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Alleged Breaches of Human Rights Law by a Canadian Mining Company: Araya v Nevsun: Resources Ltd, British Columbia Court of Appeal Case
In this case, Canadian mining company Nevsun Resources Ltd faced legal action initiated by a group of Eritrean refugees in 2014. Nevsun had established a profitable open mine in Eritrea, generating significant profits within the first four years of operation. The Eritrean government held a 40% stake in the mining operation, while Nevsun, through its foreign subsidiaries, owned the remaining 60%. The lawsuit alleged that Nevsun violated customary international law (CIL) by allegedly participating in or permitting forced labor, slavery, torture, and other crimes against humanity during the construction and operation of the mine.
The Eritrean refugees sought damages in Canada for the breach of CIL, arguing that Nevsun should be held accountable for its actions abroad. Nevsun attempted to have the claim dismissed before the British
Columbia Supreme Court and Court of Appeal, arguing that it was not a recognized private cause of action in Canada. Despite these efforts, the Court of Appeal allowed the case to proceed to trial. Nevsun then sought and was granted leave to appeal to the Supreme Court of Canada (SCC).
The excerpts from the judgment highlight key legal arguments. Nevsun contended that corporations, like itself, are subject to national law and are not directly recognized as actors in international law. The plaintiffs argued that customary international law should be automatically incorporated into Canadian domestic law, and they pointed out that Canada had not legalized slavery, torture, or crimes against humanity. The dissenting opinion from Abella J. emphasized the individual's right to a remedy for human
rights violations as a recognized principle of international law.
The case raised questions about whether Canadian common law should recognize a cause of action for damages based on alleged breaches of CIL norms. It also explored the intersection of international law, corporate accountability, and the potential liability of Canadian companies for actions carried out in foreign jurisdictions. The Supreme Court of Canada was set to decide on these issues, addressing the novel claim and its implications for the legal landscape surrounding human rights violations by corporations operating internationally.
1. Why do you think the plaintiffs are suing Nevsun in Canada and not Eritrea?
The plaintiffs may be suing Nevsun in Canada instead of Eritrea for several reasons. First of all, they might think that their claims can be arbitrated fairly and impartially through the Canadian legal system. Second, they may believe that the Canadian legal system is superior to the Eritrean legal system in terms of upholding verdicts and providing substantial compensation. Furthermore, Canada may have been chosen strategically to capitalize on its legal system, which may be able to identify and deal with violations of customary international law.
2. What are the possible ramifications for companies should a new, private cause of action for breaches of norms of customary international law become part of the Canadian common law?
Businesses that operate worldwide may be subject to greater legal scrutiny and possible liabilities if Canadian common law recognizes a new, private cause of action for violations of standards of customary international law. This may lead to a change in the situation where businesses doing business overseas must carefully evaluate and guarantee adherence to international human rights norms. Companies may
be compelled to implement greater operational and ethical standards to prevent lawsuits and reputational harm if they face the possibility of legal repercussions.
3. What is one way discussed in the chapter that Canadian companies can be held accountable for their operations abroad? Can you think of any other ways?
One way discussed in the chapter is the recognition of a cause of action for damages based on alleged breaches of customary international law. Another way Canadian companies can be held accountable is through the extraterritorial application of Canadian laws, where the Canadian legal system asserts jurisdiction over certain actions that occur abroad. Additionally, international pressure, public outcry, and engagement with non-governmental organizations (NGOs) can contribute to holding Canadian companies accountable for their overseas operations.
4. What ethical obligations does Nevsun have when operating abroad? Are the ethical obligations the same domestically? Why or why not?
Nevsun has a moral duty to uphold human rights, guarantee ethical labour practices, and make constructive contributions to the environment and local community when conducting business overseas.
A company's commitment to responsible business conduct is shown in its adherence to ethical standards, which should be upheld whether it is operating domestically or internationally. However, to handle difficulties and guarantee that moral standards be upheld, the complexity and possible consequences of conducting business abroad may call for increased caution and cultural awareness.
5. How can companies ensure they are not subject to lawsuits for breaches of customary international law?
Companies can take several measures to reduce the risk of lawsuits for breaches of customary international law. This includes conducting thorough human rights impact assessments before engaging in operations abroad, implementing robust corporate social responsibility (CSR) policies, engaging in transparent reporting, collaborating with local communities, and actively monitoring and addressing potential human rights violations. Developing a strong ethical corporate culture and complying with international standards can help mitigate the risk of legal action.
