I. Introduction
International law is most commonly regarded as a set of norms, standards and rules that regulate the behavior of States, usually in their relationship with one another, as well as vis a vis their own constituents, such as in the context of human rights law. The development in human rights and international criminal law during the 20th and 21st Centuries ushered in an era of the applicability of international law standards not only to States, but to individual persons. Now, several courts in North American jurisdictions have begun to address the issue of whether a person can face a domestic tort claim for international law violations, and if so, whether all persons—both natural and legal—are subject to such suits. This blog aims to provide some reflections about these recent North American developments and the intersection between tort law and international law, particularly in the context of business and human rights harms.
For that purpose, this blog focuses on two cases—one in Canada and one in the US—which show that both jurisdictions are still struggling with the question of whether corporations are subject to direct liability for violations of international human rights resulting in a civil cause of action. Unlike many European jurisdictions such as the Netherlands, which apply a “horizontal effect” doctrine that makes it easier for plaintiffs to directly claim violations of international human rights treaty provision against other private persons, North American common law jurisdictions have adopted a more cautious approach. For example in the US, the Alien Tort Statute (ATS) is a narrow provision that allows foreign persons to sue for a discrete category of violations of the laws of nations, but beyond that, torts based on violations of international law have not generally been invoked as grounds for tort claims in US courts. Furthermore, and as will be discussed here, the Canadian Supreme Court only recently opened the door for bringing tort claims based on customary international law violations against companies.
II. Canada
On 28 February 2020 the Canadian Supreme Court rendered a decision in Nevsun v Araya that allows the case to proceed to trial after it was filed in 2014 by three Eritreans against Nevsun Resources Ltd. (Nevsun). In light of the current blogpost, the main question of interest that the Supreme Court needed to address in order to come to its decision was: “Can the customary international law prohibitions against forced labor; slavery; cruel, inhuman or degrading treatment; and crimes against humanity ground a claim for damages under Canadian law” against a Canadian company?
Nevsun Resources Ltd. is headquartered in Vancouver and through its subsidiaries has a 60% ownership of the Bisha copper and zinc mine in Eritrea. The other 40% is owned by the Eritrean National Mining Corporation. For the construction of the Bisha mine, two companies were hired, Mereb and Segen, who received conscripts from Eritrea’s National Service Program. This program required all Eritreans to do 12 months of military development services, which could also entail working for construction projects that are of a national interest. The conscription for the Bisha mine was indefinite, yet wages only provided for subsistence and the working conditions were extremely harsh. The three Eritreans that filed the case in Canada accuse Nevsun of being complicit in their conscription into a forced labor regime in the Bisha mine. The claims for damages are based both on violations of domestic tort law as well as on violations of customary international law on the prohibitions against forced labor, slavery, cruel, inhuman or degrading treatment and crimes against humanity directly. Nevsun denies the allegations and filed a motion to strike the case on the ground, amongst others, that the claims based on customary international law had no reasonable prospect of success.
In October 2016, the chambers judge dismissed the motion to strike the case and Nevsun appealed. On appeal, the Court of Appeal explicitly stated in its judgment of November 2017 that the claims under customary international law could proceed and agreed with the chambers judge to dismiss the motion to strike the case. Nevsun was granted another appeal, now with the Supreme Court. On the 28 February 2020, the Supreme Court confirmed that the case could proceed with the claims under customary international law, thereby affirming that it is not impossible per se under Canadian law for companies to be liable for breaches of customary international law.
