# Supplier Due Diligence

Real Canadian authorities on parent-company exposure, supplier control, and the difference between due diligence that is operational versus purely cosmetic.

## Nevsun and the Litigation Risk of Weak Supplier Due Diligence

Nevsun confirms that Canadian courts may hear claims tied to alleged forced labour and other customary international law violations connected to overseas operations.

Nevsun is the most important reported Canadian case in this space. Eritrean workers alleged they were forced to work at a mine associated with a Canadian company and sought damages in British Columbia for domestic torts and for breaches of customary international law norms, including the prohibition on forced labour. The Supreme Court of Canada refused to strike those claims at the pleadings stage and held that it was not plain and obvious the claims had no reasonable prospect of success.

For supplier-diligence work, the significance of Nevsun is not that every supply-chain dispute becomes a successful lawsuit. The significance is narrower and more concrete: Canadian companies cannot assume that overseas operational distance or layered corporate structure will end the legal analysis at the threshold. Weak diligence, poor monitoring, and shallow oversight can become part of a litigation record rather than merely a disclosure problem.

The OECD Due Diligence Guidance and the UN Guiding Principles give the best recognized framework for turning that lesson into practice. They emphasize risk-based prioritization, leverage, tracking, and remediation. In a supplier module, those sources support building diligence around evidence, follow-up, and escalation, instead of treating questionnaires or codes of conduct as stand-alone compliance artefacts.

### Citations

- 2020 SCC 5: Nevsun Resources Ltd. v. Araya, 2020 SCC 5, [2020] 1 SCR 166 (https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/18169/index.do)
- OECD DDG 2018: OECD, Due Diligence Guidance for Responsible Business Conduct (2018) (https://www.oecd.org/en/publications/2018/02/oecd-due-diligence-guidance-for-responsible-business-conduct_c669bd57.html)
- UNGP: OHCHR, Guiding Principles on Business and Human Rights, UN Doc A/HRC/17/31 (2011) (https://www.ohchr.org/Documents/Issues/Business/A.HRC.17.31.pdf)

## Hudbay, Das, and What Courts Look for in Supply-Chain Negligence Claims

Hudbay shows negligence claims can survive where the parent company is alleged to have directed or assumed responsibility, while Das shows the limits where proximity and pleaded facts are weak.

Hudbay is often cited because the Ontario Superior Court allowed negligence claims to proceed against a Canadian parent company arising from alleged violence tied to a foreign mining project. At the pleadings stage, the decision accepted that the plaintiffs had alleged enough about the parent company's own role, control, policies, and decisions to justify moving the case forward rather than striking it outright.

Das is an important companion case because it shows the other side of the line. The Ontario Court of Appeal upheld the dismissal of claims arising from the Rana Plaza disaster, with the pleading and conflict-of-laws analysis proving fatal. Das therefore does not erase supply-chain litigation risk, but it does show that plaintiffs still need viable pleaded facts, proximity, and an actionable legal route. Courts will look closely at what the defendant actually undertook, controlled, represented, or ignored.

Taken together, Hudbay and Das are useful supplier-law authorities because they focus attention on practical variables compliance teams can influence: mapping the supplier relationship, documenting leverage, aligning public statements with actual controls, and recording what happens after red flags are found. Public Safety Canada's guidance points in the same direction by encouraging disclosure of how risks are identified and managed rather than conclusory claims that suppliers are simply expected to comply.

### Citations

- 2013 ONSC 1414: Choc v. Hudbay Minerals Inc., 2013 ONSC 1414 (https://www.canlii.org/en/on/onsc/doc/2013/2013onsc1414/2013onsc1414.html)
- 2018 ONCA 1053: Das v. George Weston Limited, 2018 ONCA 1053 (https://www.canlii.org/en/on/onca/doc/2018/2018onca1053/2018onca1053.html)
- PSC Guidance: Public Safety Canada, Guidance for entities (https://www.publicsafety.gc.ca/cnt/cntrng-crm/frcd-lbr-cndn-spply-chns/prpr-rprt-en.aspx)