Thomas Isaac on navigating legal challenges in Indigenous-led projects

Thomas Isaac is the co-chair of the business law group and chair of the Aboriginal law group at Cassels. His practice is based in Vancouver.

For our CL Talk podcast, he spoke about the development of Indigenous-owned projects in Canada. Isaac recently co-wrote a book called The Law of Indigenous Ownership and Projects with his colleague Jeremy Barretto, published by Thomson Reuters.

Listen to our full podcast episode here:

This episode can also be found on our CL Talk podcast homepage, which includes links to follow CL Talk on all the major podcast providers.

Below is a summary of the conversation, edited for length and clarity:

First off, can you tell me about your work with Indigenous communities?

I have spent nearly 40 years studying and working with industry, public governments, and Indigenous governments across the country. I've been very fortunate in my career.

What are the key legal challenges Indigenous communities face when initiating and managing ownership in large-scale projects?

The main challenges for Indigenous communities often involve finding the right industry partners – those who are sensitive to the unique needs of Indigenous governments. Additionally, addressing long-standing systemic issues like racism and poverty is critical as these communities transition toward more business-friendly environments. We're currently witnessing that shift in Canada, with many successful examples emerging.

The legal landscape itself isn't necessarily a challenge. While developing projects on reserve lands presents unique difficulties, there are also significant opportunities. Decades of case law have helped navigate these complexities, and many successful projects have been completed on reserve lands.

How do you see Indigenous ownership influencing the future of Canada's energy and infrastructure sectors?

It's really rewarding to be involved in a project that is positive for all Canadians, Indigenous and non-Indigenous alike. The focus of the book is on an area of law where Indigenous governments and businesses are coming together with mutual interests, particularly in business development, which is very exciting. I mentioned earlier that we're in the midst of a significant shift, and that shift is twofold.

First, there's the growing economic benefits and what some of my Indigenous clients refer to as "economic sovereignty" for communities actively engaged in business and partnerships. From an industry perspective, partnering with local Indigenous communities not only provides direct benefits but also helps navigate the uncertainty in Canada's regulatory environment. Having Indigenous communities involved in projects ensures that everyone has a stake in the outcome, making the process more efficient for investment and capital deployment.

The third key player is public government. This collaboration is also beneficial from a public policy perspective, as it promotes positive uses of the legal system – focusing on building infrastructure and economic wealth for both Indigenous and non-Indigenous communities – rather than relying on legal mechanisms like injunctions or judicial reviews. While those legal tools are a part of our practice, it's refreshing to be involved in the more constructive side of the law.

Can you discuss any successful examples of Indigenous-industry partnerships that have set a precedent for future projects?

I won't name specific projects we've advised on, but I'd like to share an example to give your listeners a sense of the kind of work we've done. One project involved renewable energy development in Ontario, where we faced several challenges. A portion of the community opposed the project, unable to see the benefits and raising some legitimate, though not critical, environmental concerns. It wasn't a case of severe issues like pollution, but there were valid worries.

In this instance, the First Nation government had little experience with full equity involvement in large projects, and the international developer had likely never considered offering ownership to a small Indigenous government. Fast forward three to three and a half years, and that Indigenous government now holds a minority share, with some governance voice – addressing some of the environmental concerns through the governance structure.

This was achieved using a general partnership/limited partnership (GPLP) model, which we discuss in the book as a useful framework for addressing unique concerns. What stands out to me about this example is that it involved pure corporate governance, without any complications like reserve land issues. The agreement was straightforward corporate governance, yet it directly reflected the Indigenous government's relationship with its people, land, and rights. The project is now up and running, and it was a real eye-opener for me at the time – more than a decade ago – but a great early example of mutual interests being met in a business-focused, corporate governance environment that respected the community's values.

The Trans Mountain Pipeline expansion project is a higher profile example. What lessons does it give?

In the end, I believe the outcome was positive for the Indigenous communities involved in that deal, but the process leading up to it was not ideal. Both the industry and Indigenous sides would likely agree it wasn't the best way to conduct business. There were numerous legal challenges from Indigenous groups, and the government’s involvement was problematic. Consultation had supposedly been completed, but the federal government decided to extend it – and they did so poorly, which opened the project to further challenges. The key takeaway here is that if you're going to conduct consultation, it must be done right – there's no halfway.

Despite those issues, the result was many Indigenous governments participating in a significant infrastructure project for Canada. Could the process have been handled better? Absolutely. However, dealing with such a large and diverse group of stakeholders is inherently complex. In Canada, we have Inuit, First Nations, and Métis peoples, each with their own distinct cultures and needs. Even within the First Nations, there are over 600 distinct groups, each with different histories, treaties, and locations.

