Mining Markets


Tsilhqot’in decision fuels uncertainty in Ontario

The Supreme Court of Canada's recent Tsilhqot’in decision will have a ripple effect across Canada and could deter resource investment in the country, according to Neal Smitheman, a partner at law firm Fasken Martineau.

The Supreme Court of Canada’s recent Tsilhqot’in decision will have a ripple effect across Canada and could deter resource investment in the country, according to Neal Smitheman, a partner at law firm Fasken Martineau.

The decision, released on June 26, gave an aboriginal group in British Columbia aboriginal title over lands for the first time in Canada.

Aboriginal title means the group has a collective ownership of the land and the right to profit from its use, including mining and forestry, and the right to decide how the land is used.

The ruling has huge implications in B.C., where there are few settled land claims, but even projects in Ontario, where most of the province is covered by treaties, could be affected.

The decision is likely to inspire legal actions across the country as historic treaties are compared with the landmark ruling, which granted the Tsilhqot’in aboriginal title over a huge swath of land.

“From what we’re hearing, every treaty in Ontario is about to be challenged by First Nations,” said Smitheman in a presentation this week.

Although that doesn’t mean the treaties will be easy to reopen, it does mean a long legal road ahead to get things sorted out and before the resource industry will have the certainty it needs to make investments.

It also means that some of what is now treaty land in Ontario – where technically only consultation with aboriginal groups is required – could become aboriginal title land when the dust settles.

Smitheman sees aboriginal groups challenging existing treaties on the basis of a reinterpretation of the language they contain, or on the basis of “improvidence.”

On the first point, Smitheman noted that all of the treaties in Ontario include similar wording that allows the province to expropriate or “take up” lands. For example, Treaty 9, which covers a vast tract of land in northern Ontario that includes the Ring of Fire, says that the aboriginals covered by the treaty “cede, release, surrender” to the government all rights to the lands in question in return for exclusive rights on reserve land. They retained the right to hunt, trap and fish on the surrendered lands “saving and excepting such tracts as may be required or taken up from time to time for settlement, mining, lumbering, trading and other purposes.”

Smitheman expects First Nations groups will argue that to the aboriginal leaders that signed the treaty back in 1923, words like surrender and cede had a different meaning.

“There’s going to be an attempt to interpret the treaty to mean there was a sharing – not a surrender, but. . .  a sharing of resources and a sharing of the land.”

Any court challenge to existing treaties will be subject to a contextual analysis, Smitheman says, meaning that the courts won’t look only at the strict wording of the agreement, but will attempt to put it in the context of the time it was signed, and to make a determination of what the parties thought they were getting.

In other court cases dealing with aboriginal rights, contextual analysis has required a thorough and often lengthy historical review of documentation in and around the time of the treaty, as well as many weeks of testimony from archeologists, anthropologists and the like.

Smitheman also sees treaties being challenged on the basis of improvidence, which has to do with unfairness or an inequality of bargaining power.

Aboriginal groups could use the Tsilhqot’in decision – which granted the Tsilhqot’in aboriginal title to 1,750 sq. km of land – as evidence that treaties such as Treaty 9 were improvident.

In exchange for giving up vast tracts of land in Ontario, treaty aboriginals got small reserves and exclusive rights within those reserves.

“In comparison to the vast tracts of lands they’ve given up, it’s almost a postage stamp — so you can see the argument for improvidence, that this was not proper – and especially given the Supreme Court of Canada decision with respect to the Tsilhqot’in lands.”

If aboriginal groups are successful in arguing that a treaty was improvident or that there was no actual surrender of land to the Crown, all bets are off and developers could find themselves in the same position as a treaty title issue.

“If the treaty was improvident, from a contextual analysis, the treaty should not be enforced, it’s null and void – this is going to take a great deal of time in the courts.”

Smitheman says that treaties are elevated beyond a regular contract in the eyes of the courts because they represent an agreement between, generally speaking, sovereign nations, and because they deal with aboriginal rights.

“It’s a solemn agreement, even more subject to questioning improvidence and exactly what it meant, given the fiduciary role of the Crown in its dealings with First Nations,” he said.

Another aspect of the Tsilhqot’in ruling that could have major impacts is the retroactive veto that it gives aboriginal title holders in paragraph 92 of the decision.

The Supreme Court of Canada made it clear that “it may be necessary for the Crown to reassess prior conduct in light of the new reality in order to faithfully discharge its fiduciary duty to the title-holding group going forward,” Smitheman said.

“For example, if the Crown begins a project without consent prior to aboriginal title being established, it may be required to cancel the project upon establishment of the title if continuation of the project would be unjustifiably infringing.”

Governments can push development projects through on aboriginal title lands, but only if they can prove they are in the public interest and would not have a more negative impact proportionally on aborginals than the benefits the general population would gain – not an easy task.

Smitheman worries that the uncertainty that now exists in Canada surrounding aboriginal title – in particular the idea of a retroactive veto — will scare investors away.

“Money’s like water – it seeks the path of least resistance, so if you’re sitting around a table in New York, London or Beijing thinking about what you’re going to do with your private equity fund, Canada may not be on the top of the list,” he said.

While he doesn’t see mines being shut down in a scenario where aboriginal title is bestowed well after operations begin, Smitheman does see possible scenarios where compensation would be required.

“For an investor, this has to be a major concern.”

Lastly, there is some debate as to whether aboriginal rights under Section 35 of the constitution are subject to the laches principal that claims have to be brought before a court within a reasonable amount of time.

Although in some cases (Chippewas of Sarnia), the courts have interpreted that aboriginal rights are subject to laches, Ontario’s recent Mining Act revisions may remove that defence.

“When you look at the Mining Act changes, there’s a retroactive implication to any lease that is or has been granted, that it’s subject to section 35 aboriginal rights,” Smitheman says.

As for how all of these developments could affect Ontario, Smitheman says development in the Ring of Fire, for example, is likely to be held up for a long time.

“It’s going to take quite a while to work through this ruling, it’s going to take quite a while to deal with some of the existing land claims, and it’s going to take quite a while for the dust to settle with respect to the numerous challenges we expect concerning the treati
es that are already in place.”

There are already about 50 unsettled land claims in the province, and the Williams treaty is already under challenge.

Meanwhile, another Supreme Court ruling released Friday morning, Keewatin, had the potential to be a much bigger problem for the resource industry.

The Keewatin decision has to do with Treaty 3 and whether the federal government, which entered into the treaty, has the right to transfer its rights to “take up” land under the treaty to the province and issue logging and other permits on treaty land.

The court ruled that it did, and therefore the province has the right to issue mining, logging and other permits on treaty land.

If the court had ruled the other way, it would have put all treaties in jeopardy, as well as mining and logging permits.

While the legal framework around aboriginal rights continues to evolve, Smitheman notes that many resource companies won’t proceed with projects unless they have First Nations support, even when they’re on treatied lands.

“When you’re dealing with treaties, it’s about consultation, theoretically. My view is that it’s more like consent because it’s going to be so difficult to try and push through a project where you don’t have First Nations consent,” he said. “So de facto, you really need the cooperation of first nations and before government, industry and companies long realized that.”

— We want to know what your view is on the Tsilhqot’in case or on the mining industry’s relationship with First Nations generally. Leave a comment or email if you want to write an opinion piece for us.

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