Paper: Negotiation and Consultation of Disputes Involving First Nations

By Billy Garton
Bull, Housser & Tupper
November 8, 1999

I. Introduction

Since the repatriation and amendment of the Canadian Constitution in 1982, governments have been constrained in their law making powers with respect to the rights of aboriginal peoples. Long before this time, however, the courts in Canada and elsewhere recognized a fiduciary or trust-like relationship between aboriginal peoples and the Crown that resulted from the exercise of Crown sovereignty over territory formerly occupied by First Nations. As early as the Royal Proclamation of 1763, the Crown interposed itself between aboriginal peoples and those who dealt with their lands and resources. The paternalistic approach taken by Canada’s Indian Act reinforced the impression that the Crown and its Indian agents knew what was best for First Nations.

It became obvious through court decisions such as Guerin v The Queen [1994] 2 SCR 335 that the Crown did not always have the best interests of First Nations in mind when dealing with First Nation lands. The courts have begun to enforce the Crown’s fiduciary duty and through successive decisions have attempted to outline in greater detail what is expected of the Crown. An offshoot of that litigation, and the litigation surrounding aboriginal title and treaty claims, is the growing body of case law pertaining to the duty of the Crown to negotiate and consult with First Nations when governments or third parties seek to act in a manner that may infringe aboriginal and treaty rights or unextinguished aboriginal title.

This paper will describe the source of the duty to consult with First Nations and some of the recent court decisions that have identified the "ground rules" for consultation and negotiation with First Nations. Following this legal review it will conclude with the author’s view of some of the expectations of non-aboriginal industry in a negotiation or consultation process with a First Nation group.

This paper is not intended to provide legal advice in any particular context.

II. Source of the Duty to Consult with First Nations

Prior to the landmark Supreme Court of Canada decision in Delgamuukw v B.C. [1997] 3SCR 1010, there were those who still doubted whether the Crown had a legal duty to consult with First Nations when exercising its authority in a manner that infringes aboriginal or treaty rights. That doubt was put to rest by the court in Delgamuukw with the bold statement (at page 1,013): "there is always a duty of consultation". The duty arises only when an aboriginal or treaty right has been infringed, but the court cautions that the nature and scope of this duty of consultation will vary with the circumstances. To understand the scope of the duty one must first understand where it comes from.

Under Section 35 (1) of the Constitution Act 1982, the existing aboriginal and treaty rights of the aboriginal peoples of Canada are recognized and affirmed. Because aboriginal title was recognized as a common law right well before 1982, section 35 constitutionalized this right in its full form (Delgamuukw page 1092). The discussion of consultation in the Delgamuukw decision arises when the court elaborates on the test for infringement of aboriginal rights and title. That discussion recalls the court’s decision in Sparrow v R [1990] 1 SCR 1075 where a First Nation member sought to challenge a federal fishing net regulation as an infringement of his aboriginal fishing rights. In Sparrow the court confirmed that aboriginal rights are not absolute, and can be infringed by justifiable legislation. It is in the context of the test used to justify federal or provincial infringements of aboriginal rights and title that the consultation obligation is most often litigated.

The test of justification for an infringement of aboriginal title is a two-part test. First, infringement of the title or right must be in furtherance of a legislative objective that is compelling and substantial. In the wake of the Delgamuukw decision and the decision of the Supreme Court of Canada in R v Gladstone [1996] 2 SCR 723, the range of legislative objectives that can justify an infringement of aboriginal title is fairly broad.

