In Chief Heidi Cook et al. v. The Government of Manitoba et al., the Manitoba Court of King’s Bench recognized that Manitoba First Nations possess a constitutionally protected Aboriginal right of self-government in relation to child and family services (“CFS“), protected under s. 35(1) of the Constitution Act, 1982.1 The Court further held that Canada and Manitoba unjustifiably infringed that right through the design, funding, regulation, and administration of Manitoba’s child welfare system.2
The decision represents a significant development in the evolving jurisprudence on Indigenous self-government and section 35 rights. Beyond recognizing a constitutional right to govern child and family services, the Court found that systemic deficiencies in the child welfare regime undermined the ability of First Nations to preserve cultural continuity, community connections, and Indigenous approaches to caring for children. The judgment also provides important guidance regarding the implementation of Indigenous child welfare laws under Bill C-92, coordination agreements, constitutional remedies, and future compensation claims.
Recognition of a Section 35 Right to Self-Government in Child and Family Services
At the heart of the decision is the Court’s recognition that First Nations possess an inherent right to govern child and family services within their communities. The Court held that the right encompasses far more than administrative control over child welfare agencies. Rather, it includes the authority to ensure that Indigenous children are raised within their cultures, communities, languages, spiritual traditions, and territorial relationships.3
The Court emphasized that maintaining children’s connection to their families, communities, and Indigenous identities is indispensable to the cultural continuity and survival of First Nations peoples.4 In doing so, the Court characterized child and family services as a core aspect of Indigenous self-government rather than merely a social service program.
The judgment builds upon previous developments arising from Bill C-92. The Court noted that Parliament expressly affirmed the inherent right of self-government in relation to child and family services through the Act respecting First Nations, Inuit and Métis children, youth and families (“Bill C-92“).5 Manitoba similarly recognized Indigenous jurisdiction through amendments to its own Child and Family Services Act.6
The Court relied heavily on the Quebec Court of Appeal’s conclusion that jurisdiction over child and family services is an existing Aboriginal right protected by s. 35. Importantly, although the Supreme Court of Canada in the Reference re An Act respecting First Nations, Inuit and Métis children, youth and families declined to determine the existence or scope of any particular Aboriginal right, it upheld the constitutional validity of Bill C-92 and did not disturb the Quebec Court of Appeal’s conclusions regarding Indigenous self-government in child and family services.7 The Manitoba Court viewed this as significant support for recognizing the claimed section 35 right.
Moving Beyond Van der Peet
One of the most significant doctrinal aspects of the decision is the Court’s departure from a strict application of the Van der Peet test for establishing Aboriginal rights.8
The Court found that the traditional Van der Peet framework was ill-suited to evaluating claims involving Indigenous self-government. Instead, it adopted a more flexible approach centred on whether the claimed right is necessary for cultural security and continuity and whether recognition of the right is compatible with Crown sovereignty.9
This analytical framework reflects a broader constitutional focus on reconciliation and Indigenous cultural continuity. By emphasizing the connection between child welfare and collective cultural survival, the Court recognized that self-government claims may require a distinct analytical approach from claims concerning discrete traditional practices.
Unjustified Infringement by Canada and Manitoba
Having recognized the existence of a section 35 right, the Court proceeded to examine whether government conduct infringed that right.
The Court concluded that Canada and Manitoba unjustifiably infringed the right through their funding, regulation, and operation of child welfare services from January 1, 1992 onward.10 The Court identified numerous systemic deficiencies within the child welfare regime, including:
- An overreliance on child apprehension instead of prevention and family support;
- Funding structures that disadvantaged First Nations communities;
- Cultural disconnection resulting from foster placements;
- Failure to maintain children’s relationships with their communities and Nations;
- Inadequate support for healing and cultural reconnection; and
- Provincial standards that failed to reflect Indigenous laws, values, and traditions.11
While the protection of children was accepted as a compelling governmental objective, the Court held that Canada and Manitoba failed to satisfy the constitutional justification test.12
In particular, the Court found that governments inadequately consulted and accommodated First Nations regarding the child welfare system and that the cumulative effects of government conduct significantly impaired Indigenous self-government rights.13
Implications for Indigenous Child and Family Services Laws
The practical significance of the decision is considerable.
Bill C-92 expressly recognizes that the inherent right of self-government includes jurisdiction over child and family services, including legislative authority and the power to administer and enforce Indigenous laws.14 The Supreme Court of Canada’s decision in the Reference re An Act respecting First Nations, Inuit and Métis children, youth and families confirmed Parliament’s authority to enact legislation recognizing such jurisdiction under section 91(24) of the Constitution Act, 1867.15
The Cook decision now provides judicial affirmation that such jurisdiction is not merely statutory but constitutionally protected. Indigenous governing bodies therefore possess a stronger legal foundation to enact their own child and family services legislation and create culturally grounded institutions and governance structures.16
For First Nations seeking greater autonomy in child welfare, the decision reinforces that jurisdiction exists as a matter of constitutional right rather than governmental discretion.
Coordination Agreements Under Bill C-92
The judgment also highlights the importance of coordination agreements under Bill C-92.
These agreements facilitate the transition from provincial child welfare regimes to Indigenous legal systems by addressing matters such as funding, emergency services, administrative cooperation, implementation mechanisms, and service coordination.17 The Court noted that several Indigenous governing bodies had pursued coordination agreements and that Peguis First Nation successfully negotiated one to implement its own child and family services laws.18
As more Indigenous governing bodies exercise jurisdiction pursuant to Bill C-92, coordination agreements will likely become an increasingly important instrument for operationalizing Indigenous self-government.
Damages, Remedies, and Limitation Issues
Although the Court granted declarations recognizing both the section 35 right and its unjustified infringement, issues relating to damages and other remedies were deferred to Stage 2 of the proceedings.19
Stage 2 will address not only damages, but also questions of causation, allocation of responsibility between Canada and Manitoba, and whether injunctive, declaratory, supervisory, or other forward-looking remedies are warranted.20
Significantly, the Court accepted that the plaintiffs had advanced a plausible methodology for quantifying collective damages resulting from excess child apprehensions and associated cultural harms.21 The proposed evidence included a “multi-attribute utility theory” approach aimed at assessing and valuing collective harms in a culturally appropriate manner. The Court further held that sufficient data appears to exist to permit the quantification of damages should liability ultimately be established.22
The Court also confirmed that declaratory relief remains available even if claims for monetary relief are ultimately found to be statute-barred.23 As a result, judicial recognition of constitutional wrongdoing does not necessarily depend on the availability of damages.
Limitation Periods and Double Recovery
The Court declined to summarily determine whether limitation periods bar some or all of the plaintiffs’ claims, leaving those issues for a later phase of the litigation.24 In doing so, the Court acknowledged unresolved constitutional questions concerning the application of limitation statutes to section 35 claims and emphasized that constitutional declarations may remain available regardless of limitations issues.25
The Court also rejected Canada’s argument that the claims were barred by section 9 of the Crown Liability and Proceedings Act or by principles prohibiting double recovery.26 It held that previous settlements and compensation frameworks did not involve sufficiently similar claimants, facts, harms, or causes of action to preclude the claims advanced by the plaintiff First Nations.27
Dismissed Causes of Action
While the plaintiffs succeeded on their section 35 claim, the Court dismissed several alternative causes of action, illustrating the distinct constitutional character of the litigation.
First, the Court rejected claims based on the honour of the Crown as a standalone cause of action. The honour of the Crown remains a constitutional principle that informs the interpretation and implementation of Crown obligations, particularly in the section 35 context, but it does not independently generate a claim for damages or other relief.28
Second, claims for both sui generis and ad hoc fiduciary duties were dismissed. With respect to a sui generis fiduciary duty, the Court held that the plaintiffs had not identified the type of cognizable Aboriginal interest, such as a specific interest in land, that traditionally gives rise to such duties.29 The Court further concluded that imposing a private-law fiduciary obligation would conflict with the public-law child welfare regime and the Crown’s obligation to prioritize the best interests of children.30
As for an ad hoc fiduciary duty, the Court found no evidence that Canada or Manitoba had undertaken to act exclusively in the interests of the plaintiff First Nations. Instead, governments remained responsible for balancing competing obligations owed to children, families, communities, and the public generally.31
Third, the negligence claims were dismissed because governments do not owe a private-law duty of care to prioritize a Nation’s collective interests within the child welfare system. The Court further held that many of the challenged decisions related to funding models, legislative choices, and system design constituted core policy decisions, which are generally immune from negligence liability.32
Finally, the Court rejected Charter claims brought under sections 2(a) and 15 because they were advanced by First Nations as collective entities. Under current Charter jurisprudence, the rights asserted in this case are generally understood as individual rather than collective rights.33 The Court also concluded that section 36 of the Constitution Act, 1982 does not create enforceable rights capable of supporting the plaintiffs’ claims.34
These dismissals underscore the Court’s conclusion that section 35, not fiduciary law, negligence law, or the Charter, provided the proper constitutional framework for addressing the harms alleged by the plaintiffs.
Practical Implications for Indigenous Governments
Beyond its significance as a section 35 decision, Cook has important practical implications for Indigenous governments exercising jurisdiction under Bill C-92.
First, the decision strengthens the constitutional foundation for Indigenous child and family services legislation. First Nations contemplating the enactment of their own child welfare laws can point to both Bill C-92 and Cook as recognizing Indigenous jurisdiction as a matter of constitutional significance rather than delegated authority.
Second, the decision may strengthen Indigenous positions during coordination agreement negotiations. Governments may face increased pressure to provide stable funding, operational supports, information-sharing protocols, and implementation mechanisms that permit Indigenous governing bodies to meaningfully exercise jurisdiction.
Third, the Court’s emphasis on cultural continuity, prevention-focused services, and community-based decision-making may influence the drafting of Indigenous child and family services laws. Indigenous governments may wish to ensure that legislation expressly incorporates language revitalization, customary care arrangements, family reunification mechanisms, culturally grounded decision-making processes, and protections designed to maintain children’s connection to their Nation.