This diversity means that working with multiple First Nations on a project is inherently challenging and requires substantial due diligence, effort, and time to ensure all voices are heard. It's not a criticism, just a reality of working within such a varied landscape.

How does the multidisciplinary nature of Indigenous-owned projects, involving areas like corporate, tax, and real estate law, complicate or enhance project development?

One key takeaway from my book is the unique tax and legal challenges that arise when dealing with Indigenous lands, whether it's Indian reserve land, modern treaty land, or land under different regimes like the First Nations Land Management Act. These issues present very specific legal challenges. On the other hand, there are also more traditional corporate and commercial law considerations, such as good old-fashioned partnership agreements. The book addresses both extremes, and the challenge is often in the intermingling of these two distinct areas.

For example, when Indigenous and industry partners collaborate, each side has its own needs and limitations. A publicly traded company, a private equity firm, and a private investor all operate very differently, especially in terms of information sharing and other legal requirements. On the Indigenous side, you have businesses that are often government-owned, which come with their own unique challenges. For instance, environmental concerns can play a larger role in partnership agreements with Indigenous governments due to the communities' deep connection to their lands. These issues might not be as prominent in other contexts, but they are critical in Indigenous partnerships.

Sometimes, rights-based issues even find their way into corporate governance discussions. From an industry perspective, it’s important not to mix constitutional rights with contractual relationships, as this can create complications. Indigenous partners, too, need to keep their constitutional rights separate to avoid challenges. However, these issues do arise occasionally, and when they do, it’s the role of counsel to translate these complexities for their clients.

For example, industry clients might need to understand why a particular stream is important to a community – it's not just any stream, and they may need to meet with elders to grasp the significance. Similarly, Indigenous clients may need help understanding why certain tax structures or disclosure requirements are critical in corporate partnerships. Often, legal counsel serves as a translator between the parties, ensuring that each side understands the other's priorities and the broader legal framework. Public government, with less experience in both Indigenous and private sector contexts, can add another layer of complexity, requiring even more translation to ensure all parties are on the same page.

How can the legal profession better support Indigenous communities in navigating the complexities of project ownership and development?

Overall, I would definitely say this area of Aboriginal and Indigenous law is a growth industry, and that’s a very positive thing. Lawyers sometimes get a bad reputation for the growth of our profession, but in this case, it’s a good news story. We’re seeing increased interest and more deals happening, not just in our group but across other firms as well. Many colleagues would agree that this area is expanding.

One of the key challenges in this growth is what I call "translation." This applies across all three sectors – public, industry, and Indigenous. Sometimes, very competent counsel may not have the specific experience needed for these types of deals. For example, you might have counsel for an Indigenous government who has excelled in rights-based litigation but now finds themselves handling a multi-billion-dollar deal without the full toolkit for tax implications or corporate negotiations.

The same goes for public government or industry. You could have an excellent deal lawyer on the industry side, but if they’ve never dealt with Indigenous governments, they may lack understanding of the cultural nuances, such as showing respect or understanding the unique needs of a particular Indigenous government. It’s about ensuring you have the right team with the right expertise – whether it’s a tax expert familiar with reserve land or an industry expert who understands the Indigenous perspective. That’s the key takeaway for me after years in this field: making sure all parties are properly equipped for these unique and complex deals.

What potential future developments do you foresee in Indigenous-owned projects, especially concerning inter-jurisdictional issues and environmental oversight?

You’ve clearly captured the essence of what we discuss in the book, particularly the complexities of inter-jurisdictional issues – not just federal, provincial, and territorial, but Indigenous as well. There’s still very little case law in this area, and those familiar with the field would agree that we're in the early stages of understanding crucial concepts like treaty interpretation, modern treaty interpretation, and the constitutional principle of the honour of the Crown. We’re really just scratching the surface of how these principles apply, especially in business contexts, such as Métis rights, where the case law is particularly sparse.

This presents a huge opportunity for growth. I’ve witnessed a steady rise in interest over the years. When I first studied this in the 1980s, there were only three people in my class. Back then, "Native People and the Law" was considered an esoteric subject. I fell in love with the field immediately, and now, of course, every law school offers a robust selection of Aboriginal and Indigenous law courses, which is fantastic.

From a business perspective, this growth is promising. Our book is about fostering both Canada’s economy and the Indigenous economy, which plays a vital role in reconciliation. But I’m also realistic. Disputes will continue, and that’s not necessarily a bad thing. A healthy governance system and economy often involve competing pressures, leading to constructive disputes. While some litigation might still seem frivolous, we're seeing a shift toward more sophisticated and nuanced legal battles that require further judicial guidance.

As a practitioner, this is incredibly exciting. It’s a sign that we’re moving in the right direction, with more meaningful discussions and opportunities to shape the future of Indigenous and Canadian law.