Newfoundland and Labrador – No attornment to court jurisdiction where arbitration mandatory under treaty – #605

In Newfoundland and Labrador v Nunatsiavut Government, 2022 NLCA 19, the Court of Appeal of Newfoundland and Labrador (the “Court”) allowed the Province’s appeal of a trial decision in respect of a dispute pursuant to the Labrador Inuit Land Claims Agreement(the “Treaty”). The Court found that the parties were required to arbitrate their dispute, even though this issue was raised for the first time on appeal. At first instance, the trial judge agreed with the claim of the Nunatsiavut Government (“Nunatsiavut”) against the Province for a share of revenue related to the exploitation of land subject to the Treaty. On appeal, the Province challenged, for the first time, the jurisdiction of the Supreme Court of Newfoundland and Labrador (the “Superior Court”) to have adjudicated the matter in light of the requirement for mandatory arbitration under the Treaty. Central to the Court’s finding on appeal was its determination that the parties could not “attorn” to the Superior Court’s jurisdiction despite the fact that the Province did not raise the issue of jurisdiction before the trial judge. The Court found that “[56] [g]iven the clear language of the treaty that the parties must proceed to arbitration to resolve the disputes over revenue sharing, the parties cannot ‘attorn’ to the jurisdiction of the Court because the jurisdiction of the provincial Superior Court has been removed by these terms.

Treaty Background – In 2004, Nunatsiavut, the Province and the Government of Canada entered into the Treaty. (Canada was not involved in the dispute.) The Treaty is twenty-two chapters and over three hundred pages, which includes an entire chapter on dispute resolution (chapter 21). The Treaty governs a large number of activities, including economic development, environmental protection, establishment of Inuit government and law, and the sharing of revenues from the exploitation of lands governed by the Treaty.

Claim Background – Nunatsiavut commenced an action alleging that monies received by the Province constituted “revenue” as defined in the Treaty that must be shared. In response, the Province denied that the monies qualified as revenue under the Treaty. Neither party raised the issue of arbitration or whether the Superior Court was the appropriate forum to resolve the dispute during the trial. The trial judge, Justice Khaladkar, found that the monies did constitute revenue and that the Province was thus liable to pay Nunatsiavut for its share.

On appeal, the Court dealt with three main issues: (i) the principles of treaty interpretation in the circumstances; (ii) whether the Treaty excludes the jurisdiction of the Superior Court; and (iii) whether the parties could attorn to the Superior Court’s jurisdiction.

Treaty Interpretation – In addressing whether the parties were required to arbitrate under the Treaty, the Court considered the principles of treaty interpretation between the federal and provincial governments and Aboriginal peoples. The Court noted that the goal of treaty interpretation is to ascertain the common intention of the parties at the time the treaty was signed, and listed the nine principles of treaty interpretation as stated by Justice McLachlin (as she was then) at paragraph 78 in R v Marshall, [1999] 3 SCR 456 and listed in full below in the Contributor’s Notes. These principles include that, “aboriginal treaties constitute a unique type of agreement and attract special principles of interpretation;” “treaties should be liberally construed and ambiguities or doubtful expressions should be resolved in favour of the aboriginal signatories”; and “in searching for the common intention of the parties, the integrity and honour of the Crown is presumed.” Among other things, the Court noted that a treaty is more than a simple “commercial contract” and cannot be treated as such, and that, “[t]he Crown has a constitutional obligation to work towards reconciliation with Aboriginal peoples.”

Excluding Superior Court Jurisdiction – On whether the Treaty could exclude the jurisdiction of the Superior Court, the Court noted that the Treaty has been enacted through the Labrador Inuit Land Claims Agreement Act, SNL 2004, c L-3.1, and thus has the “force of law.” As such, the Treaty is capable of limiting the jurisdiction of the Superior Court with clear language. Upon reviewing the relevant sections of the Treaty, the Court found that the Treaty language required the parties to arbitrate the dispute. In particular, the Court relied on the following sections from the Treaty:

[36] … [21.9.1] A Person shall not litigate a Dispute if the Dispute is one that must be referred to dispute resolution under a provision of the Agreement [emphasis added by the Court];” and,

“[42] … 7.6.9 If the Nunatsiavut Government disagrees with a calculation or a payment made to it under part 7.3, 7.4 or 7.5 and the disagreement cannot be resolved after referral to the Committee, the disagreement shall be referred to arbitration under chapter 21 [emphasis added by the Court].”

The Court found further support in the fact that the Treaty has several examples where arbitration is not mandatory, and that in some chapters the manner to access the courts is expressly outlined. The Court found that the varying dispute resolution options established in the Treaty indicated that, “[51] … the parties turned their minds in considerable detail as to how they wished to handle disputes; including limiting or specifying access to courts, depending on the circumstances or type of dispute.”  Accordingly, the Court found that the language of sections 21.9.1 and 7.6.9 (quoted above), “[52]… is clear and explicit that there was no recourse to the Superior Court.”

