Specific claim negotiation costs funding guidelines

On this page

• 1. Introduction
• 2. Objective
• 3. Eligible expenditures for negotiation and ratification costs as a component of a final settlement
• 4. Eligible Funding recipients
• 5. Eligible expenditures and maximum amount for negotiation costs loan funding
• 6. Years of loan funding
• 7. Caution concerning the interaction between loan funding received and the costs component of a final settlement
• 8. Determination of the amount of funding and stacking
• 9. Specific claim negotiation loan funding request process
• 10. Reporting requirements

1. Introduction

Specific claims deal with past wrongs against First Nations. The Government of Canada works with First Nations under the Specific Claims Policy to resolve outstanding specific claims through negotiated settlements. The Government of Canada's primary objective is to achieve fair and final settlements of outstanding lawful obligations to First Nations through a process which is fair, respectful, appropriately transparent and where settlement is achieved within a reasonable period of time.

Although court or the Specific Claims Tribunal are options for a First Nation, negotiation remains the preferred means of resolution by the federal government. The Specific Claims Policy establishes the principles and process for resolving specific claims through negotiation.

The objective of negotiation loans is to assist the First Nation with reasonable costs of the negotiation and settlement process once a validated claim has been formally accepted for negotiation and when a negotiation process has been agreed upon.

2. Objective

These guidelines apply to claims which Canada has accepted for negotiation in the specific claims process, as per the Specific Claims Policy.

The guidelines are intended to bring transparency, consistency and clarity to both the calculation of the costs component in a final settlement pursuant to criterion 7 of the compensation criteria and the eligibility requirements and process to access loan funding during negotiations.

3. Eligible expenditures for negotiation and ratification costs as a component of a final settlement

Criterion 7 of the compensation criteria set out in the Specific Claims Policy and Process Guide provides that a reasonable portion of the costs of negotiation may be added to the final financial settlement. The reasonable portion of the costs of negotiation, in most circumstances, should not exceed the total value of the settlement.

The costs of negotiation include the cost of participating in the negotiation and settlement process. These costs can vary depending on the claim and may include the following:

• legal fees such as:
  • reviewing the terms of acceptance of a claim for negotiation
  • providing advice during the negotiation process
  • drafting and reviewing a settlement agreement
  • preparing for and attending community meetings and meetings with chief and council
  • providing a solicitor's certificate to Canada
• fees for financial advisors, experts, negotiators
• studies and reports
• travel costs for legal counsel, chief and council and First Nations negotiators or members to attend negotiations and community meetings
• honoraria for chief and council if they are not salaried
• community meeting costs (for example, interpreter, mail-outs and hall rental)
• ratification costs (for example, ratification officer and hall rental)

In cases where the claim must be ratified other than by Band Council Resolution, an amount not exceeding $37,500 or $25 per voting member (whichever amount is higher) may be included to cover the cost of ratification-related activities. The amount will be lower if the vote is conducted by Canada.

Typically, when a First Nation has received negotiation loan funding, the amounts received will be considered the costs of negotiation. This is not guaranteed in all circumstances, and particularly not when the negotiation loan funding received exceeds the value of the settlement. The First Nations which receive negotiation loan funding should consider the caution in section 7 of these guidelines.

Where a First Nation does not seek loan funding for its negotiation costs, Canada will include in its settlement offer an amount for reasonable negotiation costs.

4. Eligible funding recipients

Eligible funding recipients subject to these guidelines are First Nations who are bands pursuant to the Indian Act and any Indigenous group whose claim has been formally accepted for negotiation by Canada. This may include First Nations who are no longer Indian Act bands following a self-government agreement, but who were bands at the time a claim arose.

5. Eligible expenditures and maximum amount for negotiation costs loan funding

There are 4 categories of costs for which negotiation costs loan funding is available:

1. preliminary negotiation costs
2. basic funding
3. studies and reports
4. ratification costs

Annual funding proposals for basic funding, studies and reports, and ratification costs must align with the activities and objectives outlined in a corresponding annual negotiations work plan that is jointly developed and endorsed by the negotiation parties. Canada's negotiation team is not involved in the administration or assessment of funding proposals but may be asked to confirm that funding proposals received from a First Nation align with the activities and objectives of the jointly developed and endorsed work plan.

Variations from the maximum amounts outlined in these guidelines can be considered on a case-by-case basis, subject to the submission of:

• an extraordinary work plan proposal approved by the Senior Director of Negotiations, Specific Claims Branch
• a funding decision approved by the Director of the Negotiation Support Directorate

Variations could include an increase in the amount of basic funding, an increase in the amount of legal funding, or an increase in the amount for an independent study or report.

Loan funding is available to support costs associated with the negotiation of claims. There are other sources of funding available to support First Nations in other phases of the specific claims resolution process, such as research funding to support the development of claims and Tribunal funding to support First Nations engaged in litigation before the Specific Claims Tribunal.

Eligibility and the application process for the Specific Claims Tribunal can be found at Funding for First Nations with claims at the Specific Claims Tribunal of Canada.

For any questions on the eligibility and application process for these funding programs, please contact  dsnprp-nsdscp@rcaanc-cirnac.gc.ca.

