I. Introduction
In these desperate days of combat against a global pandemic, the 28 February 2020 decision of the Supreme Court of Canada in Nevsun Resources v Araya Footnote 1 brings us some good news, in contrast to the twin decisions of the United States Supreme Court in Kiobel Footnote 2 and Jesner Footnote 3 which brought down the curtain on suing multinational corporations (MNCs) for violations of core human rights in doing business.Footnote 4
Notwithstanding Nevsun, the darkening landscape still persists given the overall state–business nexus. Apart from recent support from some corporations for mandatory human rights due diligence laws,Footnote 5 corporate lobbying against binding international law obligations persists,Footnote 6 even in the face of substantial evidence of wrongdoing and aggravation of inequality in COVID-19 times.Footnote 7 Attacks on human rights defenders opposing business projects continue to occur.Footnote 8 The barrier to access to remedy posed by Bhopal has still to be overcome despite all the efforts to displace the notions forum non conveniens and choice of law dictating the place of doing business as the ‘proper law’ governing mass toxic disasters.Footnote 9
Given the fact that the United Nations (UN) Human Rights Council is now seized with looking at the ways of taking human rights seriously, as stressed by the 2003 Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human RightsFootnote 10 and the 2011 UN Guiding Principles on Business and Human Rights (UNGPs),Footnote 11 one hopes that the nightmares of Kiobel and Jesner will yield to the dreams of Nevsun.
In Nevsun, the indictment of the violation of international customary law (ICL) was made in 2014 by a group of three refugee Eritrean nationals against British Columbia. They argued that by engaging the Eritrean military and state-owned construction companies to construct the Bisha Mine in Eritrea, Nevsun – which owned 60 per cent shares in Bisha Mining Share Company – facilitated, aided, abetted, contributed to, and became an accomplice in, the use of forced labour, crimes against humanity and other core human rights abuses.Footnote 12
Nevsun raised several typical procedural grounds to dismiss the case: from the doctrine of forum non conveniens to objections against representative action, the act of state doctrine and the CIL claims having no reasonable prospect of success.Footnote 13 The Chambers Judge and the Court of Appeal dismissed Nevsun’s motions to strike the case,Footnote 14 and the Supreme Court upheld the lower courts’ rulings on this.
Surely, corporate complicity in what would amount to crimes against humanity by state officials is not precluded by all the corporate social responsibility, whether at international or national level. However, efficient corporate governance is still in 2020 equated with forms of denialism of human rights by MNCs, with the result that while business may claim all the benefits of human rights entitlements, it may as a non-state actor not be bound by any obligations under international customary or treaty law.Footnote 15
In this article, I analyse, in part II, the act of state doctrine which entails both the comparative international law aspects as well as distinctive Canadian modes of adjudication in this sphere. In Part III, I then turn to the argumentative strategy that maintains that human rights obligations extend only to states and not corporations and note the significant differences between the majority decision and the dissent on this issue in Nevsun. The mere fact that there could be a judicial dissent on this aspect in the second decade of the twenty-first century is indeed striking and precisely for that reason the dissenting opinions are worthy of close analysis. In part IV, I argue that the Nevsun majority opinion makes a distinctive restart in rethinking the roots of corporate governance (at both domestic and international levels) for corporate complicity for violation of core or basic human rights. The new ferment such as the striking French Duty of Vigilance Law, impending mandatory human rights due diligence legislation in the European Union (EU), and the Human Rights Council’s ongoing engagement with the business and human rights treaty process continue to provide a context in which Nevsun needs to be situated.
At the outset it is indeed noteworthy that the wafer-thin majority opinionFootnote 16 begins with a resounding message concerning the meaning of contemporary human rights: describing ‘modern international human rights law’ as ‘the phoenix that rose from the ashes of World War II and declared global war on human rights abuses’, the majority affirmed, preciously, that these ‘norms were not meant to be theoretical aspirations or legal luxuries, but moral imperatives and legal necessities’.Footnote 17
II. The Act of State Doctrine
The majority generally holds that the so-called ‘act of state’ doctrine is not a part of Canadian law, a viewpoint that provokes dissent by four justices. In effect, the dissent maintains that: (i) that it was obvious that corporations are excluded from direct liability under ICL, (ii) ICL itself does not create a remedy, and the creation of such a remedy should best be left to parliaments, and only the concerned state may create the applicable remedies; and (iii) new nominate torts should not be created if there are alternative and adequate remedies to deal with the harm caused and the existing torts of battery, unlawful confinement or intentional infliction of emotional distress were held to adequately deal with the alleged harms.
