The Canadian and Chinese governments signed an investment agreement (CCFIPPA),1 which the Hupascasath First Nation (HFN) opposed because the federal government failed to consult the band before signing.

The HFN asserts aboriginal rights and title with respect to approximately 232,000 hectares of land in central Vancouver Island. The HFN claims that if the CCFIPPA is ratified and implemented, it will negatively affect the band in a number of ways, including (i) its right to conserve, manage and protect lands, resources and habitats in accordance with traditional ways and in the best interest of its members, (ii) it will prevent the band from negotiating a treaty that protects these rights, (iii) disputes over resources between the HFN and Chinese investors will be resolved by international trade and investment law to the preclusion of the Canadian constitutional legal protections afforded to the HFN, (iv) the federal and provincial governments will be less likely to take steps to protect HFN rights, and (v) it is not known if specific measures can protect HFN rights and title by reasonable accommodation

The issue

The issue before the Federal Court was: does Canada have a duty to consult the HFN prior to ratifying CCFIPPA?

The decision

The Federal Court2 found that the Government of Canada did not have a duty to consult the HFN prior to ratifying the CCFIPPA because the potential adverse impacts asserted were non-appreciable and speculative in nature. Thus, the agreement did not contravene the established principle of the Crown’s honour or Canada’s duty to consult First Nations, including the HFN, before taking any action that may adversely affect their asserted aboriginal rights.

The court also found that the HFN was unable to establish the requisite causal link between the alleged potential adverse impacts and the CCFIPPA. The same was held true for the potential adverse impact the CCFIPPA may have on the HFN’s scope of self-government.

In its analysis of the HFN’s claim, the court determined that given the nature of the duty to consult First Nations, it was a “constitutional imperative” that was triggered when all three conditions of Rio Tinto3were met. The test elaborated by Rio Tinto established that the duty was triggered when: (i) the Crown had knowledge, actual or constructive, of a potential aboriginal claim or right; (ii) the contemplated Crown conduct; and (iii) the potential that the contemplated conduct may adversely affect an aboriginal claim or right.4

The first two elements were acknowledged by both parties. In fact, both recognized that the Crown had knowledge of the HFN’s claims and rights. Furthermore, the parties both established the Crown’s contemplated conduct was to ratify the CCFIPPA.

The potential adverse effects of the ratification were at the heart of the debate. The court established that while the approach to determining the potential effects should be generous and purposive, in order to satisfy this element of the test, mere speculative impacts would not suffice. Moreover, a causal relationship between the proposed government conduct or decision and a potential for adverse impacts on pending aboriginal claims or rights must be proven.

The court analyzed the HFN’s three principal claims: the minimum standard of treatment afforded under the treaty, investor protection against direct and indirect expropriation, and the exceptions afforded by the treaty. In all three cases, the possibility of the scenarios brought forward by the HFN affecting aboriginal rights was speculative and non-appreciable. Moreover, some of the arguments and comparisons based on NAFTA jurisprudence demonstrated that aboriginal claims or rights were not shown to be interfered with or incompatible.

The court concluded its analysis of the HFN’s claims by evaluating the potential effects that the CCFIPPA would have on the legal framework applicable to land and resource regulation in Canada. Once again, it found the HFN’s submissions were ultimately reduced to assertions that were nothing more than speculative and remote.

Following this analysis, the court found that Canada’s ratification of the CCFIPPA without consulting the HFN did not breach either (i) Canada’s constitutional obligation to act honourably with the HFN in all of its dealings, particularly in respect of the HFN’s asserted aboriginal rights, or (ii) Canada’s duty to consult with HFN before taking any action that may adversely affect those rights.

In passing and by way of contrast, the court also noted that there were instances where Canada had entered into a number of final agreements with First Nations that required it to consult prior to consenting to be bound by a new international treaty that might adversely affect First Nations rights.


This is an important case in further evaluating the “speculative or non-appreciable impact” on aboriginal rights, as jurisprudence in this area is not well developed. The court develops a thorough analysis of the subject through the evaluation of the HFN’s claim.

Although the court decided that the potential adverse impacts of the CCFIPPA’s ratification on the HFN’s claims are non-appreciable and entirely speculative, foreign investors must still pay great attention to the demands and rights of aboriginal peoples. In fact, such rights create federal and provincial government constitutional obligations towards aboriginals when governments authorize natural resource development projects.