Finally, the judgment highlights the importance of information-sharing and disclosure. Effective exercise of jurisdiction under Bill C-92 may require Indigenous governing bodies to obtain timely access to information regarding child welfare investigations, placements, service histories, and planning decisions affecting their children and families. Information-sharing mechanisms are therefore likely to remain a critical component of future coordination agreements and implementation arrangements.
Conclusion
The Cook decision represents a significant judicial recognition of Indigenous self-government in Canada. By recognizing a constitutionally protected right to govern child and family services, the Court strengthened the legal foundation for Indigenous jurisdiction over matters central to cultural continuity, child well-being, and community survival.
The Court’s findings regarding decades of unjustified infringement by Canada and Manitoba may ultimately have significant implications for compensation claims, governance negotiations, and the implementation of Indigenous child welfare laws across Canada. For First Nations pursuing jurisdiction under Bill C-92, the decision provides substantial constitutional support for the development of Indigenous-led child and family services systems that prioritize prevention, cultural connection, family preservation, and community-based care.
How Barriston Law Can Help
The Cook decision confirms that Indigenous jurisdiction over child and family services is not merely a policy objective, it is increasingly being recognized as a constitutionally protected aspect of Indigenous self-government. As First Nations continue to implement jurisdiction under Bill C-92 and develop their own child and family services laws, communities face complex legal, governance, funding, and implementation challenges.
At Barriston Law, our Indigenous Legal Department works alongside First Nations governments, Tribal Councils, Child and Family Services agencies, and Indigenous organizations to support the exercise of Indigenous jurisdiction and the advancement of Nation-led governance initiatives. Our services include:
- Drafting and reviewing Indigenous child and family services laws and governance frameworks
- Advising on the implementation of jurisdiction under Bill C-92 and related federal and provincial legislation
- Negotiating coordination agreements with Canada and provincial governments
- Providing advice on funding arrangements, service delivery models, and governance structures
- Supporting Indigenous governments in matters involving section 35 rights, consultation, accommodation, and Crown–Indigenous relations
- Advising on information-sharing protocols, child welfare governance, and culturally grounded service delivery systems
- Representing First Nations in litigation, negotiations, and strategic initiatives involving Indigenous self-government and Nation rebuilding
As Indigenous governments continue to assume greater control over services affecting their citizens, robust legal frameworks and effective governance structures will be essential to ensuring that Indigenous laws and institutions can operate successfully in practice. Barriston Law is committed to supporting First Nations in advancing self-determination, strengthening governance, and protecting the well-being of future generations.
Contact Barriston Law
To learn more about how Barriston Law can assist your Nation, organization, or child and family services authority with Indigenous governance, Bill C-92 implementation, coordination agreements, or section 35 matters, visit barristonlaw.com or contact our Indigenous Legal Department directly.
Written by Garnik Martirosov
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. The legal principles discussed in this article are evolving and may be affected by future court decisions, legislation, or negotiations between Indigenous governments and the Crown. Every Nation’s circumstances are unique. Readers should obtain independent legal advice tailored to their specific circumstances before taking action based on the information discussed herein.
[1] Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11, s 35(1); Chief Heidi Cook et al v The Government of Manitoba et al, 2026 MBKB 65 at para 812 [Cook].
[2] Cook, supra note 1 at para 812.
[3] Ibid at para 812.
[4] Ibid at paras 461–462, 701, 812
[5] An Act respecting First Nations, Inuit and Métis children, youth and families, SC 2019, c 24, ss 8(a), 18(1); Cook, supra note 1 at paras 463, 466.
[6] Cook, supra note 1 at paras 468, 703.
[7] Reference re An Act respecting First Nations, Inuit and Métis children, youth and families, 2024 SCC 5 at paras 9, 136; Cook, supra note 1 at paras 469, 653.
[8] R v Van der Peet, [1996] 2 SCR 507, 1996 CanLII 216.
[9] Cook, supra note 1 at paras 458, 677, 682.
[10] Ibid at para 812.
[11] Ibid at paras 719–749.
[12] Ibid at paras 765–766.
[13] Ibid at paras 774–780, 784–788.
[14] An Act respecting First Nations, Inuit and Métis children, youth and families, supra note 5, s 18(1).
[15] Reference re An Act respecting First Nations, Inuit and Métis children, youth and families, supra note 7 at paras 9, 136.
[16] Cook, supra note 1 at para 466.
[17] An Act respecting First Nations, Inuit and Métis children, youth and families, supra note 5, ss 20–25.
[18] Cook, supra note 1 at para 383.
[19] Ibid at para 792.
[20] Ibid at paras 290, 792.
[21] Ibid at paras 487–491.
[22] Ibid at para 496.
[23] Ibid at paras 802–804.
[24] Ibid at paras 225, 251.
[25] Ibid at paras 241, 249; Canada v Jim Shot Both Sides, 2022 FCA 20 at para 206.
[26] Crown Liability and Proceedings Act, RSC 1985, c C-50, s 9.
[27] Cook, supra note 1 at para 259; Fisher River Cree Nation v Canada (Attorney General), 2025 FC 561 at para 45.
[28] Cook, supra note 1 at paras 533–536, 824.
[29] Ibid at paras 541–548.
[30] Ibid at paras 559–563, 825.
[31] Ibid at paras 568–574, 826.
[32] Ibid at paras 591–603, 827.
[33] Ibid at paras 418–450, 822.
[34] Ibid at para 524.
A Discriminatory Policy with Continuing Legal Consequences
The plaintiffs were 16 individuals who each had at least one parent, grandparent or great-grandparent who had been enfranchised after applying for enfranchisement.5 Historically, enfranchisement removed a person from the legal framework of the Indian Act. It reflected the federal government’s assimilationist position that First Nations identity and full participation in Canadian society were incompatible. In legal terms, the enfranchised person ceased to be recognized as an “Indian” under the Act. Depending on the legislation in force at the time, the consequences could extend beyond the individual and affect the person’s spouse and descendants. As the Court observed in Nicholas, the Supreme Court of Canada has described enfranchisement as “a discriminatory policy aimed at eradicating Aboriginal culture and assimilating Aboriginal peoples.”6 That history was central to the equality analysis. The challenged rules were not merely technical distinctions within a complicated registration scheme. They preserved the consequences of a policy deliberately designed to separate First Nations people from their legal identities, families and communities. Parliament removed the enfranchisement process from the Indian Act in 1985.7 It did not, however, completely eliminate enfranchisement as a factor affecting registration entitlement. A family history of enfranchisement could continue to determine:- whether a descendant was entitled to be registered;
- whether the descendant received entitlement under subsection 6(1) or subsection 6(2); and
- whether the descendant could transmit entitlement to the next generation.
Why the Difference Between Subsections 6(1) and 6(2) Matters
To understand the practical importance of Nicholas, it is necessary to understand the basic structure of section 6 of the Indian Act. Section 6 establishes several grounds for entitlement to registration. In broad terms, a person entitled under subsection 6(1) can transmit entitlement to a child even if the child’s other parent is not registered or entitled to registration. A person whose entitlement arises only under subsection 6(2), by contrast, generally cannot transmit entitlement unless the child’s other parent is also registered or entitled to registration.9 The difference therefore reaches beyond the entitlement of a single applicant. It can determine whether legal recognition is transmitted to, or extinguished in, the next generation. The provisions challenged in Nicholas assigned descendants of enfranchisees less favourable entitlement than individuals with an equivalent degree of First Nations ancestry who did not descend from an enfranchised person. In some circumstances, the result was subsection 6(2), rather than subsection 6(1), entitlement. In others, the family history of enfranchisement prevented registration or the transmission of entitlement altogether.10 At paragraph 23, Justice Fitzpatrick explained that the impugned provisions effectively treated descendants of enfranchisees as “less Indian” by providing them with more limited entitlement than people with the same degree of “Indian” ancestry whose families did not have a history of enfranchisement.11 That conclusion should be understood as a criticism of the statutory hierarchy created by the Indian Act, not as an endorsement of federal authority to define Indigenous identity. Registration is a statutory classification created and administered by Canada. It is distinct from Indigenous identity, First Nation citizenship and, depending on a First Nation’s governance arrangements, band membership. Nevertheless, registration has serious legal and practical consequences. It may affect access to federal programs and services. It can also carry profound significance for personal identity, family continuity, community belonging and the legal recognition of relationships between generations.12The Litigation, and the Legislative Solution That Did Not Arrive
The plaintiffs commenced their constitutional challenge in June 2021. They alleged that the relevant registration provisions violated sections 7 and 15 of the Charter.13 In January 2022, the parties agreed to place the litigation in abeyance while pursuing a legislative solution. The Minister of Indigenous Services committed to addressing the inequity so that individuals with a family history of enfranchisement, and their descendants, would have the same registration entitlement they would have possessed had the enfranchisement not occurred.14 That commitment eventually resulted in Bill C-38, introduced in December 2022. Among other proposed reforms, Bill C-38 would have amended the registration provisions challenged in Nicholas.15 The legislative process did not resolve the plaintiffs’ claims. The plaintiffs terminated the abeyance and reactivated their litigation in May 2024. Bill C-38 subsequently died on the Order Paper after Parliament was prorogued and then dissolved for a general election in early 2025.16 In January 2025, Canada amended its response to concede that the challenged provisions infringed section 15 and that the infringement could not be justified under section 1.71 Bill S-2, which contained substantially similar amendments relating to enfranchisement, was introduced in the Senate in May 2025.18 By the time the plaintiffs’ summary judgment application was heard, the parties agreed on the central constitutional conclusion and substantially agreed on the form of the declarations. The principal dispute concerned the remedy’s timing. Canada asked the Court to suspend the declarations to give Parliament an additional opportunity to enact a national solution. The plaintiffs maintained that the discriminatory provisions should cease to operate immediately.19The Equality Violation Was Conceded, but It Still Mattered Why
Canada’s concession meant that the Court did not have to resolve the section 15 claim through a fully contested constitutional trial. Justice Fitzpatrick nevertheless explained why the concession was legally justified. The modern section 15 framework asks two principal questions:- Does the law create or contribute to a distinction based on an enumerated or analogous ground?
