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Section XV: Indigenous

Doing Business in Canada

An understanding of Indigenous law and its history, is important to many entities conducting business in Canada. Building respectful relationships with Indigenous Peoples is a key factor in avoiding significant delays, increased costs, litigation, and ultimately project cancellations.

1. A Short History

Indigenous (Aboriginal) Peoples have lived as distinct societies in what is now Canada for thousands of years. Early contact between Europeans and Indigenous people was variously marked by co-operation and nation-to-nation trade, conflict, and displacement and assimilation. By the latter part of the 19th century, interventionist government policies were imposed upon Indigenous Peoples resulting in forced relocations, outlawing of traditional practices, and the creation of the Indian Residential School Program. Residential schools separated Indigenous children from their families for over 100 years.

By the latter part of the 20th century, Canadian society began to recognize the failure of its earlier policies and embarked on a slow but important effort to restore and reconcile the relationship between Indigenous and non-Indigenous Peoples. These efforts remain a work in progress.

2. Who are Aboriginal Peoples in Canada?

In Canada, the term “Aboriginal” is used to refer to three groups of people: First Nations, Inuit and Métis. First Nations and Inuit inhabited Canada prior to the arrival of Europeans. The Métis are people who descended from contact between Europeans and First Nations and ultimately developed into distinct communities.

Historically, the term “Indian” was used to refer to First Nations. This term is no longer acceptable in common usage, although it still has a legal meaning. For example, under the federal Indian Act, “Indian” means anyone who is registered or entitled to be registered as an Indian under the Act. The Indian Act also designates certain “bands” (communities) of which individuals are registered members.

More recently, there has been a shift towards using “Indigenous” instead of “Aboriginal” in Canada. In 2016, there were approximately 1.67 million Indigenous people in Canada, which was roughly five per cent of the total population.

3. Who has Jurisdiction over Indigenous Peoples?

The federal government has the exclusive authority to make laws in relation to Indigenous Peoples, along with the areas of land, known as reserves, designated for Indigenous Peoples. The Indian Act is the central piece of federal legislation and covers topics including band governance, the legal status of Indigenous persons, and land use.

In addition, provincial laws of general application (e.g., those laws that apply to everyone in the province) also apply to Indigenous people, as long as the laws do not impair areas or issues of exclusive federal jurisdiction.

Indigenous Peoples can also have jurisdiction over their own lands and resources. Modern treaties and recent court decisions have granted certain Indigenous Peoples the right to self-government. Over time, numerous other government-to-government agreements (between Indigenous Peoples and provincial, territorial and federal governments) and pieces of legislation have been passed recognizing increasing control by Indigenous governments over land and resources in their territory.

4. Indigenous Rights

Indigenous, or Aboriginal, rights are the collective rights of distinct Indigenous societies flowing from their pre-existing status in Canada. Aboriginal rights are those elements of a custom, practice or tradition that were historically integral to an Indigenous community’s culture and way of life prior to first contact with Europeans, and that continue to be an integral aspect of their culture in its contemporary form today.

Aboriginal rights include a range of cultural, social, political, and economic rights, including Aboriginal title (discussed further below), the right to harvest a particular resource (such as fish, game, or trees in a particular location), and other cultural and societal rights. Canadian courts have also recognized Aboriginal rights in respect of customary adoption, customary marriage, and the right to use tobacco for spiritual, religious, ceremonial and healing purposes. Aboriginal rights vary from community to community depending on the customs, practices and traditions that have formed part of their distinctive cultures.

Aboriginal rights are held communally by the members of a particular Indigenous People, and do not belong to any one individual. Aboriginal rights also can and do exist independently of any Aboriginal title to land. As a result, an Indigenous community may have Aboriginal rights in a particular area even if it does not hold Aboriginal title over that area.

5. Aboriginal Title

Aboriginal title is an Aboriginal right to exclusive use and occupation of the lands to which it applies. This right arises from Indigenous Peoples’ exclusive occupation and possession of land prior to the assertion of sovereignty by non-Indigenous governments. It confers ownership rights similar to those associated with privately-owned lands but is held communally by the Indigenous community.

