introduction

The scope of the IGE for Canada is defined by Canada’s “legal obligations” to Indigenous peoples. The meaning of this expression is addressed below. An important preliminary question, however, is whether Canada can unilaterally invoke the exception by asserting that its actions are necessary to fulfill these obligations. If it could, Canada would have significant flexibility to determine when and how to best accommodate its obligations. But if the application of the IGE depends on external, “objective” criteria, relying on the IGE is more problematic for Canada. At least in principle, Canada’s reliance on the IGE could be challenged by the United States or Mexico and, ultimately, become the subject of adjudication under CUSMA’s dispute settlement procedures. This prospect, in turn, could affect the willingness of Canada to rely on the IGE. Whether Canada can unilaterally invoke the IGE turns on how it is interpreted.

general approach to interpreting the ige

As a treaty provision, the IGE must be interpreted as mandated by the Vienna Convention on the Law of Treaties (VCLT) — in particular, Articles 31 and 32.Footnote ³³ The prime directive in Article 31(1) is that a treaty be interpreted “in good faith in accordance with the ordinary meaning given to the terms of the treaty in their context and in light of its object and purpose.” For the purposes of this directive, the context includes the preamble and any annexes, as well as certain other agreements and actions involving the state parties. Additionally, interpreters must consider “any relevant rules of international law applicable in the relations between the parties” under Article 31(3)(c).Footnote ³⁴ Under Article 32, an interpreter may also consider supplementary means of interpretation, such as the preparatory work related to the treaty.

The treaty context for the IGE warrants a few initial comments. The multiple Canadian reservations and exclusions regarding Indigenous peoples might be thought to reflect an intention that the treaty, including the IGE, should be interpreted to provide broad protection to measures related to Indigenous peoples, at least as far as Canada is concerned. But the IGE must be interpreted in the same manner for all parties, so it would not be appropriate to accord a distinctive, broader interpretation to the IGE solely for Canada.Footnote ³⁵ Indeed, the many specific reservations for Canadian measures to benefit Indigenous peoples might suggest that a broad interpretation of the IGE is inappropriate. Where the parties intended to protect measures benefiting Indigenous peoples, they did so expressly and did not intend to rely on a broad interpretation of the IGE.Footnote ³⁶ In sum, the presence of the Canadian reservations and exclusions does not seem to yield a clear interpretive direction, forcing the interpreter to closely consider the words and other relevant considerations, including CUSMA’s preamble.

CUSMA’s preamble contains a specific reference to Indigenous peoples: the parties “RECOGNIZE the importance of increased engagement by [I]ndigenous peoples in trade and investment.” The other eighteen statements in the preamble address a wide range of considerations but are dominated by statements related to increased trade and investment and economic cooperation. Cumulatively, the preamble may direct parties to interpret the treaty in a manner that promotes trade and investment, including the engagement of Indigenous peoples in trade and investment. The preamble’s role in informing the interpretation of the IGE would be limited to measures with this goal. Few Canadian measures related to Indigenous peoples, however, are likely to embody this goal. Canada will try to shelter measures under the IGE that are inconsistent with the trade and investment liberalization provisions in CUSMA. Thus, the preamble of CUSMA would not seem to provide much interpretive guidance, apart from discouraging a broad interpretation of the IGE to protect measures that impair trade or investment generally, except where those measures contribute to greater Indigenous engagement in trade and investment.

A more helpful source in the VCLT is the requirement to “take into account any relevant rules of international law applicable in the relations between the parties” in Article 31(3)(c). “Taking into account” does not mean that other rules of international law are part of the applicable law or that other international rules can displace the meaning of the treaty language being interpreted.Footnote ³⁷ This provision is intended to ensure a degree of coherence between the interpretation of treaty language and other relevant international legal rules. This coherence has several aspects. A treaty should not be interpreted to permit a breach of another international legal obligation unless the words clearly require it. More significantly, other international rules may help clarify the meaning of a treaty provision and so encourage consistency across international obligations.Footnote ³⁸

Consistent with Article 31(3)(c) of the VCLT, we consider the impact of relevant international legal rules applicable between Canada, the United States, and Mexico, focusing on the WTO Agreements. As will be seen, the IGE seems significantly inspired by language in Articles XX and XXI of the WTO’s General Agreement on Tariffs and Trade (GATT) that create general exceptions for measures related to public policy areas like health and national security, respectively.Footnote ³⁹ The interpretation of these provisions by WTO panels and the Appellate Body suggests how the IGE should be interpreted and, therefore, the circumstances in which Canada may invoke the IGE.

interpreting “deems necessary to fulfill its legal obligations to indigenous peoples”

Leaving aside momentarily the additional requirements of the IGE chapeau, the IGE exempts any action that Canada “deems necessary to fulfill its legal obligations to [I]ndigenous peoples” from treaty commitments. “[D]eems necessary to fulfill” could be interpreted numerous ways. For example, the expression might mean that Canada has an unreviewable discretion to determine whether the exception is available to shield its actions. Alternatively, it might mean that Canada’s reliance on the exception can be reviewed only to determine whether Canada invoked the IGE in good faith. Or, it might mean that Canada can only rely on the IGE where, objectively, Canada has a legal obligation to Indigenous peoples and the action taken is necessary to fulfill that obligation.

Offering a crude interpretation of the individual words, the Oxford English Dictionary defines the verb “deem” as “[t]o form the opinion, to be of the opinion; to judge, conclude, think, consider, hold.”Footnote ⁴⁰ This definition and others do not illuminate except to suggest that the word “deems” in the IGE affords some discretion to determine what is “necessary to fulfill its legal obligations to Indigenous peoples.”Footnote ⁴¹ As discussed below, “deem” has been interpreted in other international treaty contexts to confer decision-making discretion. The question then becomes what it means to determine that a measure is “necessary” to fulfill a legal obligation. “Necessary” typically means “indispensable, vital, essential, requisite,”Footnote ⁴² which would suggest that a Canadian measure must be the only way for Canada to fulfill a particular obligation to benefit from the IGE. The interpretation of “necessary” in the trade and investment treaty context, however, has been somewhat more flexible.