6. Do you consider this case to be one of international public law or private law or both? Why?
This case involves elements of both international public law and private law. The alleged breaches of customary international law, such as forced labor, slavery, and crimes against humanity, fall within the realm of international public law. However, the lawsuit itself is a private action initiated by Eritrean refugees seeking damages, making it a matter of private law. The case illustrates the intersection of international norms and individual claims for compensation within the Canadian legal system.
7. Should foreign subsidiaries of Canadian corporations be subject to Canadian law? Why or why not?
The question of whether foreign subsidiaries of Canadian corporations should be subject to Canadian law depends on legal, ethical, and practical considerations. Arguments in favor may emphasize the need for consistency in holding Canadian companies accountable for their actions globally, regardless of corporate structure. On the other hand, opponents may argue that jurisdictional matters should align with the legal framework of the host country, promoting respect for sovereignty. Striking a balance between global accountability and respecting the legal autonomy of host countries is crucial.
8. What role, if any, should Canadian (1) government, (2) corporations, and (3) NGOs play with respect to human rights internationally?
Canadian Government: The Canadian government should play a role in establishing and enforcing legal frameworks that hold corporations accountable for human rights violations abroad. This may involve developing legislation, regulations, and policies that align with international standards and promote responsible business conduct.
Corporations: Canadian corporations should adopt ethical business practices, conduct thorough due diligence on human rights impacts, and implement corporate social responsibility initiatives.
They should proactively engage with stakeholders, including local communities and NGOs, to address concerns and contribute positively to the regions in which they operate.
NGOs: NGOs can serve as watchdogs, raising awareness about human rights abuses and advocating for accountability. They can also collaborate with governments and corporations to develop and implement best practices, contributing to the protection of human rights on a global scale.
National Treatment and Labelling Requirements: 05384: United States-
Certain Country of Origin : Labelling (COOL) Requirements (WTO Appellate Body, 2008)
In 2008, the United States introduced Country of Origin Labelling (COOL) requirements for beef and pork
products, mandating disclosure of the origin at the retail level. To qualify as U.S. origin, animals needed to be exclusively born, raised, and slaughtered in the U.S., excluding cattle and hogs exported for feeding or immediate slaughter. Canadian and Mexican producers traditionally exported live cattle and hogs to the U.S. for processing and sale under the label "American beef" or "American pork." However, COOL necessitated the segregation of animals in the value chain, incurring an additional cost of about $90 CAD per beef animal, making Canadian and Mexican products more expensive.
Facing increased costs, U.S. beef and pork processors opted to reduce or cease imports of Canadian and Mexican livestock. This move negatively impacted the competitiveness of Canadian and Mexican beef and pork in the U.S. market. The Canadian Cattleman's Association reported a significant decrease in U.S.
imports of Canadian feeder cattle following the implementation of COOL.
In response, Canada and Mexico filed a complaint with the World Trade Organization (WTO), asserting that the COOL requirements constituted a market access restriction and a technical barrier to trade. They argued that the true intent of COOL was to protect the U.S. domestic cattle and hog industry, rather
than providing genuine consumer information on product origin. Canada and Mexico contended that less trade-restrictive alternatives existed and that the labeling laws caused confusion and conveyed inaccurate information. Ultimately, both the WTO panel and the Appellate Body sided with Canada and Mexico, ruling that the U.S. COOL requirements discriminated against imports of Canadian cattle and hogs. The Appellate Body's final ruling on May 18, 2015, confirmed that the U.S. measures were inconsistent with WTO rules, affirming the discriminatory nature of the COOL requirements against Canadian and Mexican livestock imports.
1. Read the case above and identify and explain the WTO rules and agreements that are triggered.
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The WTO rules and agreements triggered in this case include the Agreement on Technical Barriers to Trade (TBT) and the General Agreement on Tariffs and Trade (GATT). The COOL requirements imposed by
the United States are considered technical trade barriers, as they create obstacles for Canadian and Mexican exports of cattle and hogs. The TBT Agreement addresses such technical barriers, ensuring that they are not more trade-restrictive than necessary.
