In Treaty Land Entitlement Committee Inc. v. Canada (Indigenous and Northern Affairs), 2021 FC 329, Mr. Justice Sébastien Grammond dismissed Canada’s submissions that he refuse registration of an award because (i) applicant had not explained how it intended to enforce the award and (ii) enforcement measures would not be available against the Crown. Grammond J. rejected them as “contrary to the philosophy underpinning” the Commercial Arbitration Act, RSC 1985, c 17 (2nd suppl) (“Code”), stating that recognition of an arbitral award may be obtained “as of right”. Grammond J. noted that “the reasons for which a court may refuse to homologate or annul an arbitration award are exhaustively set out” in article 36 of the Code and non-disclosure of applicant’s intentions with respect to enforcement is not one of those grounds. As for post-recognition enforcement issues, Grammond J. commented that “I need not speculate about the immunities Canada could raise if the applicants attempted to enforce the award”.
In 1997, several Manitoba First Nations, represented by Treaty Land Entitlement Committee Inc. (“TLE Committee”), entered into a Manitoba Framework Agreement (“MFA”) with Canada and the province of Manitoba to resolve disputes involving delays and omissions in the creation of reserves in Manitoba. The creation of those reserves arose from rights and obligations set out in Treaties 1, 3, 4, 5, 6 and 10 (“Treaties”). A component of those reserve creation disputes involved the relevant time for calculation of the reference population, an issue identified as “treaty land entitlement” or “TLE”.
Grammond J. observed that MFA was a “framework agreement” from which others would incorporate its provisions into separate TLE agreements entered into by each First Nation. Despite acknowledging that there “are many steps” in the creation of a reserve and that “the parties understood it would take time”, Grammond J. recorded that, twenty-four (24) years since signature of the MFA, only 561,000 acres or “a little over 50%” of the total entitlement of acreage had been set apart as reserves, 193,000 acres are currently “being processed” and 346,500 acres “remain to be selected or acquired”.
Before identifying that progress, Grammond J. anticipated it with a summary of the land transfer process and the involvement of the First Nations and Federal and Manitoba governments/legislatures.
“[12] In today’s context, fulfilling the promise to set aside an adequate amount of reserve land is a complex task. In certain areas, most of the land is privately owned. Elsewhere, public lands are owned by Manitoba, which must transfer them to Canada before they are formally set apart as reserves. Third party interests must be dealt with and environmental assessments must be performed, to highlight only a few of the potential issues.
[13] The MFA is a complex agreement setting out in detail the process for the creation of reserves to fulfil the promise of the treaties. In a nutshell, it allows signatory First Nations to select a certain amount of public lands that Manitoba will transfer to Canada, with a view to their designation as reserves. Certain First Nations are also allowed to acquire land from third parties or certain categories of public lands for the same purposes. In addition, Canada undertakes to pay a monetary compensation to participating First Nations. Moreover, each First Nation releases Canada and Manitoba from all claims related to the fulfilment of the treaty promise regarding the creation of reserves”.
Grammond J. noted that the Treaties and the MFA had been signed with First Nations, not the Métis. Despite that omission, section 35(2) of the Constitution Act, 1982, Schedule B to the Canada Act 1982 (UK), 1982, c 12 recognizes the Métis’ status as an aboriginal people of Canada and the Métis may assert a right to be consulted following the framework set out in Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73 (CanLII), [2004] 3 SCR 511.
In 2012, Canada determined it had a duty to consult with the Métis before creating reserves under the MFA. This lead to significant delays. See paras 19-20 and 30-35 of Grammond J.’s reasons.
At paras 21-27, Grammond J. set out the key prompts to including “a detailed and exhaustive dispute resolution process” in the MFA which “provides for various methods of formal dispute resolution involving an independent third party, including fact-finding, mediation, non-binding arbitration and binding arbitration pursuant to the Commercial Arbitration Act, RSC 1985, c 17 (2nd suppl)”. Part of those prompts was the parties’ knowledge that the “complexity and expected duration of the reserve creation process” would give rise to disputes.