The word “necessary” appears in both Article XX and Article XXI of the GATT. Footnote ⁴³ As discussed below, the security exception in Article XXI provides the closest analogue to the operative part of the IGE. But we can usefully consider the meaning of “necessary” in Article XX, which has been the subject of much more analysis in WTO disputes. Following a chapeau like the IGE chapeau, Article XX provides, in part, that

WTO panels and the Appellate Body have held that “necessary” in this article is not always equivalent to indispensable. Degrees of necessity are arrayed on a continuum between “indispensable,” on the one end, and “contributing to,” on the other. In determining where “necessary” falls in a particular case, WTO cases have required parties to consider:

• • the relative importance of the interests or policies furthered by the challenged measure;

• • the contribution of the measure to the protection of those interests or the successful achievement of those policies; and

• • the degree to which the measure restricts international trade.Footnote ⁴⁴

According to the WTO’s Appellate Body, these three factors must be “weighed and balanced.”Footnote ⁴⁵ To do so, the Appellate Body has said that a measure becomes easier to justify as “necessary” where the interests or policies furthered by the challenged measure are more importantFootnote ⁴⁶ and the contribution of the measure to the protection of those interests or the successful achievement of those policies is greater.Footnote ⁴⁷ But the more restrictive of international trade the measure is, the more difficult it will be to justify it as being “necessary.”Footnote ⁴⁸ As part of this determination, the interpreter of Article XX of the GATT should consider the existence of “an alternative measure that would achieve the same end and that is less restrictive of trade.”Footnote ⁴⁹ In practice, once the responding state seeking to protect a measure under Article XX has made a prima facie case that the measure is “necessary,” the complainant must identify a WTO-consistent alternative measure that is less restrictive and that the responding party could have taken.Footnote ⁵⁰

Such a contextual approach is consistent with the interpretation of the expression “deems necessary” in other treaties. The expression “deems necessary” is found in many important international instruments. In the Charter of the United Nations (UN Charter), Article 40 empowers the United Nations Security Council, before making recommendations or deciding upon measures to address “any threat to the peace, breach of the peace or act of aggression,” to “call upon the parties concerned to comply with such provisional measures as it deems necessary or desirable.”Footnote ⁵¹ Article 51 confirms the Security Council’s power to take any action that it “deems necessary in order to maintain or restore international peace and security,” despite any measure taken by member countries in the exercise of their right to self-defence. Most states accept that these provisions afford the Security Council a broad discretion to decide what is necessary. The exercise of the Security Council’s discretion to decide what is necessary must be guided by the purposes of the UN Charter, subject to a requirement that “the impact [of the measures chosen] is not manifestly out of proportion to the aims pursued.”Footnote ⁵² Thus, consistent with the approach taken by the WTO’s Appellate Body, the Security Council does not have to decide that its measures are indispensable; it must decide that the impact of its measures is proportionate to their aims.

The meaning of “deems necessary” in the IGE may also be subject to a contextual interpretation. Whether a measure is necessary to fulfill Canada’s legal obligations to Indigenous peoples might not mean that the measure is the only measure available. Rather, the expression might refer to the importance of the obligation and the measure’s effectiveness in fulfilling it outweighing the measure’s impact on trade and investment. But the more important question is Canada’s latitude in deciding what it “deems necessary” to fulfill its legal obligations to Indigenous peoples. The answer to this question will determine whether and on what basis Canada’s reliance on the IGE could be challenged by the United States or Mexico and, ultimately, reviewed by a CUSMA dispute settlement panel. A similar interpretive challenge confronted a WTO panel established in 2017 to hear Ukraine’s complaint that Russia breached its WTO obligations by restricting the transit of Ukrainian goods through Russia to Kazakhstan.Footnote ⁵³ The approach adopted in that decision could be applied to interpret the IGE.

the approach to interpreting gatt article xxi in russia – transit

In Russia – Transit, Russia claimed that the panel lacked jurisdiction to hear Ukraine’s complaint because Russia could rely on the security exception in Article XXI(b)(iii) of the GATT. In relevant part, Article XXI provides as follows:

Russia argued that the words “any action which it considers necessary” rendered its actions “immune from scrutiny by a WTO dispute settlement panel” once it invoked the exception.Footnote ⁵⁵ The United States supported Russia’s position. The panel found, however, that it could review Russia’s reliance on the exception and proceeded to explain the nature of that review. First, the panel decided that the words “it considers necessary” did not qualify the situations spelled out in subparagraph (ii) — that is, whether the action was “taken in time of war or other emergency in international relations.” The panel had to determine on an objective basis whether an “emergency in international relations” existed and, if so, whether Russia’s actions were taken during that emergency. Ultimately, the panel was satisfied that relations between Ukraine and Russia did constitute an emergency in international relations and that Russia’s measures were taken “in time” with respect to that emergency.Footnote ⁵⁶

Second, the panel assessed whether paragraph (b) of Article XXI should be interpreted as permitting Russia to determine its “essential security interests” and when an action was “necessary” to protect them. The panel decided that the provision afforded Russia that discretion. In exercising its discretion, Russia had only to act in good faith, meaning, at minimum, not intending to circumvent its obligations.Footnote ⁵⁷ In the panel’s view, this good faith requirement also meant that Russia had to “articulate essential security interests said to arise from the emergency in international relations sufficiently enough to demonstrate their veracity” and that the “the measures at issue meet a minimum requirement of plausibility in relation to the proffered essential security interests.”Footnote ⁵⁸ In the end, the panel concluded that Russia had satisfied these requirements and could rely on the exception.Footnote ⁵⁹

