Provinces need to clarify “duty to consult” rules: Dwight Newman in the National Post

Dwight Newman
Dwight Newman

The constitutional “duty to consult” with Aboriginal groups has muddied the rules for resource development companies. Now is the time for the provinces to step in and clarify the law, writes Dwight Newman, a Senior Fellow with the Macdonald-Laurier Institute, in the National Post.

By Dwight Newman, Oct. 30, 2015

This week, closing arguments were heard in a lawsuit that highlights the Ontario provincial government’s slowness in developing clear approaches to the duty to consult Aboriginal communities and in offering any clarity to those attempting to operate in the Canadian resource sector.

The decision to be rendered has widespread implications. The case has parallels to the situation of other resource companies, and it highlights the significant dangers in governments trying to muddle through the interaction between Indigenous rights and resource development without making clear decisions and enacting clear legal frameworks. Future prosperity for Aboriginal and non-Aboriginal communities alike will be affected by what happens with these sorts of lawsuits.

Some background helps make clearer what is at stake. The lawsuit sees Northern Superior Resources, a junior exploration company, suing the province for over a hundred million dollars. The suit arises from the province’s failure to take steps on the duty to consult while suggesting — without any legal framework for it at the time — that the company had to deal with consultation.

As it began to move its project forward in 2011 and 2012, the company says that it ultimately faced an Aboriginal community asking the company to pay an amount consisting of 24 per cent of its project spending in return for the community’s support. The company considered that such expectations made the costs unviable and it cancelled further work — even while believing that it had found a world-class mineral deposit that could have had major economic spinoffs.

The consequence tends to be a very uncertain legal environment for resource activity in many parts of the country.

At the time, the only real guidance on the duty to consult Aboriginal communities with potential Aboriginal or treaty rights claims in an area came from a few early consultation judgments from the Supreme Court of Canada. The province of Ontario informally tried to encourage companies working on projects to consult with communities in the area, even though the Supreme Court of Canada in its 2004 Haida Nation decision specifically decided that third parties do not owe a duty to consult and that the duty ultimately rests on the Crown, subject to decisions it might make to delegate “procedural” aspects.

More recently, Ontario put into force in 2013 major amendments to its mining regime to specifically impose legislated and regulatory consultation obligations on companies. However, many in the resource sector find the expectations still extremely vague, while advocates for some Aboriginal communities find the legislation so weak they are raising the prospect of putting constitutional challenges to it. Clarity has improved, but possibly only marginally.

The Northern Superior claim is essentially that companies should not bear the brunt of governments seeking to operate lawlessly. The case appears to have seen the Ontario government imposing vague expectations on the company rather than the government working to fulfill the Crown’s duty to consult. This case will test out what resource companies can expect from governments, and whether they can be compensated when governments do not come through. It may affect the readiness of entrepreneurial junior companies to take on the risks of mineral exploration in Canada.

During the period at issue, other resource companies faced parallel issues, although each obviously with its own unique circumstances. The province of Ontario already paid God’s Lake Resources over three million dollars to settle a claim in 2012. Another company, Solid Gold, launched a lawsuit against the province for a hundred million dollars in 2013 after the new 2013 mining regime led courts to shut down the company’s efforts to challenge an injunction previously granted against its activities. That latter case involves a complicated set of personalities and maneuvers, and it is unclear if its lawsuit will reach trial.

All of this points to a messy framework in which companies were being forced to operate, and the Northern Superior suit will test out government responsibility for the consequences. And these are just a few examples from one industry in one province.

For a variety of reasons, most governments in the country are developing policy in this context reactively to court decisions on issues like the duty to consult, with the courts making sometimes unexpected changes to the doctrine. The consequence tends to be a very uncertain legal environment for resource activity in many parts of the country.

In turn, that uncertain environment causes challenges for everyone and risks undermining prosperity for both Aboriginal and non-Aboriginal communities even in circumstances where resource developments might have worked for everyone. Governments facing lawsuits and having to pay out larger sums might turn out to be the pressure needed to get them to work more proactively to establish a clear, predictable legal environment.

Dwight Newman is professor of law and Canada research chair in indigenous rights, University of Saskatchewan and visiting fellow, James Madison Program, Princeton University.