Background & Federal Court decision
Hupacasath is a First Nation that asserts Aboriginal rights (including self-government rights) and title over approximately 573,000 acres of land on Vancouver Island. On September 9, 2012, Canada announced that it had signed the FIPA agreement with China to ensure that investors from each of the signatory countries were afforded “non-discriminatory treatment and protection from expropriation without compensation”. Violations of FIPA can result in proceedings before an arbitral tribunal and violation of certain provisions of the agreement can result in monetary awards against the host country. Hupacasath’s challenge to the signing of FIPA was based on its view that because FIPA creates incentives for Canada to avoid breaches of the agreement that might result in monetary awards, it may cause Canada to act in a manner that injures Hupacasath and its asserted interests (including its asserted Aboriginal rights and title). Canada did not consult with Hupacasath prior to entering into FIPA and Hupacasath asserted that if Canada had done so it would have had to protect Hupacasath’s rights within the terms of the agreement, which it has not done.
In the first decision on the merits of this claim, the Federal Court preferred Canada’s expert evidence over that tendered by Hupacasath due to “impartiality concerns” and the lower court’s view that assertions of key issues by Hupacasath's experts “were baldly stated and unsubstantiated”. The Federal Court found no conflict, actual or potential, between the provisions of FIPA and Hupacasath’s asserted rights, title and interests. The Federal Court concluded that Canada did not owe Hupacasath a duty to consult because the alleged potential adverse impacts of FIPA on its interests were “non-appreciable” and “speculative”, and Hupacasath had failed to establish any causal link between FIPA and its alleged impacts.
Two jurisdictional issues arose during the hearing of this application.
First, the Court of Appeal heard submissions on whether the Federal Courts had jurisdiction to review exercises of the Crown’s prerogative power, such as entering into treaties and international agreements like FIPA. The Federal Court of Appeal rejected the authority of a 2001 decision from the Ontario Court of Appeal, which stated that the Federal Courts did not have jurisdiction over such matters. Instead, after reviewing several of its own subsequent decisions as well as subsequent decisions from the Supreme Court of Canada, the Court of Appeal concluded that the Federal Courts could review exercises of jurisdiction or power that were solely rooted in the federal Crown prerogative.
Second, Canada argued that the subject matter of this dispute, being policy-oriented and concerned with foreign relations, was not justiciable - in other words, it was not a matter that was appropriate for review by a court of law. The Court of Appeal rejected this argument as having no merit, noting that “the category of non-justiciable cases is very small”. It noted that where judicial reviews are brought against government actions motivated by economic considerations and other difficult public interest concerns, courts still assess the “acceptability and defensibility” of these decisions, although they may grant the decision-maker “a very large margin of appreciation”. The Court of Appeal further noted that assessing whether legal rights such as the duty to consult exist on the facts of a case “lies at the core of what courts do” and is therefore clearly justiciable.
Federal Court decision upheld
The Court of Appeal noted that the lower court’s decision that Canada had no duty to consult Hupacasath before signing FIPA was based on its appreciation of the evidence before it and was entitled to deference unless that lower court erred on the law. However, the Court of Appeal found nothing turned on this question of deference since it would have made the same factual findings had it been in the Federal Court’s position. The Court of Appeal found no evidence that any of Canada’s previous foreign investment promotion and protection agreements were causing Canada to make decisions that do not respect Aboriginal rights, and found that it had no basis to interfere with the Federal Court’s factual findings that FIPA would not have any such effect.
The Court of Appeal also rejected Hupacasath’s argument that Canada would avoid taking action to prevent infringements of Aboriginal rights when such action might be contrary to FIPA in order to avoid monetary awards against it. The Court called this “pure guesswork” and said that it could not assume there will be a collision between Aboriginal rights and a monetary award under FIPA, nor could it assume that Canada would “prioritize the latter over the former”. In the Court’s view, it was equally possible to assume that Canada would prioritize the protection of rights over economic penalties, noting that such priorities can “shift over time” depending on various external factors such as popular opinion or electoral results. In the Court of Appeal’s view, all it could do was imagine decisions or events and impacts from them that might flow from FIPA. It held that “the duty to consult is triggered not by imaginings but by tangibilities”.
The Court of Appeal further held that imposing a duty to consult in this case was not necessary as any adverse impacts on Aboriginal rights that might stem from the agreement could be addressed later when they “rise beyond the speculative” and trigger the duty to consult. It also asserted that that appellant’s position on when the duty to consult arises, if “[t]aken to its extreme”, would “require the Minister of Finance – before the annual budget speech in the House of Commons, on every measure in it that might possibly affect the investment and development climate – to consult with every First Nation, large or small, whose claimed lands might conceivably or imaginatively be affected, no matter how remotely, no matter how insignificantly”.