Of course, the approach adopted in that case is not directly applicable to the interpretation of the IGE. Significantly, the language of Article XXI of the GATT differs from that of the IGE. As well, the panel’s conclusions in the Russia – Transit case relied on the travaux préparatoires related to the negotiation of the GATT in 1947. Obviously, those documents have no bearing on CUSMA’s interpretation.Footnote ⁶⁰ Nevertheless, given their similarity, the words “deems necessary” in the IGE might be interpreted in the same way as “considers necessary” in Article XXI of the GATT. Footnote ⁶¹ As such, the approach adopted by the panel in the Russia – Transit case presents one possible vantage point from which to approach the IGE.

applying the approach to interpreting gatt article xxi in russia – transit to the ige

If the Russia – Transit panel’s approach applied to the IGE, Canada could decide whether its actions were necessary to fulfill its legal obligations to Indigenous peoples, subject only to a requirement to act in good faith. That would mean that Canada: (1) could not invoke the IGE for a purpose other than fulfilling a legal obligation to Indigenous peoples and (2) would have to make out some plausible connection between the action taken and the obligation. To demonstrate a plausible connection, Canada would have to describe the obligation and explain how the measure fulfilled it. A CUSMA dispute settlement panel could review whether Canada satisfied the good faith and related plausible connection requirements if the United States or Mexico challenged its reliance on the IGE.

Not clear, however, is whether the Russia – Transit approach would mean that Canada could unilaterally determine the existence and characterization of the legal obligation compelling its action. The Russia – Transit panel’s conclusion that Russia could decide what its “essential security interests” required was influenced by the nature of the concept of “essential security interests,” which the panel characterized as follows:

By contrast, the IGE refers to “legal obligations,” which are more susceptible to objective assessment than “essential security interests.” Whether Canada has a legal obligation in the first place and what it requires might have to be determined on an objective basis. If so, Canada’s assessment in this regard could be reviewed in dispute settlement under CUSMA. A good faith assertion of what the obligation requires would not be enough.

In short, reliance on the IGE is not wholly within Canada’s discretion. At a minimum, that reliance is likely subject to an obligation to act in good faith, including a requirement that the measure not be a façade for some other purpose. To demonstrate good faith, Canada may have to plausibly connect its action to the fulfillment of a legal obligation. Canada might also have to establish the existence and nature of a “legal obligation to [I]ndigenous peoples” on an objective basis. The additional language of the IGE chapeau further qualifies the availability of the exception.

interpreting the ige chapeau

The IGE is limited by the words in its chapeau: “Provided that such measures are not used as a means of arbitrary or unjustified discrimination against persons of the other Parties or as a disguised restriction on trade in goods, services, and investment.” Trade treaty general exceptions frequently use similar language, which can be traced back to Article XX of the GATT. Footnote ⁶² Versions of the GATT Article XX chapeau’s wording appear in the general exception provisions of Canada’s model Foreign Investment Promotion and Protection Agreement and many bilateral investment treaties and trade treaties worldwide.Footnote ⁶³ The CPTPP’s exception for New Zealand measures that grant more favourable treatment to Māori contains identical language.Footnote ⁶⁴ Undoubtedly, the chapeau of Article XX of the GATT was the inspiration for the IGE’s language.

What is the effect of the IGE chapeau? It must be understood to limit recourse to the exception in some way. While we cannot fully address WTO decisions on the chapeau in Article XX of the GATT, some elements of the WTO approach help explain how the IGE chapeau might be interpreted.Footnote ⁶⁵ The WTO’s Appellate Body has consistently decided that the GATT chapeau was intended to prevent “abuse or misuse” of the Article XX exceptions. Those exceptions permit state actions to achieve enumerated public policy objectives, such as the protection of health, safety, and the environment, where they would otherwise be contrary to the GATT. Footnote ⁶⁶ According to the Appellate Body, this characterization requires the interpreter to first determine whether the exception is available based on one of the enumerated public policy categories before considering the chapeau’s application.Footnote ⁶⁷ In the context of the IGE, this approach would require the interpreter to decide that the action taken was a “measure deemed necessary [by Canada] to fulfill its legal obligations to [I]ndigenous peoples” before considering whether the IGE chapeau’s requirements are met.Footnote ⁶⁸

With respect to its effect, the Appellate Body has said that the GATT chapeau expresses the general principle of good faith.Footnote ⁶⁹ Following this approach, the IGE chapeau confirms, in a seemingly duplicative way, the interpretation suggested above, requiring Canada to act in good faith in relying on the IGE. With respect to the substantive requirement of the IGE, however, the focus is on whether Canada acted in good faith in asserting that its actions were taken to fulfill a legal obligation to Indigenous peoples. The IGE chapeau requires an enquiry into whether Canada acted in good faith in applying the measure.Footnote ⁷⁰ The IGE chapeau identifies two specific criteria that must both be met in that regard. The first is that a measure cannot be “used as a means of arbitrary or unjustified discrimination against persons of the other Parties.” To assess this criterion, one must first identify some discriminatory effect, meaning different and less favourable treatment of individual nationals or enterprises of another state party compared to similarly situated nationals or enterprises of the allegedly offending party or another state.Footnote ⁷¹ If the party seeking to rely on the exception has discriminated against persons of the United States or Mexico, the enquiry shifts to whether the discrimination is arbitrary or unjustified.

In interpreting the GATT chapeau, the WTO’s Appellate Body has held that a measure might breach the substantive non-discrimination obligations in the GATT but not be arbitrary or unjustified.Footnote ⁷² Assessing whether a measure is arbitrary or unjustified would seem to require considering whether any rationale justifies the measure’s discriminatory effect.Footnote ⁷³ Where no such rationale exists, the measure is arbitrary or unjustified.Footnote ⁷⁴ If a state invokes a rationale, the question becomes whether the rationale is sufficiently compelling to justify the discrimination.Footnote ⁷⁵ What kind of discrimination might violate the IGE chapeau’s requirements? Impermissible action might include discrimination connected to actions alleged to breach the two most important obligations in CUSMA’s investment chapter: the prohibition of expropriation without compensation and fair and equitable treatment.Footnote ⁷⁶ For example, if a foreign investor alleged that an expropriation of its property was discriminatory because a similarly situated domestic investor’s property was not expropriated, reliance on the IGE chapeau would depend on the absence of arbitrary and unjustifiable discrimination. Canada would have to demonstrate a public policy rationale and justify the discrimination. Canada’s position could be challenged by the other state parties, possibly in a formal dispute under the treaty where a panel would determine whether Canada’s measure was sufficiently justified. The IGE chapeau cannot plausibly be interpreted to allow Canada to unilaterally decide whether it violates the “arbitrary or unjustified discrimination” prohibition.