Nevsun does not as a matter of law hold that the doctrine is outlawed by ICL. However, its reasoning does provide a model opportunity for a funeral move for the act of state doctrine. Put another way, Nevsun offers a critical move which is not universal in scope now, but offers the potential for universalizability in the not-too-distant future.
From its vague origins,Footnote 18 and uncertain itinerariesFootnote 19 and amidst its modernization,Footnote 20 the act of state doctrine remained merely like a ‘silhouette, by its limitations, rather than to regard it as occupying the whole ground save to the extent that an exception can be imposed’.Footnote 21 Moreover, in the luminous words of Lord Justice Rix, it ‘also has to be remembered that the doctrine was first developed in an era which predated the existence of modern international human rights law’;Footnote 22 the idea ‘that the rights of a state might be curtailed by its obligations in the field of human rights would have seemed somewhat strange in that era. That is perhaps why our courts have sometimes struggled, albeit ultimately successfully, to give effective support to their abhorrence of the persecutions of the Nazi era’.Footnote 23
The Nevsun majority proceeded to hold that: ‘Our courts determine questions dealing with the enforcement of foreign laws according to ordinary private international law principles which generally call for deference’, but allow ‘for judicial discretion to decline to enforce foreign laws where such laws are contrary to public policy, including respect for public international law’.Footnote 24 But what may this judicial emancipation from the act of state doctrine betoken? On the one hand, it does not entail that ‘… courts determine questions dealing with the enforcement of foreign laws according to ordinary private international law principles which generally call for deference’ but means merely ‘judicial discretion to decline to enforce foreign laws where such laws are contrary to public policy, including respect for public international law’.Footnote 25 On the other hand, quoting a string of extradition cases, the Court firmly chooses the view that this ‘deference accorded by comity to foreign legal systems ends “where clear violations of international law and fundamental human rights begin”’Footnote 26 and ‘[a]n extradition that violates the principles of fundamental justice will always shock the conscience’.Footnote 27
If the court is deemed to have been shocked into negation of the doctrine in extradition cases, is it unreasonable for us to think that it might not be similarly shocked by other horrendous denials of core human rights doctrines, standards and norms? In all such situations, as held by the Australian High Court in Moti v Queen, ‘the phrase “act of State”… must not be permitted to distract attention from the need to identify the issues that arise in each case at a more particular level than is achieved by applying a single, all-embracing formula’.Footnote 28 In other words, the court should never be haunted by the spectral presence of the doctrine of act of state in performance of complex tasks of interpreting law and doing justice.
The predictable justifications defending the act of state doctrine are offered by J Côté (speaking also for J Moldaver) in their dissent. What is striking, however, is the defence of the doctrine by reference to a standard which distinguishes between the model of choice of law principles and rules which apply in a national justiciability situation and the act of state doctrine ‘which renders certain claims non-justiciable’.Footnote 29 This is because ‘adjudicating them would impermissibly interfere with the conduct by the executive of Canada’s international relations’.Footnote 30
Also, as a ‘practical matter’ if ‘Canadian courts claimed the power to pass judgment on violations of public international law by states, that could well have unforeseeable and grave impacts on the conduct of Canada’s international relations, expose Canadian companies to litigation abroad, endanger Canadian nationals abroad and undermine Canada’s reputation as an attractive place for international trade and investment. Sensitive diplomatic matters which do not raise domestic public law questions should be kept out of the hands of the courts’.Footnote 31
The not so implicit postulate is that violation of core human rights protection in ‘trade and investment’ matters should be tabooed in courts, lest it should hurt national development. The minority does not wish to pose the question: what kind of trade and industry, or more generally economic development, is envisaged thus? Is not the very function of highest courts of the land to ensure that only that ought to count as ‘development’ which does not negate or threaten the core human rights of vulnerable persons and collectivises? And is that not the core of the very idea of the right to development, which is now recognized itself as a human right?
III. Applicability of International Customary Law to Corporations
The US Court of Appeals for the Second Circuit in Kiobel made two astonishing propositions. It observed, first, that ‘[f]rom the beginning … the principle of individual liability for violations of international law has been limited to natural persons – not “juridical” persons such as corporations’Footnote 32 and second, that ‘no corporation has ever been subject to any form of liability under the customary international law of human rights, and thus the ATS, the remedy Congress has chosen, simply does not confer jurisdiction over suits against corporations’.Footnote 33 Both these propositions are egregiously and deeply misleading.