The second part of the test of justification requires an assessment of whether the infringement is consistent with the special fiduciary relationship between the Crown and aboriginal peoples. The Gladstone decision makes it clear that the requirements of the fiduciary duty will be a function of the legal and factual context of each situation. For example, in the Sparrow and Gladstone decisions, the duty was interpreted and applied in terms of the amount of priority afforded the aboriginal interest. In other words, had enough fishing rights been provided in the regulatory scheme. The theory was that the fiduciary relationship between the Crown and aboriginal peoples demanded that the aboriginal interest be placed first. In Delgamuukw, it became clear that the fiduciary duty does not demand that aboriginal rights always be given priority. In other situations the fiduciary duty can be expressed in other ways. These include questions of whether there has been as little infringement as possible in order to effect the desired result; whether, in a situation of expropriation, fair compensation is available; and, whether the aboriginal group has been consulted with respect to the legal measures being implemented.

In addition to variation in the form of the fiduciary duty, there will also be variation in the degree of scrutiny of the infringing measure or action required by the fiduciary duty (Delgamuukw at page 1109). The degree of scrutiny is a function of the nature of the aboriginal right at issue. For example, the exclusive nature of aboriginal title is relevant to the degree of scrutiny of the infringing measure or action. If the Crown’s fiduciary duty requires that aboriginal title be given priority, then what is required is that the government demonstrate both that the process by which it allocated the resource and the actual allocation which results from that process reflect the prior interest of the holders of title. This does not mean that the holder of title must always have priority to the exclusion of all other considerations. Again, the court in Delgamuukw noted that because aboriginal title encompasses within it a right to choose how a piece of land will be used, this suggests the fiduciary relationship of the Crown may be satisfied by the involvement of First Nations in decisions taken with respect to their lands. In Delgamuukw the court said:

The nature and scope of the duty of consultation will vary with the circumstances. In occasional cases, when the breach is less serious or relatively minor, it will be no more than a duty to discuss important decisions that will be taken with respect to lands held pursuant to aboriginal title. Of course, even in these rare cases when the minimum acceptable standard is consultation, this consultation must be in good faith, and with the intention of substantially addressing the concerns of the aboriginal peoples whose lands are at issue. In most cases, it will be significantly deeper than mere consultation. Some cases may even require the full consent of an aboriginal nation, particularly when provinces enact hunting and fishing regulations in relation to aboriginal lands. (Delgamuukw p. 113)

The court went on to say that due to the inescapable economic aspect of aboriginal title, compensation is also relevant to the question of justification of an infringement of aboriginal title. The court said:

In keeping with the duty of honour and good faith on the Crown, fair compensation will ordinarily be required when aboriginal title is infringed. The amount of compensation payable will vary with the nature of the particular aboriginal title affected and with the nature and severity of the infringement and the extent to which aboriginal interests were accommodated. (Delgamuukw p. 1114)

Although the court speaks often of consultation, this will undoubtedly also require negotiation if the test of justification requires compensation, an allocation of the resource or consent. Thus it is not possible to clearly separate the negotiation and consultation process. The ultimate aim of the Crown should be to act in a way that reconciles the interest and rights of aboriginal societies with the broader political community and to do so in a way that upholds the fiduciary duty and honour of the Crown.

In addition to the common law duty of consultation that arises when there has been an infringement of aboriginal rights and title, there are also statutory duties of consultation that arise under various legislation, including for Forest Practices Code of British Columbia Act, Environmental Assessment Act (B.C.), Forest Land Reserve Act and others. Consultation is also a key element of the due diligence that governments and corporations should exercise to avoid unnecessary conflict and identify issues and mitigative measures before a project gets entangled in complex litigation. In some jurisdictions it is customary to consult and negotiate impact and benefit agreements before a resource project is started to ensure that the project will proceed without delay and in a manner that responds to the interests of local First Nations.

III. What is the scope of the duty to consult/negotiate?

In any negotiation or consultation with First Nations concerning potential or existing infringements of aboriginal rights or title, the objective of the Crown will be to "insulate" or justify the infringement by acting in a manner that upholds the fiduciary duty and honour of the Crown. The courts have said this fiduciary duty can be fulfilled in a number of ways. There is no cookbook recipe for consultation or negotiation that will be blessed by the courts.