The second criterion in the IGE chapeau prohibits parties from using a measure “as a disguised restriction on trade in goods, services, and investment.”Footnote ⁷⁷ Few cases have considered the similar criterion in the chapeau of Article XX of the GATT. Lorand Bartels argues that the criterion should be interpreted as applying to measures “for which an ostensibly legitimate purpose is merely a ‘disguise’ for an improper purpose.”Footnote ⁷⁸ Rather than measures adopted for no legitimate purpose, which would either be arbitrary or in bad faith, Bartels argues that disguised restrictions are measures adopted for a mixture of legitimate and illegitimate purposes.Footnote ⁷⁹ He notes that adopting his approach would require a WTO panel to decide the relative significance of the legitimate and illegitimate purposes to determine whether the measure was a disguised restriction on trade.

In applying Bartels’ approach to the IGE, a measure would violate the second criterion of the IGE chapeau if it had an illegitimate purpose that restricted trade in goods, services, and investment in addition to the legitimate purpose of fulfilling a Canadian legal obligation to Indigenous peoples. As discussed, before the IGE chapeau became relevant, the interpreter would have already found that Canada had a legal obligation and acted in good faith in deciding that the measure was necessary to fulfill the obligation. The interpreter would have found that Canada had shown some plausible connection between the measure and the fulfillment of the obligation. Presumably, this would be considered a legitimate purpose. The measure would only be a “disguised restriction” if the measure had an illegitimate second purpose and it was more significant for the state than the legitimate purpose. In such a case, the legitimate purpose would be a disguise. But, in such a situation, an interpreter might plausibly have found that Canada did not act in good faith in the first place.

interpreting the ige chapeau: an example

To illustrate the approach described above and the challenges it raises, consider the following example. Suppose that a Canadian province enacted a measure to fulfill a legal obligation recognizing an Indigenous group’s title to territory. The measure excludes anyone but that group from managing commercial activity in the territory. Assume that the provincial measure was also intended to benefit a Canadian business with which the group had partnered to develop eco-tourism on the land. Assume further that this benefit disadvantaged an American investor.Footnote ⁸⁰ Imagine, for example, that the American investor had invested substantial time and money in developing a proposal for an eco-tourism business of its own and was seeking provincial environmental approvals, all of which would be made moot by the provincial measure. Finally, assume the Canadian courts had recognized Indigenous title over the territory, meaning the provincial government had a legal obligation, and the province acted in good faith in deciding that its measure was necessary to fulfill it.

While a discriminatory effect flows from the measure, one might say that the discrimination cannot be described as arbitrary or unjustified because the province had a legitimate and important purpose: recognizing Indigenous title. This conclusion, however, conflates the first requirement of the IGE chapeau with the IGE’s basic requirement that Canada act in good faith in undertaking the measure to fulfill a legal obligation to Indigenous people rather than for some other purpose. If this conclusion is correct, satisfying the “deems necessary to fulfill a legal obligation to [I]ndigenous peoples” requirement would automatically satisfy the first requirement of the IGE chapeau. Accordingly, some further enquiry would be needed in regard to whether the discrimination in applying the measure (rather than the measure itself) was arbitrary or unjustified. That enquiry could include asking whether the discrimination was an unavoidable consequence of the measure or could have been reasonably avoided or whether the province had taken steps to avoid or mitigate the discriminatory effect, such as by offering compensation to the foreign investor. The facts of this imagined scenario do not address these considerations. However, a conclusion that the measure does not constitute arbitrary or unjustified discrimination is supported by the fact that the measure does not require the discriminatory effect. Rather, the Indigenous group’s sovereign decision to partner with the Canadian business to the exclusion of the US investor created that effect.

Regarding the second requirement of the IGE chapeau in this scenario, two purposes drive the measure — one that is legitimate (the recognition of Aboriginal title) and the other that is arguably illegitimate (extinguishing the US investor’s rights in favour of the Canadian business’ interest).Footnote ⁸¹ Under Bartels’ approach, if the United States challenged the measure and the matter went to a panel, the panel would have to decide whether the illegitimate purpose was sufficiently important in motivating the measure that it would be considered a disguised restriction on trade in goods, services, and investment. If so, the measure would be prohibited. Divining and weighing such intentions behind a government action will be a daunting and uncertain task.Footnote ⁸² But, more importantly, recall that this requirement of the IGE chapeau should only arise after a panel has determined that Canada has acted in good faith to fulfill a legitimate purpose: a legal obligation to Indigenous peoples. Accordingly, the circumstances in which a measure will have a sufficiently important illegitimate purpose to render it a disguised restriction on trade in goods, services, and investment are likely to be rare.

interpreting “this agreement does not preclude”

The simplest interpretive issue with respect to the IGE is the meaning of the phrase “this Agreement does not preclude” Canada from adopting or maintaining a measure that meets the requirements of the IGE, as discussed earlier. Similar wording in other exception provisions has been interpreted to provide a defence to a state action that would otherwise be a breach of the treaty if the exception’s substantive requirements have been met. In some cases, the wording is treated as a permission to engage in the conduct permitted by the exception, placing the conduct outside the scope of the treaty’s prohibitions.Footnote ⁸³ Important implications flow from whether the provision is a defence or a permission. For example, an exception only becomes relevant after a breach of the treaty has been found. A permission’s application should be considered as a preliminary question of the tribunal’s jurisdiction to hear a claim that a substantive treaty obligation has been breached.Footnote ⁸⁴ A discussion of the nature of the IGE in this regard is beyond the scope of this article. In either case, however, the IGE would protect a Canadian government measure that meets the requirements from challenge under the treaty.

summary and preliminary conclusions regarding the interpretation of the ige

Whether Canada can rely on the IGE with respect to a particular measure depends on how the exception is interpreted. Based on the foregoing analysis, the IGE will not allow Canada to unilaterally determine what actions are necessary to fulfill its legal obligations to Indigenous peoples. The United States and Mexico could challenge Canada’s reliance on the IGE, and, ultimately, whether reliance on the IGE is permitted in a particular case could be determined by a state-to-state dispute settlement panel under the treaty. Given the prospects for such a review, Canada would have to determine whether the requirements suggested above are met in assessing whether a measure would be protected by the IGE.

