Aboriginal Land and Resource Development

Tsilhqot’in Chiefs drum together after the release of the Supreme Court of Canada’s Tsilhqot’in decision in June 2014.
Tsilhqot’in Chiefs drum together after the release of the Supreme Court of Canada’s Tsilhqot’in decision in June 2014.

The Supreme Court of Canada’s decision recognizing title over a piece of First Nations land is having a major impact on investment in the resource sector


If resource companies
thinking of doing business in Canada read just one thing it should be this: a decision called Tsilhqot’in, which found a small semi-nomadic tribe has title to more than 1,750-square kilometers of land in British Columbia.

While the concept of Aboriginal title has long existed under Canadian law, no court has ever before found it applied.

“This is the first time the court, in this case the Supreme Court of Canada, has recognized title over a piece of First Nations land; thats definitely the headline,” says Charles Kazaz, a partner at Blake, Cassels & Graydon LLP in Montréal.

Some would characterize Tsilhqot’in (pronounced chill-KO-tin) as nothing less than a legal earthquake.

The question of title cuts to the heart of the often uneasy relationship between government, business and First Nations over who has final say over projects that touch on Aboriginal lands.

Where no title has been recognized, the Crown has a fiduciary duty to the affected Aboriginal group and is required to consult with them in good faith, and, “if appropriate, accommodate [their] interests,” according to the Constitution Act, 1982.

But where title has been recognized – and so far that is just one place in all of Canada, the Tsilhqotin lands in south-central BC – the group has the “exclusive right” to decide how the land is used unless it can be demonstrated the proposed infringement is justified by a compelling public interest.

The practical effect of Tsilhqotin is that any company hoping to develop resources or carry out infrastructure work on Tsilhqotin lands must either obtain consent from the small group of six bands or demonstrate that the infringement is defensible.

Erik Goldsilver, a partner at Cassels Brock & Blackwell LLP in Toronto, says where there is no valid public-interest argument, the consent requirement amounts to a veto.

“I think it does. Absent meeting the conditions set out for a justifiable infringement they have a consent right, or a right of veto if thats what you want to call it.”

Where the landmark ruling gets even more interesting is in situations where title has been asserted but not yet determined — and there are a hundred or more outstanding title claims in the Canadian courts.

The top justices say that if the government permits a project to proceed and title is later recognized, “it may be necessary for the Crown to reassess prior conduct in light of the new reality.”

If consultation was inadequate or accommodation less than it should have been under the circumstances, the government may be required to cancel all the permits “if continuation of the project would be unjustifiably infringing.

“Similarly, if legislation was validly enacted before title was established, such legislation may be rendered inapplicable going forward to the extent it unjustifiably infringes Aboriginal title.”

That raises the possibility that a company’s lawfully awarded permits could be in jeopardy — even though they were granted years or decades earlier.

“That’s one of the most interesting pieces from my perspective,” says Shawn Denstedt, the Calgary-based national Co-chair of Osler, Hoskin & Harcourt LLP. “It takes away the certainty and, obviously, companies don’t like uncertainty. The pendulum has swung a bit more towards First Nations and if I were a company and that applied to me, I’d be very worried.

“What it really means is if you’ve got permits and projects in play or operating on lands that have been found to have title, there’s a claim to be made that those permits were improperly granted. There would be an evaluation of whether the Crown undertook appropriate consultation with the First Nations whose rights may be impacted and, if they didn’t, how best the rights of permit holders could be reconciled.”

Denstedt says such a finding could have many implications for businesses affected. “If it was a forestry project, for example, and no trees had yet been cut down, the Crown might simply invalidate the permit and start from square one. In a case where you’ve built a mining project, the reconciliation might be compensation for the First Nation for the damages to their rights.”

Pierre Langlois, counsel with McCarthy Tétrault LLP in Montréal, believes corporations and developers required to pay compensation or shut down a project they already built would have a financial claim against the government.

“The government that authorized the project, set the conditions, granted the permit authorizations and the like would probably be on the hook,” he says. “I think huge litigation would follow the cancellation of a project.”

In the world post-Tsilhqotin, just the assertion of title can hold a project up for years, Langlois says. “If a company has to finance it, especially in the international market, and there are claims and even occasional court proceedings initiated by Native groups, you can appreciate it will be quite difficult if not impossible to raise money. It will trigger extensive negotiations.

“If your project is tied up in court for 15 years, who knows what the global conditions will be by then? The project may no longer be interesting.”

The decision, written by Supreme Court of Canada Chief Justice Beverley McLachlin, seems to acknowledge some of the potential difficulties. The Chief Justice says in obiter that problems resulting from title claims can easily be avoided by obtaining the consent of the affected group before a determination.

Many resource companies doing business in Canada have been doing exactly that, says Chris Sanderson, a partner at Lawson Lundell LLP in Vancouver.

“I’m not sure whether Tsilhqot’in will lead resource companies to do anything materially different in terms of engagement with First Nations — but what it may do is affect their willingness to invest. That is a binary decision, though, and you won’t be able to tell until you either see the money coming in or see investment falling off. I think it’s still too early to tell.”