- Does the distinction impose a burden or deny a benefit in a manner that reinforces, perpetuates or exacerbates disadvantage?20
The legislation drew a distinction based on race or ethnic origin
Section 6 distinguished between descendants of enfranchisees and people with the same degree of First Nations ancestry who were not descended from an enfranchised person. The distinction did not arise from a neutral administrative criterion. It depended on a family’s relationship to a historical legal process directed specifically at First Nations people. Canada acknowledged that this amounted to a distinction based on race or ethnic origin, both enumerated grounds under section 15.21 The comparison was particularly revealing. Two individuals could have the same degree of First Nations ancestry. Yet the descendant of an enfranchised person could receive the more limited subsection 6(2) entitlement, while the other individual could receive subsection 6(1) entitlement. The difference was not based on any present-day circumstance relevant to the individual’s identity, family or community. It arose solely because the first individual’s ancestor had been subjected to, or had participated in, a historical legal process intended to remove that ancestor from the Indian Act regime.The distinction perpetuated historical disadvantage
The provisions also perpetuated disadvantage by carrying the consequences of enfranchisement into later generations. The plaintiffs did not themselves apply for enfranchisement. Their entitlements were diminished because of the legal treatment of a parent, grandparent or great-grandparent. Section 6 therefore made the consequences of an assimilationist policy inheritable. Justice Fitzpatrick captured the problem in a particularly important passage:“Thus, the problematic exchange underpinning historical enfranchisement (whereby divesting oneself of ‘Indianness’ brought the benefits of full citizenship) continues to have a residual effect on the descendants of enfranchisees.”22
The harm was not merely symbolic. The provisions could deny registration, reduce a person’s category of entitlement and impair the ability to transmit entitlement to a child. Nor could registration be characterized as a minor statutory benefit. Drawing on decisions including McIvor v Canada (Registrar of Indian and Northern Affairs), Descheneaux c Canada (Procureur général) and Gehl v Canada (Attorney General), the Court recognized that registration is important because of its relationship to identity and community belonging, as well as its connection to tangible programs and benefits, including certain health and post-secondary education benefits.23 The constitutional problem was therefore both historical and contemporary. A policy designed to facilitate assimilation continued to determine whether present-day descendants received equal recognition under federal law. Canada conceded that the infringement could not be justified under section 1. The Court consequently did not need to conduct a full proportionality analysis. It also did not need to decide the plaintiffs’ alternative section 7 claim.24A Precise Remedy for a Precise Constitutional Defect
Once the Court accepted that the provisions violated section 15 and could not be justified, section 52(1) of the Constitution Act, 1982 required an appropriate remedy. Legislation inconsistent with the Constitution is, to the extent of the inconsistency, of no force or effect.52 The Court did not invalidate section 6 as a whole. Instead, relying on the remedial principles discussed in Ontario (Attorney General) v G, it granted a tailored declaration directed at the specific statutory language producing the unequal treatment.26 Justice Fitzpatrick declared unconstitutional and of no force or effect:- the words “pursuant to an order made under subsection 109(2)” in paragraph 6(1)(a.1) of the Indian Act; and
- all of paragraph 6(1)(d).27
The remedy was carefully confined.
First, it removed the statutory language responsible for the differential treatment without invalidating unrelated portions of the registration scheme. Second, it did not remove or diminish anyone’s existing registration entitlement. Third, it did not prevent Parliament from enacting broader reforms concerning other aspects of registration or band membership. Fourth, it closely tracked the government’s own proposed legislative response. As Justice Fitzpatrick observed, the revision was “exactly what was to be accomplished through Bill C-38.”[28] The declaration was, however, subject to an important limitation. It did not apply to people who had been members of a band enfranchised under section 112 of the 1970 Indian Act.29 The case addressed the continuing consequences of the forms of individual enfranchisement captured by the impugned provisions. It did not resolve every consequence arising from every historical form of enfranchisement. That limitation matters. The Court did not declare the entire historical enfranchisement regime constitutionally remedied. Its order responded to the statutory provisions and factual circumstances placed before it.Why Leave an Unconstitutional Law Temporarily in Place?
The most difficult part of the decision concerned whether the declarations should take effect immediately. Constitutional supremacy provides the starting point. Once a court determines that legislation is unconstitutional, the ordinary result is that the legislation is of no force or effect. A suspended declaration temporarily preserves the operation of an unconstitutional law and therefore requires justification. Under Ontario v G, the government bears the burden of demonstrating that immediate invalidity would threaten a sufficiently important public interest and that the benefits of temporarily suspending the declaration outweigh the harms caused by continuing the unconstitutional law.30 Suspended declarations are exceptional. Legislative inconvenience, administrative preference or a general desire that Parliament act first will not necessarily justify delaying relief. Canada relied primarily on two considerations: the possibility of inconsistent registration rules across Canada and the existence of an ongoing legislative process.The risk of a geographically uneven registration regime
The Indian Act is federal legislation operating across Canada. Canada argued that the immediate effect of a declaration made by a British Columbia superior court could produce different registration rules for applicants within the Court’s jurisdiction and applicants elsewhere in the country.31 Justice Fitzpatrick accepted that this could create an “undesirable and confusing patchwork of registration rules.”32 Two individuals with materially identical family histories could receive different treatment depending on whether the British Columbia declaration applied to them. The Court did not accept every aspect of Canada’s argument. Immediate invalidity would not deprive anyone of an existing entitlement or dismantle the broader registration regime. Justice Fitzpatrick considered Canada’s suggestion that immediate relief would produce administrative “chaos” to be “hyperbolic to a degree.”33 The narrower concern was nonetheless legitimate. A geographically uneven remedy could produce inconsistent entitlement under a national statute, an especially difficult outcome in litigation intended to eliminate unequal treatment within the registration scheme.Parliament was already considering corrective legislation
Canada also relied on its legislative efforts. Bill C-38 had been introduced to correct the enfranchisement-related inequity but did not complete the legislative process. Bill S-2 had since been introduced to continue that work. Canada argued that a suspension would allow Parliament to enact a solution applicable throughout the country.34 That history cut both ways. The proposed legislation demonstrated that Canada had already identified a workable amendment. At the same time, affected individuals had already waited while Bill C-38 failed to become law. A government cannot ordinarily justify the continued operation of unconstitutional legislation merely by pointing to its intention to remedy the problem at some later date. Justice Fitzpatrick also considered the administrative context. Indigenous Services Canada had placed 1,462 potentially affected registration applications on hold since June 2023. Canada anticipated that the proposed reforms could lead to approximately 6,200 additional registrations over 13 years.35 Those figures did not establish that immediate implementation would be impossible. They did, however, show that the declaration would affect a meaningful number of applications and that a coherent transition would have practical value. Balancing the continuation of an admitted equality violation against the risk of inconsistent national administration, the Court concluded that a limited suspension was justified:“In summary, I am satisfied that, on balance, the Declarations should be suspended to allow Canada to reinvigorate the legislative process toward enacting the amendments to the Indian Act, consistent with the Declarations.”36
Justice Fitzpatrick suspended the declarations until April 30, 2026. The approximately 10-month period was selected to encompass Parliament’s anticipated sittings through the end of April.37 The suspension was not an endorsement of indefinite legislative delay. It was a temporary accommodation intended to provide Parliament with a defined opportunity to implement a nationally applicable solution.Immediate Relief for the People Who Brought the Case
Suspending the declarations created an obvious fairness problem. Without further relief, the successful plaintiffs would remain subject to provisions Canada had admitted were unconstitutional. The Court avoided that result by granting each plaintiff an individual constitutional exemption under section 24(1) of the Charter.38 The distinction between the two forms of remedy is important:- the declarations under section 52(1) addressed the validity and operation of the impugned legislation generally; and
- the exemptions under section 24(1) provided personal relief to the individuals whose Charter rights had been infringed.
Retaining Jurisdiction Without Supervising Parliament
Justice Fitzpatrick also agreed to remain seized of the proceeding and retained the authority to vary the suspension period if necessary.41 This did not give the Court continuing supervisory jurisdiction over Parliament. The Court could not control the legislative agenda, prescribe the content of amendments or require Parliament to enact a particular bill. The retained jurisdiction was narrower. It permitted any issue concerning the duration of the suspension to return to the judge who was already familiar with the evidentiary record, legislative history and remedial balance. Justice Fitzpatrick granted the request on the grounds of efficiency and judicial economy.42 Costs were left unresolved. If the parties could not reach an agreement, they were given leave to bring a costs application within four months.43What Nicholas Does, and Does Not, Decide
The precision of the judgment is one of its strengths. It also makes it important not to overstate the decision’s scope. The decision establishes that:- the identified words in paragraph 6(1)(a.1) and all of paragraph 6(1)(d) unjustifiably infringed section 15;
- the provisions perpetuated disadvantage by assigning inferior registration and transmission rights because of a family history of individual enfranchisement;
- the unconstitutional provisions were invalid under section 52(1);
- the general declarations were temporarily suspended;
- the plaintiffs received immediate individual exemptions under section 24(1); and
- the Court retained the ability to reconsider the duration of the suspension.
- every historical inequity in section 6 has been resolved;
- every form of historical enfranchisement falls within the declarations;
- registration, band membership, First Nation citizenship and Indigenous identity are legally interchangeable;
- every descendant of an enfranchised person automatically qualifies for registration without an individualized assessment; or
- suspended declarations are appropriate whenever Parliament is considering related legislation.