6. Years of loan funding

Negotiation loan funding will be provided for up to 6 years. Additional negotiation loan funding may be provided if the parties are able to agree on a plan with activities and expected timelines to settlement.

7. Caution concerning the interaction between loan funding received and the costs component of a final settlement

Compensation provided in a settlement may include an additional amount for reasonable negotiating costs pursuant to criterion 7 of the specific claims compensation criteria. In most circumstances, the negotiation costs amount in the settlement will include the amount of the negotiation loans. However, the reasonable portion of the costs of negotiation should not exceed the total value of the compensation, except in extraordinary circumstances. Therefore, First Nations with low value claims should be cautious about the total size of negotiation loans incurred.

Historically, loan funding was only provided for higher value claims to ensure substantial negotiation loans were not incurred on smaller value claims. However, at the request of First Nations, loan funding is now available for all specific claims accepted for negotiation. As Canada's loan funding officers do not know the potential compensation of the claim, and Canada's negotiators do not know the amount of loan funding, the First Nation must be responsible for ensuring that negotiation loans are reasonable and less than the compensation amount.

Only in exceptional circumstances will smaller value claims see costs added to settlement compensation which exceed the total value of the settlement.

8. Determination of the amount of funding and stacking

Annual amount of loan funding to assist with the negotiation costs of a specific claim will be determined based on the following:

• availability of loan funding
• activities and deliverables set out and described in a jointly approved annual work plan and related amendments, where applicable
• First Nation estimated reasonable costs included in their annual budget and related amendments, where applicable
• maximum amount per cost category outlined in section 5
• application of benchmark and rates (Appendix 2 – Specific claim negotiation support benchmark and rates)
• review of First Nation's previous years of activity and expenditures reports, where applicable, to monitor progress and identify unexpended funding
• review and consideration of other sources of funding for the negotiation of the claim (such as the Government of Canada, provincial, territorial, and municipal governments)

Travel expenses are to be claimed at actual cost and may not exceed Treasury Board of Canada Secretariat's guidelines as specified in the Travel Directive in effect at the time of travel. Expenses which exceed the rates set out in the directive are not eligible for funding.

The annual amount will reflect a First Nation's participation in negotiations and the level of activity required to settle the claim. In-person meetings will usually be 3 to 6 per year for claims in active negotiations. Additional meetings by conference call are permitted.

First Nations are required to declare any and all sources of funding for the negotiation of the claim that are expected to be received or that are received, including all funding from the Government of Canada and from provincial, territorial and municipal governments. Annual financial reporting must show all sources of funding received.

9. Specific claim negotiation loan funding request process

10. Reporting requirements

The reporting requirements (activity report and financial report) are listed in the recipient's loan agreement and details on these requirements are available in the reporting guide.

Loan funding to support the negotiation activities of a specific claim must be reported separately from any other funding received by the First Nation.

Loan funding cannot be released and requests for additional funding will not be considered until all overdue reports are received and approved. First Nations are advised that special notations can be made in their audits so that these loans do not impact their audit and rating.

Appendix 1: Compensation criteria

Compensation criteria under The Specific Claims Policy and Process Guide are the following:

1. As a general rule, a claimant band shall be compensated for the loss it has incurred and the damages it has suffered as a consequence of the breach by the federal government of its lawful obligations. This compensation will be based on legal principles.
2. Where a claimant band can establish that certain of its reserve lands were taken or damaged under legal authority, but that no compensation was ever paid, the band shall be compensated by the payment of the value of these lands at the time of the taking or the amount of the damage done, whichever is the case.
3. 1. Where a claimant band can establish that certain of its reserve lands were never lawfully surrendered, or otherwise taken under legal authority, the band shall be compensated either by the return of these lands or by payment of the current, unimproved value of the lands.
   2. Compensation may include an amount based on the loss of use of the lands in question, where it can be established that the claimant did in fact suffer such a loss. In every case the loss shall be the net loss.
4. Compensation shall not include any additional amount based on "special value to owner," unless it can be established that the land in question had a special economic value to the claimant band, over and above its market value.
5. Compensation shall not include any additional amount for the forcible taking of land.
6. Where compensation received is to be used for the purchase of other lands, such compensation may include reasonable acquisition costs, but these must not exceed 10% of the appraised value of the lands to be acquired.
7. Where it can be justified, a reasonable portion of the costs of negotiation may be added to the compensation paid.
8. In any settlement of specific Indigenous claims, the government will take third party interests into account. As a general rule, the government will not accept any settlement which will lead to third parties being dispossessed.
9. Any compensation paid in respect to a claim shall take into account any previous expenditure already paid to the claimant in respect to the same claim.
10. The criteria set out above are general in nature and the actual amount which the claimant is offered will depend on the extent to which the claimant has established a valid claim, the burden of which rests with the claimant. As an example, where there is doubt that the lands in question were ever reserve land, the degree of doubt will be reflected in the compensation offered.

Appendix 2: Specific claim negotiation support benchmarks and rates for fiscal year 2021 to 2022

Recipients can claim preliminary negotiation support up to a one-time $15,000 per claim accepted for negotiation, and negotiation support (basic funding) up to a maximum of $200,000 per claim per fiscal year. Funding is allocated to support the negotiation activities and is based on the level of effort estimated in the approved annual work plan signed by Canada and the First Nation.