Transnational corporations and modern slavery: Nevsun and beyond

ABSTRACT

A recent decision of the Supreme Court of Canada Nevsun Resources Ltd. v Araya, has brought the issue of transnational corporations’ responsibility for human rights violations to the forefront in Canada. After critically examining the decision, this article aims to propose an effective legislative design for Canada. The article also examines another pertinent decision (this one from the UK), Vedanta Resources plc. v Lungowe in this regard. The proposals for effective legislation in Canada set out in this article will also be relevant for other countries considering the introduction of (or amending) modern slavery laws.

KEYWORDS:

• Corporate liability
• human rights
• modern slavery
• Nevsun
• Vedanta

Acknowledgements

I am grateful to Dr Leonid Sirota and Prof Charles Rickett for their comments on previous drafts. I would also like to thank the anonymous referee and the editor for helpful comments.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Nevsun Resources Ltd. v Araya 2020 SCC 5 [Nevsun].

2 Vedanta Resources plc. v Lungowe [2019] UKSC 20 [Vedanta].

3 James Cockayne, ‘Working with the Financial Sector to Correct the Market Failure of Modern Slavery’ (2021) 6(1) BHRJ 159.

4 Nick Friedman, ‘Corporate Liability Design for Human Rights Abuses: Individual and Entity Liability for Due Diligence’ (2020) 1 OJLS Advance online publication 21. Friedman titles the two categories as act-based liability and harm-based liability. I expand the former categorization to ex ante measures so as to include not only liability based on non-compliance with some required acts, but also voluntary measures with no liability attached to them.

5 ‘Swiss vote to reject Responsible Business Initiative’ BBC News (London, 29 November 2020) <https://www.bbc.com/news/world-europe-55122172> accessed 1 April 2021.

6 ibid.

7 The California Transparency in Supply Chains Act 2010, s 2(a).

8 Sunil Rao, Modern Slavery Legislation: Drafting History and Comparisons between Australia, UK and the USA (Routledge 2020) 28.

9 Modern Slavery Act 2015, s 54.

10 Modern Slavery Act 2018 (Australia); Rao (n 8) 62–63.

11 Rao, ibid 83.

12 Tasqin Iqbal, ‘The Efficacy of the Disclosure Requirement under s.54 of the Modern Slavery Act’ (2018) 39(1) Comp. Law. 3.

13 LAW No. 2017-399 of March 27, 2017 relating to the duty of vigilance of parent companies and ordering companies (1), online: <https://www.legifrance.gouv.fr/eli/loi/2017/3/27/ECFX1509096L/jo/texte>.

14 Sandra Cossart, Jérôme Chaplier and Tiphaine Beau de Lomenie, ‘The French Law on Duty of Care: A Historic Step Towards Making Globalization Work for All’ (2017) 2(2) BHRJ 317–23.

15 Bjorn Fasterling, ‘Vigilance or Compliance? On the New French “Vigilance” Law’ NYU Stern Center for Business and Human Rights (19 June 2017) <https://bhr.stern.nyu.edu/blogs/french-vigiliance-law> accessed 1 April 2021.

16 ibid.

17 As of the date of writing, only one claim under the law (against Total) went to court. The Versailles Court of Appeal held that the case should be decided by the Commercial Court. The decision of the Commercial Court is pending. See ‘Court Backs Total in Uganda Vigilance Case’ Energy Voice (10 December 2020) <https://www.energyvoice.com/oilandgas/africa/ep-africa/285055/total-uganda-vigilance-appeal/> accessed 1 April 2021.

18 Cossart, Chaplier, and Beau de Lomenie (n 14). The authors are of the view that the legislation is a ‘major milestone towards improving corporate respect for human rights and the environment’.

19 Barnali Choudhury, ‘Balancing Soft and Hard Law for Business and Human Rights’ (2018) 67(4) I.C.L.Q. 961.

20 ibid.

21 ibid 964, 969–70.

22 Terry Glavin, ‘Will Canada stand with Uyghurs – and Against “Modern Slavery?”’ Macleans (27 July 2020) <https://www.macleans.ca/news/world/will-canada-stand-with-uyghurs-and-against-modern-slavery/> accessed 1 April 2021.

