Canada Announces Two New Initiatives To Hold Companies Accountable For Human Rights Violations Abroad

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The Canadian Government recently announced two new initiatives to “strengthen Canada’s approach to responsible business conduct for Canadian companies doing business and operating abroad.”1 The first initiative is the creation of an independent Canadian Ombudsperson for Responsible Enterprise (the “Ombudsperson”), to investigate allegations of human rights abuses linked to Canadian companies’ activities abroad.  The second is the creation of a multi-stakeholder Advisory Body (the “Advisory Body”) comprising civil society and industry experts to advise the Government and the Ombudsperson on corporate conduct abroad. 

These initiatives will add to the increasing number and complexity of executive, legislative, and judicial measures that sub-national, national and supranational government entities have created to address human trafficking, child labor, and other forms of forced labor in global corporate operations. 

The Ombudsperson

What is the Mandate?

The Ombudsperson's precise mandate is currently unknown.  An anticipated Order-in-Council will appoint the Ombudsperson for a term of up to five years, and will also shed light on his/her mandate. 

For now, based on the Government’s initial announcement, the Ombudsperson’s imminent authority appears to cover the following:

  • Independently investigate allegations of human rights abuses arising from Canadian corporate activity abroad;
  • Collaborate with other entities, such as law enforcement, in investigating such allegations;
  • Ensure compliance with information requests – including the compelling of witnesses and documents;
  • Upon the finding of possible criminal wrongdoing, refer the matter to the appropriate law enforcement authorities, including the Royal Canadian Mounted Police;
  • Publicly recommend solutions to disputes (including sanctions against companies engaged in wrongdoing) to the parties involved as well as to the Canadian government;
  • Monitor implementation of those recommendations; and,
  • Publicly report to Parliament (via the Minister of International Trade) on investigations and recommendations.

In exercising this authority, the Ombudsperson will be guided by certain instruments, including the UN Guiding Principles on Business and Human Rights (the “UN Guiding Principles”)2 and the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises (the “OECD Guidelines”).3

The Ombudsperson’s role is also intended to complement that of Canada’s National Contact Point (“NCP”) under the OECD Guidelines.  Accordingly, the Ombudsperson may refer cases to the Canadian NCP for formal mediation, where appropriate, and where the relevant parties are in agreement pursuant to the NCP’s mandate. 

What Sanctions Can it Impose on Companies?

While the Ombudsperson cannot by itself impose sanctions, it can recommend that the Government impose sanctions on companies that either do not cooperate in the investigative process or are found to have committed human rights violations in their operations.  These sanctions include the withdrawal of certain Government services, such as trade advocacy and future Export Development Canada support.  The Ombudsperson can also recommend that companies compensate victims, issue apologies, cease particular activities, implement measures to mitigate the harms caused or institute changes to company policies. 

Who Can Complain to the Ombudsperson, and What Rights do Companies Have?

It appears that any person or entity within Canada may make allegations against companies that could become subject to the Ombudsperson’s investigations.  The Government intends to open a web portal that will accept such public submissions.  There will also be an option to make submissions by mail for those without access to a computer or the internet.  It is unclear whether entities outside of Canada can make such complaints. 

Currently, there is no defined process for companies to respond to a complaint, but the Government intends to establish standard operating procedures that would allow for certain appeal rights and process.  

Is There a Focus on Certain Industries? 

The Ombudsperson’s initial focus will be on the mining, oil and gas, and garment sectors.  The Government expects to expand this focus to other business sectors within the first year that the Ombudsperson takes office. 

The Advisory Body

The Advisory Body will comprise experts from civil society and industry, who will advise:  

  • The Government on the effective implementation and development of its laws, policies and practices related to responsible business conduct by Canadian companies operating abroad;
  • The Minister of International Trade on the operations of the Ombudsperson; and,
  • Canada’s OECD NCP on its mandate to undertake public outreach and increase awareness of the NCP and the OECD Guidelines.  

The Advisory Body members are unpaid volunteers who will meet four times annually, and as necessary, from time to time, and will report to the Minister of International Trade.  