Attornment to the Jurisdiction – Nunatsiavut argued that, notwithstanding the terms of the Treaty, the Province had attorned to the jurisdiction of the Superior Court by failing to raise the issue at first instance. As such, the Province should not be allowed to argue for a different forum just because it was unsuccessful before the Superior Court. The Court noted, however, that, “[54] … parties cannot ‘attorn’ to jurisdiction where jurisdiction does not exist.” In this case, the exclusion of the Superior Court was not by way of contract, but an agreement that has, “[55] … constitutional dimensions with the force of law.” The Court thus found that the parties must arbitrate the dispute in accordance with the clear language of the Treaty, which removed the possibility of attorning to the jurisdiction of the Superior Court.

As such, the Court concluded that the claim was not properly before the Superior Court, and the dispute was required to be referred to arbitration in accordance with the Treaty.

Contributor’s Notes:

First, the full list of the principles of treaty interpretation, as stated by Justice McLachlin (as she was then), at paragraph 78 in R v Marshall, [1999] 3 SCR 456 and reproduced at paragraph [20] of the decision [citations omitted] is as follows:

  1. “Aboriginal treaties constitute a unique type of agreement and attract special principles of interpretation.
  2. Treaties should be liberally construed and ambiguities or doubtful expressions should be resolved in favour of the aboriginal signatories.
  3. The goal of treaty interpretation is to choose from among the various possible interpretations of common intention the one which best reconciles the interests of both parties at the time the treaty was signed.
  4. In searching for the common intention of the parties, the integrity and honour of the Crown is presumed.
  5. In determining the signatories’ respective understanding and intentions, the court must be sensitive to the unique cultural and linguistic differences between the parties.
  6. The words of the treaty must be given the sense which they would naturally have held for the parties at the time.
  7. A technical or contractual interpretation of treaty wording should be avoided.
  8. While construing the language generously, courts cannot alter the terms of the treaty by exceeding what “is possible on the language” or realistic.
  9. Treaty rights of aboriginal peoples must not be interpreted in a static or rigid way. They are not frozen at the date of signature. The interpreting court must update treaty rights to provide for their modern exercise. This involves determining what modern practices are reasonably incidental to the core treaty right in its modern context.”

Second, the Court’s decision on costs, is noteworthy:

“[81The trial judge awarded costs to Nunatsiavut, as the successful claimant. On appeal, the Province took no position on costs. While the Province has been successful in this Court in having the decision set aside, the trial judge’s decision on costs should not be disturbed.  The Province could, and should have, as part of its duty to behave honourably, raised the jurisdictional issue as soon as it was served with the statement of claim.  As stated in Corporation Makivik c. Quebec (Procurer général), 2011 QCCS 5955:  [97]      The honour of the Crown means, in particular, that when it concludes and applies a treaty, the government must behave with honour and integrity; it must avoid any appearance of “sharp dealing.” [R. v. Badger, 1996 CanLII 236 (SCC), [1996] 1 S.C.R. 771, at para. 41]

[82Whether by acquiescence or neglect, the Province’s failure to address the jurisdictional issue if not sharp dealing, brings to mind the comments of Strathy J. in Engels v. Merit, [2008] O.J. No. 672, 164 A.C.W.S. (3d) 434, at paragraph 11 (Ont. S.C.J.), that “[i]t is not appropriate to ride the litigation horse down the road until it becomes inconvenient to do so and then try to mount the arbitration horse.”

[83As discussed earlier, if the treaty is to be a viable framework under which the relationship between the parties operates, the broad principle of the duty of the Crown to behave honourably in its dealings with Aboriginal peoples, and the goal of reconciliation, supports that the Province shouldered the greater responsibility to have raised the issue of jurisdiction. 

[84The trial judge’s award of costs is affirmed.

[85Nunatsiavut nonetheless must bear some responsibility for the decision to pursue litigation in the face of the mandatory arbitration clauses of chapter 7. As a signatory to the treaty, represented by counsel during exhaustive and comprehensive negotiations, Nunatsiavut cannot be said to have misunderstood the clause or to have been misled because of the ambiguity of an ancient term in a historical treaty. There was clear evidence in the record that Nunatsiavut was aware that the next step was arbitration but chose not to pursue it.

[86Given this, both parties shall bear their own costs on this appeal.”

Third, for other Case Notes relating to treaties with Indigenous peoples and arbitration see Case Notes: Ontario – Historic arbitration decision is not probative evidence in interpretation of a Treaty – #556, Federal – arbitral party’s post-recognition intentions not a ground to refuse recognition – #475, and Federal – Court of Appeal notes 1890’s provincial undertakings to arbitrate with other provinces as predecessor to current court rule on jurisdiction – #075.