Aboriginal land claims and Canada's resource economy

Since the recent Supreme Court judgment that the Tsilhqot’in hold title to a tract of land in BC, many Aboriginal land claims suddenly look more legally viable. But what does it mean for the country’s resource economy?

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Tsilhqot’in Chiefs are shown above drumming together after the release of the Tsilhqot’in decision in June.

When a group of native leaders who were gathered in a Vancouver boardroom heard the Supreme Court of Canada had ruled that the Tsilhqot’in hold title to a tract of BC land a third the size of PEI, the room erupted in cheers and tears. They had made Canadian history. But the reaction in resource companies and government offices was assuredly somewhat different, amid concerns it could prove the unmaking of the country’s resource economy. That prospect is what makes Tsilhqot’in (pronounced chill-KO-tin) a legal earthquake. It has been branded a game changer, economic poison, a recipe for interminable investment-killing litigation. The decision that prompted so much corporate angst marks the first time the top court has found an Aboriginal group has title over traditional lands. The justices found title can be established by regular and exclusive use of land prior to Canadian sovereignty — even by semi-nomadic groups. “It’s huge. This is the first time a court has actually found Aboriginal title over a specific piece of land,” says Julie Abouchar  of Willms & Shier Environmental Lawyers LLP in Toronto. “In previous cases, courts have said Aboriginal title could exist but they never actually found it applicable. “I expect we’ll now see a lot more claims of Aboriginal title coming forward as a result.” 

In fact, in the world post Tsilhqot’in, many Aboriginal land claims suddenly look much more legally viable.

That matters because where title exists - and that is one place in Canada: the 1,750 square kilometres of Tsilhqot’in land in south-central BC - any government or company wanting to carry out resource development or infrastructure work in that area must either obtain consent or demonstrate the proposed infringement is justified by an overriding compelling public interest.

The reverberations of the ruling go far beyond Tsilhqot’in borders.

Where there is no title but a claim to title - there are one hundred or more such challenges in Canada - and the Crown permits a project without consent, the government may be required to cancel the project if title is ultimately found.

“The courts have always said you’ve got to go through the full consultation process but the First Nations don’t have a veto over things that are happening in their territory,” says Abouchar. “The thing that Tsilhqot’in says is if the area is eventually found to have been an Aboriginal title area, the Crown will have to go back and relook at all the permits it granted, to see if that was done in an appropriate way.

“So there’s a possibility where there’s a claim of Aboriginal title and you don’t get their consent, if and when title is eventually proven, your permits could be in jeopardy.”

That sends a clear signal that government cannot ignore questions about Aboriginal title when taking actions such as issuing permits, says Sandra Gogal,  a partner at Miller Thomson LLP  in Toronto. “The prospect is going to cause some angst with project developers, who will say: ‘We don’t have their consent, should we proceed?’ Developers are going to be super-sensitive,” says Gogal.

“If you don’t get consent and the government still gives you your permits on the basis they feel justified, and title is granted, the court is no doubt going to scrutinize the decision. If you don’t meet the test, your permits are at risk.”

Writing the unanimous decision for the court, Chief Justice Beverley McLachlin said in obiter: “I add this. Governments and individuals proposing to use or exploit land, whether before or after a declaration of Aboriginal title, can avoid a charge of infringement or failure to adequately consult by obtaining the consent of the interested Aboriginal group.”

The decision should be seen as a message to both government and industry that “these are the rules of the road, the new reality, the new dawn,” says Maxime Faille,  national leader of the Aboriginal law group at Gowling Lafleur Henderson LLP in Ottawa.

“The way forward is to work together, collaboratively, on these things. What’s really telling is that if you don’t, some of those decisions can be undone. The court said that very explicitly.”

The dynamic hands Aboriginal communities with a viable title claim significantly more leverage in negotiating agreements than they had the day before Tsilhqot’in was handed down. 

Some in the business community say the idea Aboriginal communities may have to give consent will chill capital spending in the relevant sectors, by delaying mining and forestry permits and infrastructure projects and pipeline approvals, increasing the cost to business and opening the door to a flood of court challenges.