How Do These Initiatives Affect Current Human Rights Litigation In Canadian Courts?

Notably, these Government initiatives have appeared against a backdrop of developing and novel common-law theories to impute liability to Canadian companies for alleged overseas abuses.  Indeed, courts in Canada have emerged as testing grounds for advancing claims of forced labor.4  Recently, the British Columbia Court of Appeal affirmed a lower court’s decision holding that Canadian law could allow overseas plaintiffs to pursue private rights of action against Canadian companies based on violations of customary international law standards (which were based partly on voluntary guidelines like the UN Guiding Principles) on forced labor, rather than a violation of a specific Canadian statute or common-law rule.5

The advent of the Ombudsperson and Advisory Body may intensify the scrutiny of companies’ global operations.  The Government has made clear, however, that a complaint to the Ombudsperson is not intended to be a substitute for legal action in courts regarding allegations of harms committed by a Canadian company abroad.   

How Should Companies Prepare For These Initiatives?

In preparation for these initiatives, the Government has encouraged all Canadian companies to comply with all applicable laws and international standards on human rights, and to operate according to the UN Guiding Principles and the OECD Guidelines.  It also invites companies to “connect with a Canadian trade commissioner” at one of the regional offices across Canada, or in the country where they are operating, in order to obtain further guidance on corporate responsibility abroad. 

In addition, companies should prepare by first taking stock of their own operations and those of their suppliers and other business partners, and identifying areas in those operations where there is a high risk of human rights abuses such as forced labor.  Where such risks are identified, companies should take appropriate action to address those risks and implement procedures to ensure that new and existing relationships remain free of such activities.  Because this due diligence process is complex and culture-specific, it is recommended that companies engage the services of experienced counsel.

Littler will continue to monitor and report on these new initiatives in Canada.

 

Footnotes

1 The Government of Canada, News Release, The Government of Canada brings leadership to responsible business conduct abroad, available at:  https://www.canada.ca/en/global-affairs/news/2018/01/the_government_ofcanadabringsleadershiptoresponsiblebusinesscond.htmlsee also The Government of Canada, Global Affairs Canada, Responsible business conduct abroad – Questions and answers, available at:  http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/faq.aspx?lang=eng&_ga=2.92978142.291595801.1518362863-1848821425.1518271311.

2 These principles do not “creat[e] new international law obligations,” but rather define governments’ and companies’ already-existing obligations to protect human rights and remedy violations.  (A copy of the UN Guiding Principles, published by the Office of the United Nations High Commissioner for Human Rights, is available online at http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf ).   The UN Guiding Principles comprise three “pillars”: Pillar One – the state duty to protect against human rights abuses by business; Pillar Two – the business responsibility to respect human rights; and, Pillar Three – the responsibility of states and business to provide effective access to remedies.

3 The OECD Guidelines are recommendations addressed by governments to multinational enterprises.  They provide voluntary principles and standards for responsible business conduct consistent with applicable laws.  With respect to employment and industrial relations, the OECD Guidelines state that enterprises should, among other things, respect the rights of employees to be represented by trade unions, and eliminate child labor, forced labor, and discrimination.  One of the most significant aspects of the OECD Guidelines is that it creates a mechanism that interested or aggrieved parties can use to file a complaint against a company to address issues that arise under the OECD Guidelines with respect to the company.  The process is called a Specific Instance Proceeding, and it is handled before an OECD Member State’s National Contact Point (NCP).  See Organisation for Economic Co-operation and Development, OECD Guidelines for Multinational Enterprisesavailable at http://www.oecd.org/corporate/mne/1922428.pdf.

4 See John Kloosterman, Michael Congiu, Stefan Marculewicz, Lavanga Wijekoon, and Aaron Saltzman, Advancing Human Rights Claims Based on Global Supply Chain Activities: Recent Developments in California and Canada, Littler Insight (Feb. 15, 2017).

5 Araya v. Nevsun Resources, Ltd., 2017 BCCA 401 (Court of Appeal for British Columbia, November 21, 2017).  

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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