When the parties proceeded to binding arbitration, an Implementation Monitoring Committee would prepare the “terms of reference for the arbitration” which would include questions for the adjudicator to decide. Grammond J. added that “[a]rbitration awards may be appealed to the Manitoba Court of Queen’s Bench on issues of law”.
Arbitration – At paras 28-36, Grammond J. set out the process by which the TLE Committee initiated arbitration under the MFA and alleged that Canada’s consultation with the Métis constituted a material failure to comply with the MFA. One of the questions submitted to the adjudicator involved TLE Committee’s request that the adjudicator declare that Canada did not have a duty to consult with the Métis with respect to thirty-five (35) specific parcels selected or acquired by seven (7) First Nations. In her award (“Award”), the adjudicator declined to determine that question, holding that she did not have jurisdiction over those who were not parties to the MFA.
As reproduced in part at para. 31, the adjudicator in her Award determined that Canada did breach the MFA by inserting a step into the implementation process which had not been agreed to by the First Nations.
In addition to further context and determinations made in the dispute resolution process, the adjudicator determined that Canada “effectively amended the [MFA] by inserting into the agreed upon implementation process a step which is not provided for in the [MFA] and which has a significant impact on the [MFA]’s implementation”.
The adjudicator understood that the “change in circumstances” presented in regard to Canada’s consultation with the Métis did place Canada in a “somewhat challenging position” but held that this was “precisely the type of matter which the parties anticipated could arise” and which required negotiation under the MFA’s section 40.07.
Canada did not appeal the adjudicator’s Award.
Relief sought by TLE Committee – Grammond J.’s decision addresses a variety of consequences which flowed from the adjudicator’s award. Those included the TLE Committee’s application to (i) register the Award and (ii) declare void the releases and indemnities contained in the relevant agreements.
(i) Declaratory relief and respect for parties’ agreement – This note only addresses Grammond J.’s comments on registering the award under the Commercial Code. That said, in addressing the application for declaratory relief, Grammond J. did comment on the binding force of the parties’ agreement and the court’s obligation to respect that agreement.
Regarding the declaratory relief, Canada added that it “attempted to comply with the adjudicator’s directions but is unable to remedy the default by itself and voiding the releases would be a disproportionate remedy depriving Canada of the consideration it received for the MFA, especially in the context where the releases are already suspended until the default is remedied”. Grammond J. set out the parties’ respective positions in greater detail at paras 50-96. Grammond J. refused to exercise his discretion to refrain from voiding the releases.
“[98] More importantly, under the guise of judicial discretion, Canada is in effect asking the Court to supervise the implementation of the MFA and the negotiations to amend it. If I were to accede to this request, my own view—or Canada’s view—of what is just and reasonable in the circumstances would displace the parties’ bargain.
[99] Yet, the parties chose to settle their disagreement through a detailed contract. As the Supreme Court noted in [Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7], adherence to the parties’ bargain promotes contractual justice. Legal certainty requires no less. In [Goodswimmer v Canada (Attorney General), 2017 ABCA 365], a case dealing with another TLE agreement, the Alberta Court of Appeal stated that “[l]egal rules or approaches to the interpretations of settlement agreements should not be set in a way that acts as a disincentive to governments to settle such claims” (at paragraph 47). This, however, is a two-way street. Depriving the applicant First Nations of the ultimate remedy they bargained for would certainly not give other First Nations an incentive to settle claims in the future”.
In his first reference to Wastech at para. 70, Grammond J. relied on the caution expressed by the Supreme Court.
“To borrow the words of Justice Nicholas Kasirer of the Supreme Court of Canada in Wastech Services Ltd v Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 at paragraph 5 [Wastech], the Court should not, through the exercise of its discretion, “displace the detailed, negotiated bargain as the primary source of justice between the parties””.
(ii) Registering the Award – Canada resisted having the Award, arguing that “the applicants have not shown that registering the award would serve any specific purpose”. Grammond J. rejected this submission. “The applicants are entitled as of right to have the award registered”.
At para. 46, Grammond J. pointed to (a) Rules 326-344 of the Federal Courts Rules, SOR/98-106 for the procedure by which an applicant could apply to register an award and (b) the Commercial Arbitration Act, RSC 1985, c 17 (2nd Supp) for the “substantive conditions”.