Why Nicholas Matters
Nicholas is significant because it recognizes that discrimination can survive the formal repeal of the policy that created it. Parliament removed enfranchisement from the Indian Act in 1985, but the registration scheme continued to carry its effects forward. The plaintiffs’ disadvantage was not merely a historical grievance. It was produced by legislation that remained in force. The decision also confirms that section 15 is concerned with intergenerational consequences. The plaintiffs received less favourable treatment because of the way the law had classified and treated an earlier generation. Substantive equality required the Court to examine that inherited disadvantage rather than viewing the contemporary registration provisions in isolation. The judgment is also important for its treatment of registration. The Court did not suggest that federal registration defines Indigenous identity. It did, however, recognize that registration carries both legal and personal significance. The denial or reduction of entitlement may affect access to benefits, but it may also affect identity, belonging, family continuity and the ability to transmit legal recognition to one’s children. At the same time, the remedy reveals a genuine institutional tension. Immediate constitutional relief is especially important where the government concedes that a law is discriminatory. But the uneven operation of a federal statute across provincial boundaries could create new disparities among the people the remedy was intended to assist. Justice Fitzpatrick addressed that tension by separating general and individual relief. The declarations were temporarily suspended to allow for a nationally coherent response, while the plaintiffs received immediate exemptions. That approach did not eliminate the cost of delay for other affected descendants, but it ensured that legislative and administrative concerns did not entirely displace the rights of the successful claimants. Most importantly, the judgment rejects the premise that the consequences of enfranchisement may continue indefinitely merely because they have been preserved through technical registration rules. A policy designed to facilitate the legal disappearance of First Nations peoples cannot be treated as constitutionally spent while its effects continue to determine which descendants receive recognition and which do not.Conclusion
Nicholas v Canada (Attorney General) is not simply a decision about the wording of section 6 of the Indian Act. It is a decision about what happens when an expressly assimilationist policy continues to shape legal entitlement generations after its formal repeal. The Court’s conclusion was precise. Descendants of enfranchisees could not constitutionally be assigned inferior registration rights because of their family history. The distinction was based on race or ethnic origin, perpetuated the disadvantage associated with enfranchisement and violated section 15 of the Charter. The remedy was equally deliberate. Justice Fitzpatrick invalidated only the statutory language responsible for the discrimination, temporarily suspended the general declarations to address concerns about national inconsistency, and granted immediate relief to the plaintiffs. The decision therefore advances two related principles. The first is substantive: historical enfranchisement cannot constitutionally continue to diminish the registration rights of descendants. The second is remedial: where institutional concerns justify delaying a general declaration, courts must still take seriously the immediate rights of the people who brought the constitutional violation to light. The Indian Act has repeatedly been amended in response to successful challenges to discriminatory registration rules. Nicholas is another important chapter in that history, but it also exposes the limits of incremental reform. Each successful challenge may remove a particular inequality while leaving the broader structure of federal control over registration intact. For descendants affected by enfranchisement, however, the decision carries a direct and important message: the attempted legal erasure of an earlier generation cannot serve as a continuing basis for denying equality to the generations that followed.How Barriston Law Can Help
The continuing reform of the Indian Act’s registration provisions can create important legal, governance, and operational considerations for First Nations and Indigenous organizations. Changes to federal registration entitlement may affect community planning, membership administration, governance policies, access to programs and services, and communications with members and affected families. These considerations are particularly complex because registration under the Indian Act, band membership, and First Nation citizenship are legally distinct and may be governed by different statutory, constitutional, and community-based frameworks. Barriston Law’s Indigenous Legal Department advises First Nations and Indigenous organizations on the legal and governance issues arising from Indian Act registration, band membership, citizenship, and legislative reform. Our team can assist with:- reviewing membership codes, citizenship laws, and related governance policies;
- advising on the legal distinctions between federal registration, band membership, and First Nation citizenship;
- assessing how changes to federal registration entitlement may interact with existing community laws and governance structures;
- supporting First Nations responding to inquiries from members and families affected by historical enfranchisement;
- reviewing the potential governance and administrative implications of decisions such as Nicholas v Canada (Attorney General);
- advising leadership and administration on the implementation of legislative or policy changes affecting registration and membership;
- assisting with community engagement and the development of clear communications concerning registration, membership, and citizenship; and
- providing strategic advice concerning constitutional litigation, Crown–Indigenous relations, treaty rights, specific claims, and other matters affecting First Nations governments and Indigenous organizations.
Contact Barriston Law
To learn more about how Barriston Law can support your First Nation or Indigenous organization with registration, membership, citizenship, governance, constitutional litigation, or related matters, visit barristonlaw.com or contact our Indigenous Legal Department directly. Written by Garnik MartirosovDisclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Entitlement to registration under the Indian Act depends on the applicable legislation, an individual’s family history, the particular form of historical enfranchisement, the territorial application of relevant court orders, and subsequent legislative and judicial developments. Registration, band membership, and First Nation citizenship are distinct legal concepts. Every individual’s and community’s circumstances are unique. Readers should obtain legal advice tailored to their specific circumstances before relying on the decision discussed in this article or making changes to any membership, citizenship, or governance framework.
[1] Nicholas v Canada (Attorney General), 2025 BCSC 1596 [Nicholas]. [2] Ibid at paras 8–9, 23–24. [3] Canadian Charter of Rights and Freedoms, ss 1, 15, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11 [Charter]; Nicholas, supra note 1 at paras 2–3, 20, 23–24. [4] Nicholas, supra note 1 at paras 62, 74–77. [5] Ibid at para 8. [6] Canada (Canadian Human Rights Commission) v Canada (Attorney General), 2018 SCC 31 at para 70, [2018] 2 SCR 230, cited in Nicholas, supra note 1 at para 23. [7] An Act to amend the Indian Act, SC 1985, c 27. [8] Nicholas, supra note 1 at paras 8–9. [9] Indian Act, RSC 1985, c I-5, ss 6(1)–(2). [10] Nicholas, supra note 1 at paras 8–9, 23. [11] Ibid at para 23. [12] Ibid, citing McIvor v Canada (Registrar of Indian and Northern Affairs), 2009 BCCA 153 at paras 68–69, 306 DLR (4th) 193; Descheneaux c Canada (Procureur général), 2015 QCCS 3555 at paras 32–33, [2016] 2 CNLR 175; Gehl v Canada (Attorney General), 2017 ONCA 319 at paras 40–41, 138 OR (3d) 52. [13] Nicholas, supra note 1 at paras 1, 10. [14] Ibid at para 11. [15] Bill C-38, An Act to amend the Indian Act (new registration entitlements), 1st Sess, 44th Parl, 2022 (first reading 14 December 2022); Nicholas, supra note 1 at paras 12–13. [16] Nicholas, supra note 1 at paras 16, 19. [17] Ibid at para 20. [18] Bill S-2, An Act to amend the Indian Act (new registration entitlements), 1st Sess, 45th Parl, 2025 (first reading 29 May 2025); Nicholas, supra note 1 at para 21. [19] Nicholas, supra note 1 at paras 3–6, 29–30. [20] R v Sharma, 2022 SCC 39 at para 28; R v CP, 2021 SCC 19 at para 56; Fraser v Canada (Attorney General), 2020 SCC 28 at para 27, [2020] 3 SCR 113; Kahkewistahaw First Nation v Taypotat, 2015 SCC 30 at paras 19–20, [2015] 2 SCR 548; Nicholas, supra note 1 at para 23. [21] Nicholas, supra note 1 at para 23. [22] Ibid. [23] Ibid; McIvor, supra note 12 at paras 68–69; Descheneaux, supra note 12 at paras 32–33; Gehl, supra note 12 at paras 40–41. [24] Nicholas, supra note 1 at paras 2, 20, 23. [25] Constitution Act, 1982, supra note 3, s 52(1). [26] Ontario (Attorney General) v G, 2020 SCC 38 at paras 98–108, [2020] 3 SCR 629 [Ontario v G]; Nicholas, supra note 1 at paras 25–28. [27] Nicholas, supra note 1 at para 77(a). [28] Ibid at paras 27–28. [29] Ibid at para 77(b). [30] Ontario v G, supra note 26 at paras 117–39; Nicholas, supra note 1 at paras 31–36. [31] Nicholas, supra note 1 at para 42(d); see also R v Sullivan, 2022 SCC 19 at paras 54–55, [2022] 1 SCR 460. [32] Nicholas, supra note 1 at para 55. [33] Ibid at paras 47, 56. [34] Ibid at paras 42–43, 61–62. [35] Ibid at paras 39–40, 59. [36] Ibid at para 62. [37] Ibid at paras 63–66, 77(c). [38] Charter, supra note 3, s 24(1); Nicholas, supra note 1 at paras 74–77. [39] Ontario v G, supra note 26 at paras 142–49; Nicholas, supra note 1 at paras 74–75. [40] Nicholas, supra note 1 at para 76. [41] Ibid at paras 68–73, 77(d). [42] Ibid at paras 71–73. [43] Ibid at para 77(f).
Canada’s approach to Indigenous participation in major economic development projects is entering a period of significant transformation. Three recent federal initiatives, the establishment of the Major Projects Office (“MPO”), the ongoing renewal of the federal Consultation and Accommodation Guidelines, and the redesign of the Additions to Reserve (“ATR”) process, reflect broader efforts to advance reconciliation, support Indigenous economic development, and improve Indigenous participation in federal decision-making.1
These developments are significant, but they operate at different legal levels. The constitutional duty to consult remains grounded in s. 35 of the Constitution Act, 1982 and the jurisprudence of the Supreme Court of Canada.2 By contrast, the MPO and ATR reforms are primarily legislative, regulatory, and administrative initiatives, while the renewed Consultation and Accommodation Guidelines remain prospective and are not expected to be finalized until 2026.3 This distinction is important when assessing both the opportunities and limitations presented by these developments.
