Corporate Law: Nevsun Resources Ltd.v.Araya 2020 SCC5
- LSOU Publications
- 1 hour ago
- 4 min read
Written By: Jissana Ahad
Legal Terms
1. Corporate Liability: legal responsibility of a corporation for its conduct
2. Customary International Law (CIL): international norms accepted as binding law
3. Act of State Doctrine: limits court review of foreign sovereign acts
4. Jus Cogens: peremptory international norms permitting no derogation
5. Civil Cause of Action: legal basis to bring a civil claim
Facts
Nevsun Resources Ltd. is a Canadian mining company headquartered in British Columbia (BC). It held a majority interest in the Bisha Mine, located in Eritrea, through a locally operated mining enterprise. Former Eritrean workers alleged that they were forcibly conscripted through Eritrea’s National Service Program and compelled to work at the mine under conditions amounting to forced labour, slavery, and cruel, inhuman, or degrading treatment, all of which are prohibited under customary international law (CIL). In 2014, after fleeing Eritrea and becoming refugees in Canada, the workers commenced a civil action in BC against Nevsun, asserting claims in domestic tort. Nevsun denied the allegations and argued that the claims were barred by the act of state doctrine and that international law does not create a private cause of action against corporations. The Court treated these arguments as raising foundational questions about the role of Canadian courts in adjudicating alleged violations of international human rights norms by Canadian corporations operating abroad.
Although the Supreme Court did not address environmental issues directly, commentators have noted that the decision carries broader implications for accountability in the extractive sector. Mining operations are closely associated with environmental and social governance concerns, particularly where corporate activities affect local communities and land use. As such, Nevsun has been situated within wider discussions about corporate responsibility in industries with significant environmental footprints.
Procedural Posture
The action was commenced in the Supreme Court of British Columbia (BCSC), where Nevsun applied to strike the plaintiffs’ claims on the grounds that the act of state doctrine barred the action and that CIL could not give rise to a civil cause of action against a private corporation. The chambers judge dismissed Nevsun’s motion to strike, holding that it was not plain and obvious that the claims would fail and allowing the action to proceed, though class certification was denied. Nevsun appealed, and the BC Court of Appeal upheld the dismissal of the motion to strike. Nevsun then appealed to the Supreme Court of Canada (SCC), seeking a determination on whether the doctrine applied in Canada and whether such claims could proceed against a corporation.
Issue
The central issue before the SCC was whether Canadian courts can impose corporate liability on a Canadian corporation for alleged breaches of CIL committed abroad. Specifically, the Court was tasked with determining whether claims alleging violations such as forced labour and crimes against humanity could proceed against a private, non-state actor. A related point of contention was whether the doctrine operates in Canadian law to bar courts from settling claims that implicate the conduct of a foreign state. In essence, the case required the Court to determine the extent to which Canadian courts may exercise jurisdiction over corporate conduct linked to serious international law violations abroad, particularly in the context of extractive activities affecting local populations.
Rule, Holding, & Reasoning
The SCC applied the principle that CIL forms part of Canadian common law unless it has been clearly displaced by legislation. The Court held that peremptory norms of international law, including prohibitions against forced labour and slavery, may give rise to civil claims against private corporations. In applying this rule, the Court rejected the argument that the act of state doctrine bars Canadian courts from adjudicating such claims, emphasizing that it does not operate as a blanket prohibition on judicial review of alleged international law violations committed abroad.
The SCC dismissed Nevsun’s appeal and held that the plaintiffs’ claims should not be struck at the preliminary stage. The Court ruled that it was not plain and obvious that claims based on alleged breaches of CIL could not proceed against a private corporation, nor that the doctrine barred the action. As a result, the Court allowed the civil claims to move forward for determination on their merits in the BC courts.
Accordingly, the Court reasoned that international law is incorporated into Canadian common law and that certain peremptory norms bind all actors, including corporations. It rejected the application of the doctrine, holding that Canadian courts are not barred from adjudicating claims involving foreign state conduct. In reaching this conclusion, the Court relied on principles of judicial restraint at the preliminary stage and international law recognizing jus cogens norms, emphasizing that the claims should not be struck where the law remains unsettled.
Result
The SCC affirmed the decisions of the lower courts and dismissed Nevsun’s appeal, allowing the plaintiffs’ claims to proceed in the BC courts. By declining to strike the action at a preliminary stage, the Court confirmed that the claimants may pursue civil remedies in Canada for alleged violations committed abroad. For the parties, this meant that the plaintiffs were permitted to move forward with their claims on the merits, while Nevsun remained subject to further judicial scrutiny. More broadly, the decision signals that Canadian corporations operating internationally, particularly in extractive industries, may face domestic judicial scrutiny for overseas conduct, reinforcing accountability frameworks that intersect with environmental and social governance concerns. Beyond the parties, the decision underscores the role of domestic courts in holding private corporations accountable for overseas conduct.
Concurrences and dissents were issued. While the majority permitted the claims to proceed, dissenting judges expressed concern about recognizing new causes of action based on customary international law against private corporations. The dissents cautioned that such developments raise complex questions about the proper role of courts and the limits of judicial law-making in the absence of legislative direction.
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