23 Jason Haynes, ‘The Confluence of National and International Law in Response to Multinational Corporations’ Commission of Modern Slavery: Nevsun Resources Ltd. v Araya’ (2020) Journal of Human Trafficking <https://www.tandfonline.com/doi/full/10.1080/23322705.2020.1832785> accessed 1 April 2021.

24 ibid.

25 S.B.C. 2002, c. 57. Nevsun (n 1) [7].

26 Nevsun (n 1) [17].

27 ibid [8].

28 ibid [9] and [10].

29 ibid [11].

30 ibid [12].

31 The act of state doctrine, as described by Lord Millet, is ‘a rule of domestic law which holds the national court incompetent to adjudicate upon the lawfulness of the sovereign acts of a foreign state’. R. v Bow Street Metropolitan Stipendiary Magistrate, Ex parte Pinochet Ugarte (No. 3) [2000] 1 A.C. 147 (H.L.) 269; ibid [29].

32 ibid [60].

33 ibid [60] at para 60.

34 ibid [73].

35 ibid [75].

36 I.C.J. Report 1969, 3, ibid [63].

37 Nevsun (n 1) [82].

38 ibid [86]. This is referred to as the doctrine of adoption.

39 ibid [104].

40 ibid [106].

41 ibid.

42 ibid [111].

43 Koh, ‘Separating Myth from Reality about Corporate Responsibility Litigation’ (2004) 7 J.I.E.L. 263, 266.

44 Nevsun (n 1) [112].

45 Koh (n 43), 265.

46 Nevsun (n 1) [113].

47 ibid [113].

48 ibid [122].

49 ibid [86].

50 ibid [160].

51 ibid [189].

52 Nevsun (n 1) [188].

53 U.N. Doc. A/HRC/4/035, February 9, 2007.

54 Nevsun (n 1) [190].

55 ibid [268].

56 ibid [269].

57 ibid [212].

58 Andrew Sanger, ‘Corporate Liability for Human Rights Abuse: For Congress, Not Courts’ (2018) 77(3) C.L.J. 441, 444.

59 Adefolake Adeyeye, ‘Corporate Responsibility in International Law: Which Way to Go?’ 11 S.Y.B.I. L. 141, 143. See also Madeleine Conway, ‘A New Duty of Care? Tort Liability from Voluntary Human Rights Due Diligence in Global Supply Chains’ (2015) 40 Queen’s L.J. 741, 743. Conway says that Canadian corporations that benefit from foreign labour have no legal responsibility to protect the human rights of workers in their supply chains.

60 ibid Conway 745.

61 Kiobel v Royal Dutch Petroleum 621 F.3d 111 (2d Cir. 2010). For a discussion of the issue in the United States, see generally Sanger (n 58) 441; Jolane T Lauzon ‘Araya v Nevsun Resources: Remedies for Victims of Human Rights Violations Committed by Canadian Mining Companies Abroad’ (2018) 31(1) Revue québécoise de droit international 143, 163–66.

62 Human Rights Council, Resolution 26/9 (14 July 2014) ‘Elaboration of an International Legally Binding Instrument on transnational corporations and other businesses with respect to human rights’ – UN Doc A/HRC/RES/26/9.

63 Virginia Mantouvalou, ‘The UK Modern Slavery Act 2015 Three Years On’ (2018) 81(6) MLR 1017, 1044.

64 Nevsun (n 1) [262].

65 Stephen Pitel, ‘Claims Against Corporate Defendant Founded on Customary International Law Can Proceed in Canada’ Conflict of Laws (28 February 2020), <https://conflictoflaws.net/2020/claims-against-corporate-defendant-founded-on-customary-international-law-can-proceed-in-canada/> accessed 1 April 2021.

66 Bernise Carolino, ‘Nevsun Settles with Eritrean Plaintiffs in Relation to Landmark Supreme Court of Canada Case’ Canadian Lawyer (5 November 2020) <https://www.canadianlawyermag.com/practice-areas/litigation/nevsun-settles-with-eritrean-plaintiffs-in-relation-to-landmark-supreme-court-of-canada-case/334916> accessed 1 April 2021.

