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Impact benefit agreements (IBA) have become a critical instrument allowing Indigenous communities to fully participate in projects carried out within their traditional territories. In fact, IBAs are now a common vehicle for community consultation and approval of projects. The five W’s of IBAs are outlined below.

1.    WHAT are IBAs?

IBAs are agreements that allow Indigenous communities to ensure that their concerns respecting a project are identified, and that the impacts of the project are addressed by business. This means that the adverse impacts of a project may be compensated to reconcile the competing interests of the community and of the business.

2.    WHY IBAs?

The Crown has an obligation to consult with Indigenous peoples whenever something is contemplated that will impact on a right or the exercise of a right. This is a substantive obligation that has been recognized by the Supreme Court of Canada (SCC) as deriving from the honour of the Crown.

However, the Crown is often not in a position to properly consult with Indigenous communities on the potential impacts of a project. For this reason, the procedural aspect of consultation is usually satisfied by business. Businesses understand their projects and are able to adequately describe and define the different phases, which is necessary if there is to be meaningful consultation with Indigenous communities.

Even though a business typically carries out the consultation, this does not let the Crown off the hook for ensuring that the consultation was adequate since it cannot delegate this duty.

Since the SCC decision in Tsihlqot’in Nation v. British Columbia, IBAs will likely become even more essential to businesses. The SCC appears to have strengthened the consultation obligations on government and business when it stated, “The right to control the land conferred by Aboriginal title means that governments and others seeking to use the land must obtain the consent of the Aboriginal title holds.” This means that the wording in existing IBAs may not be clear enough to provide sufficient consent to a project that infringes on a group’s Aboriginal title. Also, if details regarding the project have changed in a significant manner, it is possible that the consent previously given may no longer be valid.

Businesses and the Indigenous community should also be aware that a project may have such far-reaching impacts on, and be incompatible with the communities’ attachment to the land, that it actually results in a surrender of the communities title, and requires the consent of the whole community.

IBAs may be a business decision, or may derive from the requirements of some laws, or they may be mandatory under certain modern treaties. Regardless of why a business decides to engage with an Indigenous community, a properly negotiated and drafted IBA should aim to minimize the impairment of Aboriginal rights, and should give both the Indigenous community and the business greater certainty about their relationship.

3.    WHO should participate in the negotiation process?

Indigenous communities should give a lot of thought to who represents them at negotiation tables. While lawyers, engineers and other consultants are important because they can help Indigenous communities understand a project, and can ensure that the best positions are put forward, it is essential that key community members be part of the IBA negotiation process. These people will have a better understanding of the history, short and long-term goals and concerns of the community.

The key roles are the lead negotiator, a secretary and a budget manager. The lead negotiator ensures consistent messaging, is the primary speaker during negotiation sessions and reports back to the community on the negotiation positions and the status of the negotiations. The secretary keeps a record of the meetings and channels communications between the parties. Monitoring expenses and making sure there is enough money to complete negotiations falls to the budget manager. These key functions should be filled by community members.

During the negotiation process, Indigenous communities might also consider involving special interest groups, such as elders or youth, at strategic moments.

4.    WHEN should IBAs be negotiated?

IBAs can be negotiated at different phases. The decision on when to engage in negotiations with a business is a strategic one. The timing can be prior to the environmental assessment, if any is required, during the environmental assessment phase or post-environmental assessment.

Before an environmental assessment (EA) is completed, the Indigenous community has more leverage, because the business is still seeking approvals. The downside of negotiating at this time is that there is often little information available on the potential impact or benefits of a project. For example, it may not even be clear that the project must undergo environmental assessment, given the new Canadian Environmental Assessment Act (CEAA 2012) which was discussed in one of our blog posts. Under the CEAA 2012, a project is subject to the environmental assessment process if it is listed in the Regulations or if the National Energy Board or Canadian Nuclear Safety Commission is responsible for regulating the project, unless there is an equivalent provincial process.

For this reason, pre-EA IBAs are not always the best because the Indigenous community may not have enough information on the project to identify its impacts and define the necessary mitigation measures.

Conducting IBA negotiations at the same time the EA is being carried out will allow the IBA to identify and address community concerns. However, conducting these two processes simultaneously can be difficult and extremely demanding on community resources. The risk is that community involvement in either process may be affected by the other process, meaning its contribution will be less forceful than it might otherwise be.

The post-EA IBA is when the Indigenous community will have the most information on the project and its impacts. This information can be used to elaborate better mitigation measures in the IBA. However, the community will have less leverage at this time because the project will have received the necessary approvals. That being said, if the community participates fully in the EA process it will be able to raise its concerns with the regulatory authorities and potentially influence the protective measures imposed on the project.

5.    HOW to negotiate an IBA?

When negotiating an IBA with a business, the key is unity and equality to ensure the best outcome. The Indigenous community must show community unity. Some businesses will take advantage of dissention between community members, while others will shy away from deals because they consider this dissention to be an indication of instability in the community. A long term, sustainable relationship between a business and the Indigenous community will depend on stability and unity within the community.

Unity is also an issue when a project impacts more than one community. The usual business practice is to negotiate with each Indigenous community individually and require confidentiality from each community. This means that the communities may have incomplete information or inconsistent information about the project, and may receive disparate compensation. Indigenous communities should ensure that they are able to share information amongst themselves when negotiating IBAs for a project that impacts them.

Finally, it is important that the community comes to the negotiation table with equally situated members. This means that if a business sends its highest officer to a meeting then the community should do likewise. The reason behind this strategy is to ensure that the Indigenous community has similar negotiating powers as the business.


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This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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