The majority of the Supreme Court (five against four) identified that the prohibitions against crimes against humanity, forced labor, slavery, cruel, inhuman and degrading treatment are rules under customary international law and even have the status of jus cogens. According to the Supreme Court, Canada applies the doctrine of adoption. This doctrine, in the absence of conflicting legislation, allows customary international law to be incorporated automatically into domestic law without a need for legislation to confirm this. The Supreme Court goes on to determine whether such prohibitions could also apply to corporations. The majority explains that it is commonly agreed upon that States, as well as individuals, should not violate these rules. More interestingly, they state that: “The context in which international human rights norms must be interpreted and applied today is one in which such norms are routinely applied to private actors. It is therefore not plain and obvious that corporations today enjoy a blanket exclusion under customary international law from direct liability for violations of obligatory, definable, and universal norms of international law.” So, the norms form part of the Canadian common law and could arguably also apply to Nevsun. The next question however centers on whether a civil remedy is available for breaches of adopted customary international law norms. According to the majority, customary international law is part of Canadian domestic law and on a par with any other legal norm. The majority argues that theoretically a direct remedy is available because Nevsun is a Canadian company and bound by Canadian law. Based on this reasoning the majority concludes that it was not demonstrated that the claims by the Eritrean workers should be dismissed as having no reasonable prospect of success.
The minority argues differently and explains that there were two theories brought to the fore that could support the claims of the Eritrean workers: 1) their claims are based on a breach of customary international law directly for which Canadian domestic law could offer a remedy, and 2) their claims are based on the recognition of the Canadian Courts of a common law tort that reflect customary international law in substance. The dissenting judges argue in relation to the first theory that there is no customary international law recognizing direct liability of corporations for human rights violations yet. They argue that this is the missing element in the reasoning of the majority. They explain and dismiss three possible lines of reasoning that could support a positive outcome for the victims in relation to the majorities decision: 1) The prohibitions under customary international law requires Canada to provide domestic civil liability based on the right to an effective remedy. This is not the case however according to the dissenting judges because there is not enough evidence for such a customary rule to exist, 2) the prohibitions under customary international law themselves include a rule of liability. They also dismiss this for a lack of evidence that such a rule exists, and 3) the doctrine of adoption is producing a rule of liability under Canadian law. According to the dissenting judges the doctrine of adoption cannot impose civil liability based on a general prohibition upon states and criminal prohibitions on individuals. Interestingly they state: “The hoary and historically unique Alien Tort Statute requires courts to treat international law as creating civil liabilities. Essentially, the majority’s approach would amount to Americanizing the Canadian doctrine of adoption.” This would amount to judicial lawmaking according to the dissenting judges, which is the same argument that makes the dissenting judges dismiss the second theory. Thus, in order for the doctrine of adoption to form the basis for civil liability of corporations for breaches for international law, the dissenting judges seem to argue that there needs to be customary international law that prohibits slavery, etc., but also customary international law that establishes direct liability for the violation of the prohibitions by corporations and a civil cause of action. According to the dissenting judges, this is not the state of the law.
The judgment seems hopeful for potentially offering victims of international human rights abuses a way of redress in domestic courts against corporations. However, the Supreme Court leaves untouched a definitive judgment on the exact way in which the civil liability of corporations for breaches of customary international law can be established. The explanation of Justice Albella (nr. 117 and 118) even explains that the common law needs to be developed further to recognize direct remedies and she states in nr. 127: “The workers’ customary international law pleadings are broadly worded and offer several ways in which the violation of adopted norms of customary international law may potentially be compensable in domestic law. The mechanism for how these claims should proceed is a novel question that must be left to the trial judge”. Justice Albella explains how the compensability for violations could be possible without developing new torts by grounding liability in international customary law directly, based on the right to an effective remedy. The majority does not seem to have a problem with the direct applicability of customary international law to corporations but still grapples with the question of how to establish tort liability in case of breaches. The dissenting judges seem to suggest however that the question of tort liability is very much related to the question of direct applicability of customary international law to corporations and that there is a lack of evidence for such applicability. Taking into account the remaining questions and the arguments of the dissenting judges, getting to the finish line of a court establishing direct liability of corporations for customary international law will probably still be a hard battle to fight.
III. Corporate Liability under the US Alien Tort Statute
The ATS grants federal courts jurisdiction to hear lawsuits filed by non-US citizens for torts committed in violation of international law. As a prior blog post describes, US courts have grappled with the contours of the applicability of the ATS, but generally accept that jus cogens violations fall within its scope. Therefore, unlike in Canada, where the courts had to first establish the basis upon which international claims may be actionable as domestic torts, US federal court have been granted subject-matter jurisdiction through legislation.