67 Nevsun, no 1 [123].

68 ibid.

69 ibid [123].

70 ibid [124].

71 ibid [137].

72 ibid [137].

73 ibid [137].

74 ibid [141].

75 ibid [215].

76 ibid [218].

77 ibid.

78 ibid [219].

79 ibid [220], [221].

80 ibid [237].

81 ibid [238].

82 ibid [242].

83 ibid [245].

84 ibid [256].

85 ibid [247].

86 ibid [247].

87 ibid [249].

88 ibid [251].

89 ibid [253].

90 ibid [259].

91 ibid [259].

92 R. v Mann [2004] SCC 52. See also Cory Giordano, ‘Recognizing New Torts: How Does It Work?’ Canlii Connects (20 March 2019) <https://canliiconnects.org/en/summaries/66046> accessed 1 April 2021.

93 Vedanta (n 2).

94 Sanger (n 58) 489.

95 Vedanta (n 2) [44].

96 ibid.

97 ibid [46].

98 ibid [54].

99 ibid [55].

100 ibid [55].

101 ibid [65].

102 ibid [52].

103 ibid [53].

104 ibid.

105 ibid [54].

106 Sanger (n 58) 489.

107 LKL International Consulting Inc, ‘Human Rights Impact Assessment: Nevsun’s Bisha Mine – 2015 Audit’ <https://www.business-humanrights.org/en/human-rights-impact-assessment-nevsuns-bisha-mine-2015-audit> accessed 1 April 2021.

108 ibid 17.

109 Conway (n 59) 756.

110 Shuangge Wen, ‘The Cogs and Wheels of Reflexive Law – Business Disclosure under the Modern Slavery Act’ (2016) 43 JL & Soc’y 327; Galit A. Sarfaty, ‘Translating Modern Slavery into Management Practice’ (2020) 45(4) L. & Soc. Inquiry 1027, 1046.

111 ibid Wen 339–41. For a comparative discussion of the modern slavery law in UK, Australia and California, see Rao (n 8). For a discussion of the Australia modern slavery law, see Ramona Vijeyarasa, ‘A Missed Opportunity: How Australia Failed to Make Its Modern Slavery Act a Global Example of Good Practice’ (2019) 40 Adel L Rev 857.

112 Wen (n 110) 344.

113 ibid 329.

114 Modern Slavery Act 2015 (UK), s 54.

115 Modern Slavery Act 2015 (UK), s 54.

116 Mantouvalou (n 63) 1044.

117 ibid.

118 Liezel Hill, ‘Canadian Lawmakers Vote Down Controversial Bill C-300’ Mining weekly (28 October 2010) <https://www.miningweekly.com/article/canadian-mps-vote-against-bill-c-300-2010-10-28> accessed 1 April 2021.

119 Bill S-211, Senate of Canada.

120 Emerald Bensadoun, ‘Trudeau Prorogues Parliament – What Exactly Does that Mean?’ Global News (18 August 2020) <https://globalnews.ca/news/7283685/trudeau-prorogues-parliament-explained/> accessed 1 April 2021.

121 Bill S-211, s 7.

122 Bill S-211, s 7 (3).

123 Bill S-211, s 9.

124 Bill S-211, s 14.

125 Bill S-211, s 15(1).

126 Global Affairs Canada, ‘Canada’s Enhanced Corporate Social Responsibility Strategy to Strengthen Canada’s Extractive Sector Abroad’ <https://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse.aspx?lang=eng#:~:text=Canada's%20enhanced%20Corporate%20Social%20Responsibility%20(CSR)%20Strategy%2C%20%E2%80%9CDoing,CSR%20strategy%2C%20%E2%80%9CBuilding%20the%20Canadian> accessed 1 April 2021.

127 ibid.

128 ibid.

129 Ghada Alsharif, ‘“No Real Role”: Canada’s Watchdog for Mining Abroad Struggles to Sharpen Its Teeth’ CBC News (20 November 2016) <https://www.cbc.ca/news/canada/mining-watchdog-1.3855789> accessed 1 April 2021.