The Major Projects Office and Indigenous Economic Participation
The federal government established the Major Projects Office as part of the framework created by the Building Canada Act. The Act is intended to accelerate approvals for projects identified as being in the national interest while continuing to respect environmental protections and Indigenous rights.4
Federal materials describing the MPO emphasize Indigenous engagement, consultation, and partnership as important components of the major-project review process. The Government of Canada has expressly stated that it seeks to build major projects in partnership with Indigenous Peoples and to foster long-term prosperity through economic participation and collaboration.5
In support of these objectives, the federal government has committed funding to increase Indigenous capacity to engage in major-project consultations and related processes. Federal materials indicate that up to $40 million has been committed to support Indigenous participation, although government publications describe the funding over different implementation periods. Communities should therefore verify the most current program requirements and funding terms when considering participation in MPO-related initiatives.6
The MPO also benefits from the advice of an Indigenous Advisory Council, which provides distinctions-based First Nations, Inuit, and Métis perspectives on MPO policies, processes, and implementation. The Council’s mandate includes advising on Indigenous participation in major projects and the integration of Indigenous perspectives into MPO decision-making. Importantly, however, the Council’s work is advisory only and does not replace or satisfy the Crown’s constitutional duty to consult and accommodate.7
While the legal framework does not create a right to equity ownership in major projects, the MPO’s focus on partnership and economic participation may create new opportunities for Indigenous communities to pursue procurement opportunities, commercial partnerships, employment benefits, revenue-sharing arrangements, and, where appropriate, equity participation. These opportunities will remain project-specific and subject to negotiation.8
The Renewal of Federal Consultation and Accommodation Guidelines
A second significant development is the federal government’s ongoing renewal of the Guidelines for Federal Officials to Fulfill the Duty to Consult. The current federal guidelines were last comprehensively updated in 2011. In Budget 2023, Parliament allocated $11.4 million over three years to Crown-Indigenous Relations and Northern Affairs Canada (“CIRNAC”) to engage Indigenous communities, organizations, and governments in the development of updated guidance.9
According to CIRNAC, the purpose of the renewal process is to support implementation of the United Nations Declaration on the Rights of Indigenous Peoples Act (“UNDA”) and provide greater clarity regarding a whole-of-government approach to consultation and accommodation.10 The government has indicated that publication of the renewed guidelines is anticipated following completion of the engagement process, with current federal materials referencing a planned release in 2026.11
Importantly, the proposed guidelines are not yet in force. At present, they should be understood as an evolving policy initiative rather than a source of new legal obligations.
The Constitutional Duty to Consult
Regardless of future policy reforms, the legal foundations of the duty to consult remain unchanged.
The duty arises when the Crown has real or constructive knowledge of a potential Aboriginal or Treaty right and contemplates conduct that may adversely affect that right.12 The doctrine flows from the honour of the Crown and serves to promote reconciliation between Indigenous Peoples and the Crown.13
The Supreme Court of Canada established the modern framework in Haida Nation v British Columbia (Minister of Forests) and Taku River Tlingit First Nation v British Columbia (Project Assessment Director).14 Subsequent decisions have clarified that consultation must occur before decisions are made, must be meaningful and conducted in good faith, and must be proportionate to the strength of the claim and the seriousness of the potential adverse impact.15
Although procedural aspects of consultation may be delegated to regulators or proponents, ultimate responsibility for ensuring adequate consultation remains with the Crown.16
Objectives of the Consultation Renewal Process
Federal engagement materials indicate that the consultation renewal process is intended to strengthen Crown-Indigenous relationships, promote partnerships, support Indigenous self-determination, advance reconciliation, and improve consistency across the federal government.17
It is important to characterize these not as established legal requirements but as policy objectives informing the development of future federal guidance. The renewal process also reflects the federal government’s commitment to implementing UNDA. While UNDA does not alter the constitutional test for the duty to consult, it increasingly informs federal policy discussions concerning Indigenous participation in decision-making and broader reconciliation initiatives.18
Economic Participation and Accommodation
One noteworthy aspect of recent federal policy discussions is the increasing emphasis on Indigenous economic participation.
Neither the Constitution nor existing consultation jurisprudence establishes a general right to equity ownership, revenue sharing, or economic participation as a mandatory component of accommodation. However, federal policy initiatives increasingly recognize that Indigenous communities often seek meaningful economic participation in projects affecting their territories.19
As a result, participation measures such as procurement opportunities, partnership arrangements, employment commitments, revenue-sharing agreements, and equity ownership may increasingly form part of broader discussions regarding project development and accommodation. Whether such measures are appropriate will always depend on the particular circumstances of the project and the affected rights.20
The Redesigned Additions to Reserve Process
The third major development concerns the redesign of Canada’s ATR framework.
Additions to Reserve play an important role in treaty implementation, reconciliation, community growth, and economic development. Federal policy recognizes that reserve creation and reserve expansion can improve access to lands and resources while supporting economic initiatives led by First Nations.21
Following several years of engagement, the Minister of Crown-Indigenous Relations approved a series of interim policy measures in December 2024. These measures apply to both new and existing reserve creation proposals.22
Environmental Site Assessments
Among the most significant changes is the removal of the former five-year “stale date” applicable to Environmental Site Assessments (“ESAs”).
Under the interim measures, previously completed ESAs may continue to be relied upon unless significant changes have occurred on the proposed reserve lands. The revised framework also permits arrangements whereby third parties may assume financial responsibility for environmental contamination in appropriate circumstances.23
Dispute Resolution
The redesigned framework recognizes that dispute-resolution mechanisms should be informed by First Nations and clarifies that Canada may continue to support a reserve-creation proposal even where outstanding issues exist, provided available dispute-resolution avenues have been explored.24
Reducing Administrative Delay
Federal guidance also seeks to reduce procedural inefficiencies in the reserve-creation process. The interim measures clarify that issues raised by provinces, territories, or other parties may not necessarily prevent proposals from advancing and that certain previous timing requirements no longer apply in all circumstances.25
Application to Existing Proposals
Importantly, First Nations with existing reserve-creation proposals are generally not required to restart the process in order to benefit from the interim measures. The revised framework applies to both existing and newly submitted proposals.26
Strategic Considerations for Indigenous Communities
Taken together, the MPO, consultation renewal process, and ATR redesign suggest a broader federal policy shift toward increased Indigenous participation in economic development.
For Indigenous communities, several strategic opportunities may emerge.
First, the MPO framework may create additional avenues for participation in major resource, infrastructure, transportation, and energy projects through commercial partnerships and negotiated economic benefits.27
Second, Indigenous governments and organizations currently have an opportunity to influence the development of the renewed federal consultation guidelines before they are finalized. Participation in that process may help ensure that future guidance better reflects Indigenous priorities concerning reconciliation, economic development, and self-determination.28
Third, the ATR redesign may support economic growth by facilitating reserve expansion and providing greater flexibility in land-based development initiatives. Reserve lands continue to play a critical role in supporting commercial, industrial, residential, and community-development projects.29
Conclusion
The MPO, consultation-guideline renewal process, and ATR redesign collectively represent important developments in Canada’s evolving Indigenous policy landscape.
At the same time, it remains essential to distinguish between constitutional obligations, enacted legislation, administrative policy, and prospective guidance. The constitutional duty to consult continues to be governed primarily by s. 35 and the jurisprudence of the Supreme Court of Canada. By contrast, the MPO and ATR reforms are policy and legislative initiatives, while the renewed consultation guidelines remain under development and are not yet in force.
Nevertheless, these initiatives signal a meaningful federal emphasis on Indigenous participation, partnership, and economic development. Indigenous governments, development corporations, and project proponents should continue to monitor these evolving frameworks closely and consider how they may create new opportunities for collaboration, land development, and economic participation in the years ahead.
How Barriston Law Can Help
The legal and regulatory landscape governing major projects, Indigenous consultation, economic participation, and reserve creation is evolving rapidly. As governments continue to introduce new policies and processes, Indigenous communities must be strategically positioned to protect their rights, advance their interests, and capitalize on emerging economic opportunities.
Barriston Law’s Indigenous Legal Department advises First Nations, Tribal Councils, Indigenous organizations, and economic development corporations on a broad range of matters relating to:
- Major project development and participation, including impact benefit agreements, partnership agreements, and negotiations with project proponents
- Consultation and accommodation, including strategic advice regarding Crown consultation processes, regulatory approvals, and Indigenous rights considerations
- Economic development and equity participation, including governance structures, joint ventures, limited partnerships, economic development corporations, and Indigenous ownership opportunities
- Additions to Reserve and land-related matters, including reserve creation, land acquisitions, land management, and community development initiatives
- Governance and nation-building, including community decision-making processes, policy development, and long-term economic planning
As federal initiatives such as the Major Projects Office, consultation guideline renewal, and ATR reforms continue to develop, Indigenous communities that engage early and proactively may be better positioned to secure meaningful economic benefits, strengthen their land base, and advance community priorities. Barriston Law works alongside Indigenous clients to navigate these opportunities while ensuring that constitutional rights, Treaty rights, and community interests remain at the forefront.
Contact Barriston Law
To learn more about how Barriston Law can assist your community with Indigenous consultation, economic development, major projects, governance, or land-related matters, visit barristonlaw.com or contact our Indigenous Legal Department directly.
Written by Garnik Martirosov
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. The laws, policies, and government initiatives discussed in this article continue to evolve, and their application will depend on the specific facts and circumstances of each community and project. Readers should obtain independent legal advice tailored to their particular situation before making decisions regarding major projects, consultation processes, economic participation opportunities, or land-related matters.
(1) Canada, Building Canada Act – Projects of National Interest (Ottawa: Government of Canada, 2025); Canada, Crown-Indigenous Relations and Northern Affairs Canada, Engagement: Consultation and Accommodation – Guidelines for Federal Officials to Fulfill the Duty to Consult (Ottawa: CIRNAC, 2025); Canada, Indigenous Services Canada, Additions to Reserve/Reserve Creation: Guidelines for Interim Policy Redesign Measures, 2025 (Ottawa: ISC, 2025).
(2) Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11, s 35; Haida Nation v British Columbia (Minister of Forests), 2004 SCC 73, [2004] 3 SCR 511.
(3) Canada, Crown-Indigenous Relations and Northern Affairs Canada, Engagement: Consultation and Accommodation – Guidelines for Federal Officials to Fulfill the Duty to Consult (Ottawa: CIRNAC, 2025).
(4) One Canadian Economy Act, SC 2025, c 2, s 4 (enacting the Building Canada Act); Canada, Building Canada Act – Projects of National Interest (Ottawa: Government of Canada, 2025).
(5) Canada, Indigenous Engagement and Consultation Under the Building Canada Act (Ottawa: Government of Canada, 2025).