Once proven, Aboriginal title includes rights of exclusive occupation and use of the relevant lands for a variety of purposes, including a power to exclude others from those lands. Aboriginal title holders possess the exclusive right to decide how the land is used. They also have the right to benefit from those uses, as long as they do so in a way that is consistent with the collective nature of the right and its continued exercise by future generations. This includes uses that are modern and not necessarily rooted in past cultural practices.

While courts in Canada have recognized the legal possibility of Aboriginal title for some time, it was not until 2014 that the Supreme Court of Canada first confirmed that an Indigenous People held Aboriginal title. Many (if not most) other Indigenous Peoples assert Aboriginal title, although no other claims have successfully progressed through the courts.

6. Treaties

Treaties are agreements between the government and Indigenous Peoples that define the ongoing rights and obligations of the parties. Treaties include both historic and modern treaties (some of which are called comprehensive land claim agreements).

Treaty rights vary from agreement to agreement. Rights protected in a treaty may only be exercised by the Indigenous People that signed the treaty, and only in the areas set out in the treaty. Like Aboriginal rights, treaty rights are collective rights that do not belong to any particular individual.

6.1 - Historic Treaties

Starting in 1701, the British Crown entered into treaties with Indigenous Peoples to support economic and military relations. These treaties provided for peaceful relationships, trade, military support, and strategic alliances, but typically did not contemplate the giving up of land or other rights.

Between 1871 and 1921, the new Canadian government (since Canada only came into existence in 1867) entered into numerous land cession treaties. These treaties covered large areas of land occupied or controlled by Indigenous nations. Most notable are the 11 “numbered treaties,” which cover northern Ontario, Manitoba, Saskatchewan, Alberta, and parts of the Yukon, Northwest Territories and British Columbia. In all, there are approximately 70 historic treaties that cover nearly 50% of Canada.

In return for the transfer of the legal ownership of the lands and resources covered by the treaty to the Crown, the treaties generally provided for:

  • Annual payments (annuities)
  • Land set aside for the First Nation’s exclusive use (reserves)
  • The right to fish, hunt and trap on unoccupied Crown land
  • One-time benefits (such as farm equipment, ammunition and clothing)

The historic treaties were typically based on the exchange of verbal promises reduced to writing by the Crown, in a language that many of the Indigenous Peoples did not understand. As a result, the written versions of historical treaties do not necessarily set out fully, or with complete accuracy, the terms of these agreements, so the government and First Nations often have differing views with respect to the interpretation and implementation of these treaties. These differing views have resulted in litigation, which continues.

7. Modern Treaties

Historic treaties only addressed a portion of Aboriginal rights to land across Canada. As a result, the negotiation of modern treaties is still underway in parts of the country.

Unlike historic treaties, modern treaties are the result of lengthy negotiations (sometimes decades) between well-resourced and sophisticated parties. Modern treaties aim to promote reconciliation and foster a positive long-term relationship between Indigenous and non-Indigenous communities.

Under modern treaties, treaty rights and benefits for Indigenous Peoples often (but do not always) include:

  • Ownership of lands
  • Self-government
  • Consultation and participation requirements
  • Wildlife harvesting rights
  • Financial settlements
  • Participation in land use and management
  • Resource revenue sharing and measures to participate in the Canadian economy

Since 1975, Canada has signed at least 25 modern treaties with Indigenous Peoples in various regions of the country.

8. Constitutional Protection

Both Aboriginal and treaty rights are constitutionally protected (the highest protection in Canadian law). Section 35 of the Canadian Constitution states in part, “[t]he existing aboriginal and treaty rights of the Aboriginal Peoples of Canada are hereby recognized and affirmed”.

This provision protects Aboriginal rights and treaty rights that were in place in 1982 or that subsequently came into effect. However, section 35 does not enumerate a comprehensive list of rights it protects. As a result, there has been significant litigation in this area of the law over the last 40 years.

Aboriginal or treaty rights cannot be extinguished without the consent of the Indigenous people. However, in certain circumstances, the Crown can still infringe or restrict the exercise of such rights without the Indigenous people’s consent. This is where the duty to consult and accommodate comes in.