130 ‘The Government of Canada Brings Leadership to Responsible Business Conduct Abroad’ (17 January 2018) <https://www.canada.ca/en/global-affairs/news/2018/01/the_government_ofcanadabringsleadershiptoresponsiblebusinesscond.html> accessed 1 April 2021.

131 ibid.

132 Jeff Lewis, ‘Canada Companies’ Watchdog to Press Trudeau for Expanded Powers’ Financial Post (21 November 2019) <https://financialpost.com/pmn/business-pmn/canada-companies-watchdog-to-press-trudeau-for-expanded-powers> accessed 1 April 2021.

133 ibid.

134 John Longhurst, ‘Frustration Fuels Exodus from Advisory Body’ Winnipeg Free Press (12 September 2019) <https://www.winnipegfreepress.com/arts-and-life/life/faith/frustration-fuels-exodus-from-advisory-body-560105052.html> accessed 1 April 2021.

135 Autorité des marchés financiers ‘Notice Relating to Modern Slavery Disclosure Requirements’ (2018) <https://lautorite.qc.ca/fileadmin/lautorite/reglementation/valeurs-mobilieres/0-avis-amf/2018/2018sept04-avis_esclavage_moderne-en.pdf> accessed 1 April 2021.

136 ibid 3.

137 ibid 5.

138 ibid.

139 Mantouvalou (n 63) 1040, 1041; See also Ingrid Landau and Shelley Marshall, ‘Should Australia be Embracing the Modern Slavery Model of Regulation’ (2018) 46(2) Federal L Rev 313, 326.

140 Mantouvalou ibid 1041.

141 Landau and Marshall (n 139) 330.

142 ibid.

143 Jonathan Tuck and Laura Bentham, ‘Modern Slavery – Where Are We Now?’ (2019) 8(5) Comp. & Risk 3, 4.

144 Rao (n 8) 57.

145 ibid 58.

146 Tuck and Bentham (n 143) 2, 4.

147 Julianne Hughes-Jennett and Peter Hood (Hogan Lovells), ‘The Implications of the UK Supreme Court’s Decision in Vedanta for the Management of Human Rights Risk in Overseas Operations and Supply Chains’ Oxford Business Law Blog (30 May 2019) <https://www.law.ox.ac.uk/business-law-blog/blog/2019/05/implications-uk-supreme-courts-decision-vedanta-management-human> accessed 1 April 2021.

148 Jamie Curle, Sarah Ellington, and Isobel Rees, ‘Supreme Court Rules Vedanta Case on Parent Company Liability for Actions of Overseas Subsidiary Can Proceed to Trial’ DLA Piper Publications (11 April 2019) <https://www.dlapiper.com/en/uk/insights/publications/2019/04/supreme-court-rules-vedanta-case-on-parent-company-liability/> accessed 1 April 2021.

149 ibid.

150 Conway (n 59) 780.

151 Patricia Nilsson, ‘Boohoo Launches Independent Investigation into Supply Chain’ Financial Times (8 July 2020) <https://www.ft.com/content/343290ba-b7a4-477e-8fa2-af2fd6a5b841> accessed 1 April 2021.

152 Attracta Mooney, ‘Frédéric Janbon: “Sustainable Investing Will be a Major Force”’ Financial Times (26 July 2020) <https://www.ft.com/content/8ed1aa98-d534-4703-a2b3-dcacdaec83df> accessed 1 April 2021.

153 Sharon Yadin, ‘Regulatory Shaming’ (2019) 49 Environmental L 407.

154 Conway (n 59) 753.

155 Friedman (n 4). Friedman argues that imposing liability on both the corporation and responsible executives within the corporation would be the most optimal way to deter bad behaviour.

156 Tuck and Bentham (n 143) 3.

157 Sarfaty (n 110) 15.

158 ibid.

159 ibid 12.

160 Choudhury (n 19) 985, 986.

161 For a detailed report on human rights violations by Canadian companies in the mining sector see Justice and Corporate Accountability Project, ‘The Canada Brand: Violence and Canadian Mining Companies in Latin America’ (1 December 2017) <https://justice-project.org/the-canada-brand-violence-and-canadian-mining-companies-in-latin-america/>.

162 Bill S-211, s 9.

163 OSC Policy 15-601 Whistleblower Program (4 October 2018).