Exactly how the IGE should be interpreted, however, is not entirely clear. By protecting any “measure [Canada] deems necessary to fulfill its legal obligations to [I]ndigenous peoples,” the IGE does accord Canada significant discretion to decide what its legal obligations are and what actions are necessary to fulfill them. But the Russia – Transit case, which dealt with a similar broad grant of discretion in Article XXI of the GATT, suggests that such discretion is not unlimited. The approach adopted in Russia – Transit would require Canada to act in good faith to rely on the IGE, meaning that Canada’s measure could not be adopted or maintained for a purpose other than the fulfillment of a legal obligation to Indigenous peoples. Showing good faith would require Canada to describe some plausible connection between its measure and the fulfillment of a legal obligation, meaning that Canada would have to describe the obligation and explain how its measure fulfilled it. The existence and nature of the “legal obligation to [I]ndigenous peoples,” however, might have to be established on an objective basis. In other words, Canada ultimately might have to convince a dispute settlement panel of the existence and nature of the legal obligation, rather than simply show the panel that it was acting in good faith in identifying the obligation and characterizing its effects.

The existence of a good faith requirement is confirmed by the IGE chapeau, but this provision imposes additional requirements. It limits the availability of the IGE in specific ways by requiring that, to be protected by the exception, a Canadian measure cannot constitute “arbitrary or unjustified discrimination” or be a “disguised restriction” on trade in goods, services, and investment. The first condition would seem to require Canada to provide a rationale that justifies any discriminatory effect of its measure. Applying Bartels’ approach, as described above, the second condition would become relevant if Canada had demonstrated some illegitimate purpose for its action that restricted trade in goods, services, and investment in addition to the legitimate purpose of fulfilling a legal obligation to Indigenous peoples. Canada would then have to show that the illegitimate purpose was not sufficiently significant compared to the legitimate purpose of fulfilling a legal obligation. If not, the measure could be considered a disguised restriction on trade in goods, services, and investment.

While this suggested approach might seem disconcertingly abstract and complex, it is consistent with the language of the IGE. Even if the analysis above is not fully adopted, the main conclusion that Canada cannot unilaterally decide what the IGE requires is hard to resist. The United States and Mexico could challenge Canada’s reliance on the IGE, possibly leading to a decision by a dispute settlement panel established under the agreement. Canada would have to consider that possibility in taking any action that relied on the exception. Such an assessment might limit the circumstances in which Canada would act in reliance on the IGE, encouraging a “chilling effect.”

The nature of these concerns is set out in more detail in the following parts. Various factors, however, mitigate the risks associated with a challenge to Canada’s reliance on the IGE in practice. Before turning to these concerns and mitigating factors, however, we discuss the obligations that Canada owes to Indigenous peoples because these define the IGE’s substantive scope.

introduction

Regardless of the standard for invoking the IGE, its scope is defined by Canada’s “legal obligations to Indigenous peoples.” CUSMA provides that Canadian obligations include, but are not limited to, those rights that are recognized and affirmed by section 35 of the Constitution Act, 1982 and those rights contained in self-government agreements between Canadian governments and Indigenous peoples.Footnote ⁸⁵ As explained below, determining the existence, nature, and content of these specific obligations is a complex and evolving process. Indigenous peoples in Canada have been engaged in a continuous struggle to assert rights and have them recognized and affirmed in Canadian courts and respected by Canadian governments. At present, courts — particularly, the Supreme Court of Canada — play a significant role in defining constitutionally protected rights and creating rules around rights recognition in that context.

The IGE expressly states that it is not limited to constitutionally protected rights. Other obligations almost certainly include Canada’s obligations under other international rules, including international treaties to which Canada is a party as well as customary international law.Footnote ⁸⁶ Canada’s international legal obligations in relation to Indigenous peoples extend across a wide range of subject areas from human rights to cultural property and traditional knowledge. If “legal obligations” in the IGE embrace general Canadian international obligations, such as basic human rights obligations, which obviously extend to Indigenous peoples, the range of legal obligations enabling recourse to the IGE could be extremely broad.Footnote ⁸⁷ Domestic Canadian statutory obligations to Indigenous peoples, such as those under the Indian Act,Footnote ⁸⁸ could also be included as well as obligations based in Indigenous law.Footnote ⁸⁹

In the following subparts, we sketch out some of Canada’s constitutional obligations that are expressly covered by the IGE. This discussion helps explore the content of the exception and illuminate some of the challenges and concerns with its application.

context and history

Canada owes obligations to a diversity of Indigenous nations and peoples. Any descriptions and identifications of these nations and peoples, other than those generated by Indigenous peoples themselves, are inevitably imprecise and reflect colonial thinking.Footnote ⁹⁰ We offer the information below simply to afford a sense of the breadth of Indigenous groups to whom the government is obligated. According to recent government figures, approximately 1.67 million people in Canada identify as “Aboriginal,” a broad term that can refer to “First Nations,” Inuit, or Métis people and peoples.Footnote ⁹¹ “First Nations” refers to “Aboriginal” people who are neither Inuit nor Métis, and, within this first category alone, the government estimates more than 630 groups speaking fifty different languages.Footnote ⁹² As noted earlier, the term “Aboriginal” is used in the Constitution Act, 1982, and the federal government often uses this term for that reason; “Indigenous,” however, is the more commonly used term domestically and internationally.Footnote ⁹³