(6) Ibid; Canada, Privy Council Office, Participant Funding to Support Indigenous Participation in Major Projects Consultations (Ottawa: Government of Canada, 2025).
(7) Canada, Privy Council Office, Indigenous Advisory Council to the Major Projects Office: Terms of Reference (Ottawa: Government of Canada, 2025).
(8) Canada, Indigenous Engagement and Consultation Under the Building Canada Act, supra note 5.
(9) Canada, Crown-Indigenous Relations and Northern Affairs Canada, Engagement: Consultation and Accommodation – Guidelines for Federal Officials to Fulfill the Duty to Consult (Ottawa: CIRNAC, 2025); Canada, Crown-Indigenous Relations and Northern Affairs Canada, 2024 Engagement on the Renewal of the Federal Consultation and Accommodation Guidelines: Companion Interim What We Learned Report (Ottawa: CIRNAC, 2025).
(10) Ibid.
(11) Canada, Crown-Indigenous Relations and Northern Affairs Canada, Engagement: Consultation and Accommodation – Guidelines for Federal Officials to Fulfill the Duty to Consult (Ottawa: CIRNAC, 2025).
(12) Rio Tinto Alcan Inc v Carrier Sekani Tribal Council, 2010 SCC 43, [2010] 2 SCR 650 at para 31; Haida Nation, supra note 2 at para 35.
(13) Haida Nation, supra note 2 at paras 16–18; Tsilhqot’in Nation v British Columbia, 2014 SCC 44, [2014] 2 SCR 257 at para 78.
(14) Haida Nation, supra note 2; Taku River Tlingit First Nation v British Columbia (Project Assessment Director), 2004 SCC 74, [2004] 3 SCR 550.
(15) Mikisew Cree First Nation v Canada (Minister of Canadian Heritage), 2005 SCC 69, [2005] 3 SCR 388 at para 64; Clyde River (Hamlet) v Petroleum Geo Services Inc, 2017 SCC 40, [2017] 1 SCR 1069 at paras 18–22; Ktunaxa Nation v British Columbia (Forests, Lands and Natural Resource Operations), 2017 SCC 54, [2017] 2 SCR 386 at para 79; Haida Nation, supra note 2 at paras 39, 41; Tsilhqot’in Nation, supra note 13 at para 79.
(16) Chippewas of the Thames First Nation v Enbridge Pipelines Inc, 2017 SCC 41, [2017] 1 SCR 1099 at para 32; Clyde River, supra note 15 at para 22; Haida Nation, supra note 2 at para 53.
(17) Canada, Crown-Indigenous Relations and Northern Affairs Canada, Federal Consultation and Accommodation Guidelines: Key Themes Report (Ottawa: CIRNAC, 2025).
(18) United Nations Declaration on the Rights of Indigenous Peoples Act, SC 2021, c 14; Canada, Crown-Indigenous Relations and Northern Affairs Canada, Engagement: Consultation and Accommodation – Guidelines for Federal Officials to Fulfill the Duty to Consult, supra note 9.
(19) Canada, Indigenous Engagement and Consultation Under the Building Canada Act, supra note 5.
(20) See generally Haida Nation, supra note 2; Ktunaxa Nation, supra note 15 at paras 112–114; Canada, Federal Consultation and Accommodation Guidelines: Key Themes Report, supra note 17.
(21) Canada, Indigenous Services Canada, Additions to Reserve (Ottawa: ISC, 2025).
(22) Canada, Indigenous Services Canada, Additions to Reserve/Reserve Creation: Guidelines for Interim Policy Redesign Measures, 2025 (Ottawa: ISC, 2025).
(23) Ibid.
(24) Ibid.
(25) Ibid.
(26) Ibid.
(27) Canada, Building Canada Act – Projects of National Interest, supra note 4; Canada, Indigenous Engagement and Consultation Under the Building Canada Act, supra note 5.
(28) Canada, Crown-Indigenous Relations and Northern Affairs Canada, Engagement: Consultation and Accommodation – Guidelines for Federal Officials to Fulfill the Duty to Consult, supra note 9.
(29) Canada, Indigenous Services Canada, Additions to Reserve, supra note 21; Canada, Indigenous Services Canada, Additions to Reserve/Reserve Creation: Guidelines for Interim Policy Redesign Measures, 2025, supra note 22.
The Ontario Superior Court of Justice recently issued two significant decisions, Nootchtai v. Nahwegahbow Corbiere Genoodmagejig, 2024 ONSC 6088 and Nootchtai v. Nahwegahbow Corbiere Genoodmagejig Barristers and Solicitors, 2025 ONSC 6071, which provide important guidance on the assessment of legal feels within the context of large scale settlements.
Background
These court cases trace back to the Robinson Huron Treaty which was signed in 1850. That agreement included an “augmentation clause” promising that annuity payments to First Nations would go up if the lands they ceded brought in enough money. Despite this promise, the annual payment stayed at just $4 per person for more than a century.
In 2010, 21 First Nations created the Robinson Huron Treaty Litigation Fund (“RHTLF”) to push for fair compensation through negotiations or court action. They launched a lawsuit in 2014, arguing that Canada and Ontario had failed to uphold their treaty obligations, fiduciary duties and rights protected by section 35 of the Constitution Act, 1982. The Court agreed, ruling that the Crown had a responsibility to raise annuities.
After this decision, the RHTLF entered negotiations with Canada and Ontario. In January 2024, the parties reached a historic $10‑billion settlement, split evenly between the two governments, to compensate for past breaches of the treaty. The court later approved the Settlement Agreement, marking a major milestone in recognizing treaty rights and advancing reconciliation.
The legal team representing the RHTLF had been retained under a Partial Contingency Fee Agreement, which provided for a contingent success fee of 15% on the first $100 million and 5% on any amounts above $100 million. Following the settlement, the legal team sought payment of $510 million in fees. The legal team later offered to share $255 million of those fees with the Fund for specified communal purposes. These cases revolve around whether the court would allow such a large amount of legal fees to be paid.
The Right to Assessment:
Nootchtai v. Nahwegahbow Corbiere Genoodmagejig, 2024 ONSC 6088
On April 22, 2024, the Chiefs and trustees of the RHTLF met to review and vote on the proposed legal fees connected to the Robinson Huron Treaty settlement. At the meeting, 67% of Chiefs and 71% of trustees in attendance voted in favour of approving $510 million in legal fees. These fees were then paid out around May 3, 2024, from the $10‑billion settlement fund.
Following this, Gimaa (Chief) Craig Nootchtai of Atikameksheng Anishnawbek, and Ogimaa Kwe (Chief) Karen Bell and Councillor Chester Langille of Garden River First Nation asked the court to asses the legal fees that had been approved and paid.
The first question before the court was whether it had the authority to order such an assessment. Relying on section 9(4) of the Solicitors Act, the court confirmed its power to send the lawyer’s bill for assessment. It ultimately ordered that both the Partial Contingency Fee Agreement and the legal fees themselves were to be formally assessed.
The Assessment of Fees:
Nootchtai v. Nahwegahbow Corbiere Genoodmagejig Barristers and Solicitors, 2025 ONSC 6071.
The second decision focused on the assessment itself. The court acknowledged that contingency fees are a legitimate form of lawyer remuneration in Ontario, often calculated as a percentage of a client’s recovery, and play an important role in ensuring access to justice. However, the court emphasized that lawyers are not entitled to a percentage of a client’s recovery that amounts to a windfall, meaning a sum disproportionate to the value of the professional services rendered. If the sum amounts to this disproportionate windfall, it would be champerty. Champerty is roughly described as buying a piece of a lawsuit without a legitimate interest in the case. In other words, lawyers in Ontario are entitled to fair and reasonable fees but not a ‘piece of the action.’ Champerty has long been prohibited in common law jurisdictions, with roots tracing back centuries in English law. It remains illegal in Ontario.
In cases involving “mega-fund” settlements, such as the $10 billion settlement in the Robinson Huron Treaty litigation, the court highlighted the importance of maintaining proportionality between lawyers’ fees and the settlement amount. The court found that the legal team’s contingent success fee of $510 million was neither fair nor reasonable.
The court determined that the Partial Contingency Fee Agreement, signed in 2011, was not fair when it was made. The clients, representing the First Nations, did not receive independent legal advice before entering the agreement. They did not fully understand the nature and risks of the agreement, including the financial obligations it entailed and whether a percentage-based fee was appropriate for a potential mega-fund case.
The court also concluded that the agreement was not reasonable at the time of the hearing. The resulting fee was found to be disproportionate to the time spent, the value of the services, the success achieved, and the actual risks undertaken by the legal team. The legal team’s financial risk was limited because the Fund paid most legal fees and all disbursements, and the legal team even helped the Fund secure financing for legal fees. For context, total billable fees at normal rates amounted to approximately $23 million before disbursements, against which the $510 million sought represented a multiplier of more than 20 times.
Consequently, the court declared the Partial Contingency Fee Agreement unenforceable. With the contingency fee agreement unenforceable, the court proceeded to assess the value of the legal team’s services on a quantum meruit basis. Quantum meruit means “as much as deserved” and involves determining a fair and reasonable amount for services rendered. In this assessment, the court considered various factors, including the complexity of the case, the responsibility assumed, the skill demonstrated, and the significant results achieved.
The court determined that doubling the legal team’s billable fees was an appropriate and deserved recognition of their work. This calculation resulted in a fair and reasonable fee of approximately $40 million for the legal team. As a result, the court ordered the legal team to refund $232 million to the Fund, representing the excess amount paid over the approved fee.
Conclusion
The Nootchtai v. Nahwegahbow Corbiere Genoodmagejig decisions represent how courts supervise legal fee arrangements, particularly in large-scale settlements involving Indigenous communities. These rulings affirm the courts’ commitment to ensuring that legal fees are fair, reasonable, and proportionate to the work performed and the risks undertaken. Contingency fee agreements need to be transparent so that clients truly understand the nature of the agreement and what they are signing.