Grammond J. granted TLE Committee’s application to register the Award.
“[47] Canada acknowledges that these conditions are satisfied. It asserts, however, that the Court should exercise its discretion to refuse registration, as the applicants have not explained how they intend to enforce the award. Canada also argues that enforcement measures would not be available against the Crown.
[48] I reject these submissions, as they are contrary to the philosophy underpinning the Code. Articles 35 and 36 of the Code provide that recognition (also called registration or homologation) of an arbitral award may be obtained as of right and that it may be refused only for specific grounds enumerated in article 36. In a case decided under similar legislation, the Supreme Court of Canada held that “the reasons for which a court may refuse to homologate or annul an arbitration award are exhaustively set out in [article 36]”: Desputeaux v Éditions Chouette (1987) inc, 2003 SCC 17 at paragraph 67, [2003] 1 SCR 178. The fact that the applicant does not disclose its intentions with respect to enforcement is not one of these grounds. For the same reasons, I need not speculate about the immunities Canada could raise if the applicants attempted to enforce the award”.
Impact of the Award – Grammond J.’s decision covers a variety of other issues raised by the application for declaratory relief and are beyond the scope of this note. That treatment relies on the Award and underlines its importance in the process between the parties and in the applications for declaratory relief. The Award serves to confirm an event of default on which TLE Committee relied successfully to pursue declaratory relief. A key passage in Grammond J.’s reasons bridges the application for registration and the application for declaratory relief. At paras 50 and following, Grammond J. considers the consequences of an event of default and the entitlement to request a declaration that the release and indemnity are void.
“[52] There is no serious dispute that these conditions are met. The adjudicator found that Canada committed an event of default by engaging in consultation with the Métis without securing an amendment to the MFA. Her award has not been appealed. This event of default has continued for more than 180 days. Where the existence of an event of default has been established in binding arbitration, section X.05(3) establishes a presumption that the event of default continues until a further determination by the Implementation Monitoring Committee or another arbitration award. This has not happened. Indeed, Canada acknowledges that the conditions precedent to the issuance of a declaratory judgment under section X.05(4) are met”.
urbitral notes – First, regarding the distinction between recognition and enforcement, see the earlier Arbitration Matters note “Québec – recognition granted for international award with which respondent had already complied – #307” regarding Metso Minerals Canada Inc. v. Arcelormittal exploitation minière Canada, 2020 QCCS 1103. Madam Justice Marie-Anne Paquette issued an order recognizing an international commercial arbitration award despite prior compliance with the payment obligations in the award. She underlined that recognition and enforcement were distinct aspects: although an award will not be enforced if it is not recognized, it can be recognized without being enforced. She further noted that the award once recognized could serve other purposes between the same parties, including their other ongoing arbitrations regarding the same grinding mill.
Second, when considering his discretion, Grammond J. sets out the court’s limited role the court which included refraining from “relitigating issues already decided in arbitration”.
“[71] Second, the overall intent that emerges from a reading of the entire dispute resolution provisions is that courts would only play a subsidiary role in the resolution of disputes. The main roles are performed by the Implementation Monitoring Committee, mediators and adjudicators. Courts are involved only where an arbitration award is appealed on a question of law or where a declaration is sought pursuant to section X.05(4). This limited judicial role is consistent with what the Supreme Court of Canada said in First Nation of Nacho Nyak Dun v Yukon, 2017 SCC 58 at paragraph 33, [2017] 2 SCR 576 [Nacho Nyak Dun]: “[i]n resolving disputes that arises under modern treaties, courts should generally leave space for parties to govern together and work out their differences.” While the MFA is not a modern treaty, it is the same kind of complex negotiated scheme for which “[i]t is not the appropriate judicial role to closely supervise the conduct of the parties at every stage of the […] relationship” (ibid).
[72] In particular, invoking the Court’s discretion must not be a manner of relitigating issues already decided in arbitration. The MFA provides for a right of appeal to the Manitoba Court of Queen’s Bench, which was not exercised in this case. Nor should this Court pronounce on issues that could be submitted to arbitration. Pursuant to section X.05(3), this would include a declaration that an event of default has ceased”.