The specific obligations owed to diverse Indigenous collectives are complicated and evolving, but largely stem from colonialism and assumed Crown sovereignty. The 1763 Royal Proclamation placed the CrownFootnote ⁹⁴ between settlers and Indigenous peoples and required Indigenous peoples to “cede” land directly to the Crown rather than to settlers. The Royal Proclamation also asserted that the transfer of land would be predicated on mutually negotiated treaties and that relations between settlers and Indigenous peoples would be premised on respect for the latter’s internal sovereignty.Footnote ⁹⁵ Many Indigenous nations did not perceive the treaty process as involving the “surrender” of land; rather, they continue to view treaties as agreements intended to guide mutually beneficial and respectful relationships.Footnote ⁹⁶ The Crown’s one-sided view of treaties as land cession agreements with minimal Indigenous rights has often marred treaty relationships and implementation.Footnote ⁹⁷ In some areas of Canada, the Crown ushered in settlement and development without first negotiating treaties at all.Footnote ⁹⁸ In other areas, sparse treaties were made under circumstances of privation. Julie Jai, for example, speaks to post-Confederation treaties that “allegedly surrendered land [and that] were signed during this … period when Indigenous populations had been decimated by European diseases, wars, loss of wildlife which they relied upon, and settler pressures for the best agricultural land.”Footnote ⁹⁹ Colonial governments became increasingly disrespectful and expedient in their quest for land, treating Indigenous peoples as far less than equal partners in the treaty relationship.Footnote ¹⁰⁰ Settlement led not only to loss of territory but also to disease, death, and the imposition of external control within Indigenous nations.Footnote ¹⁰¹ Insidious racism informed and compounded the effects of colonial policy.Footnote ¹⁰²

In this context of increasing antagonism and racism towards Indigenous peoples, the legal force of treaties was often ignored, and the Crown disregarded their terms. As well, Indigenous rights could be and were nullified by legislative enactment under Canada’s system of parliamentary supremacy. The Constitution Act, 1867, which united British colonies into the Dominion of Canada, simultaneously excluded Indigenous peoples from shared political power and made them and their lands a subject of federal legislative authority.Footnote ¹⁰³ That power has been primarily articulated in the Indian Act, a section of which maintains the obligation of surrendering Indigenous land to the Crown.Footnote ¹⁰⁴ The Act purports to define status and identity in ways that do not necessarily coincide with the self-definition of all Indigenous peoples. The Act also authorized the indescribably destructive residential school system, the societal effects of which persist even after the closure of the state- and church-run institutions.Footnote ¹⁰⁵

The foregoing is a non-exhaustive history and list of colonial harms. This description points to why and how the Crown is now compelled to act remedially and to prioritize commitments to Indigenous peoples. And it helps to explain the risk of subjecting those remedial and evolving commitments to adjudication by a trade panel. Some of Canada’s commitments to Indigenous peoples were constitutionalized in 1982 as rights. While constitutional recognition was significant, the intent of Indigenous representatives was always to negotiate the scope of Aboriginal rights protection with Canadian governments.Footnote ¹⁰⁶ Negotiations foundered, and, ultimately, the Canadian courts have defined many Aboriginal and treaty rights. The courts have inevitably engaged in this task piecemeal, dealing with cases as they arrive before them, while often urging government and Indigenous parties to negotiate and determine rights in political fora.Footnote ¹⁰⁷ Cases incrementally change the scope of rights as do negotiations around modern land claim agreements.

indigenous rights as defined by the canadian courts

Thus far, courts have interpreted Aboriginal rights under section 35(1) of the Constitution Act, 1982 as protecting a fairly narrow range of activities said to be “integral to [an Indigenous group’s] distinctive culture.”Footnote ¹⁰⁸ The Supreme Court of Canada’s Van der Peet test for Aboriginal rights recognition is notoriously difficult for Indigenous parties, given the Court’s evidentiary and other requirements.Footnote ¹⁰⁹ Van der Peet requires rights claimants to demonstrate that a claimed right “be an element of a practice, custom or tradition integral to the distinctive culture of the aboriginal group claiming the right.”Footnote ¹¹⁰ The claimed practice must be of central significance to that group; former Chief Justice Antonio Lamer explained that, without that practice, the group would be significantly altered.Footnote ¹¹¹ The practice in issue must have continuity with pre-European contact practice, placing a heavy evidentiary burden on the claimant. Many have vociferously criticized the test and its burdens.Footnote ¹¹² In those cases where rights claimants have succeeded, judges have generally recognized narrow, site-specific fishing, hunting, trapping, and other cultivation rights as Aboriginal rights;Footnote ¹¹³ commercial rights relating to any of these activities have been even more narrowly construed.Footnote ¹¹⁴

Treaty rights vary depending on the content of the underlying agreement. The Supreme Court of Canada has enumerated a list of distinctive treaty interpretation principles guiding the review of historic treaties. Speaking to a post-Confederation treaty in R. v Badger, Justice Peter Cory pointed to the solemn and sacred nature of treaty promises. The Crown must act honourably and refrain from “sharp dealings.” Ambiguous language is resolved in favour of the Indigenous party and limitations on Indigenous signatories’ rights are narrowly interpreted.Footnote ¹¹⁵ Numerous other cases speak to this “large and liberal” interpretive approach.Footnote ¹¹⁶ Cases involving historic treaties have interpreted these instruments as guaranteeing fishing, hunting, trapping, and other resource cultivation rights, albeit narrow ones.Footnote ¹¹⁷

