Written By Sharon Singh, Laurie Wright, Radha Curpen, Sabrina A. Bandali, Manpreet Dhillon and Samantha Chenatte

On July 11, 2023, the Canadian Ombudsperson for Responsible Enterprise (CORE) announced the launch of two separate investigations into allegations that Uyghur forced labour was used in the supply chains and operations of two Canadian companies. The CORE also published two Initial Assessment Reports (IAR). This is the first time the CORE has published an IAR or launched an investigation since the federal government created the human rights ombudsperson in April 2019. Accordingly, companies that fall within the CORE's mandate (i.e., the garment, mining and oil and gas sectors) should carefully monitor these developments as they are the first examples of the CORE process at work.

The Complaints

The first case is a complaint against a Canadian garment company for their supply relationships with several Chinese companies that allegedly use or benefit from Uyghur forced labour. The complaint asserted that there was no indication that the garment company had taken any concrete steps to "ensure beyond a reasonable doubt" that there is no forced labour in its supply chain. The garment company maintains that it no longer has ties with the companies identified, and provided information on its due diligence processes.

The second case is a complaint against a Canadian mining company for holding a majority interest in business operations in northwest Xinjiang, China, that allegedly use or benefit from Uyghur forced labour. The mining company has responded that it does not have operational control over the mine and that these allegations arose after it had left the region.

These IARs are two of thirteen admissible complaints that are before the CORE. The CORE announced that it intends to publish IARs on the remaining 11 complaints in the coming weeks with a decision on how to move each complaint forward.

The CORE's Mandate

Bennett Jones has previously discussed the CORE's mandate in the blog, Canadian Ombudsperson for Responsible Enterprise Launches Human Rights Complaints Process. The CORE is mandated to:

1. promote the implementation of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises;
2. advise Canadian companies on responsible business conduct;
3. review complaints of alleged abuses of internationally-recognized human rights;
4. review alleged human rights abuses on their own initiative;
5. offer informal meditation services; and
6. advise the Minister on relevant matters concerning Canadian business abroad.

This mandate is limited to Canadian companies working overseas in the garment, mining, and oil and gas sectors.

The CORE's Complaint Process

These two complaints are the first complaints to advance beyond the intake and initial assessment stages of the CORE's process. The complaint review process has five possible stages:

1. Intake: The CORE reviews complaints, holds interviews with eligible complainants and decides whether complaints are admissible based on criteria set out in section 5.7 of Operating Procedures for the Human Rights Responsibility Mechanism of the Canadian Ombudsperson for Responsible Enterprise. A decision by the CORE that a complaint is admissible is not a decision on the merits of the complaint.
2. Initial Assessment: If the CORE determines that a complaint is admissible, it may proceed with an initial assessment where appropriate, and with the complainant's consent. In the initial assessment phase, the CORE will work with complainants and implicated Canadian companies to find early resolution to the issue, and may suggest mediation. The CORE may also decide to publish an IAR.
3. Mediation: Mediation is optional. Parties can forego mediation and request an investigation instead. Parties can also return to mediation despite initially refusing it.
4. Investigation: The CORE gathers information about the alleged human rights violation to find out if it happened, how it happened, and if it is still happening.
5. Recommendations and Follow-Up: The CORE writes and publishes a report from their investigation with recommendations to, among other things, fix harms, pay compensation, change a company's policies and practices, and change Canadian laws or policies.

Although the process is voluntary, not collaborating in good faith could result in withdrawal of trade advocacy support and jeopardizing future Export Development Canada financial support. The CORE may draw conclusions based on its fact finding where a Canadian company decides not to actively participate in the complaint review process.

At any point in the review, the CORE may terminate or refuse to proceed with a complaint.

Since launching the Human Rights Responsibility Mechanism online complaint form in March 2021, the CORE has received twenty-six complaints. The CORE found seventeen of these complaints to be admissible, of which thirteen were moved to the initial assessment phase.

Connection to Other Government Measures Related to Uyghurs and Forced Labour

As part of the implementation of the Canada-United States-Mexico Agreement (CUSMA), Canada amended the Customs Tariff to prohibit the importation of goods produced, in whole or in part, by forced labour. As of January 1, 2024, this prohibition will extend to goods produced in whole or in part by child labour.

The recently enacted Fighting Against Forced Labour and Child Labour in Supply Chains Act will require certain Canadian entities to report publicly, as of May 2024, on their efforts to prevent and reduce the risk of forced and child labour in their supply chains. Bennett Jones has previously discussed this legislation in the blog, What Canada's New Forced Labour Reporting Law (Bill S-211) Means for Businesses.

The Government of Canada issued a business advisory in January 2021 to inform importers and exporters about concerns of human rights violations and the use of forced labour in Xinjiang, China. In order to receive certain services from Canada's Trade Commissioner Service, companies sourcing directly or indirectly from Xinjiang, or that are established in or seeking to engage in the Xinjiang market must sign an Integrity Declaration on Doing Business with Xinjiang Entities. Among other things, the Declaration contains an attestation that the company is not directly or indirectly sourcing products from Chinese entities implicated in forced labour or other human rights violations related to the Xinjiang Uyghur Autonomous Region (XUAR) and commits the company to conducting due diligence on suppliers to ensure there are no linkages to forced labour or other human rights violations related to the XUAR.

Key Takeaways

Canadian companies in the garment, mining, and oil and gas sectors should take care to ensure they have robust due diligence mechanisms in place, and that they are regularly refreshing their reviews of the conduct of other actors in their supply chains, in addition to complying with the relevant regulatory obligations in their overseas relationships and operations. Canadian companies should also continue to monitor developments in the CORE's mandate and powers.

Bennett Jones has extensive knowledge and experience in regulatory and trade law and can help your business address any questions regarding human rights obligations. If you want to learn more, please contact the authors or a member of our ESG Strategy and Solutions group or International Trade & Investment group for further advice.

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