Will it be a project killer? Practitioners say that’s what many clients are asking.

The Tsilhqot’in nation at the heart of the landmark case is a small semi-nomadic group of roughly 3,000 people belonging to six bands in British Columbia. They never signed a treaty with the federal government, and have been fighting for years to have title to their lands recognized.

The trial judge found the Tsilhqot’in were, in principle, entitled to a declaration of Aboriginal title but for procedural reasons declined to grant it. The BC Court of Appeal rejected the Tsilhqot’in claim on the grounds they were semi-nomadic and title can only be granted title over areas that have been intensively occupied or had specific uses.

In overturning that decision, the Supreme Court clarified for the first time how the legal test set out in a previous decision can be transformed into formal title by semi-nomadic groups.

The Supreme Court justices took a liberal approach, saying cultivated fields, dwellings and a consistent presence on parts of the land “are not essential” to establish occupation. “The notion of occupation must also reflect the way of life of the Aboriginal people, including those who were nomadic or semi-nomadic.”

Abouchar predicts that interpretation will lead to many new land claims. “I definitely think it’s going to encourage other First Nations to make claims for Aboriginal title.”

While many First Nations communities ceded title in historic treaties more than a century ago, there are still huge resource-rich tracts of Canada in which they did not. That includes most of BC and Yukon, and parts of Ontario, Quebec and the Northwest Territories.

It’s there the impact of Tsilhqot’in will be felt in the near term.

Many believe the controversial Northern Gateway Pipeline extension will provide the first high-profile test of the new decision. It’s a prospect that is causing a collective gulp in the oil patch.

The proposed pipeline extension, which received conditional approval from Ottawa in June, would move crude oil across 657 kilometres of British Columbia. At least eight First Nations groups have already filed court challenges against the project including the Gitga’at, who are seeking a declaration of Aboriginal title.

“Before Tsilhqot’in, Northern Gateway was already a big challenge for proponents,” says Pierre-Christian Labeau, chair of the Aboriginal law team at Norton Rose Canada LLP in Quebec City. “Since Tsilhqot’in, it’s even more complicated.

“I don’t want to say there’s a strong possibility that the project would be blocked by a court but there are real possibilities, considering the number of First Nations impacted, the sum of the environmental risk and the impacts of the Tsilhqot’in decision,” he says. “We’ll have to wait for a court decision in that case, but it’s certainly a situation where First Nations have a good case.”

Brian Dominique, a partner at Cassels Brock & Blackwell LLP in Toronto, believes Tsilhqot’in is a “significant game changer” for Northern Gateway. “To the extent there are First Nations in that area that have not signed treaties and can argue Aboriginal title, it effectively makes them the owner of the lands,” he says. “That changes the game significantly. It shifts the ground on any consultation and negotiation on accommodation, and that’s the card they want to be able to play.”

Dominique predicts the delays caused by longer negotiations not just on Northern Gateway, but all kinds of projects, will increase the cost of doing business significantly. “Money has to be committed over the time it takes to negotiate, or go through the courts. The longer it’s delayed, the more it’s going to raise costs. Everything escalates — the price of labour will go up, the price of steel will go up, the price of oil could go down.

“All these are factors that could cause projects to become uneconomic.”

Concern in the business community is not limited to land where there is a title claim.

The fear is the Tsilhqot’ in effect is going to get bigger, leading Aboriginal communities that signed historic treaties in the 1700s and 1800s to try and get those treaties reopened. 

One consequence of Tsilhqot’in is that First Nations that did not sign historic treaties with the Crown have much more control over projects on their own lands and much more clout in dictating terms than those that did.

One practitioner who spoke on condition of anonymity says Tsilhqot’in sharply divides Canada’s First Nations into two categories. “If I’m in a community that has a historic treaty, I’m looking at Tsilhqot’in and thinking wait a second, they didn’t even have a treaty and they’re better off than I am. Right?

“People with historic treaties are going to start to think they’re poor second cousins to people with new treaties, modern land-claim treaties, or to people with no treaty at all because they have a blank slate. If your community had the misfortune of signing a historic treaty 100 years ago that signed away various rights, maybe in a way that made sense then but doesn’t now, you’re going to be very critical of that.”