Modern treatiesFootnote ¹¹⁸ and land claim agreements contain a broader and more specific range of rights and obligations. These treaties and agreements purport to involve the surrender of larger title claims in exchange for defined territory and specific rights. Newer agreements often include some form of power sharing between Indigenous and territorial or provincial governments, at least in specified subject areas.Footnote ¹¹⁹ Pursuant to the 1997 Little Salmon/Carmacks First Nation Final Agreement,Footnote ¹²⁰ for example, Indigenous signatories

The Supreme Court of Canada has adopted a different interpretive posture around these newer, lengthier, and more detailed agreements, preferring to defer to the language of the document but still holding the Crown to expectations of honourable conduct, discussed in more detail below.Footnote ¹²²

Title is a specific genre of “Aboriginal” right, recognized only once by the Supreme Court.Footnote ¹²³ In Tsilhqot’in Nation v British Columbia, the Court explained that title protects a broad scope of rights within it, including possession, land use management, and the right to profit from the land.Footnote ¹²⁴ If title is proven — typically after an onerous legal proceeding — the Crown might have to reassess or cancel earlier decisions if those decisions would infringe on title rights and cannot be justified.Footnote ¹²⁵ Brad Morse describes the unceded territory in Canada where resource companies operating on Crown leases or licenses could be affected by title claims as including

Regardless of the type of constitutional right involved, however, Aboriginal law doctrine allows governments to justify infringements. The Supreme Court has stated that governments may justifiably infringe any rights, including title, for such purposes as resource conservation, agriculture, hydro power generation, and settlement.Footnote ¹²⁷ Justifiable infringement will turn, in part, on whether the government upholds Indigenous peoples’ priority access to resources “after valid conservation measures have been implemented.”Footnote ¹²⁸

The foregoing discussion has sketched out just some of the kinds of constitutional rights and some corresponding obligations that are recognized in Canadian case law: inherent Aboriginal rights, treaty rights, and title. But this is an incomplete statement of obligations. For instance, the Crown owes Indigenous parties a fiduciary duty when it “assumes discretionary control over specific [Indigenous] interests.”Footnote ¹²⁹ That duty would apply when an Indigenous group transfers land to the Crown.Footnote ¹³⁰ Fiduciary and other duties find their root in the Crown’s broader obligation to act “honourably” in all of its dealings with Indigenous peoples as a consequence of its unilateral assertion of sovereignty.Footnote ¹³¹ The overarching principle of the “Honour of the Crown” takes different shapes in different contexts, animating the particular interpretation and discharge of Aboriginal and treaty rights, as discussed, and the duty of consultation.Footnote ¹³²

The duty of consultation warrants further elaboration. The duty requires the Crown to consult with affected Indigenous groups when it contemplates actions that could adversely affect asserted or proven rights and interests, including treaty rights and title.Footnote ¹³³ The Crown’s specific responsibilities vary according to the nature and strength of the Indigenous right asserted.Footnote ¹³⁴ The Supreme Court of Canada has located the duty on a spectrum; contemplated conduct with fewer, or less intense, impacts on rights could require mere notice to the affected group.Footnote ¹³⁵ In Tsilhqot’in, the Court clarified that consultation in the context of established title — the “biggest” right under section 35 — could require the consent of the affected Indigenous group before action is taken on the territory.Footnote ¹³⁶ In Rio Tinto Alcan v Carrier Sekani Tribal Council,Footnote ¹³⁷ the Supreme Court clarified that actual or contemplated Crown action sufficient to trigger consultation includes “strategic, higher level decisions” (or, at paragraph 47, “structural changes to the resource’s management”) such as

The Court explained that a contractual shift in management, for example, might transfer decision-making power to a third party, diminishing the Crown’s capacity to ensure resource development in a way that respects section 35 rights.Footnote ¹³⁹ Carrier Sekani also underlined the need for a “causal” relationship between the Crown’s conduct and the adverse effect on the Indigenous right in question — the connection cannot be “speculative.”Footnote ¹⁴⁰

Many Indigenous nations and groups have expressed intense frustration with consultation doctrine. The doctrine is viewed as being common law oriented, one-sided, and tilted towards the project’s inevitable approval.Footnote ¹⁴¹ The Crown, many say, treats consultation as a pro forma obligation that inevitably leads to project approval. And, while touted as a dialogue, consultation often disregards Indigenous laws and decision-making processes.Footnote ¹⁴²

the impact of the united nations declaration on the rights of indigenous peoples ( undrip )

Perceived failings in section 35 doctrine, including consultation, and the Crown’s approach to its relational duties, have led many to call for the full domestic implementation of the UNDRIP. Footnote ¹⁴³ The UNDRIP underlines Indigenous peoples’ right to self-determination, tying that right to territorial sovereignty and explicitly linking these concepts to participatory decision-making.Footnote ¹⁴⁴

Numerous UNDRIP articles speak to consultative processes, using language that suggests a process that is more inclusive of Indigenous law and autonomy, including, for example,

Debate surrounds the meaning of many UNDRIP provisions, but the UNDRIP certainly offers stronger substantive and participatory rights for Indigenous peoples than what Canadian governments and courts currently recognize. The UNDRIP’s stronger guarantees would likely affect projects implicating land and resource use.Footnote ¹⁴⁶ In the narrow frame of the current discussion, we offer some thoughts on the UNDRIP’s legal effects in Canada since they would affect “obligations” for the purposes of the IGE.

