Araya v. Nevsun

2018 BCSC 1898 Araya v. Nevsun

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Araya v. Nevsun, 2018 BCSC 1898 Date: 20181030 Docket: S148932 Registry: Vancouver Between: Gize Yebeyo Araya, Kesete Tekle Fshazion and Mihretab Yemane Tekle Plaintiffs And Nevsun Resources Ltd. Defendant Before: The Honourable Mr. Justice Abrioux Oral Reasons for Judgment Counsel for Plaintiffs/Respondents: J. Fiorante, Q.C., J. Thornback Counsel for Defendant/Applicant: A. Nathanson, M. Parrish, A. Mitretodis, R. Schechter Place and Date of Hearing: Vancouver, B.C. October 26, 2018 Place and Date of Judgment: Vancouver, B.C. October 30, 2018 Table of Contents I: INTRODUCTION.. 3 II: PROCEDURAL BACKGROUND AND THE EXISTING CONFIDENTIALITY ORDER.. 4 III: THE LEGAL FRAMEWORK.. 6 IV: DISCUSSION.. 8 V: CONCLUSION.. 10 I: INTRODUCTION [1] Due to the need for an expedited ruling on this application, I am delivering oral reasons for judgment. I intend to render written reasons and when I do they may be edited for publishing purposes. [2] This proceeding involves allegations of the most serious nature made by refugees from the State of Eritrea, which include the use of forced labour and torture against a Canadian mining company. [3] The allegations are categorically denied by the defendant, Nevsun Resources Ltd. ("Nevsun"). [4] I have been the trial management judge since early 2015. In my reasons for judgment indexed at 2016 BCSC

1856, I rendered my decision with respect to certain preliminary motions brought by Nevsun, which included potentially dispositive jurisdictional issues. The Court of Appeal's reasons for judgment are indexed at 2017 BCCA 401. [5] Nevsun then sought and obtained leave from the Supreme Court of Canada, with the appeal to be heard in January 2019. [6] The plaintiffs intend to seek leave (the "leave application") from the Supreme Court of Canada to adduce fresh evidence before that Court, which includes a mining agreement entered into between the Government of the State of Eritrea and Bisha Mining Share Company (the "Mining Agreement"). [7] I am advised by counsel that the plaintiffs must complete their materials in support of the leave application as soon as possible. In fact, they have delayed doing so by one week in order for Nevsun to bring this application. [8] Nevsun applies for an order on short leave that Affidavit #1 of Betty Chan sworn October 23, 2018, which contains the Mining Agreement, be sealed in the court file and not form part of the public record. Nevsun's position is that the Mining Agreement contains confidential information. [9] The plaintiffs oppose the application on the basis that Nevsun has not established that the Mining Agreement contains information of a commercially sensitive nature sufficient to merit a sealing order. [10] For the reasons that

follow, the application is granted. II: PROCEDURAL BACKGROUND AND THE EXISTING CONFIDENTIALITY ORDER [11] On June 18, 2015, Nevsun brought an application concerning a protective order to govern the use and disclosure of certain documents over the course of these proceedings. [12] In support of that application, Nevsun tendered evidence from its then Chief Financial Officer, Thomas Whelan, which provided in part: [8] The parties to the Mining Agreement are the Government of the State of Eritrea and BMSC. BMSC operates the Bisha Mine in Eritrea. [9] The Mining Agreement is expressly confidential. A copy of the confidentiality' covenants contained in the Mining Agreement and the definition of "Affiliate" in that Agreement are attached to Mr. Nathanson's June 8, 2015 letter. [10] The Mining Agreement is a commercial agreement. Its purpose is to delineate each party's status, rights and obligations under the Mining Agreement in respect of the Mining Licenses issued to BMSC under the Proclamation No. 68/1995 (the "Proclamation"), which includes the mining area covered by the Mining Agreement. [11] Nevsun is an "Affiliate" of BMSC as that term is defined in the Mining Agreement. . . . [24] I believe that the Confidential Documents contain proprietary commercial information the disclosure of which could be harmful to one or more of BMSC, NREL, ENAMCO and the State of Eritrea. Other

