IN Nevsun Resources Ltd. v Araya, 2020 SCC 5, the Supreme Court of Canada held that claims against a Canadian corporation for complicity in breaches of customary international law in Eritrea could proceed. Eritrean workers alleged that they were forced by the military to work at Bisha mine in Eritrea, in which Nevsun Resources Ltd., a Canadian company, has a majority stake. They alleged, among other things, that they had been forced to work for 12 hours a day, six days a week, in temperatures approaching 50°C, and without cover. The plaintiffs sued Nevsun in British Columbia, seeking damages for complicity in breaches of customary international law prohibitions (of forced labour; slavery; cruel, inhuman and degrading treatment; and crimes against humanity) as well as existing domestic torts. Nevsun brought a motion to strike out the pleadings, relying on the act of state doctrine and arguing that the customary international law claims have no reasonable prospect of success. A 7–2 majority found that the act of state doctrine, present in English and US law, is not part of Canadian common law: instead the principles underlying the doctrine – conflict of laws and judicial restraint – have developed separately and are not a bar to the plaintiffs’ claims. A 5–4 majority held that the customary international law claims could proceed to trial in British Columbia, where the plaintiffs will have to establish the merits of their case.

The decision is hugely important, both because it recognises that corporations may breach international norms and because the majority make good the promise of a monist approach to customary international law to provide a remedy for such breaches. Abella J., writing for the majority, reasoned that, since the doctrine of adoption means that norms of customary international law are part of Canadian law unless contrary to domestic law, and the norms in this case prohibit conduct regardless of whether the perpetrator is a state, it follows that the common law should be developed to provide a remedy for any breaches. This is essentially an application of the principle that “where there is a right, there must be a remedy for its violation” (at [119]–[120]). A new remedy is required since existing torts do not capture the “profound” and “distinct” harm that results from the breaches of the norms in question (at [126]). Abella J. left open how the remedy would work, suggesting that courts could recognise new torts or directly remedy the breach of customary international law, but she considered the latter approach to be more consistent with the doctrine of adoption.

There were two strong dissents. Brown and Rowe JJ. concurred with the decision on act of state, but rejected the majority's reasoning on the international law claims. In their view, corporations are “excluded from direct liability” – or at best, the issue is “equivocal” – and customary international law prohibitions are insufficient to create rules of civil liability (at [203]). Moreover, they considered that “since all torture is battery… it does not need to be recognized as a new tort” (at [216]). While the creation of a cause of action for breaches of customary international law might seem “intuitively desirable” (at [228]), it “would require the courts to encroach on the roles of both the legislature (by creating a drastic change in the law and ignoring the doctrine of transformation), and the executive (by wading into the realm of foreign affairs)” (at [262]). Côté and Moldaver JJ. dissented on both issues: they agreed with Brown and Rowe JJ. on corporate liability but concluded that the act of state doctrine exists in Canadian law and would render the plaintiffs’ claims non-justiciable.

On whether corporations may breach international norms, Abella J. is clearly correct that some international norms may be breached through private conduct with or without state involvement. However, it is also true that, since a corporation is a creature of domestic law, the conduct of private individuals must be attributed to the corporate entity before the corporation – as opposed to its individual members – can be said to have breached an international norm. In the present case, there will also need be a theory that explains when a corporation can be regarded as complicit in the actions of a foreign state. For their part, the dissenting opinions appear to elide the question of the personal scope of international norms with the question whether there are international enforcement mechanisms for their breach.

As for whether common law courts may fashion a private right of action, this is fundamentally a constitutional question concerning the proper role of courts. The monist sensibility underlying Abella J.'s view that recognition of a new cause of action is merely providing a remedy for important norms already part of Canadian law is attractive, not least because it gives practical effect to the often repeated doctrine that customary international law is part of the common law. However, it means that courts will have to decide on standards for the attribution of conduct, whether specific international norms are capable of being breached by a corporation, which theory of secondary participation applies when corporations are alleged to have been complicit in state violations of international law, as well as the extent to which knowledge, intention or other awareness would be required. These questions involve policy choices of the kind normally made by lawmakers, although the legislature could always step in if it is unhappy with any judge-made remedy. Moreover, deference to the legislature of the kind envisaged by the minority would mean that victims of business-related human rights abuse would be left without an adequate remedy for breaches of important norms which form part of Canadian law. Courts are therefore placed in a difficult position, largely because lawmakers have failed to create suitable remedies for transnational corporate harm.

Abella J.'s reasoning stands in contrast to the dominant US position. The US Supreme Court has twice declined to recognise corporate liability explicitly in cases brought under the Alien Tort Statute (ATS). In Jesner v Arab Bank Plc., 138 S. Ct. 1386 (2018), the majority was deeply critical of the judicial power to create remedies for breaches of international norms – for Gorsuch J such a power “invaded terrain that belongs to the people's representatives and should be promptly returned to them”. In English courts too, it was argued that parent company liability for harmful conduct committed by foreign subsidiaries would be a novel extension of the law of negligence, “calling for a cautious incremental approach by analogy with established categories” and making it inherently unsuitable for summary determination (Vedanta v Lungowe [2019] UKSC 20). However, the UK Supreme Court concluded that parent liability was simply an application of the general principle of third-party liability, highlighting that one key benefit of relying on existing torts is that it largely avoids the separation of powers and foreign policy concerns that arise when the cause of action is for a breach of international law.

Although Abella J. left open how the breaches would be remedied, she favoured damages for a direct breach of customary international law, as opposed to creating a new tort. Such an approach would not avoid the need to establish the contours of liability and attribution: courts would essentially still be fashioning a new tort, albeit one where the conduct-governing norm would be supplied by renvoi to international law. If courts decide that the standards for liability should be drawn from international law, this will raise thorny questions about whether rules of international law on liability and complicity designed for international criminal tribunals and state responsibility can and should be applied by domestic courts for the purposes of civil rights of action. These issues are neither straightforward nor free from controversy, as illustrated by the intractable US ATS jurisprudence.

Finally, there is the issue of whether, even if such a cause of action were recognised, it should be available to the plaintiffs, given that the torts took place abroad and the standard conflict of laws approach is to apply the law where the tort occurred. Brown and Rowe JJ. noted that “Canadian courts have no legitimacy to write laws to govern matters in Eritrea, or to govern people in Eritrea” (at [259]). This is of course true but it also misses the point, since in the present case, a Canadian court would be providing a remedy where Canadian corporations are complicit in Eritrea's violation of norms that already bind the state as a matter of international law. Moreover, some of the norms relied on by the plaintiffs, such as the prohibition of slavery, have erga omnes and jus cogens status: that is, their violation harms the international community as a whole and all states have an obligation to ensure that they are enforced.

That serious questions need to be resolved does not negate the majority's reasoning; it simply highlights that much remains to be worked out in the approach to corporate liability now left open. Ideally this work would be undertaken by legislatures, but they have largely failed to provide effective remedies for business-related human rights abuses abroad. Some domestic courts are now seizing the reins, which may provoke lawmakers into action, or encourage governments to take the draft business and human rights treaty seriously. If that happens, then Nevsun will become an example of how international law can be used in domestic courts not only to obtain a remedy, but also to pressure lawmakers into protecting human rights beyond their borders.