Faille of Gowlings says while the old treaties contain “cede, release and surrender clauses,” many First Nations say that was not their understanding when they signed. “I can tell you the First Nations perspective is that is not what was agreed to, that is not what was intended,” he says. “The arguments they will raise is that notions of ceding, releasing and surrendering title to land had no meaning within their existing legal structures and language and spiritual understanding as to the connection between humans and land.”

Faille, who often acts for First Nations, says the concept of owning the land as a prerequisite of surrendering it “was completely absent. Sharing lands with others was a longstanding concept but land was not something that an individual owned. It was something collectives controlled, vis-à-vis other nations, but it wasn’t something that was owned by them.

“I think the real significance of Tsilhqot’in is it makes the test for proving Aboriginal title more flexible, the threshold is lower.”

He believes the change in tone is also significant. In its first major Aboriginal title case in 1997, he says, the court was reluctant to step in, sending a message that the parties had to negotiate these matters.

“I think Tsilhqot’in reflects a certain frustration on the part of the courts to see that the process has taken far too long. So this is a very not-so-gentle nudging of government to get serious about this process, and get on with it.”

That said, given Tsilhqot’in took more than 300 trial days and enormous amounts of resources, he’s not expecting the floodgates to open. There is bound to be litigation, he says, most likely where two sides are unable to agree on what constitutes reasonable accommodation.

“Will there be circumstances where the interests of both sides can’t be reconciled, and will have to be determined by the courts? Undoubtedly. The courts will still have to resolve some of these thorny issues either because there is uncertainty or one party or the other is being unreasonable.”

An interesting key case playing out in Northern Quebec is also being watched. Two Innu First Nations are suing Iron Ore Canada for $900 million, asking as part of the suit that the court presume Aboriginal title in the absence of treaties.

“The First Nations are essentially arguing their rights should be presumed, even if they haven’t been established by a court or recognized by a government,” says Labeau of Norton Rose Fulbright Canada LLP,  who is acting for Iron Ore Canada.

“They say the Supreme Court has said in the past the Aboriginal rights do not depend on a recognition from the government. They exist because First Nations were there before the French and the English established themselves in Canada.

“But I think the state of law is that until you have proof before a court, or obtain a recognition of your title from government, your claim is not recognized in Canadian law. You can’t just assume what is claimed is what they have.” 

Fifteen days after releasing Tsilhqot’in, the Supreme Court justices released another Aboriginal rights case, and this time they did not come down on the side of the First Nations.

The Grassy Narrows First Nation in Ontario challenged the province’s right to issue forestry and mining permits on its lands, arguing it has signed a historic treaty with Ottawa, so only Ottawa had the right.

In a unanimous decision, the top court confirmed that while the province must consult and accommodate where appropriate, it can act alone in taking up treaty land for forestry, mining or settlement.

This case is different from Tsilhqot’in because it involves treaty land, not Aboriginal title. Yet it has to be read together because it reaffirms post-Tsilhqot’in that governments continue to have the right to take up lands where the project is justified, says Dominique of Cassels.

In Grassy Narrows, again written by the chief justice, the court overturned prior case law that held the provinces do not have the authority to justifiably infringe, says Dominique, who acted for the Gold Corp. on the file.

“That’s huge, and they also found the provinces have that right in respect to Aboriginal title in the Tsilhqot’in case,” he says. “So what the court has done is establish Aboriginal title for the first time but made it clear that in cases of title and surrendered treaty lands, the provinces have the right to justifiably infringe.

“It was a balancing with Tsilhqot’in. It’s going to take the courts, the highest levels of the courts, to make that determination until there’s a whole body of case law on this. But at least there’s not going to be a loggerhead.”

The chief justice talked at length in Tsilhqot’in about what would constitute a justifiable incursion. The Crown must show the project is necessary to achieve the government’s goal, she wrote, that the government is going no further than necessary to achieve it, and that the expected benefits are not outweighed by the adverse effects on the affected Aboriginal interest.

