In recent years, Canadian courts have increasingly heard large civil claims against Canadian companies for alleged human rights violations in their foreign operations. As we have discussed previously, judges faced with these claims must determine whether the court’s jurisdictional reach extends to the company’s activities in its global supply chain, thus permitting foreign claimants to pursue their action in Canada.

Ontario Court of Appeal dismisses proposed Rana Plaza class action

The proposed Rana Plaza class action in Das v George Weston Limited  is an example of a court declining to extend jurisdictional reach to clothing production in Bangladesh carried out for Canadian companies.

In 2015, a group of Bangladeshi workers commenced a proposed class action against Loblaws and Joe Fresh (“Loblaws Defendants”) following the collapse of the Rana Plaza factory in 2013, which killed 1,130 garment workers. The substance of the plaintiffs’ claim was that the Loblaws Defendants owed a duty to ensure the safety of workers in its supply chain and breached that duty by failing to properly inspect and ensure the structural integrity of the Rana Plaza building.

On December 21, 2018, the Ontario Court of Appeal upheld the lower court’s decision to dismiss the plaintiffs’ class certification motion. The Court agreed with the lower court’s conclusion that Bangladeshi law applied to the plaintiffs’ claims and that the proposed class action disclosed no reasonable cause of action under Bangladeshi law. The plantiffs’ argument that Sharia law would treat female victims of the collapse differently than male victims in terms of damages calculations did not alter the Court’s conclusion that Bangladeshi law should apply. The Court also held that not only were the claims time-barred under Bangladesh’s Limitation Act, 1908, but claims grounded in negligence and vicarious liability were novel in Bangladesh and were unlikely to be recognized.

Further, the Court determined that the Loblaws Defendants did not have direct control over its local clothing suppliers, and so were unlikely to be found vicariously liable. The Court of Appeal held that although the Loblaws Defendants’ Code of Conduct addressed workplace health and safety at the factory, it did not specifically mention the structural integrity of the building operated by the suppliers. The Court of Appeal was satisfied that there is a distinction between the two issues.

It remains to be seen whether the putative class members will seek leave of the Supreme Court of Canada to appeal the Court of Appeal’s decision.

Nevsun appeal before Canada’s highest court

On January 23, 2019, the Supreme Court heard oral arguments in Araya v Nevsun Resources Ltd, a case that promises to be precedent-setting in terms of foreign claimants’ ability to bring claims in Canada for alleged human rights violations in the supply chains of Canadian companies.

As we wrote previously, the Nevsun case involves a group of Eritrean miners who filed a claim in British Columbia alleging that Nevsun Resources Ltd. was implicated in serious human rights abuses at the Bisha mine in Eritrea from 2008 to 2012. Nevsun opposed the miners’ claim on jurisdictional grounds, arguing that the claim should not be heard in British Columbia but by a court in Eritrea.

In October 2016, the British Columbia Supreme Court disagreed with Nevsun’s jurisdictional arguments and ruled that the lawsuit should proceed to trial. Nevsun’s appeal before the British Columbia Court of Appeal was dismissed the following year.

Nevsun’s appeal before the Supreme Court raises the question of whether Canadian common law should recognize a cause of action for damages based on alleged breaches of customary international law. Nevsun’s position is that customary international law governs state actors, not private corporations. They argue that extending claims for breach of international law to private actions for damages is unprecedented and would have serious ramifications for Canadian businesses operating abroad. In response, the Eritrean miners submit that it is premature to settle this question before a trial on the merits.

The Supreme Court’s decision will deal only with the preliminary question of whether the action should proceed to trial in British Columbia. The Court did not hear submissions on the merits of the miners’ human rights claims.

Implications for Canadian businesses operating abroad

The ongoing prevalence of human rights claims against Canadian companies by foreign workers will continue to shape the case law on how legal responsibility is attributed along multinational supply chains. In particular, if the Supreme Court dismisses Nevsun’s appeal, it will send a clear message to lower courts that they should not be quick to dismiss the human rights claims of foreign litigants against Canadian companies.

The trend in litigation against high profile Canadian companies is a reminder for all Canadian companies to fully examine and review their global operations and take steps to investigate and remedy deficiencies. While there is no “one size fits all” solution, respect for human rights, a comprehensive understanding of the direct and indirect impacts of foreign business activities and supply chains, and effective due diligence processes are increasingly essential for large and small businesses alike to mitigate against financial and brand risk. Canadian companies operating in high risk jurisdictions and/or industries need to conduct a legal risk analysis of current activities and operations, implement human rights policies and supplier codes of conduct, and commit to swift action to investigate and remedy problems that may have adverse human rights impacts.

Stay tuned for further updates as the case law in this area continues to develop.

  • Many thanks to Faye Williams for her assistance with this article.