2. The Canadian Cattleman's Association (CCA) noted the adverse effects of COOL on the Canadian cattle and hog industry. Which branch of the Canadian government did CCA contact to request that they commence proceedings in the WTO? The Canadian Cattleman's Association (CCA) likely contacted the Canadian federal government, specifically the Department of Global Affairs Canada or the Canadian Trade Commissioner Service, to request that they commence proceedings in the WTO. Trade-related matters, especially disputes with other countries, fall within the purview of the federal government in Canada.
3. If the United States argued that the Canadian cattle and hogs were subject to inhumane treatment in Canada, what article of the GATI could it rely on to justify its labeling and possibly import restrictions? The United States could rely on Article XX of the GATT to justify its labeling and possibly import restrictions on Canadian cattle and hogs if it argued that they were subject to inhumane treatment in Canada. Article XX allows WTO members to adopt measures necessary to protect human, animal, or plant life or health, provided that such measures are not applied in a manner that constitutes a means of
arbitrary or unjustifiable discrimination between countries. However, this would be subject to scrutiny, and the labeling measures must be justified as necessary and not more trade-restrictive than required to
achieve the health objectives.
Hypothetical: Baby Formula Processing Requirements
The situation involves the regulation of baby formula in Canada. During the first year of an infant's life, baby formula can be their primary source of nutrition, crucial for rapid growth and brain development. Canadian baby formula manufacturers have been following specific quality and technical standards set by the government. However, there has been a scandal overseas where baby formula was found to be adulterated or not meeting the necessary standards. In response, Canada is considering implementing stricter processing regulations specifically targeting imported baby formula. The proposed regulations for
imported products would be more stringent compared to those for domestically produced baby formula.
The key point is that unless manufacturers of baby formula from other countries can prove that their products meet these new, higher standards, their products will not be allowed into Canada. The goal is to ensure that all baby formula, whether made domestically or imported, adheres to the highest quality and safety measures to safeguard the health and long-term well-being of infants in Canada. This initiative is a response to the scandal abroad and aims to prevent the entry of substandard or compromised baby formula into the Canadian market.
1. What WTO rules are triggered by the proposed Canadian measure to impose stricter controls on imported baby formula?
WTO Rules Triggered by Canadian Measure: The proposed Canadian measure to impose stricter controls on imported baby formula triggers several WTO rules, primarily falling under the Agreement on Technical Barriers to Trade (TBT) and the General Agreement on Tariffs and Trade (GATT). The TBT Agreement addresses technical regulations and product standards, ensuring they are not more trade-restrictive than necessary. The GATT, particularly Article III (National Treatment) and Article XI (General Elimination of Quantitative Restrictions), is also relevant.
Options Under WTO Law if Canada Alleges Health Protection: If Canada claims that it needs to protect the health of its population, it can potentially invoke the General Exceptions provision under Article XX of the GATT. Article XX allows WTO members to adopt measures necessary to protect human life or health, provided that such measures are not applied in a manner that constitutes arbitrary or unjustifiable discrimination between countries. However, Canada would need to demonstrate that its proposed regulations are necessary and do not unjustifiably discriminate against foreign products.
2. If Canada alleges that it needs to protect the health of the people in Canada, what are its options under WTO law?
WTO Rules and Agreements Triggered: The case involves the Agreement on Technical Barriers to
Trade (TBT) and the General Agreement on Tariffs and Trade (GATT). The TBT Agreement is relevant as the COOL requirements are considered technical trade barriers. The GATT, particularly its provisions related to discrimination and market access (Articles I, III, and XI), is also implicated.
Branch of Canadian Government Contacted by CCA: The Canadian Cattleman's Association (CCA)
likely contacted the Canadian federal government, specifically the Department of Global Affairs Canada or the Canadian Trade Commissioner Service, to request WTO proceedings. Trade-
related matters, including disputes with other countries, fall under the jurisdiction of the federal
government in Canada.
Article of GATT for Possible Import Restrictions Justification: If the U.S. argued that Canadian cattle and hogs were subject to inhumane treatment to justify labeling and import restrictions, it might rely on Article XX of the GATT. Article XX allows measures necessary to protect human or animal life or health, provided they are not applied in a manner that constitutes arbitrary or unjustifiable discrimination between countries. However, such measures must be justifiable and not more trade-restrictive than necessary.