The Crown owes a constitutional duty – under s. 35(1) of the Canadian Constitution – to engage in honourable negotiations “leading to a just settlement of Aboriginal claims,” and to consult and accommodate before taking actions that have the potential to negatively impact on Aboriginal Title and Rights.
First of all, First Nations take the position that the federal government has a legal obligation to consult with them before ratifying FIPA, a duty which has not been met. Indeed, two modern treaties in British Columbia, explicitly reference a consultation requirement. For example, the Maa-nulth First Nations Final Agreement states:
1.7.1 After the Effective Date, before consenting to be bound by a new International Treaty which would give rise to a new International Legal Obligation that may adversely affect a right of a Maa-nulth First Nation Government under this Agreement, Canada will Consult with that Maa-nulth First Nation Government in respect of the International Treaty either separately or through a forum that Canada determines is appropriate.
The Tsawwassen First Nation Final Agreement contains a similar provision.
But secondly, FIPA itself may violate the constitutionally-protected process of negotiations between the Crown and First Nations. There is a reasonable probability that the threat of multi-million dollar investor-state suits under FIPA will create a disincentive for the Crown to negotiate honourably with First Nations (for example, regarding environmental and cultural protection measures in treaties or other legal agreements). The question is whether this effect is so significant that that it can be said that FIPA therefore “substantially interferes” not just with the First Nations preferred outcomes, but the very process of negotiation. If so, then on the basis of Charter jurisprudence in Canada, a court could hold any legal action taken by Canada to ratify or implement FIPA to be unconstitutional, and it is possible that a First Nation could seek an interim injunction preventing its ratification until they have their day in court. Given the lack of consultation with First Nations on FIPA it is very difficult to see how Canada could justify its infringement of First Nations constitutional rights.
We note that FIPA does incorporate a “reservation” from the Free Trade Agreement between Canada and the Republic of Peru that reads:
Canada reserves the right to adopt or maintain any measure denying investors of Peru and their investments, or service providers of Peru, any rights or preferences provided to aboriginal peoples.
However, this reservation does not to apply to Article 10 of FIPA, the expropriation provisions, which create the risk of investor-state suits for compensation, and which are a major source of the potential impacts on First Nations. This reservation does not legally remove the obligation of the Crown to act honourably toward First Nations with respect to the ratification and implementation of FIPA.
FIPA raises the specter of the Canadian tax payers being on the hook to Chinese investors if the Crown lives up to its obligations to First Nations in ways that impact the investors. As a practical matter, that creates a tremendous incentive for the Crown not to live up to its obligation to the First Nations.
Options for First Nations
With the clock ticking down to the likely ratification date, what can be done?
Even at this late hour there is the possibility that a First Nation will seek to challenge the legality of the FIPA, and seek an injunction to prevent its ratification. This would be far from straightforward, as the courts might view the impacts on a First Nation as speculative. Nonetheless, a First Nation facing development in their territory by companies with Chinese investors, or one with specific treaty provisions regarding consultation on international treaties might well be able to convince a court to hear the case.
If such a challenge does not occur before the Treaty is ratified, it may be possible for a First Nation to challenge the Commercial Arbitration Act in respect of disputes occurring within their territory. However, a successful challenge would not remove Canada’s international law obligation to Chinese investors – merely the domestic remedy whereby it is enforced. It would be far preferable for the Canadian government deal honourably with Aboriginal and Treaty Rights before making any decision about ratification.
By Jessica Clogg, Executive Director and Senior Counsel, and Andrew Gage, Staff Lawyer