Canada’s proposed Modern Slavery Act and Nevsun: Implications, opportunities
On Feb. 28, 2020, the Supreme Court of Canada released its decision in Nevsun Resources Ltd. v. Araya 2020 SCC 5. Subject to significant legal commentary in the months since its release, Nevsun has been heralded as a step forward to recognize the liability of Canadian corporations for human and labour rights violations under their watch abroad.
Eight months later, Sen. Julie Miville-Dechêne (re-)introduced Bill S-216: An Act to enact the Modern Slavery Act and to amend the Customs Tariff. Modelled after the U.K. and Australia’s Modern Slavery Act, and a revamped version of Senate Bill S-211, the proposed Act would require corporations operating in Canada to report to the minister of public safety and emergency preparedness on their annual efforts to “prevent and reduce the risk that forced labour or child labour is used at any step in the production of goods.” The Act would require annual reporting on (inter)national operations, grant authority for in-person and electronic searches of corporate records and impose a maximum fine of $250,000.
Bill S-216 and Nevsun appear to work hand-in-hand by placing a burden on corporations to branch outside of the corporate social responsibility model and actively turn their minds to their use of forced or child labour. Importing peremptory norms of customary international law on slavery, forced labour and crimes against humanity, the Act and Nevsun together will hold corporations accountable to Canadian standards despite operating outside our borders. With Nevsun acting as the threat of civil enforcement, and the Act acting as the public accountability mechanism, the goal of reducing imported and domestic forced and child labour goods seems within reach.
Undoubtedly, however, the transition will not be smooth. Any defendant caught up in a civil claim for engaging in slave-labour type practices could turn to the Act in defence of its actions, pointing to the low bar of annual reporting as the standard of care they were required to meet under Canadian law. Without requiring corporations to carry out due diligence to determine if there is modern slavery ongoing in their ranks, it is entirely possible for corporations to routinely report they heard and saw no evil. Even where it is found, by requiring no positive steps for businesses to respond to events of modern slavery in their supply chains, the Act adds nothing beyond the already in effect customs tariff No. 9897.00.00 which prohibits forced labour goods from entering Canada. Further, and as is the case with any quasi-criminal statute, corporate defendants will likely argue the Act imposes a complete code for the enforcement of anti-slavery laws, thereby closing the door Nevsun cracked open just months before.
By exposing the corporations to a maximum of $250,000 in fines and potentially removing a path for recovery by the victims of the abuse, it is entirely possible for the Modern Slavery Act to further the harm it set out to prevent.
Despite the challenges, if the Act is passed, corporate counsel would be wise to advise their clients to resolve forced and child labour issues in their supply chain if they wish to continue doing business in Canada. While annual reporting sets a low standard, over time this is likely to catch up with the large corporations subject to the reporting requirements and the Public Safety Canada’s investigation powers could result in their removal from the Canadian market.
Likewise, class actions, human rights and labour counsel should monitor the mandatory public reports of these corporate entities submitted under the proposed Act. Signs of missing links in the supply chain, key employees departing around the timing of the annual reports and missing reports altogether may enforce and strengthen clients’ claims of mistreatment.
At the end of the day, Nevsun wasn’t decided on its merits and Bill S-216 is in its very early stages. While the law develops, it will be up to corporations through effective monitoring of their supply chains and individuals through the power of their purse to ensure the practice of using forced and child labour becomes obsolete long beforehand.
Annie Legate-Wolfe is a class actions and indigenous law associate with Foreman & Company, a boutique plaintiff’s side litigation firm based in London, Ont. She acts on behalf of plaintiffs in a variety of matters including financial services, consumer protection, product liability, and interpretation & application of indigenous statutory and common law rights.
This article was originally published by The Lawyer’s Daily, part of LexisNexis Canada Inc.