mining companies do business in Eritrea, and BMSC, NREL and ENAMCO would naturally wish to keep confidential the terms of their bargains as against competitors to prevent them from obtaining a competitive advantage and to give ENAMCO and the Eritrean government the ability to negotiate distinct commercial terms in agreements with third parties that are most favourable to the Eritrean state. [25] I am not conversant with Eritrean law. I do not know whether there are other applicable Eritrean laws that restrict or prevent the disclosure of the Confidential Documents. Nevsun would not want to cause BMSC to breach its existing contractual obligations or breach other Eritrean laws by disclosing the Confidential Documents without authorization of BMSC, NREL, ENAMCO or the State of Eritrea, at least without significant express confidentiality protections. [13] My reasons for judgment arising from that application are indexed at 2015 BCSC 1209 and provide as follows: [2] The issues on this application are the terms of a confidentiality order relating to certain material documents as particularized below' (the "Documents"), which are to be produced by the defendant, Nevsun Resources Ltd. ("Nevsun"), in this proceeding. . . . [13] The Response explicitly refers to the Documents as follows: ... the Project Agreements: BMSC is a party to a series of agreements with the State of Eritrea and

ENAMCO which give rise to its right, title and interest in the Bisha Mine. These agreements include the Mining Agreement made as of December 12, 2007 between BMSC and the State of Eritrea, as represented by the Minister of Energy and Mines (the "Mining Agreement") . . . [32] It is agreed between the parties that the Documents contain confidential or highly confidential information [14] The order arising from those reasons provides in part: 1. Any documents or materials produced or otherwise disclosed in this action (the "Action") designated by the parties as "Confidential Documents" in their List of Documents and any Amended List(s) of Documents shall be treated as confidential. In addition to being used by the parties for the purpose of the Action, the Confidential Documents shall be subject to the provisions of this Order.

2. Any documents or materials designated as a Confidential Document shall be marked as "Confidential Document - Araya v. Nevsun, SCBC No. S148932 ". . . .

4. Confidential Documents produced by the other party and the information contained therein shall not be disclosed by counsel for the Plaintiffs or Defendants to any persons other than lawyers and staff of that counsel EXCEPT THAT counsel may disclose copies of Confidential Documents to the following "Excepted Persons": (a) other members of the Plaintiffs' counsel team namely Siskins LLP, James Yap and Matt Eisenbrandt and all lawyers working at Camp Fiorate Matthews Mogerman; or (b) any expert witness for the purpose of the Action when such counsel considers disclosure to such persons to be necessary or appropriate for the preparation for, and the conduct of, the trial of the Action and any interlocutory proceedings. . . .

6. The parties shall not file materials containing Confidential Documents or information derived from the Confidential Documents without giving counsel for the other parties five (5) business days' notice of their intention to do so, in order to provide the other parties with an opportunity to seek a sealing order.

7. The parties shall be at liberty to make application at any time to seek a sealing order with respect to any Confidential Documents or information contained therein which form part of any material to be filed with the court. (the "Confidentiality Order") [15] On April 30, 2018, Nevsun produced its third amended list of documents including the Mining Agreement, which was marked as a confidential document pursuant to the Confidentiality Order. [16] On October 19, 2018, the plaintiffs advised of their intention to apply to the Supreme Court of Canada for leave to introduce the Mining Agreement as fresh evidence. According to Nevsun, the basis and rationale for that intended application has not been explained. However, the plaintiffs took the position that Nevsun had five business days to seek a sealing order pursuant to the Confidentiality Order if it wished to protect the Mining Agreement document from public disclosure, hence the urgency in this application. [17] As at the time of the hearing of this application, the plaintiffs had provided notice of their intention to narrow the scope of the material to be filed on the leave application to certain extracts of the Mining Agreement. III: THE LEGAL FRAMEWORK [18] The parties agree on the legal framework which applies. What follows is excerpted from Nevsun's notice of application: 1. The authority for making a sealing order is the court's inherent jurisdiction. Nevsun accepts that a sealing order is an exception to the rule that judicial proceedings are open and public. Nevsun further accepts that it must satisfy the court that the sealing order is necessary and that its beneficial effects outweigh the deleterious effects on the rights and interests of the public.

2. The B.C. Supreme Court Practice Direction No. 35 - Sealing Orders in Civil and Family Proceedings sets out the procedure for applying for an order sealing all of part of the court file.

3. The leading authority for a sealing order in civil proceedings is set out Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41 (CanLIl). At para. 53, the court defined the test for a sealing order as follows; (a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and (b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.

4. Justice Iacobucci then described three elements of the first branch of the test: (1) that the risk be real and substantial, in that the risk is well grounded in the evidence and poses a serious threat to the commercial interests in question; (2) to qualify as an important commercial interest, this interest must be one that can be expressed in terms of a public interest in confidentiality; and (3) the phrase "reasonably alternative measures" requires that the court restrict the scope of the order as much as is reasonably possible while preserving the commercial interest in question.

