies operating abroad may be sued for violating them,” Mr. Fiorante said of the Supreme Court’s 5-4 majority decision.

This decision opens the door to many new civil suits in Canada. It also gives individuals added options before launching a suit, allowing them to pick the jurisdiction with the sturdiest legal system.

For the Canadian mining industry, the ruling adds an extra layer of risk and expense to its business model. Most of Canada’s biggest mining companies, including Barrick Gold Corp., Teck Resources Ltd., Kinross Gold Corp. and First Quantum Minerals Ltd. have extensive operations overseas.

About four years ago, the Eritreans launched a suit against Vancouver-based zinc and copper miner Nevsun in the lower B.C. court. The plaintiffs alleged that they were subject to forced labour, slavery and torture during the construction of Nevsun’s Bisha mine in the east African country of Eritrea.

The allegations have not been proven in court.

Nevsun argued that the case should not even be heard in Canada, under a legal principle called the Act of State, which deems that one country can’t hold another country liable for actions inside its borders.

However, in the ruling on Friday, the Supreme Court concluded that the Act of State doctrine does not apply in Canada and is therefore irrelevant in this case.

“The doctrine is not part of Canadian common law, and neither it, nor its underlying principles as developed in Canadian jurisprudence, are a bar to the Eritrean workers’ claims,” the court said in its ruling.

The Eritrean complainants also argued in submissions to the Supreme Court last year that the rules of customary international law should apply.

Established after the Second World War, customary international law holds that in certain instances, abuses are so egregious that they should be policed internationally, under what is known as “peremptory norms.”

A majority of Supreme Court justices agreed with this thesis and ruled that customary international law is indeed part of Canadian law and, in this instance, does not conflict with any existing domestic law.

“Violations of peremptory norms are serious violations of rights that are important to everyone, everywhere. They need to be strongly discouraged,” the court said.

The decision by the Supreme Court means that the Eritreans can continue their civil case against Nevsun in the lower courts in B.C.

In testimony, the Eritreans alleged they were conscripted under Eritrea’s national-service program and forced to work 60 hours a week in temperatures approaching 50 C, housed in huts without beds or electricity, and routinely physically assaulted.

In an e-mailed statement to The Globe and Mail, Nevsun said it “denies the allegations made by all of the plaintiffs and intends to vigorously defend itself in court."

Nevsun was acquired by Chinese company, Zijin Mining Group Co. Ltd. last year for $1.9-billion.

The Mining Association of Canada (MAC) warned in submissions to the Supreme Court that the case could create so much uncertainty for mining companies that they wouldn’t be able to assess their potential liabilities, forcing some to flee developing countries.

Luis Sarabia, lawyer with Davies Ward Phillips & Vineberg LLP, who represented MAC in submissions to the Supreme Court said he doesn’t think that the decision will end up being a huge negative for the industry, as it only opens the door to the potential of increased liability, as opposed to guaranteeing it.

Anneke Van Woudenberg, executive director of a Britain-based international non-governmental organization called Rights and Accountability in Development, said the Supreme Court’s decision was “an important victory” for victims of human-rights abuses.

"This is a significant step forward to holding Canadian companies to account for human-rights abuses committed abroad,” she said.

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