The major open questions with regards to suing for human rights violations in US courts is the issue of whether corporations can be held liable under the ATS. The last time the Supreme Court ruled on the ATS, in Jesner v. Arab Bank, it barred corporate liability for foreign corporations on the basis of foreign policy concerns. As for domestic corporations, at the moment there is a split between federal circuits: The majority of federal circuits hold or assume that corporations can be liable. However, the Second Circuit Court of Appeals held in Kiobel v. Royal Dutch Petroleum that corporations could not be subject to suit under the ATS. Until now, the US Supreme Court has punted the question, but it appears the time to reach a definitive conclusion may be drawing nigh.
The case that will likely to resolve the issue comes to the Supreme Court from the Ninth Circuit Court of Appeals. The case was brought by former child slaves who were forced to work on cocoa farms in the Ivory Coast, against large manufacturers, purchasers, processors, and retail sellers of cocoa beans. One of the defendant corporations, Cargill, requested that the Supreme Court review the issue of corporate liability (among other issues), and the Supreme Court invited the US Department of Justice (DOJ) to submit an amicus curiae brief, which was filed on 26 May 2020 and takes the position that corporations should not be subject to suit under the ATS. Although the Supreme Court has clearly signaled its interest in hearing the case, it has not yet granted writ of certiorari as of the time of the publication of this blog.
The positions of those against corporate liability for violations of international law, which include the Second Circuit and the DOJ, are as follows: The Second Circuit in Kiobel based its rejection of corporate liability on the position that “international law has steadfastly rejected the notion of corporate liability for international crimes, and no international tribunal has ever held a corporation liable for a violation of the law of nations.” Especially because the international norm must be “specific, universal, and obligatory” to be actionable under the ATS, the court held that the absence of apparent examples of corporate liability for human rights violations before international courts means that corporate liability does not exist under customary international law. In reaching this holding, the court reviewed the jurisprudence of a number of international criminal tribunals and the Rome Statute of the International Criminal Court, and found that they have not tried corporations. It also reviewed treaties, but found that the treaties that provide for corporate liability do not sufficiently to demonstrate that corporate liability is a universally recognized norm of customary international law.
The DOJ does not rely on the Second Circuit holding when forming the main points of its argument in the amicus curiae brief, although it does appear to agree that corporate liability is not a part of customary international law. Citing Jesner, The DOJ argues that the court must exercise “great caution” before recognizing a new cause of action under the ATS, including the imposition of corporate liability, and that absent further action by Congress, the scope cannot be thus expanded. It suggests that the separation-of-powers doctrine is particularly salient here because of potential foreign policy concerns, especially in light of the fact that “ATS suits against domestic corporations frequently involve claims of aiding and abetting misconduct abroad—which often implicate the policies and conduct of foreign states.” Thus, it is not the role of the courts to extend liability to corporations. It also submits that because Jesner precluded liability of foreign corporations, a contrary rule for domestic corporations would result in discrimination against US corporations. Finally, it notes that with the exception of the Ninth Circuit, most circuit courts that supported corporate liability under ATS did so before the Jesner decision was issued by the Supreme Court.
Those in support of allowing for corporate liability under the ATS provide counter-arguments to the positions held by the DOJ and the court in Kiobel, and add additional reasons for why corporate liability is a part of customary international law and thus permissible under the ATS. Judge Leval notes in his dissenting opinion in Kiobel that the majority’s holding could have significant consequences, as one can escape liability “simply by taking the precaution of conducting the heinous operation in the corporate form.” He takes the opposite view of the majority regarding customary international law on corporate liability, arguing that there is no rule that precludes corporations from being liable for international law violations. He points out the majority’s reliance on criminal tribunals that do not have personal jurisdiction over corporations is incompatible with the ATS, since “[t]he reasons why international tribunals have been established without jurisdiction to impose criminal liability on corporations have to do solely with the theory and the objectives of criminal punishment, and have no bearing on civil compensatory liability.” He points out that there is no international rule for civil corporate liability only because civil law is generally a national issue, and no body of international civil law exists. That being said, “[i]f the absence of a universally accepted rule for the award of civil damages against corporations means that U.S. courts may not award damages against a corporation, then the same absence of a universally accepted rule for the award of civil damages against natural persons must mean that U.S. courts may not award damages against a natural person.”