By declaring the contingency fee agreement unenforceable and assessing fees on a quantum meruit basis, the Court reinforced its role as a safeguard against unjust outcomes, ensuring lawyers are compensated appropriately without exploiting clients or undermining broader principles of justice.
How Barriston Law Can Help
Barriston Law’s Indigenous Legal Department has extensive experience advising First Nations and Indigenous organizations on a wide range of legal matters, including the negotiation and review of legal retainer agreements, specific claims and treaty rights litigation, and governance structures. The Nootchtai decisions underscore the importance of proper legal guidance when entering into complex fee arrangements, particularly in high-value litigation involving Indigenous communities. Our team is committed to ensuring that First Nations clients understand their rights and obligations at every stage of the legal process.
Contact Barriston Law
To learn more about how Barriston Law can support your community or organization, visit barristonlaw.com or contact our Indigenous Legal Department directly.
Written by Garnik Martirosov and Wyatt Shipley
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Every community’s circumstances are unique. Before pursuing any legal fee assessment, retainer arrangement, or related matter, readers should obtain independent legal advice tailored to their specific situation.
The Restoule litigation centers on the Robinson‑Huron and Robinson‑Superior Treaties of 1850, in which the Anishinaabe of the Upper Great Lakes ceded more than 100,000 km² of land to the Crown in exchange for lump‑sum payments, perpetual annuities, hunting and fishing rights, and reserve lands. Crucially, these treaties included an Augmentation Clause, requiring that annuities “shall be augmented from time to time” if revenues from the ceded territory allowed the Crown to do so “without incurring loss.”
The annuity increased once, in 1875, to $4 per person. It never increased again, despite extensive resource development across the treaty territory. Over time, litigation emerged as First Nations sought a declaration that the Crown had failed to implement the Augmentation Clause and owed compensation.
Two major claims were filed: the Superior plaintiffs (2001) and the Huron plaintiffs (2014). These actions were heard together in three stages: treaty interpretation, limitations and Crown immunity, and damages.
Lower Court Decisions
Ontario Superior Court of Justice
Regarding Stage One the trial judge held that the Crown had a mandatory and reviewable obligation to increase annuities when economic conditions permitted an increase “without incurring loss.” She concluded the Augmentation Clause created both a collective entitlement and an individual entitlement, with the $4 figure acting only as an individual cap and not a cap on the collective payment. The trial judge also found that although no sui generis fiduciary duty existed, the honour of the Crown and an ad hoc fiduciary duty required diligent implementation.
In Stage Two the Court rejected Ontario’s defences of Crown immunity and statutory limitation periods, concluding that limitations legislation did not bar treaty breach claims.
Ontario Court of Appeal
The Court of Appeal agreed that the Crown’s obligation to consider augmentation was mandatory and reviewable, and that the $4 amount served as a soft cap, but it rejected the trial judge’s finding that the treaties guaranteed a “fair share” of Crown revenues.
The Court also held there was no fiduciary duty, but confirmed the duty of diligent implementation arising from the honour of the Crown. It unanimously confirmed that limitations legislation did not extinguish the claims.
Before the Supreme Court of Canada appeal, the Huron plaintiffs settled with Ontario and Canada for $10 billion, an agreement finalized and court‑approved on February 26, 2024.
Supreme Court of Canada Decision
In its unanimous ruling, the Supreme Court of Canada determined that both Canada and Ontario had failed to diligently uphold the treaty promises set out in the Robinson‑Huron and Robinson‑Superior Treaties. The Court then articulated several important conclusions concerning the scope of the Crown’s obligations and related interpretive issues.
Limitations and Crown Immunity
On the limitations issue, the SCC confirmed the lower courts’ conclusion that the claims were not statute‑barred. Treaty obligations are constitutional in nature rather than private law claims, and the Treaties cannot be reduced to common‑law categories such as “actions on the case” or “actions of account.”
Because Ontario’s historic limitations legislation did not apply to constitutional treaty claims (and it is generally understood that the modern 2002 Limitations Act expressly excludes Aboriginal rights), the claims were properly before the courts.
Treaty Interpretation and the Standard of Review
The Supreme Court held firmly that treaty interpretation is a question of law reviewed for correctness, rejecting the idea, accepted in some quarters since Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 that appellate courts should defer to lower‑court treaty interpretations as mixed questions of fact and law.
The Court emphasized that because historic treaties are constitutional instruments, their interpretation requires national consistency, and appellate courts cannot simply defer to a trial judge’s reading of their meaning. Questions about the language of the treaties, the intention of the parties, and the legal consequences of historical context fall squarely within a court’s legal expertise and therefore demand a correctness standard. Historical fact‑finding, however, remains subject to palpable and overriding error.
The Augmentation Clause
The Court clarified that the Treaties establish one unified annuity, payable to the “Chiefs and their Tribes,” rather than a dual structure divided into collective and individual components. It further held that the historic $4 figure operates as a soft cap, obliging the Crown to raise the annuity when circumstances permit, while permitting but not requiring increases beyond it.
The Honour of the Crown and the Duty of Diligent Implementation
Although the Court rejected the trial judge’s finding of a specific ad hoc or sui generis fiduciary duty, it reaffirmed a powerful constraint on Crown conduct: the duty of diligent implementation, which flows from the honour of the Crown. The duty requires the Crown to periodically consider whether annuity augmentation is possible and to make decisions governed by honourable conduct rather than administrative convenience or political preference. The Court concluded that the Crown’s century‑and‑a‑half failure to revisit the annuity level violated this constitutional duty.
The Court emphasized that while the honour of the Crown is not itself a cause of action, it informs and shapes the Crown’s obligations under the Treaties. If the Crown neglects those obligations, the resulting breach is a breach of the Treaties themselves.
Remedy
After finding a longstanding breach of the Robinson Treaties, the Supreme Court concluded that declaratory relief alone would be inadequate. Instead, it ordered a structured remedial process aimed at implementing the treaty promise rather than merely describing it.
The Court directed the Crown to engage meaningfully and honourably with the Robinson‑Superior plaintiffs to attempt to negotiate compensation for past breaches. If no agreement is reached, the Crown must, within six months of the decision, exercise its discretion to determine a compensation amount itself. The Court’s structured remedial framework reflects its expectation that the Crown’s determination of compensation must be “just and honourable,” and that any subsequent judicial review would assess both the process followed and the substance of the amount determined.
The Court specified if negotiations fail and the Crown sets an amount, the Superior plaintiffs may seek judicial review of both the process followed and the substance of the determination.
Conclusion
The SCC’s decision in Restoule reshapes Canadian treaty law on multiple fronts: it elevates the standard of review, clarifies the structure of treaty obligations, rejects the notion of unfettered Crown discretion, and introduces a new model for enforcing treaty promises. By grounding its analysis in correctness review, the honour of the Crown, and a structured remedial framework, the Court has provided a decision that will guide treaty litigation for decades.
How Barriston Law Can Help
Barriston Law’s Indigenous Legal Department has experience advising First Nations communities on treaty rights, specific claims, and the evolving legal framework governing Crown-Indigenous relationships. Whether your community is assessing the implications of Restoule for existing treaty obligations, evaluating potential claims, or navigating negotiations with the Crown, we are available to assist.
Contact Barriston Law
To learn more about how Barriston Law can support your community or organization, visit barristonlaw.com or contact our Indigenous Legal Department directly.
Written by Garnik Martirosov and Bennett Marshall
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. The information presented reflects the authors’ summary of a judicial decision and is not a substitute for independent legal advice. Every community’s circumstances are unique. Readers should obtain legal advice tailored to their specific situation before taking any action in reliance on the matters discussed in this article.
The Burden of Upfront Costs and Inadequate Federal Funding
The initial stages of a Specific Claim require extensive financial investment. First Nations bear the responsibility of researching their own claims and submitting them to the Government of Canada1. This research and preparation is a complex undertaking2, often taking six months to two years to develop a single claim, with each researcher typically handling only one or two claims per year3. The federal government’s Specific Claims Policy requires that First Nations provide a thoroughly researched historical report, together with copies of primary and secondary documents, to support all allegations in the claim.4 A claim cannot be officially filed without this material.5 Despite the critical need, federal funding for Specific Claims research has been consistently insufficient. The annual budget for claims research dropped from approximately $14 million in the 2013–14 fiscal year to an average of $9 million in the two subsequent years,6 a reduction implemented as part of the Deficit Reduction Action Plan.7 More recently, Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) had an annual budgetary allocation of $12 million for specific claims research funding but received applications totaling $30.5 million in a single fiscal year, resulting in an $18.5 million shortfall.8 In 2025–26, applications totaled $34.5 million against the same $12 million budget.9 That shortfall meant 98 First Nations were denied funding, forcing them to put critical work on hold indefinitely.10 Annual funding is projected to plummet to just $4 million beginning in April 2026, a 75 percent reduction that threatens the entire program and access to justice for hundreds of claims.11 Existing federal loan funding is capped and does not reflect the actual costs involved. Maximums range from $15,000 to $427,000 depending on claim size, spread over multiple years, far below the actual costs, which can exceed $1 million for the research and submission phase alone. The Department has been unable to explain why the funding provided was considered adequate to assist First Nations in negotiating their claims at equitable levels with the government.12 This inadequacy leads to significant delays in researching and developing specific claims,13 with some research organizations becoming so debilitated they are unable to submit any claims at all.14 Many valid claims are abandoned due to a lack of resources or reluctance to enter into high-percentage contingency fee agreements, which can significantly diminish the benefit to the community.The Conflict of Interest and Lack of Guarantees
The Specific Claims process is further complicated by an inherent structural conflict of interest: the Crown simultaneously acts as defendant, adjudicator, and funder. The government’s policy and process for addressing specific claims has been criticized by First Nations and the Auditor General of Canada, both of whom have called for major reforms.15 The process has been described as confusing, time-consuming, expensive, adversarial, and legalistic.16 The requirements for submitting a Specific Claim are stringent, demanding detailed legal arguments, historical reports, supporting documents, and Band Council Resolutions, all in a prescribed format.17 Once filed, the Minister has up to three years to assess the claim.18 If Canada determines it has an outstanding lawful obligation, it offers to negotiate; if the First Nation accepts, it becomes eligible for funding to support those negotiations.19 If a settlement cannot be reached within three years, the First Nation may file the claim with the Specific Claims Tribunal,20 which can make binding decisions on validity and compensation up to $150 million per claim.21Barriston Law and Funding Partners: Innovative Solutions
Barriston Law, in collaboration with its funding partners, offers innovative solutions to these systemic challenges. This funding is structured as a line of credit, not a capped grant, and is managed through a legal administrative trust to ensure transparency, control, and segregation of funds.Why This Matters for First Nations Communities
This collaborative approach empowers First Nations to pursue their claims aggressively and effectively, without relying on inadequate government funding or sacrificing a significant portion of their settlements to contingency fees. It also supports broader community planning and economic development initiatives, fostering self-determination and long-term prosperity. It is worth noting how these private funding solutions may interact with ongoing efforts to reform the Specific Claims process, including the proposed Independent Centre for the Resolution of Specific Claims, which envisions a dedicated Funding Division to provide financial resources directly to First Nations.22 Until such reforms are realized, the current funding gap remains a critical barrier to justice, and innovative private solutions offer the most viable path forward.About Barriston Law
Barriston Law is a trusted legal partner for First Nations communities across Canada, bringing deep expertise in Indigenous law, Specific Claims, and Crown–Indigenous relations. The firm is committed to advancing reconciliation through principled, results-driven advocacy. With a dedicated team experienced in navigating the complexities of the Specific Claims process and access to innovative funding solutions through its partner funding brokers, Barriston Law opens the door for First Nations to pursue justice without bearing the burden of prohibitive upfront costs.Contact Barriston Law
To learn more about how Barriston Law can support your community’s Specific Claims, visit us online or contact the firm directly. Written by Garnik MartirosovDisclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Every community’s circumstances are unique. Before pursuing a Specific Claim or entering into any funding arrangement, readers should obtain professional legal, financial, and strategic advice tailored to their specific situation.
