I sat through three days of the court hearings on the Hupacasath (HFN) challenge to the Canada China Foreign Investment Promotion and Protection Agreement (FIPA) with great interest.  I could not help but think that Canada’s arguments and assurances to the court were incredibly paternalistic and Big Brotherish. I heard over and over again in many forms the theme: “we know what is best for First Nations, we know FIPA will not adversely affect First Nations rights without even having a dialogue with First Nations, let alone a meaningful consultation. We know that companies from China will not develop in Hupacasath territories as there has been no interest to date and there won’t be in the future.” (Hupacasath evidence was that a Chinese company was buying a 25% interest in Island Timberlands) Add to the list that Canada said “that First Nations have never brought any claims against NAFTA and so there would never be any claims by First Nations under FIPA”. Canada’s lawyers made the government out to be all seeing and all knowing almost making Canada out to be a God or alternatively, a very good fortune teller. Throughout the federal governments arguments, these themes were presented ad nauseum, and there was no proof provided from them that rights and title would not be impacted, or that foreign investors would not come into HFN territory and access the many rich resources ranging from forestry, energy, coal, gold, silver, fisheries and sea resources including fish farms and development of a port to ship the resources to China.

Chief Justice Paul S. Crampton of the Federal Court heard this case June 5th to the 7th in Vancouver, BC.  An important issue to be tried:  Should First Nations be consulted before the Federal Government negotiates international trade treaties? In my previous blog which I entitled, “A modern day David vs. Goliath”, I outlined how a relatively small First Nation was taking on the federal government and all its power.  Never was that more obvious than in courtroom.  HFN had 2 lawyers who did a good job of putting forward their position.  The federal government had 5 lawyers, 4 assistants in the court room and an army of lawyers back at the office.  They were able to produce maps and charts within hours of the Justice’s questions on various matters. 

What is at stake in this court case? From HFN perspective, FIPA must undergo a consultation process with First Nations across Canada that would result in a FIPA that reflects the concerns of First Nations and then go back to China for their approval before ratification.  From a Canadian government prospective, that they would not have to consult on this FIPA and any further FIPA’s they chose to negotiate.

The HFN court case was not a constitutional challenge and was not seeking injunctive relief.  It was not questioning the wisdom of the executive to ratify FIPA, and it was not asking the court to pass judgment on the Canadian Foreign trade policy or to intrude on Executive power.

Why does HFN think Canada should have consulted with them?  It is very simple, the Supreme Court of Canada has said that the duty to consult arises when the government contemplates conduct or a decision that will potentially affect aboriginal rights and title. Put simply, the duty to consult is a good faith, reasonable information disclosure between the First Nation and Government and has the purpose of substantially addressing the First Nation interests at stake.  Such duty arises before legislation is enacted or measure taken.  Nowhere in the negotiation of FIPA did any information flow from the federal government to the HFN or any other First Nation in Canada as was required. Therefore no interests at stake could be appropriately addressed. 

HFN, Tsawwassen First Nation, Chiefs of Ontario, Serpent River First Nation and the Union of BC Indian Chiefs, all provided letters to the Federal Government that they would like to commence consultations and such a request was denied. The Chief Justice stated that was sufficient for the Federal Government to know of the assertion of rights and title in their territories. Those First Nations provided affidavits to the court stating how they felt their rights would be impacted under FIPA and the letters to the Federal government were provided.  What is of interest here is that the Tsawwassen Final Agreement has a provision that reads:

s. 30. After the Effective Date, before consenting to be bound by a new
International Treaty that would give rise to a new International Legal
Obligation that may adversely affect a right of Tsawwassen First Nation
under this Agreement, Canada will Consult with Tsawwassen First Nation in
respect of the International Treaty, either separately or through a forum that
Canada determines is appropriate

Canada did not feel they had to consult with Tsawwassen on FIPA as required under their treaty because they did not believe there would be adverse affects. So, even with specific obligations, consultation is not guaranteed and First Nations negotiating treaties should look at wording to ensure consultations occur. 

Interestingly enough, Canada’s experts stated that they did not they did not

1. Do an analysis of FIPA and if it had potential adverse impacts on rights and title of First Nations.
2. Did not look at the implications of Chinese investment in the First Nations lands subject to rights and title, and
3. Did not determine in any way how First Nations governance rights would be affected even though First Nations are considered sub-national governments under FIPA. What that means is that sub-national governments are required to change their laws/policies so Canada can honour their international legal obligations. (includes provinces and territories as well)

HFN counsel argued that if Canada did not do a risk assessment/analysis of how FIPA would affect First Nations rights, how would they know if there was any impact? The fact that there was no dialogue with First Nations adds to the fact that Canada did not know if there would be an adverse impact and therefore failed in their constitutional duties.

Canada has adopted a standard FIPA model which it uses to negotiate other FIPA’s.  Right now there are currently 24 FIPA’s and Canada is negotiating one with the European Union. The model is based on the North America Free Trade agreement (NAFTA). NAFTA was concluded in 1994 before the duty to consult had been recognized and there was no First Nations consultation on the base model. HFN counsel spent time going through why this FIPA is different than NAFTA ranging from issues like this FIPA is a capital importer model meaning that there is more Chinese investment in Canada than Canada has in China. This FIPA is for 30 years minimum (15 years in length with 15 years for companies to continue operating if they are given notice that the FIPA will be terminated). NAFTA can be cancelled in 6 months. Interestingly enough Canada’s experts said that Canada enters into international agreements for the long term and doesn’t enter into them to terminate them, so the term of FIPA could easily be extended.  This FIPA reaches back to 1994, that is they can take into account any international rulings/findings since 1994, where other FIPA’s only go back to 2004.  Another fact that also makes this FIPA different is that Chinese investment in Canada grew 92.4% from 2008-2011 and would grow exponentially with FIPA. American investment under NAFTA has not grown at this rate.

