The Supreme Court of Canada, located in Ottawa, heard arguments this week over whether a Canadian firm can be sued domestically for alleged complicity in human rights abuses abroad. (Richard Lautens/Toronto Star via Getty Images)

Canada’s top court heard arguments this week over whether a Canadian mining firm can be sued on home turf for alleged complicity in human rights abuses abroad, in a potentially groundbreaking case that is being closely watched by Canadian businesses with overseas operations.

At the center of the case are three Eritrean refugees who claim that the Vancouver-based mining firm Nevsun Resources breached international laws against torture, slavery and forced labor at its Bisha mine in Eritrea.

The refugees, who were present at Wednesday’s oral arguments, allege that they were conscripted under Eritrea’s national service program — mandatory military service that can be indefinite — to work for state-controlled entities under contract with Nevsun to build the gold, copper and zinc mine that has become the single biggest source of revenue for the Eritrean government.

They claim they were forced to work long days in scorching heat that sometimes caused scars and bruises and were subjected to physical assault, threats and torture if they took breaks.

Nevsun, which owns a 60 percent stake in the mine, denies the allegations.

Canada’s Supreme Court is not tasked with judging the case on its merits. Rather, it must decide whether the case should proceed to trial at all, as well as whether violations of customary international law — a body of law traditionally applied to sovereign states — could be actionable as torts against Canadian firms.

Canadian judges have been unwilling to consider such cases, punting them to the jurisdictions where the breaches of international law are alleged to have occurred.

But the British Columbia Supreme Court rejected Nevsun’s calls to dismiss the suit, arguing that there was a “real risk” the refugees would not get a fair trial in Eritrea. That court’s decision was upheld on appeal, prompting Nevsun’s appeal to the Supreme Court.

Experts say that allowing the case to proceed in a Canadian court could fundamentally alter how Canadian firms assess the risks of operating abroad.

“I would expect that any Canadian company that operates abroad in countries with authoritarian regimes or in fragile states would have reason for concern,” said Audrey Macklin, counsel for the University of Toronto’s International Human Rights Program, which was granted intervener status — comparable to amicus curiae, or “friend of the court,” standing in U.S. courts — in the appeal.

The potential ramifications are not lost on Canada’s mining industry.

In an intervention prepared for the case, the Mining Association of Canada warned that a decision in favor of the refugees would put Canadian companies at “a competitive-disadvantage” and foster so much uncertainty that it would lead to “reduced investment in Canada as well as reduced Canadian investment abroad.”

Canada, according to government figures, is home to nearly half of the world’s publicly listed mining companies.

Nevsun’s lawyers argued in oral arguments that the case should be dismissed, citing a legal principle known as the “act of state doctrine,” which asserts that the courts of one country should not judge the lawfulness of the actions of another government within its own borders.

But lawyer Joe Fiorante, who represents the Eritreans, said that what Nevsun seeks “is impunity for its conduct” and noted that the act of state doctrine has never been applied in a Canadian court.

Since the three refugees launched the case in 2014, more than 80 other plaintiffs have joined the claim with similar allegations of forced labor and torture.

The use of conscripted labor at the Bisha mine was also reported by the United Nations in a 2015 report. A witness claimed that workers there were forced to work day and night and said that those who took breaks would be “tied to the tree, hanging down” as punishment. Nevsun dismissed the report as “sensational and unbelievable.”

The Canadian government announced in January 2018 that it would be creating a new position for an ombudsman tasked with investigating allegations of human rights abuses tied to the activity of Canadian firms abroad. The position is still vacant.

The lawsuit against Nevsun is the latest in a string of claims filed in Canadian courts against Canadian mining firms seeking to hold them accountable for alleged human rights violations at mines overseas. Two others, involving Hudbay Minerals and Tahoe Resources for work in Guatemala, are making their way through the courts.

In the United States, claims such as the one launched against Nevsun could theoretically be brought to court under the Alien Tort Statute, a law passed in 1789 that allows citizens of foreign countries to seek redress in U.S. courts for violations of international law.

But John B. Bellinger III, a partner at Arnold & Porter who has litigated a number of suits involving the statute, said that the Supreme Court has recently “narrowed the circumstances” under which companies can be sued under the statute in U.S. courts.