Thomas Isaac,  a partner in Aboriginal law at Osler, Hoskin & Harcourt LLP  who works out of Vancouver, Calgary and Toronto, says he believes the takeaway is that “consent is not required if you can justify an infringement.

“That’s where the rubber hits the road,” says Isaac, a former Chief Treaty Negotiator for the BC government and Assistant Deputy Minister responsible for establishing Nunavut for the Government of the Northwest Territories. “Tsilhqot’in raises many more questions than it answers. What Tsilhqot’in really means is it’s time for governments to govern.

“The Supreme Court has once again put governments in the cross-hairs and said governments have to stop avoiding making the tough decisions. So the real question is what are governments going to do to justify infringements?”

Isaac says the ruling has raised significant concern in the corporate community. “Absolutely. Everybody wants to know what it means. The good news is the sky is not falling. Things have not changed materially on the ground, unless you’re on Tsilhqot’in lands. I think the real litmus test will be how governments react. This issue isn’t going away, we’ve got over 200 First Nations in BC. We haven’t even written the first chapter of this book yet. That’s the reality.”

Roy Millen, a partner at Blake, Cassels & Graydon LLP in Vancouver, also says Canada’s resource companies have definitely been apprehensive. “People are concerned about it, they’re definitely making plans and contingencies and developing means to address it. I think over the long run, it can be addressed, it’s a fact of doing business in Canada.

“Aboriginal rights are part of our Constitutional context. Clients that are here understand that. Clients new to Canada have to learn that, and sometimes it’s surprising to them if they’re not from a country that’s used to indigenous rights.”

Unlike some others, Millen – who clerked for Chief Justice McLachlin – does not see Tsilhqot’in ushering in a wave of treaty challenges. “There have been arguments in treaty cases about the extent to which First Nations knew what they were giving up. No one has succeeded with the argument they were only sharing the land, or giving it up to the depth of a plough. None of those have succeeded.”

He says most of his corporate clients are far more interested in negotiating than litigating. “I don’t see any clients who wish to litigate these days. Sometimes they get forced into it, and sometimes a First Nation litigates because it feels its rights haven’t been addressed, but I would say all of the clients we advise in this space have a strong desire to avoid litigation. 

“So I would think over the long run, this kind of litigation is decreasing and will continue to decrease.”

Adam Chamberlain, national leader of the Team North and Climate Change Practice Groups and Toronto regional leader of the Aboriginal Law Group at Borden Ladner Gervais LLP, is often at the table at the earliest stages of project development.

He says expectations have greatly increased over the years, and he suspects it won’t take long to see the effects of the latest decisions added in. “My view is it spills over in terms of creating expectations. I think the biggest issue we’ve got with Tsilhqot’in isn’t the black-letter law and how it applies. It’s what does it do to Aboriginal expectations. Expectations are being changed in some ways completely appropriately, and other times in ways that are overreaching.

“But the trajectory of these cases evolving in the Supreme Court is towards more good-faith consultation with Aboriginal peoples, towards involving Aboriginal peoples in projects. The amount of scrutiny that consultation is now getting by the courts is significant.”

Chamberlain, who also practises environmental law, is frequently brought in to a project at the earliest stages. “I often get involved the first time a developer engages with the Aboriginal community during the environmental assessment of a project, negotiating impact and benefit agreements, things like that. I guess it’s too early for me to say Tsilhqot’in and Grassy Narrows have added to the expectations for sure, but in the cases I’ve seen until now – and I certainly expect it to continue that way based on those cases – the expectations at the negotiating table are higher, and getting higher still.”

Those higher expectations can be money or other considerations. “Sometimes it’s ownership interest in a project, sometime it’s royalties, sometimes it’s just that we’ll hire Aboriginal workers or we’ll try and retain Aboriginal businesses to help our project. Sometimes, where the rights are very minor and the effects very small, it may be as simple as we’ll pay for you to come to our meetings and hear about our project, and give us your input, or we’ll build an interpretive centre.

“The first time I did one of these agreements in the mid-1990s, it was in Northern Ontario. The Aboriginal community was happy to be included at the table, they thought they should be receiving benefits but their expectations weren’t particularly high. That’s not the case anymore.”