Canada repeatedly stated that they had never been found of egregious behaviour or found in violation of the fair and equitable treatment and therefore First Nations would not have to concern itself over this.  They also said they had never violated any expropriation terms in that they provided fair compensation as was required.  Canada came to the conclusion that the mere fact that there were never any claims from First Nations on NAFTA means there never would be any under FIPA. Again, Canada provided no proof, only a statement.

The Chief Justice was very curious as to how FIPA could have looked had First Nations been consulted properly.  HFN counsel mentioned possibilities of the following:

1. There could have been a much more general reservation to protect aboriginal rights.
2. A broader section on the duty to consult-including if government had to make changes or not permit a development, there could be no damages assessed against Canada. Also asking companies from China to address this area when doing business in Canada-that is to work with First Nations.
3. That there be a carve-out for First Nations laws so their laws would not be affected by FIPA.
4. That there be space to deal with modern land claims-and is subject to consultation
5. A carve out for First Nations assets abroad so they could not be seized
6. An indemnification of First Nations from damages assessed against Canada. 

Canada continually insisted through their arguments that FIPA gave enough policy space to allow them to consult and accommodate First Nations. They talked a lot about remedial measures and damages for First Nations which of course does not replace aboriginal rights or a way of life. Canada stated that FIPA did not change any Canadian laws or the ways lands and resources are managed in Canada. Of course the federal government already stripped natural resource laws of adequate environmental standards through Bill C-38 and 45 in contemplation of FIPA and getting businesses approved quickly.  They further argued that FIPA operated entirely in the international realm and had no affect on domestic law or could cause adverse impacts on rights.  HFN lawyers argued that FIPA as a higher level decision, could lead to structural changes that may not be immediate but could change the laws which would impact rights adversely. Such impacts do not need to be physical and that the policy space the feds said existed was insufficient. HFN lawyers told the court that Canada’s position that their international obligations would remain in a silo apart from their obligations was not acceptable and that there would be clashes over natural resources. 

Canada also tried to invoke the flood gates argument that they could not consult 633 First Nations.  Such arguments failed in the Haida Case.  HFN counsel suggested that a process could take place that First Nations could be consulted on the model FIPA.  If Canada was to change the terms, a new consultation would be carried out on the new terms. 

Chief Justice Crampton asked a few times what would happen if a First Nation imposed a moratorium against fracking. How would this affect FIPA?  Federal lawyers suggested that Canada would approach the First Nation and ask them to lift the moratorium so they could carry out their international obligations and could make remedial measures.  The justice then asked, couldn’t they just say no?  They could but Canada could be assessed damages because the expectation of the companies from China would be that they could develop. Canada’s lawyers then said that it had to be a recognized law that imposed a moratorium and since HFN didn’t have powers to do that under s. 81 and 83 of the Indian Act they would not be changing their laws.  They completely discounted the HFN Land Use Plan (LUP) and the ability of the First Nation to pass their own inherent laws and assert their jurisdiction over their territories.  The Justice also asked a few times what would happen to the LUP.  The HFN land use plan determines where no development can happen and areas where development can occur with special management measures while still protecting important areas.  The answer to that of course would be if Canada came to HFN and asked them to change the LUP, then areas that are important to them for sacred, cultural or historical reasons would be destroyed through the development.

HFN counsel spent time arguing that Canada will be impacted by the chilling affect.  That is, that they will not make decisions favourable to First Nations that would stop a development because they would be afraid they will be assessed with damages under FIPA.  As the panels that are set up to determine damages do so outside Canadian law, there is a possibility that damages could be very large and this is a huge risk to Canada. The solution promoted by Canada was to amend the FIPA but that would require China’s consent.  Amending FIPA would not change the assessment of damages payable by Canada as they are bound by the arbitral panel’s decision and cannot be changed.

Three days of arguments, very complex issues under consideration and an important development in the law of consultation, the Honour of the Crown and reconciliation. This is a small summary of all the issues and arguments but you get the idea of the scope of the matter before the court. The Justice took the case under advisement and may take up to 6 months to decide this.  Whatever the result, I am sure this is going to appeal by either party as this is just too compelling of a case not to.

Reconciliation is elusive when parties go to court but when the federal government acts like Big Brother and asserts its paternalistic attitudes to First Nations, reconciliation will never be achieved. How much easier would it have been for the Canadian Government to consult with First Nations as was requested, make changes to FIPA, and then ratify it after further negotiations with China. Earlier, I outlined the possible changes to meet First Nations interests and this was not major changes, just changes to protect First Nations constitutional rights. But to Canada it seems, that would be giving in and losing its total control over First Nations. I think this is a decision they will come to regret throughout this court battle, and the chasm between First Nations will continue to grow and tensions will continue to mount.  Sovereignty summer is on the horizon, resurgence is on the rise. Canada would do well to start working with First Nations on a serious and good faith basis and avoid the lengthy costly court battles that only create uncertainty.

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