Araya v. Nevsun Resources Ltd., 2016 BCSC 1856: British Columbia Supreme Court refuses to strike civil claims alleging human rights violations at Eritrean mine
In an important decision for Canadian resource companies operating abroad, the British Columbia Supreme Court has permitted claims alleging human rights abuses at a mine in East Africa to proceed to trial.
The plaintiffs are three Eritrean nationals who are now refugees. In November 2014, they commenced a representative proceeding against Nevsun Resources Ltd., a British Columbia mining company, in connection with the Bisha Mine in Eritrea. They claim that they were forced to work at the mine by the Eritrean state and military, acting pursuant to construction agreements with Nevsun and its Eritrean subsidiary. The plaintiffs are seeking damages on behalf of all Eritreans forced to work at the mine from September 2008 to the present. Their claims are based on alleged breaches of customary international law.
In a series of preliminary applications, Nevsun argued that the claims should not proceed because: 1) Eritrea is the more appropriate forum; 2) the plaintiffs’ claims are barred by the act of state doctrine; 3) breaches of customary international law are not justiciable; and 4) the case is not appropriate for a representative proceeding. In a lengthy decision released October 6, 2016, Abrioux J. rejected the first three applications, but agreed with Nevsun on the fourth. The case will now proceed to trial on an individual basis.
Supreme Court’s Decision
Nevsun argued that the claims should be heard in Eritrea because the majority of both the witnesses and the documentary evidence is located in that country. Nevsun relied in particular on a recent case, Garcia v. Tahoe Resources Inc., 2015 BCSC 2045, in which the Court declined to exercise jurisdiction over a claim involving an alleged shooting at a mine in Guatemala for similar reasons. Here, Abrioux J. acknowledged that evidentiary concerns are typically given significant weight when considering whether to decline to exercise jurisdiction. However, unlike in Garcia, there is a real risk of an unfair trial in Eritrea because: 1) the plaintiffs are refugees who will face significant consequences if they attempt to return; and 2) evidence from Eritrean judges and lawyers demonstrates that there is a high level of state interference with the justice system. Given these exceptional circumstances, the Court held that Eritrea is not the more appropriate forum.
Customary international law
The Court next considered whether breaches of customary international law may form the basis of a civil proceeding in British Columbia. The customary international rules relied on by the plaintiffs in this case (including prohibitions against slavery, torture, and crimes against humanity) fall into a special subset of customary international law referred to as jus cogens, or peremptory norms. These rules are binding on all states and permit no exceptions.
Nevsun argued that customary international law claims are barred by the act of state doctrine, a common law rule holding that courts cannot adjudicate the lawfulness of the acts of a foreign state committed within that state’s territory. The Court acknowledged that this doctrine forms part of the common law of Canada. However, given the uncertainty surrounding the scope and application of the doctrine (it has yet to form the basis of a decision by any Canadian court), the Court was not prepared to dismiss the plaintiffs’ claims on a preliminary application.
Nevsun also argued that the plaintiffs’ claims have no reasonable prospect of success because customary international law does not apply to corporations and cannot form the basis of a private law action. Again the Court disagreed, noting the uncertain state of the law in this area. Although the Court acknowledged that the plaintiffs will face significant obstacles at trial, it could not conclude that the plaintiffs’ novel claims are bound to fail.
Finally, the Court held that the plaintiffs could not continue the action as a representative proceeding under Rule 20-3(1) of the Supreme Court Civil Rules. The plaintiffs relied on Rule 20-3 rather than the Class Proceedings Act, R.S.B.C. 1996, c. 50 (CPA), because they are not residents of British Columbia. They argued that Rule 20-3 preserves common law class actions in the province. The Court disagreed, explaining that the CPA sets up a comprehensive code for class actions in British Columbia. As a result, non-CPA proceedings are governed by Rule 20-3 and its jurisprudence. This rule is limited to cases in which plaintiffs allege a common right or seek a common remedy. The Court concluded that a representative proceeding was not appropriate for this case, given the factual differences between each proposed class member.
Arya v. Nevsun represents the latest development in a number of recent cases involving Canadian resource companies and allegations of their complicity in human rights abuses abroad. Significantly, however, this is the first case in which claims against a Canadian corporation for alleged breaches of customary international law have been allowed to proceed. Although the plaintiffs will certainly face major obstacles at trial, this case clearly indicates the reluctance of courts to strike novel civil claims against parent entities operating internationally through foreign subsidiaries.
This decision is also significant for its consideration of the suitability for claims of this nature to be brought by way of a representative proceeding, and the court was clear that such a proceeding is limited to a narrow class of cases only. It remains to be seen whether these claims may be suitable for disposition by way of a class proceeding, but on the basis of the evidence tendered in this case, the court found the plaintiffs not to have satisfied the criteria for a “common law class action”. Parties pursuing or defending these claims in the future should give careful consideration to the evidence necessary to satisfy the threshold criteria for a class proceeding.
circumvent the residency requirement common law class action companies operating abroad customary international law