Has consent been relatively easy to obtain in recent years? Sanderson says it has not. He expects Tsilhqot’in to make it even more challenging in some circumstances. “Where you don’t have strong leadership, in groups where there’s not a lot of trust in the leadership, it very much could.”

That may be why, in the wake of the ruling, Tsilhqotin was branded a game changer, economic poison and a recipe for interminable investment-killing litigation.

 

In most of Canada, title may seem not to be an issue. Aboriginal communities in the majority of provinces signed historic treaties in the 1700s and 1800s that guaranteed them certain rights in return for ceding title to their land.

The Tsilhqotin Nation, made up of six bands in British Columbia, did not and they have been fighting for years to have title to their lands recognized.

They are not alone. Most Aboriginal groups in BC and the Yukon did not sign treaties nor did their counterparts in chunks of Ontario, about a third of Québec and parts of the Northwest Territories. That’s where title claims are being filed, and Tsilhqot’in has breathed new life into them.

The threshold for succeeding is not low; in order for title to be recognized the group must prove “sufficient, continuous and exclusive” occupation of the lands prior to the assertion of European sovereignty.

 Tsilhqot’in took 339 days at trial over five years, and, in the end, the small Aboriginal group won title to just a fraction of the lands over which they were asserting a claim.

Even so, many observers believe Aboriginal groups that ceded their rights under historic treaties may go to court to have them reopened after seeing the Tsilhqotin Nation given so much more control over its title lands.

Its speculated they will argue that notions of ceding, releasing and surrendering title to land had no meaning within their existing legal structures and language at the time, so their ancestors could not have given informed consent.

“There are all sorts of rumors this is going to happen, so I wouldn’t be surprised,” says Brian Abraham, Canadian Chair of the mining group at Dentons LLP in Vancouver. “If I think I have a chance of doing something that’s going to benefit me, obviously I’m not going to ignore that opportunity.”

That said, Abraham believes the reaction to Tsilhqotin has been overblown. He says a careful reading shows much of what was said by the top court – if not most – was obiter rather than representing a change in the law.

 “It has caused some anxiety but part of that is because people are in some respects looking at the obiter as opposed to the implications. Is it a game changer? Its certainly the first case title has been granted but I dont know that it is a game changer, per se.”

John Sabine, counsel to Bennett Jones LLP in the Toronto office, says he and his colleagues are already seeing the impact. “Companies we act for are finding where previously they were dealing with a local First Nations group or two or three, all of a sudden people are coming out of the woodwork to say: ‘Our tribal lands are 300 kilometers away but we hunted there and we have rights.So all of a sudden we are expanding the industry within which the First Nations are going to have a greater say in the resource development.”

He says Canada remains a resource-friendly, politically stable jurisdiction post-Tsilhqot’in “with one caveat. Its the one caveat I dont have an answer to, and I dont think anybody does. A lot of people have memorandums of understanding in place. They can be challenged. We just had recent ones where we had everything signed, sealed and delivered and it was just thrown out by the new tribal council. First Nations issues in Canada are the same as the kind of royalty issues and taxation issues in other jurisdictions — I think its going to play a bigger role going forward.”

The first high-profile test may be the bid by Enbridge Inc. to extend the Northern Gateway Pipeline, already politically unpopular with many Canadians on environmental grounds. The proposed extension would move crude oil across 657 kilometers of British Columbia.

At least eight First Nations groups filed court challenges against the project, including the Gitga’at, who are seeking a declaration of title.

At the end of 2014, Enbridge announced significantly greater Aboriginal participation and perhaps even control of the pipeline. The company also said it was open to significantly boosting Aboriginal equity participation and recruiting Aboriginals to fill senior positions.

That shows how Tsilhqot’in tilts the playing field, says a senior practitioner who spoke on condition he not be identified. “Obviously the leverage the First Nations will have under those circumstances is going to be significant, so it becomes a discussion of what type of compensation, what type of accommodation is necessary. They can also ask for the project to be stopped or shut down. Theres the leverage.”

The concern in the business community, he says, is that title claims can be used for purely tactical reasons. He expects to see more title claims filed.

While Tsilhqot’in may be the first time a Canadian court has found title over a specific piece of land, he says no one expects it will be the last.

 “As a resource company or the government, you have to ask yourself: Do I spend the time arguing this issue, or do I take that into consideration as part of my negotiations on accommodation? It may cause our clients to concede on certain points. So it becomes an issue of leverage, thats the practical effect of it. Were already seeing greater assertions of title.”

Will the decision be a project killer, as some have predicted?

Langlois says that has yet to be determined. But, he adds, one of his clients, looking at a project in northern Québec, “has hired historians, anthropologists and the like to carry out studies of the occupation of the land in the vicinity of the project. Its proceeding quite logically in terms of what the law is on Aboriginal claims, Aboriginal rights.

“You have to know who to negotiate with, and in certain cases there may be more than one group and overlapping title claims. I think these days, companies have to be careful.”

Sandra Rubin is a freelance legal affairs writer.