5. This test for a sealing order was recently explained and applied in Royal Bank of Canada v. Westech Appraisal Services Ltd., 2017 BCSC 773. The court accepted that the information which the plaintiff was seeking to protect was confidential and that a sealing order to maintain confidentiality outweighed the curtailment of the public's right to an open and accessible court proceeding.

6. The importance of protecting sensitive business information or commercial information was upheld by the British Columbia Court of Appeal in Sahlin v. The Nature Trust of British Columbia, 2010 BCCA 516. The court held that the sealing order protecting financial information that was filed in an appeal book would not create a cloud of secrecy under which justice will wither and that the financial information in question was not generally available to the public. [19] Rule 19.1 of the Rules of the Supreme Court of Canada, SOR/83-74 addresses the filing of sealed and confidential documents: 19.1(1) If it is filed, any document that is subject to a sealing or confidentiality order from a lower court or the Court or that is classified as confidential by legislation shall be sealed in an envelope and be accompanied by a covering letter and a copy of the sealing or confidentiality order or provision of the applicable legislation. IV: DISCUSSION [20] Nevsun's position is that the sealing order is required to prevent potential harm to third parties and/or Nevsun that could be created by having portions of the Mining Agreement made available to the public. [21] It submits that: (a) the Mining Agreement, as attested to by Mr. Whelan, contains confidential information of a commercial nature; (b) it is governed by Eritrean Law; and (c) Nevsun is not a party to the Mining Agreement;

and (d) neither the State of Eritrea nor BMSC have been provided with notice of this application. [22] It also argues that providing an edited excerpt of the agreement with commercially sensitive information expunged would be contrary to the principles set out in Sierra Club. [23] Nevsun maintains that a sealing order would provide the requisite balance between permitting the plaintiffs to proceed with the leave application while preserving the confidentiality of the commercially sensitive contents of the Mining Agreement itself. [24] The plaintiffs say that the excerpts from the Mining Agreement, which I shall not detail in these reasons, bear directly on Nevsun's "act of state" argument and, in particular, its assertion that this proceeding is a "root and branch" attack on Eritrean sovereignty. [25] They also argue that the Mining Agreement, which their counsel did not have the opportunity to review until after it was disclosed following the making of the Confidentiality Order, does not contain commercially sensitive information. [26] The plaintiffs point to the fact that: (a) the labour standards provision of the Mining Agreement is referenced in a report prepared in April 2009 by Dr. Kerry Connor entitled "Labour Assessment of Bisha Mining project"; and (b) the Mining Agreement is referred to in a letter dated February 19, 2013 from Nevsun's CEO, Cliff Davis, to the House

of Commons Subcommittee on International Human Rights. [27] I have concluded that the sealing order should be made in the form proposed by Nevsun. [28] Mr. Whelan's affidavit made in support of the Confidentiality Order remains, in my view, the best evidence as to whether Nevsun has satisfied its onus on this application, specifically, to establish "an important commercial interest". To that extent, the proposed sealing order is "well grounded in the evidence". [29] The fact that the Mining Agreement is generically referred to in the Connor Report and Mr. Davis' letter does not detract from this conclusion. I would add that the Confidentiality Order specifically provides for disclosure of confidential documents to expert witnesses, although I am mindful that the Connor report predates the commencement of this proceeding. [30] There is also the fact that the two parties to the Mining Agreement, the State of Eritrea and BMSC, have not been provided with notice of this application. [31] I am of the view that allowing the plaintiffs to place only a redacted or "expunged" copy of the Mining Agreement before the court is not a "reasonable alternative" to the granting of the sealing order. The practical difficulties with this approach were identified by Justice Iacobucci in Sierra Club at paras. 62-68. [32] The sealing order maintains the balance of preserving confidential information

on the one hand and permitting the plaintiffs to bring the leave application on the other. [33] Furthermore, the limitation of the open court principle arising on this application is reasonably limited, in my view, by a term of the proposed order which provides that any person (which Nevsun's counsel acknowledges includes the plaintiffs) may apply to set aside or vary the order upon giving 14 clear days notice to the lawyers for the parties to this action. V: CONCLUSION [34] The sealing order is granted on the terms contained in the draft order attached to the notice of application. [35] Costs of this application are in the cause. "Abrioux J."