(1)Dickson v Vuntut Gwitchin First Nation, 2024 SCC 10 [Dickson] at paras 1–3, 164–165. (2) Auditor General of Canada, “Report 6 – First Nations Specific Claims – Indigenous and Northern Affairs Canada” (November 2016), at para 6.48. (3) House of Commons Standing Committee on Indigenous and Northern Affairs, Committee Report No. 12 (42nd Parliament, 1st Session), at p. 24. (4) Union of BC Indian Chiefs, “Open Letter to Minister Miller Calling on Canada to Provide Specific Claims Research Funding to all First Nations Claimants to Ensure Full and Fair Access to Justice.” (5) Ibid. (6) Auditor General of Canada, supra note 2, at para 6.11. (7) Auditor General of Canada, supra note 2, at para 6.48. (8) Union of BC Indian Chiefs, supra note 4. (9) Crown-Indigenous Relations and Northern Affairs Canada, “Question Period Note: Specific Claims Research Program” (2025), CIR-2025-QP-2899. (10) Union of BC Indian Chiefs, supra note 4. (11) Union of BC Indian Chiefs, “Budget 2025: Canada Fails to Fulfil Duties To Resolve Specific Claims.” (12) Auditor General of Canada, supra note 2, at para 6.51. (13) House of Commons Standing Committee on Indigenous and Northern Affairs, supra note 3. (14) Ibid. (15) Crown-Indigenous Relations and Northern Affairs Canada, supra note 1. (16) Auditor General of Canada, supra note 2. (17) Crown-Indigenous Relations and Northern Affairs Canada, “The Specific Claims Policy and Process Guide,” Annex A. (18) Crown-Indigenous Relations and Northern Affairs Canada, “The Specific Claims Policy and Process Guide.” (19) Crown-Indigenous Relations and Northern Affairs Canada, supra note 1. (20) Ibid. (21) Crown-Indigenous Relations and Northern Affairs Canada, supra note 1; “Grants to First Nations to settle specific claims negotiated by Canada.” (22)Assembly of First Nations, “Specific Claims Policy Reform,” online: https://afn.ca/environment/land-rights-jurisdiction/specific-claims-policy-reform/.
Across Canada, First Nations communities are increasingly turning to sophisticated business structures to advance their economic development goals. Among these, Limited Partnerships have emerged as the preferred vehicle for communities seeking to operate businesses beyond reserve boundaries while preserving both their tax-exempt status and protection from financial liability.
At Barriston Law, we have had the privilege of advising Indigenous communities and their economic development corporations on how to design, implement, and govern limited partnership structures that align with their long-term nation-building objectives. This article outlines the key features of the limited partnership model and explains why it has become so widely adopted.
Taxation of Off-Reserve Business Activity
Under section 87 of the Indian Act, property of an Indian or a band situated on a reserve is generally exempt from taxation. This exemption has been interpreted by the courts to protect First Nations property from erosion through taxation. However, when a First Nation establishes a corporation that operates off reserve, the income earned by that corporation is typically subject to federal and provincial income tax, even if the First Nation is the sole owner.
This creates a significant dilemma. Many of the most promising economic development opportunities, construction contracts, resource extraction, service delivery, joint ventures with industry partners, necessarily involve activity that takes place outside reserve boundaries. Without a thoughtful legal structure, First Nations communities risk losing a substantial portion of their business earnings to taxation, limiting the reinvestment capital available for community priorities.
The Limited Partnership Structure
The limited partnership structure solves this problem by taking advantage of two well-established principles of Canadian tax and corporate law. First, a limited partnership is not itself a taxable entity, its income flows through to its partners and is taxed in each partner’s hands according to that partner’s own tax status. Second, a limited partner enjoys protection from liability beyond the amount of its capital contribution to the partnership.
The typical structure works as follows:
- The First Nation creates a wholly owned corporation, usually called an Economic Development Corporation (EDC). This EDC serves as the general partner in the limited partnership, assuming management responsibility and unlimited liability for the business.
- The First Nation itself becomes the limited partner, contributing capital and receiving the vast majority of the partnership’s net income, typically 99.9%, while remaining shielded from liability beyond its investment.
- Because the income flows through to the First Nation as limited partner, and the First Nation’s tax-exempt status applies to income received in its hands, the partnership income is effectively exempt from taxation, even though the underlying business activity takes place off reserve.
The general partner (EDC), as a taxable corporation, does pay tax on its share of income. However, since its ownership interest is typically limited to 0.1%, the tax liability is negligible. The critical point is that the EDC handles all operational and management decisions, insulating the First Nation from the legal restrictions that apply to limited partners.
Governance: Getting It Right
One of the most important, and frequently misunderstood, aspects of the limited partnership structure is the governance boundary between the limited partner and the general partner. By law, a limited partner cannot participate in the management or operation of the partnership’s business. If it does, it risks losing its limited liability protection.
For First Nations, this means that Chief and Council, acting in their capacity as the governing body of the Nation, cannot direct the day-to-day operations of the limited partnership. Band Council Resolutions cannot address operational matters of the LP. However, individual members of Chief and Council may serve on the board of directors of the EDC (the general partner), provided they act in their capacity as board members and exercise their fiduciary duties to the corporation, not as political leaders of the Nation.
This distinction is vital. The board of the general partner should be composed of individuals with relevant expertise: industry knowledge, financial acumen, contract management experience, and governance skills. A capable, independent board gives the community confidence that its investment is being managed responsibly and that proper oversight is in place.
Partnering with Industry: Joint Ventures Through LPs
The limited partnership model is equally effective when a First Nation wishes to partner with an industry partner on a specific project, for example, a highway construction contract, a resource development project, or a service delivery agreement. In these arrangements, the First Nation’s existing LP and the industry partner each become limited partners in a new joint venture LP, with a jointly owned operating corporation serving as the general partner.
Crucially, the limited partnership structure does not alter the tax treatment of the non-Indigenous partner. The industry partner pays tax on its share of the joint venture income just as it would in any other business arrangement. The First Nation’s share, meanwhile, flows through its own LP structure and back into the hands of the Nation, tax-exempt. This means there is no tax advantage or disadvantage for a non-Indigenous partner entering into a limited partnership with a First Nation, and no reason for taxation considerations to discourage partnerships that make sound business sense.
Why This Matters for First Nations Communities
The economic impact of properly structured limited partnerships is substantial. Tax savings that result from the LP structure can be reinvested directly into community priorities, housing, education, health services, infrastructure, and cultural revitalization. The limited liability protection ensures that the Nation’s core assets and lands are not placed at risk by business ventures. And the governance structure, when properly implemented, promotes professional management and accountability.
First Nations across Saskatchewan and beyond have demonstrated the effectiveness of this model, with communities like Mistawasis Nêhiyawak, Beardy’s & Okemasis Cree Nation, and the Northern Village of Pinehouse all successfully using limited partnerships to advance their economic development.
How Barriston Law Can Help
Establishing a limited partnership requires careful attention to corporate law, tax law, partnership legislation, and the unique legal framework governing First Nations. The structure must be tailored to the community’s specific circumstances, objectives, and existing governance arrangements. Errors in design or implementation can have significant consequences, from the loss of tax-exempt status to unintended exposure to liability.
At Barriston Law, our team brings deep experience in advising First Nations, economic development corporations, and their industry partners on the full range of legal issues arising from limited partnership structures.
Our services include:
- Structuring and incorporating economic development corporations and limited partnerships
- Drafting and negotiating limited partnership agreements, including ownership splits and profit allocation
- Advising on governance frameworks that maintain the critical boundary between limited and general partner roles
- Structuring joint ventures with industry partners to preserve tax-exempt status and limited liability
- Navigating the interplay between the Indian Act, the Income Tax Act, and applicable provincial partnership legislation
- Providing ongoing governance advice to EDC boards and community leadership
Whether your community is launching its first business venture or structuring a complex joint venture with an industry partner, our team is ready to help you build a legal foundation that protects your interests and positions your Nation for long-term economic success.
Contact Barriston Law
To learn more about how we can assist your community with limited partnership structures and economic development, please contact us.
Written by Garnik Martirosov