9. Duty to Consult and Accommodate

When the government is considering making a decision that has the potential to impact asserted or established Indigenous rights, it has a duty to consult, and where appropriate, accommodate Indigenous Peoples. This duty stems from the honour of the Crown, which arises from the Crown’s assertion of sovereignty over Indigenous people, and control of land and resources that were formerly under Indigenous Peoples’ control.

For many Indigenous Peoples, the duty to consult has become an important means of protecting — and exercising — their rights. As a cost-effective alternative to litigation and treaty negotiation, consultation supports relationship-building without surrendering rights. Engaging in a successful consultation process can also benefit project proponents and the government by facilitating agreement before conflicts arise or escalate. The government and (to a large extent) project proponents generally bear the cost of consultation. These costs should be anticipated and can prevent unforeseen delays and expenditure later in the project development process.

The duty to consult Indigenous people rests with the government (often referred to as the “Crown” in this context). Apart from the specifics of individual regulatory processes, there is no general legal obligation on third parties (such as businesses) to consult. However, governments can, and often do, delegate the procedural aspects of the duty to consult to project proponents. Even if this duty is delegated, the government ultimately remains responsible for ensuring that consultation undertaken by a project proponent meets the threshold established by the courts.

If an Indigenous People objects to the development of a project on the basis of an infringement of their rights or a lack of consultation or accommodation, its primary recourse (apart from negotiation) is to seek remedies from the courts. While many project proponents have successfully navigated regulatory processes and negotiated mutually beneficial agreements with Indigenous Peoples, others have faced significant delays, increased costs, and even project cancellations.
Early identification of Indigenous rights, and early and consistent engagement with Indigenous communities, is therefore critical. Such engagement can be accomplished though consultation and accommodation, and in particular commercial agreements with Indigenous communities.

9.1 - Content of the Duty to Consult

The duty to consult is triggered when the Crown has knowledge of the existence of potential or established Aboriginal or treaty rights, and contemplates conduct that might adversely affect those rights. Neither the impact nor the right needs to be definitively proven, simply asserted (with some apparent legitimacy). As a result, this threshold is low and is easily triggered. Most resource developments in Canada, and some other business activities, trigger the duty to consult.

The level of consultation that is required will vary from case to case. It must be proportionate to a preliminary assessment of the strength of the case supporting the existence of the right or title, and to the seriousness of the potential adverse effect upon the right or title claimed.

Less rigorous consultation is required where the claim to the Aboriginal right or title is weak, the Indigenous right is limited, or the potential for infringement is minor. In these circumstances, the government need only give the Indigenous People notice of the possible infringement, disclose information, and discuss any issues raised in response to the notice.

In contrast, where a prima facie claim to the Aboriginal right or title is strong, the right and potential infringement is of high significance to the Indigenous Peoples concerned and the risk of non-compensable damage is high, then the government may be required to engage in deep consultation.

Once the level of consultation has been determined, the government must consult with each Indigenous nation with the goal of substantially addressing its concerns. Because consultation is intended to facilitate dialogue with Indigenous People, it must provide them with meaningful input into the decision-making process.

The duty to consult does not provide the Indigenous nation with a veto or require obtaining its consent (unless the Indigenous nation has Aboriginal title, or an agreement with the government which recognizes the Indigenous nation as having decision-making authority). However, the consultation must be reasonable and meaningful. Consultation cannot preclude the possibility of accommodation from the outset, and cannot simply be an opportunity to “blow off steam.”

Indigenous Peoples are also bound by reciprocal obligations to outline their claims clearly and engage in the consultation in good faith. Indigenous nations cannot “thwart the Crown’s efforts” to consult with them (e.g., by refusing to respond to correspondence or attend meetings).

Ultimately, the courts have been tasked with deciding if the government’s consultation and accommodation is sufficient when disagreement arises.

10. Commercial Agreements

As part of businesses’ engagement with Indigenous Peoples, it is common to enter into commercial agreements to secure Indigenous consent and support for a proposed project or activity.

The most common type of agreement in Canada between project proponents and Indigenous Peoples have been referred to as impact and benefit agreements (IBAs). IBAs are legally enforceable contracts between proponents and Indigenous communities that are designed to address the impacts of a proposed project and outline the benefits the business will provide to the Indigenous People. Agreements of this kind can take a variety of forms and will rarely conform to a standard template.