The respondents to the petition of writ of certiorari by Cargill to the Supreme Court, who are the plaintiffs in the case before the Ninth Circuit, submit that “general principles of international law support corporate liability.” They emphasize that while in Jesner the defendant was a foreign bank that provided financial services to foreign governments—which raised important foreign policy concerns—the case against Cargill and other US-based corporations poses no such risks. They highlight that the prior Executive Branch in Kiobel and Jesner (under President Obama) supported corporate liability, based in part on its acceptance in the federal common law. They also note that a decision to the contrary would bring American law out of step with international law. Finally, they note that the Kiobel decision “appears to swim alone against the tide,” and that the majority of circuits allow for corporate liability under the ATS; indeed, they even point to courts in the Second Circuit that have expressed reluctance to follow this precedent.
It will be interesting to see how the Supreme Court ultimately resolves the question of corporate ATS liability, but for now it suffices to make the following observations: there seem to be two main hurdles in answering the question. First, is the concept of corporate liability in international law “specific, universal, and obligatory” enough to be actionable under the ATS? Based on Judge’s Leval astute dissenting opinion in Kiobel that seems to accurately track the customary international law position on corporate liability, as well as the DOJ’s hesitance to mirror the Kiobel majority’s arguments in its amicus curiae brief, we argue that it is. Indeed, other countries’ general acceptance of corporate responsibility for international law harms seem to support this position. Second, are there other reasons why corporate ATS liability should not be recognized by US courts? Here, the opportunity to depart from international law justifications and instead rely on domestic doctrines that supersede international law, comes into play. For example, the DOJ’s arguments, which are centered on the separation of powers doctrine and foreign policy concerns, provide reasons to preclude corporate liability under ATS, regardless of the international law reasons supporting it.
IV. Reflections on Recent Developments in the Law
While in Canada the question of suing corporations for their involvement in human rights harms centers on the threshold issue of whether international law violations can be claimed as torts against companies, the US resolves the question of liability for breaches of international law with the existence of the ATS. On the other hand, the US has yet to resolve the issue of whether it will treat natural and legal defendants alike under the ATS.
Ultimately, the possibility to sue private actors—especially transnational corporations—in tort for international law violations is an important tool for the advancement of human rights accountability. Civil actions, rather than criminal prosecutions, are more accessible in some jurisdictions, for example because of the lack of criminal corporate liability, less jurisdictional hurdles, or the reticence of prosecutors to pursue such cases. Furthermore, victims are more directly involved in the case, and can also expect a direct remedy if their claims are successful. However, domestic systems must be amenable to accepting such claims.
Canada’s recent developments show a hopeful move towards direct corporate liability for human rights harms before a domestic court. The Canadian Supreme Court used the doctrine of adoption to show that international customary law is part of the Canadian common law, that the international customary law provisions could in theory apply to corporations and that remedies for corporate violations of international customary law could be available in the domestic system. Whether corporations are indeed liable for violations of customary international law, will have to be decided by the trial judge however. According to the minority of the Supreme Court, the missing element to establish such liability is the lack of international customary law on such corporate liability. However, allowing direct adoption of international customary law without also offering remedies in case of breaches of the provisions incorporated in domestic law, would arguably dilute the doctrine of adoption according to justice Abella.
As for the US, while the framework for certain international law tort claims exists with the ATS, the invocation of domestic doctrines that would prevent suits against corporations threaten the efficacy of the statute as a tool for remedying harms that arise out of human rights violation committed by corporations. However, when considering the fact that ATS claims overwhelmingly constitute jus cogens violations such as crimes against humanity, torture, and slavery, which the international community has deemed so abhorrent that the obligations to prevent and punish them cannot be overridden by contrary concerns, the US should support allowing claims against corporations.
