Commercial Litigation and Dispute Resolution Blog

On September 16, 2014, I blogged concerning the filing of a Notice of Civil Claim in British Columbia in Adolfo Garcia v. Tahoe Resources Inc.  That case concerns a claim against a Canadian parent company for mining activities conducted through a foreign subsidiary in Guatemala.  I noted a trend towards seeking redress against Canadian parent mining companies in Canadian courts.  This trend has been picked up by the press and I was quoted on this topic in the Legal Post on December 10, 2014.

This trend is continuing.  On November 20, 2014, a Notice of Civil Claim was filed in Araya v. Nevsun Resources Ltd.  This is a representative claim brought on behalf of four Eritrean Nationals, now refugees, who allege that they were forced to work at the Bisha Mine in Eritrea.  The Bisha Mine is alleged to be a project operated by an indirect subsidiary of Nevsun (60%) with 40% being held owned by the state-owned Eritrean National Mining Corporation.

The Notice of Civil Claim alleges that Eritrea is a repressive rogue State in which there is a national system of forced labour akin to slavery.  It alleges that this forced labour was used to construct and operate the Bisha Mine.  Further, it is alleged that revenue generated from the Bisha Mine has provided the financial support for a system of “forced labour and human rights abuses”.

The plaintiffs assert the right to bring this claim as representatives on behalf of all Eritrean Nationals who are forced to work at the Bisha Mine from September 2008 to the present claiming damages (general, special, aggravated and punitive).  The plaintiffs are not seeking to certify the claim as a class proceeding.

The allegations made in the Notice of Civil Claim are far-reaching.  From a legal pleadings perspective, the plaintiffs have relied upon both international and domestic law to ground their claim.  The plaintiffs allege that they are entitled to damages for forced labour, slavery, torture and cruel, inhuman or degrading treatment under international law, and damages for crimes against humanity under international law.  Of particular interest, however, is the fact that the plaintiffs also allege that the actions of Nevsun are tortious under British Columbia law.

It is alleged that Nevsun controlled the operations at Bisha Mine and exercised complete control over the actions of the foreign subsidiary or that the foreign subsidiary acted as the agent of Nevsun.  The plaintiffs plead that this conduct amounts to conversion, battery, unlawful confinement and intentional infliction of mental distress.  The plaintiffs also allege that Nevsun condoned the use of forced labour and the system of enforcement and is therefore directly liable for the injuries suffered by the plaintiffs, or alternatively, it failed to stop the forced labour and enforcement practices when it was obvious to it that such activities were occurring.  Further, the plaintiffs say that Nevsun has vicarious liability for Eritrean government entities as well as the Eritrean military who were engaged to further Nevsun’s commercial activities at the Bisha Mine.  There is also an allegation that Nevsun was negligent in that it owed a duty of care in light of its corporate responsibility policies and that it breached the standard of care by failing to act in accordance with customary corporate social responsibility principles, failing to conduct due diligence and failing to adequately investigate and respond to reports of abuse.  There is also an allegation of conspiracy between Nevsun, its foreign subsidiary, Eritrean corporate entities and the Eritrean military.  The final claim is that Nevsun has been unjustly enriched at the expense of the forced labourers who were not paid for their work.  As a result, there is a claim that Nevsun hold its interests in the Bisha Mine “in trust” for the plaintiffs.

Nevsun is another example of the use of traditional and well-known Canadian legal principles in an effort to have claims against Canadian parent companies adjudicated in Canada.  The pleadings in Nevsun expand the use of those principles with claims under international law.  This increased litigation trend dovetails with the announcement of the Canadian government that it issued a new strategy imposing new consequences on foreign extractive Canadian companies operating in foreign jurisdictions who refuse to adhere to corporate social responsibility best practices and the government’s dispute resolution process initiated through the office of the Extractive Sector CSR Counsellor.  This is further evidence that Canadian mining and other extractive industries companies operating in foreign jurisdictions ought to be prepared to defend their activities and the activities of their subsidiaries in Canadian courts as well as before Canadian regulators.