While some form of monetary payment is generally part of an IBA, Indigenous communities usually require additional commitments in an agreement. These may include participation in regulatory processes, including ongoing mitigation, monitoring, or reclamation requirements or the consideration of Indigenous knowledge. Opportunities for economic development, education, training and employment are also common provisions in an IBA. A project proponent, in turn, receives community support (or consent), which can significantly improve regulatory and project completion timelines and reduce unforeseen costs and uncertainty.

Capacity funding is often provided by the project proponent to an Indigenous community to enable the community to retain the legal and technical advice necessary to negotiate an IBA.

Other types of commercial agreements tend to predate or supplement an IBA. For example, a Protocol Agreement or Memorandum of Understanding, which favours relationship-building, with few formal legal commitments, can be negotiated early in the engagement process. Similarly, Exploration and Development Agreements facilitate industry-specific priorities, often leading to an IBA, and are commonly used in the mining sector.

A Joint Venture Agreement may be negotiated between an experienced contractor and an Indigenous community or business. Whether the resulting joint venture is directly awarded work from a project proponent or bids on contracts with preferential treatment will depend on the project.

Ultimately, businesses should negotiate commercial agreements that promote clear and predicable outcomes, with the goal of obtaining Indigenous consent to the business’s activity.

11. Anti-Bribery and Corruption

The federal Extractive Sector Transparency Act (ESTMA) imposes reporting and transparency obligations aimed at combatting corruption. Businesses engaged in the commercial development of oil, gas or minerals must report payments they make to all levels of government which total at least C$100,000. These requirements are broadly aligned with similar provisions in other countries.

ESTMA includes payments made to Indigenous governments. ESTMA does not specifically address IBAs and other commercial agreements with Indigenous Peoples, but some reportable payments may be included in such agreements. Confidentiality clauses which limit transparency and information sharing around IBA-related compensation do not supersede the requirements established by ESTMA. Non-compliance in the form of a failure to disclose, providing misleading information, or structuring payments to avoid reporting may result in penalties under the legislation.

Providing capacity funding or negotiating agreements with Indigenous Peoples will usually not offend the principles underlying transparency and anti-corruption laws. However, it is important to be aware that these laws exist and that they could become relevant during the engagement or negotiation process.

12. The Evolution of Indigenous Law in Canada

Indigenous law in Canada is constantly evolving. One area to watch is the implementation of the United Nations Declaration on the Rights of Indigenous Peoples, known as UNDRIP.

UNDRIP is an international instrument adopted by the United Nations to recognize the rights that “constitute the minimum standards for the survival, dignity and well-being of the Indigenous Peoples of the world.” Despite the breadth of subject-matter covered by UNDRIP, it is an aspirational declaration and not a binding international convention. In recent years, UNDRIP has come to play an increasingly influential role in Canadian legal and political discourse.

UNDRIP recognizes various rights, including the right to self-determination and autonomy in internal affairs, the right to be free from discrimination, and the right to free, prior and informed consent (FPIC).

Canada endorsed UNDRIP in 2010, reaffirming its commitment to promoting and protecting the rights of Indigenous Peoples at home and abroad.

In 2019, the provincial government of British Columbia adopted the Declaration on the Rights of Indigenous Peoples Act, establishing UNDRIP as British Columbia’s framework for reconciliation with Indigenous Peoples. In 2021, the federal government of Canada adopted the United Nations Declaration on the Rights of Indigenous Peoples Act to affirm UNDRIP as an international human rights instrument that can help interpret and apply Canadian law.

A number of important considerations related to the implementation of UNDRIP have yet to be substantively addressed. For example, it is not clear how governments will resolve interpretive disagreements over what certain articles of UNDRIP mean in practice. Those articles concerning FPIC, in particular, will require clarification.

The underlying reason for obtaining the FPIC of Indigenous Peoples is to ensure that they can take part in decision-making processes affecting their lands and interests. This requires consent to be given that is “free” from coercion, intimidation, or manipulation, made “prior” to any authorization or commencement of activities, and “informed” with the benefit of all relevant information. The extent to which FPIC is required (in the sense that the absence of Indigenous consent may prevent a project from receiving all of the necessary government approvals) is evolving at different rates within different governments in Canada.