The context of any consultation or negotiation exercise usually includes a government (or the holder of rights from a government) who wants to regulate or conduct a regulated activity, and a First Nation which wants to limit or control that activity or to participate in the activity. As pointed out above, negotiation of an allocation of the resource or consultation are means by which the Crown can have its way and uphold its fiduciary duty to aboriginal peoples.

Court decisions before and after Delgamuukw have provided useful guidance for all parties involved in such negotiations and consultation, but much is left to be learned about what the courts expect from this process. Some of what we know so far can be summarized as follows:

(1) There is a distinction between consultation and consent. If the infringement is not so serious as to require consent, the court will not require that the parties reach agreement on the proposed course of action. (Ryan v British Columbia [1994] BCJ 194)

(2) There is no special legal meaning to the word "consultation". The adequacy of consultation will be judged against the facts and circumstances of each particular case. (R v Sampson [1995] 16 BCLR 226 (BCCA))

(3) Consultation is not one-way communication. A person that engages in consultation must fully inform itself of the affected aboriginal group’s traditional practices and of their views of the potential infringement. A person who merely informs the First Nation of its plans for development and does not expend the time and energy necessary to inform itself of the group’s traditional practices may not be found to have satisfied the duty to consult. Consulting parties should therefore assume an active role in soliciting relevant information from the applicable First Nation. (R v Jack 1995 16 BCLR (3d) 201 (BCCA))

(4) The First Nation must be consulted in a meaningful fashion, covering all of the potential infringements and their impact on the First Nation and on other third party groups. It is not acceptable to infringe aboriginal rights and only later consult the affected group. The consultation should occur before a resource allocation decision is made. (R v Jack Supra)

(5) First Nations should not be rushed through consultation. The special trust relationship demands that hasty and pressured decisions be avoided. An exception to the general requirement for full and meaningful consultation would be a "catastrophic situation" that may threaten wildlife conservation programmes and necessitate expedited consultation. (R v Noel [1995] 4 CNLR 78 (NTTC) and R v Nikal [1996] 1 SCR 1013)

(6) Selecting the appropriate group for consultation is a critical step. Umbrella organisations such as tribal councils can play an important role in alleviating difficulties posed by competing or overlapping claims. (Kitkatla Band v British Columbia [1998] BCJ 1616)

(7) The duty of consultation rests with the Crown, but adherence to a government consultation policy is no guarantee that the consultation will be sufficient to justify any particular infringement. (Halfway River First Nation v British Columbia [1997] BCJ 1494 BCSC)

(8) The special trust-like relationship between the Crown and First Nations requires reasonableness and good faith on both sides and presumes that each party respects the obligations that it assumes towards the other (Halfway River, Supra).

(9) First Nation demands for information in the consultation process must not be unreasonable. For example, aboriginal groups must not obstruct meaningful consultation by requesting research that defies generally accepted professional, scientific and commercial practices and standards. (Cheslatta Carrier Nation v British Columbia [1998] BCJ 178 BCSC)

(10) First Nations cannot complain about potential infringements if they refuse to be consulted in an effective forum created in good faith. (Cheslatta Carrier Nation Supra; and Ryan Supra; Halfway River Supra)

The courts have not yet expressly described the scope of a duty to negotiate with First Nations, but at a minimum it is known that the standards of good faith expected of a fiduciary would apply to such negotiations conducted by the Crown, particularly if the negotiations are intended to result in a resource allocation or compensation package to justify the infringement of an aboriginal right or title. Where the negotiations occur between a private party and a First Nation, it would seem odd to impose a duty of good faith on the private party, but this may be so if the agreement is intended to justify an infringement of aboriginal title or rights by the Crown.