The first proposition has been totally discredited, in a magisterial analysis by Professor Jordan Paust who demonstrates how even ‘today, invidious consequences occur when judges cling to clearly ahistorical assumptions about international law’.Footnote 34 He notes how crucial it is:
to explode a false and inhibiting myth regarding nonstate actors and a related pretense of exclusion by identifying a large number of such actors from each inhabited region of the globe and a number of specific forms of formal participation from the 1700s through the early twentieth century when, according to mendacious myth, state-oriented positivism achieved complete and universal acceptance and denied the existence of any status, role, right, or duty of any nonstate actor.Footnote 35
The Nevsun contentions expressly address this very question. It may be helpful to distinguish three, related but distinct, questions: (i) what may constitute ICL obligations on the state in general, (ii) the specific question of what obligations automatically become binding on Canadian non-state actors, and (iii) whether the Canadian Supreme Court or the legislature is best equipped to create additional new civil remedies. I focus here only on the first question.
The majority in Nevsun responds to the first question largely by reiterating the commonly accepted criteria. In order to become recognized as a rule of ICL, two ingredients should be satisfied: there must be widespread, representative and consistent state practice, and opinio juris. The majority rules that when ‘an international practice develops from being intermittent and voluntary into being widely accepted and believed to be obligatory, it becomes a norm of customary international law’.Footnote 36 The learned dissenting opinion by Brown and Rowe calls this a ‘high bar’, reflecting ‘the extraordinary nature of customary international law’ because ‘it leads courts to adopt a role otherwise left to legislatures’ and ‘unless a state persistently objects, its recognition binds states to rules to which they have not affirmatively consented’.Footnote 37 Moreover, ‘if a rule becomes recognized as peremptory (i.e., as jus cogens) then even persistent objection will not relieve a state of the rule’s constraints’.Footnote 38
There is no disagreement in the Nevsun court on the proposition that the core human rights to immunity from slavery and forced labour form a part of ICL called jus cogens. Footnote 39 However, the learned dissent vehemently disagrees with the majority on the applicability of ICL obligations. It cites, as high authority, the views of Professor Ruggie that ‘preliminary research has not identified the emergence of uniform and consistent state practice establishing corporate responsibilities under customary international law’.Footnote 40 It also re-cites the evaluation of Judge Professor Crawford: ‘At present, no international processes exist that require private persons or businesses to protect human rights. Decisions of international tribunals focus on states’ responsibility for preventing human rights abuses by those within their jurisdiction. Nor is corporate liability for human rights violations yet recognized under customary international law…’.Footnote 41
Yet, the ever so circumspect Ruggie uses a qualifier that seems to have escaped the Court. He speaks only of ‘preliminary’ research; yet the Court cites this as an authoritative study. That leaves then one lone expert on each side: if the majority relies on Professor Koh, the minority invokes Professor Crawford. Perhaps this illustrates more a research shortfall than a truism that ICL does not recognize human rights responsibilities as applicable to corporations.
IV. Relevance of Nevsun to the Evolution of Binding Obligations
The time for debate for a deference to the executive is long over, especially when businesses specialise in core human rights violations in foreign states and fail to practise minimal norms of due diligence. When corporations trade away core human rights, and national courts practise judicial abdication by deferring to executive and the legislature, impermissible violation of core human rights occurs, even though prohibited by customary, or conventional, international law.
