Canada: "Forced Labour" Case To Go To Trial


The British Columbia Court of Appeal recently confirmed that customary international law may be used as a basis to seek damages from B.C. companies alleged to have acquiesced in human rights abuses in foreign jurisdictions. The decision in Araya v. Nevsun Resources Ltd., 2017 BCCA 401 ("Araya") is a novel and significant step in the development of "transnational law" that could expand the scope for liability for corporations conducting resource development projects abroad.

This decision bears some similarity to the B.C. Court of Appeal's decision earlier this year in Garcia v. Tahoe Resources Inc., 2017 BCCA 39, in which a group of miners was permitted to seek damages against a Canadian company for alleged wrongs that occurred at a Guatemalan mine. Both decisions are part of the increasing number of lawsuits against Canadian parent companies for the conduct of their foreign subsidiaries, which is a topic that has been previously discussed in our prior posts to this blog in  Canadian Companies and the Effects of Foreign Operations, Court Refuses to Hear Corporate-Veil Case, and Dodging the Corporate Veil.


The defendant Nevsun Resources Inc. ("Nevsun") is a B.C. mining company that entered into a joint venture with Eritrean state companies to develop and operate the Bisha gold mine near Asmara, Eritrea. Through its foreign subsidiaries, Nevsun owns 60% of the mine. The plaintiffs are a group of Eritrean citizens who alleged that they were forced by Eritrean authorities to work in the mine in inhumane conditions under the constant threat of punishment, torture and imprisonment. They eventually fled to Canada as refugees and commenced an action in 2014 against Nevsun on the basis that Nevsun violated customary international law ("CIL") by aiding or permitting the use of forced labour, slavery, torture and other crimes against humanity.

The BCSC Decision

In 2016, Nevsun brought a number applications seeking to prevent the action from proceeding to trial (2016 BCSC 1856).

Nevsun first sought to stay the proceedings on the grounds that Eritrea is the more appropriate forum for a trial (the "Forum Application"). The lower court denied the application because there was compelling evidence that the Eritrean judicial system was corrupt and unlikely to adjudicate the issues fairly, and there was a real risk of imprisonment or death if the plaintiffs returned to Eritrea to pursue their action.

Nevsun also sought to have the action dismissed on the basis of the "Act of State" doctrine, which is a rule that precludes courts from adjudicating the legality of a foreign state's conduct (the "Act of State Application"). The lower court denied the application because Eritrea was not a party to the action and the doctrine had never formed the basis of a decision in a Canadian court before.

In the third application, Nevsun sought to have the portions of the notice of civil claim that relied on CIL struck on the grounds that breaching CIL norms is not an actionable wrong (the "CIL Application"). Prior to this case, no Canadian court had ever recognized a civil remedy for breaching CIL norms. The Court denied the application because Nevsun had not proved that the claim was certain to fail. The Court concluded that this novel issue should be properly considered on its merits after a trial.

The BCCA Decision

The Court of Appeal upheld all three decisions. On the Forum Application, the Court held that the lower court reasonably concluded that the risk of death, corruption, and unfairness to the plaintiffs outweighed considerations of expense, inconvenience, and practical challenges.

On the Act of State Application, the Court of Appeal found that the plaintiffs were not challenging Eritrea state action per se. Rather, their claim focused on Nevsun's conduct, which could be adjudicated without the need to pass judgment on Eritrean laws or actions. In any event, even if this case involved some consideration of the legality of Eritrean state acts or laws, the Court stated that the public policy exception to the Act of State doctrine would apply given the serious wrongs alleged in this claim. 

Finally, the Court upheld the lower court's decision in CIL Application. The Court noted that causes of actions against private parties for breaching CIL norms have been recognized in other jurisdictions, and that "transnational law" (which regulates "actions or events that transcend national frontiers") is an emerging area of law that might be adopted into Canadian law. As such, the plaintiffs' claim was not "bound to fail" and ought to proceed to trial.


This decision could have significant ramifications for companies engaging in resource projects in foreign jurisdictions, particularly in developing countries. Companies may find themselves in a B.C. courtroom having to answer for events that occurred half a world way in which they did not directly participate and which were legal in the country in question.

It is important to note, however, that the Court has only permitted the action to proceed to trial, and has not made any determination on the merits of the claim. Whether a court ultimately recognizes this novel claim remains to be seen, and both levels of court recognized that the plaintiffs will have to overcome significant hurdles to succeed at trial. At the same time, both courts also recognized, and at times seemed to welcome, the incremental development of the common law in this area and the effectiveness of such legal mechanisms in an increasingly globalized economy.

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