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Alec Dan of the Musqueam First Nation outside the British Columbia Court of Appeal in Vancouver, British Columbia, in 2010.

DARRYL DYCK/The Globe and Mail

Canada has staked its future on the oil sands. In November, Report on Business magazine together with Thomson Reuters examine what that means both at home and abroad. Read more from the issue at tgam.ca/oil.

For the past few years, British Columbia's Moricetown Indian Band has mulled whether to join 15 other First Nation groups who have teamed up to get a stake in the Kitimat LNG Project and pipe-line. A large plant and export terminal, spearheaded by California-based Chevron, would ship up to 10 million tonnes a year of liquefied natural gas from Bish Cove, near Kitimat, on the province's northwest coast. The band is weighing the environmental and cultural risks against the prospect of jobs, training and millions of dollars worth of other benefits for its 2,000 members.

In recent months, those conversations have often hung on another thread: a June Supreme Court of Canada decision that recognized aboriginal title over more than 1,700 square kilometres of territory in Interior B.C. The case dates back to the 1980s, when the province authorized logging on lands B.C.'s Tsilhqot'in Nation considered their own. The decision was the first in Canada to confirm aboriginal title to a specific tract of land, and set off a flurry of speculation about what it might mean for other First Nations, and for resource companies that want to build pipelines, plants or other projects in areas subject to unresolved land claims.

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The implications loom larger in B.C. than in other provinces. Only a handful of its First Nations have signed land treaties, but companies are now scrambling to build new pipelines that would carry liquefied natural gas, oil and bitumen through traditional native territories. Decades of court rulings have already underscored the duty of provincial and federal governments to consult and accommodate aboriginal interests.

First Nations believe they now have more leverage in negotiations. "Whether it is a yes or no, the [decision] strengthens a First Nation's ability to say yes or no," says Trevor Jang, a communications officer for the Moricetown band. The ruling augments a landmark 1997 Supreme Court of Canada case, known as Delgamuukw, that confirmed that aboriginal title exists in B.C. "It added to what we already had and solidified what we have known all along," says Jang.

The band is feeling more confident as it debates whether to join the First Nations Limited Partnership (FNLP). Last year, the partnership agreed to support the Kitimat LNG project, and the associated Pacific Trail Pipeline, in exchange for $200-million worth of benefits.

The Tsilhqot'in decision will raise the stakes in other negotiations as well. Corporations will now be under pressure to sweeten the terms of deals they offer to aboriginal partners. There are currently 17 proposals for LNG projects at various stages in B.C., and two pitches for large coastal oil refineries. Albert Hudec, a partner with the Vancouver law firm Farris, Vaughan, Wills & Murphy, who represents some FNLP members, says that the decision "shifts the balance of negotiating power."

But whether First Nations are inclined to say yes or no to a project, the ruling also presents them with a dilemma: Should they start by negotiating with industry? Or should they head to court first in an attempt to secure aboriginal title to land, which can be a very long and expensive process?

Even before the decision, some corporations in B.C. and Alberta recognized the upside of working with First Nations through joint ventures, royalty agreements or equity deals. Calgary-based Cenovus Energy has struck five long-term agreements with aboriginal communities for oil sands projects since the company was formed in 2009. The exact terms of those agreements haven't been disclosed, but they spell out how communities are to be consulted, and include money for education, training and other purposes. The company has also concluded more than $1-billion worth of deals with First Nations and Métis companies for construction, supplies and services.

Beverley Clifton Percival, a negotiator who represents the Gitxsan hereditary chiefs of northwestern B.C. in treaty talks with the provincial and federal governments, says companies will now have to treat First Nations like true partners, not just as activist groups that can be bought off with a relatively small investment. "We have proprietary interests in the land, water, air and resources across 33,000 square kilometres. You have some people who are trying to make moves on that [land], but they are going to have to get consent from the titleholders," she says.

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But legal experts say that First Nations still do not have a veto. Under Canadian law, including the Tsilhqot'in decision, governments can infringe on aboriginal rights if a broader public interest can be proved. Ottawa reinforced that position in a Sept. 22 statement in which it responded to an "outcome document" from the World Conference on Indigenous Peoples. The document calls for "free, prior and informed consent" from indigenous peoples before adopting legislation or regulations that may affect them. The Harper government says that "could be interpreted as providing a veto to aboriginal groups and in that regard, cannot be reconciled with Canadian law."

Former Liberal MP Bob Rae, who is chairman of the board for the 15-member FNLP, says that Ottawa's response is disappointing and "unhelpful." "The reality is most companies and most thoughtful governments realize that without First Nations' active participation and consent, resource development will not happen. And if the federal government keeps returning to this mantra of, 'well, we can do whatever we like'…that sets us on the path to confrontation."

Rae added that "the whole purpose of what the courts have been saying is that it is important to avoid confrontation. And the way you avoid confrontation is recognizing that there are rights on all sides, and there needs to be a meeting of minds on how to go forward."

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