Parliament has recently reintroduced legislation regarding the UNDRIP at the federal level. Clause 4 of the bill describes the legislation’s purpose as “affirm[ing] the Declaration as a universal human rights instrument with application in Canadian law; and provid[ing] a framework for the Government of Canada’s implementation of the Declaration.”Footnote ¹⁴⁷ British Columbia has made somewhat firmer progress, recently enacting the Declaration on the Rights of Indigenous Peoples Act (DRIPA).Footnote ¹⁴⁸ The DRIPA raises some important questions in terms of how it could interact with the IGE. The precise legal effect of the new provincial law is an open question.Footnote ¹⁴⁹ The new legislation does not clearly state that it “implements” the UNDRIP: the title does not refer to implementation, although a listed purpose is to “contribute” to the UNDRIP’s implementation.Footnote ¹⁵⁰ Consistent with international bodies’ requirements,Footnote ¹⁵¹ the DRIPA requires an action plan to implement the UNDRIP and requires a government to report on its progress. But that language again underscores that the UNDRIP is not immediately and fully incorporated into provincial law.Footnote ¹⁵² The DRIPA “affirm[s] the application of [the UNDRIP] to the laws of British Columbia” and requires that the government align provincial laws with UNDRIP, in consultation with Indigenous peoples.Footnote ¹⁵³ This last requirement seems consistent with Article 38 of the UNDRIP, which requires “States in consultation and cooperation with [I]ndigenous peoples, [to] take the appropriate measures, including legislative measures, to achieve the ends of this Declaration.”

We raise the question of the DRIPA’s effect only to determine whether the Act creates binding obligations on the BC government to comply with the declaration. If it does, Kerry Wilkins might describe the result as statutory rights, rather than constitutional ones.Footnote ¹⁵⁴ Statutory rights, though more ephemeral than constitutional rights, nonetheless denote “legal” obligations. CUSMA’s text explains that Canada’s legal obligations “include,” but are not limited to, respecting rights under section 35. But what precisely does the DRIPA oblige? If the Act does not create binding and enforceable obligations against the government but, rather, speaks to progressive realization, would measures taken pursuant to the statute be protected under the IGE?

Imagine amendments to British Columbia’s project approval legislation that required approval only with “free, prior and informed consent” of affected groups, as required by Article 32(2) of the UNDRIP. Assume, at a minimum, that such consent requires Indigenous participation beyond current Canadian legal consultative requirements. That enhanced collaboration might involve longer time frames for Indigenous groups to reflect on proposals pursuant to their own laws and procedures. If the United States or Mexico were to claim that the imposition of these new time frames breaches Canada’s CUSMA obligation to give fair and equitable treatment to their investors, could Canada then rely on the IGE to protect the provincial law? Would measures like those taken under the BC legislation to contribute to the progressive realization of the UNDRIP be shielded by the IGE? The answer is unclear.Footnote ¹⁵⁵

canada’s evolving legal obligations to indigenous peoples

This discussion of the UNDRIP illustrates only one way in which Canadian legal obligations to Indigenous peoples have evolved. This evolution raises other distinct issues in the context of the IGE. Accepted principles of treaty interpretation require that the language of most commitments and obligations in trade agreements be interpreted as of the moment the treaty is concluded.Footnote ¹⁵⁶ Under this view, Canadian legal obligations would be fixed at the moment CUSMA came into force on 1 July 2020. That position is untenable in the context of Canada’s evolving and changing relationship with Indigenous peoples. The International Court of Justice and the WTO’s Appellate Body have recognized that some international obligations are evolutionary and that the parties must have intended that they should be interpreted in light of the circumstances in existence at the time an issue regarding their application arises.Footnote ¹⁵⁷ An evolutionary approach has been applied, for example, in determining the meaning of the exception from the general obligations of the GATT for measures designed to protect “exhaustible natural resources” set out in Article XX of the GATT. Footnote ¹⁵⁸

Such an approach should not be necessary to accommodate the slow and often grudging affirmation of Aboriginal rights by Canadian courts and governments. Because such affirmed rights are not “new” rights, the issue of evolutionary interpretation arguably does not arise. But what about treaties between Canada and Indigenous peoples that are negotiated after 1 July 2020 and that change Canada’s current obligations? This form of evolution should be accommodated for the purposes of the IGE. If Canada negotiates a new treaty with an Indigenous group, the resulting obligations are arguably not new but, rather, derivative of underlying pre-existing Aboriginal and treaty rights and the inherent sovereignty of the Indigenous group. Predicting IGE analysis becomes murkier when one contemplates obligations to Indigenous peoples that are clearly novel. With CUSMA in force, whether Canada would expand its legal obligations to Indigenous peoples by undertaking any new international obligations is unclear. It is difficult to say whether Canada, the United States, and Mexico intended that Canada’s obligations for the purposes of the IGE would change if Canada ratified a new convention subjecting Canada to new levels of international commitment.

The discussion of British Columbia’s new DRIPA raises a similar, difficult issue. Did Canada, the United States, and Mexico intend “legal obligations” for the purposes of the IGE to include ordinary domestic law obligations, as opposed to constitutionally protected obligations, undertaken by a Canadian government? The DRIPA came into effect before CUSMA did. But would clearer and more enforceable Canadian legislative obligations be “legal obligations to Indigenous peoples”? The parties did not likely intend that Canada could protect, in effect, its actions under the IGE through the simple expedient of enacting legislation. Would it matter that the legislation was intended to give effect to an obligation to Indigenous peoples under the UNDRIP? Certainly, the words “legal obligations” are broad enough to support this analysis. The fact that constitutional obligations are separately identified as a subset of legal obligations suggests that a broader meaning must have been intended. But how broad is unclear.

summary and preliminary conclusions regarding canadian legal obligations to indigenous peoples

Canadian governments must respect and uphold constitutionally protected Aboriginal and treaty rights and numerous other obligations stemming from the Crown’s duty of honourable conduct.

Some of the interpretive issues around the evolving content of obligations can be addressed under the conventional rules of treaty interpretation, although the IGE presents these issues in a distinctive context. More importantly, the nature and content of Canada’s legal obligations to Indigenous peoples raise extremely complex issues of domestic and Indigenous law and practice that are not addressed in any way by the rules of treaty interpretation. Those issues are far outside the ordinary competence of international law specialists. Addressing them effectively and sensitively requires a deep understanding of a fraught historical context and the Crown’s unique responsibilities. A non-expert tribunal struck pursuant to CUSMA would be completely ill-suited to address and determine the content of Canada’s “legal obligations to Indigenous peoples.” The concerns in this regard are set out in more detail in the next part.