IV. Prejudice v Without Prejudice Negotiations and Consultation

An obvious concern that shines through the caselaw regarding the Crown’s consultation obligations is the extent to which negotiations and consultations about a prospective development can prejudice the ability of the First Nation to assert its rights to prevent the project. The Supreme Court of Canada has expressed the desire that issues of aboriginal title and rights be resolved outside the courts through negotiation and consultation. However, the courts have held out consultation, compensation and resource allocation as keys to justification of the infringement of these rights. Consequently, there is a natural reluctance on the part of First Nations to participate in these discussions if it means that their rights will be infringed without their consent. Similarly, governments and third parties clearly want the discussions to be conducted on a "with prejudice" basis so that if agreement is not reached they can proceed with their action and let the court decide whether or not the Crown has upheld its fiduciary duty.

These conflicting objectives mean that almost every negotiation or consultation process begins with lengthy negotiations about the "with prejudice" or "without prejudice" nature of the process. There is no easy solution, but if both parties step back and see that what they ultimately want to preserve is the ability to ask a court to determine whether the actions of the Crown have been sufficient to justify infringement of a right or title, it becomes possible to structure a protocol that permits each party to introduce the evidence of discussions without conceding to the other that the infringement is justified or not justified, as the case may be.

V. Industry Expectations at the Bargaining/Consultation Table

When First Nations and industry or government sit down to negotiate an agreement or consult on a project they often have very different expectations of the outcome. There are many examples of successful negotiations between industry and First Nations, but many too of deals that don’t make it to the finish line. Frequently there appears to be a mis-match between the expectations of the parties that results in a move to litigation before the parties have fully explored the opportunities for a negotiated settlement. The expectations of the resource industry in these discussions usually include one or more of the following objectives:

A. Certainty and stability of result.

Industry will expect a binding contract, as this is how business is generally conducted. However, the long term nature of the relationship will also require flexibility to adapt to changing circumstances. This can be achieved through "deal openers" for changing circumstances, such as periodic rent or payment reviews, rights of termination upon sufficient notice, and renegotiation upon the happening of predictable events (such as cancellation of a tenure or entering into a treaty).

B. Prejudice

Industry will want the agreement to prejudice the rights of the parties to the extent they have agreed to do so. In other words, if a concession is made by one party, this concession should not be denied at a later time unless circumstances change in a manner contemplated by the contract.

C. Dispute Resolution

Industry may want to adopt a dispute resolution mechanism to deal with any matters that become an impasse during negotiations or consultation. Although it may seem odd to resort to dispute resolution before an agreement is reached, this can be an effective means of separating contentious issues from the non-contentious ones in order to make progress, build trust and deal with the "hard points" with the assistance of knowledgeable third party facilitators.

D. Joint Contributions to the Outcome

Industry will expect to see a shared commitment of time and resources to the outcome of the discussions - in other words, a "buy in" to the process so that both parties are contributing towards a mutually positive outcome.

E. Clear Communication

It will be critical to establish clear channels of communication so that plans and positions can be clearly expressed and disseminated within each negotiation team.

F. Mutual Respect

Each party should respect the rights of the other, and understand when it is not possible for the other party to make a required concession. For example, resource industries often live within regulatory controls that can prevent them from acting in the manner required by the First Nation. Similarly, industry must not see aboriginal groups as another "stakeholder", but as group with distinct and substantial rights that must be accommodated as a matter of law.

G. Solutions Within Authority

Industry will want to make agreements within the scope of their powers and authority and may not be able to address issues or concerns caused by other players in the same industry or government. Similarly, industry negotiators must recognize that their counterparts across the table may need broad community support to authorize the agreement. A common mistake is the desire by both parties to resolve global issues at the limits of their authority when all that is needed at the beginning is resolution of the immediate needs and a framework for negotiation of new matters as and when they arise.

VI. Conclusion

While governments struggle with issues of title and rights, First Nations and business in British Columbia are starting to sit down to discuss their mutual needs and create mutually beneficial arrangements. These discussions are frequently charged with legal and economic agendas that go beyond the scope of the deal under discussion. The negotiator must have a sound understanding of the parties and their needs and the legal framework that has brought them to the table.