Rather, these are the times to further develop the UNGPs in such a way that fully meets obligations of the state to respect, protect and fulfil human rights and fundamental freedoms, for ‘business enterprises as specialized organs of society performing specialized functions, required to comply with all applicable laws and to respect human rights’ and the ‘need for rights and obligations to be matched to appropriate and effective remedies when breached’.Footnote 42 Perhaps the most important principle in the UNGPs is that of human rights due diligence. Principle 17 enunciates that ‘business enterprises should carry out human rights due diligence’ and that this ‘process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed’.Footnote 43
In this context, we must take a brief note of further developments in the EU law and policy. The 2017 Loi relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, has been rightly hailed as a pioneering French law imposing a duty of vigilance. It creates a binding legal duty to prevent, mitigate and, when needed, remedy human rights violations by holding companies. The elaboration of plan de vigilance entails an obligation of means (obligation de moyens), and not an obligation of result (obligation de resultant), to follow up on the implementation and efficiency of measures.Footnote 44
While this law has been hailed both as progressive and workable, it does not provide for any criminal liability for large MNCs. Nor does it set out specific details of stakeholder consultations in preparing the corporate vigilance plan. However, it is worth noting that human rights groups, trade unions and social movements had proposed a more comprehensive law in 2013 which ‘initially tried to push for a criminal liability regime as well as a civil regime with a reversal of the burden of proof…. The weakening of the legislative proposal was due mainly to intensive business lobbying against the text…’.Footnote 45
On the other hand, the Dutch Child Labour Due Diligence Act, passed in May 2019, crystallizes a generic duty to exercise due diligence that extend to all companies that sell or supply goods and services to Dutch end-users, including companies registered outside the Netherlands (Article 4.1).Footnote 46 If a company determines that there is ‘a reasonable suspicion that a product or service involves child labour’, it has to develop and implement an action plan and declare that the company has conducted due diligence.Footnote 47 Although victims, consumers or other stakeholders cannot use this law to sue a company, they can approach a regulator appointed under Article 3 of the Dutch Act, who is under a duty to publish the corporate human rights due diligence statements in an online public registry.Footnote 48 However, such a complaint to the regulator could only be lodged if ‘the company has not responded to the complaint six months after filing it’.Footnote 49 The Dutch Act envisages criminal sanctions if ‘a company fails to produce the statement, carry out the investigation, or set up an action plan or if the investigation or action plan are inadequate’.Footnote 50
The procedural limitation on filing a complaint for alleged break of the Dutch Act is perhaps considered necessary to produce a balanced result. Nevertheless, the period of six months to respond appears excessive because companies with robust human rights due diligence processes in place should be able to respond much sooner, especially for wrongs such as child labour. The limitation on affected stakeholders being able to directly sue companies is also far from clear. Even so, the imposition of criminal liability is welcome, particularly if seen as presaging a global regime of human rights obligations of business.
The introduction of mandatory human rights due diligence legislation in France and the Netherlands as well as the push for similar legislation in several other European countriesFootnote 51 have created momentum for an EU-wide legislation. Amidst continued business wrongdoings, on 29 April 2020 the European Justice Commissioner Didier Reynders announced that ‘the Commission commits to introducing rules for mandatory corporate environmental and human rights due diligence’.Footnote 52 Although the precise elements of the proposed EU regulations are yet to be seen,Footnote 53 this appears a step in the right direction in hardening human rights responsibilities of businesses.
At the international level, in July 2019, the Chair of the Open-Ended Intergovernmental Working Group (OEIGWG) released a Revised Draft of a Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises (Draft Treaty).Footnote 54 At the outset, and given some rumblings in Nevsun dissentFootnote 55 about the conflation of analytical and descriptive aspects, it is worth recalling that the Draft Treaty is based on the very idea of the promotion and protection of human rights obligations and responsibilities of corporations, most of which are already recognised in the ICL.
Mandatory human rights due diligence, as a requirement of ICL, remains central to the responsibilities of prevention of human rights victimage in doing transnational business. Clauses (d) and (e) of Article 5(3) of the Draft Treaty provide for integrating ‘human rights due diligence requirements in contractual relationships which involve business activities of a transnational character, including through financial contributions where needed’ and ‘adopting and implementing enhanced human rights due diligence measures to prevent human rights violations or abuses in occupied or conflict-affected areas, arising from business activities, or from contractual relationships, including with respect to their products and services’.
Moreover, Article 6(7) provides that, subject to their domestic law, ‘State Parties shall ensure that their domestic legislation provides for criminal, civil, or administrative liability of legal persons for’ several listed offences.Footnote 56 Doubts may be expressed whether these are all violations of jus cogens, or appear in the list of crimes against humanity. Nevsun, for example, provides a more chiselled listing of such norms. Moreover, the issue of civil versus criminal liability of corporations still remains wide open. Yet, human rights crimes as developed by the Draft Treaty appear to settle this issue insofar as it proposes a treaty approach rather than the ICL approach.
V. Conclusion
It is too late in the day to resurrect the idea that human rights doctrines, standards and norms do not apply to corporations as non-state actors or to revive the rather obsolete rationales (such as separation of powers, or institutional capacities and legitimacy of courts). At the end of the second decade of twenty-first century, MNC-developed forms of human rights nihilism ought to end, and the idea of doing business as a ‘moral free zone’,Footnote 57 generating forms of ‘corporate Neandtherlaism’Footnote 58 should yield to a core human rights oriented, and friendly, corporate governance. To this end, and particularly in clear affirmation of ICL legal liability of business, Nevsun makes, and marks, a substantial contribution.
