Specific claim negotiation costs funding guidelines

Effective as of April 1, 2021

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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:

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:

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 dsn-nsd@rcaanc-cirnac.gc.ca

5.1 Preliminary negotiation costs

All new claims accepted for negotiation are eligible for a one time loan funding of up to $15,000 for preliminary discussions on the terms of Canada's acceptance, the planning of negotiations and the preparation of a workplan and funding proposal. The $15,000 will be in addition to any further loan funding in the other 3 categories: basic, studies and reports, and ratification.

5.2 Basic funding

The maximum for loan funding in this category is a total of $200,000 per claim, per fiscal year, for the following 4 types of eligible costs:

  • First Nation costs
  • legal costs
  • professional costs
  • other costs

Within a fiscal year, First Nations may reallocate funds received within the different types of eligible costs under the basic funding category only based on First Nation priorities, but must report on actual expenditures outlined in section 10. Funding may not be reallocated between basic costs, studies and reports, and ratification.

a) First Nation costs

Includes costs associated with activities necessary for a First Nation's participation in negotiations and community meetings (for example, travel, honoraria for non-salaried individuals, facility rentals) subject to applicable policies and fee limitations outlined in section 8.

b) Legal costs

Includes legal fees, legal disbursements and travel costs that are subject to applicable policies and fee limitations outlined in section 8, up to 50% of the maximum basic funding allocation (up to $100,000).

c) Professional costs

The professional costs category is to support internal First Nation due diligence and not to prepare evidence for review by Canada. This includes costs associated with activities such as employing specialists or experts (for example, financial advisors) to conduct work related to a particular area of expertise. Cost proposals must be supported by a description of the activities and deliverables for the fiscal year along with the level of effort (such as the number of hours as agreed to in the annual work plan) and the rates and estimated costs.

The professional costs category does not include costs to conduct studies and reports, as these costs are covered under the studies and reports category. 

d) Other costs

Other costs include, but are not limited to: administration fees of up to 10% of First Nation costs, audit costs, technical and advisory committees, meeting costs and communications.

5.3 Studies and reports

This category of cost is limited to studies, appraisals, mapping and proposals that involve terms of reference. Studies and reports must be identified in the annual approved work plan signed by the First Nation and Canada. Land surveys and environmental site assessments which must occur during the course of the negotiation process, as well as travel costs to conduct the study, are also included in the cost of the study or report.

5.3.1 Joint and independent studies

To be eligible for negotiation costs loan funding, any proposed study or report must appear in the annual jointly approved work plan.

Joint studies

In working toward a negotiated settlement, studies and reports are usually joint between Canada and the First Nation, meaning that the terms of reference are jointly developed, both parties choose the consultant, both parties review any draft reports and provide feedback and input to the consultant, and both parties own the study.

Independent studies

In some cases, a First Nation may propose to undertake non-joint or independent study when developing an annual joint work plan with Canada. In this context, an independent study would mean that the terms of reference are not jointly developed, only the First Nation chooses the consultant, both parties do not provide feedback and input to the consultant and only the First Nation will own the study. As studies are meant to be joint in a negotiation process, proposals for independent studies must specify the reasons why a joint study is not feasible and how the independent study relates to the shared objective of reaching a negotiated settlement.

Proposals for independent studies will be considered on a case-by-case basis.

5.3.2 Maximum amounts

There is no specific maximum amount of funding for the joint studies and reports. The maximum funding to be provided to a First Nation for joint studies and reports will be determined based on reasonably supported estimated costs to complete work associated with the terms of reference within the fiscal year identified in the approved annual work plan, and the total loan funding budget available.

In general, a maximum cumulative amount of $50,000 annually will apply to independent studies and reports.

5.4 Ratification costs

In cases where the claim must be ratified other than by Band Council Resolution, a one-time amount not exceeding $37,500 or $25 per voting member, whichever is higher, may be included in loan funding to cover the reasonable cost of ratification-related activities (for example, hall rental, ratification officer honorarium and mail-outs). The amount will be lower if the vote is conducted by Canada.

5.5 Loan funding maximum summary table

Category Amount of up to (subject to loan funding budget available) Specification
Pre-negotiation funding $15,000 One time
Basic funding
(First Nations costs, legal costs, professional costs and other costs)
$200,000

(including maximum of $100,000 for legal costs)
Annual
Studies and reports No maximum for joint studies and reports Funding subject to:
  • approved annual workplan setting out studies and reports activities
  • related annual terms of reference and service provider's statement of work or contract information
Maximum of $50,000 annually (cumulative amount) for approved independent studies and reports
Ratification $37,500 or $25 per voting member, whichever is higher One time per vote

Funding subject to approved annual workplan setting out ratification activities

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:

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

9.1 Who can apply

Request for funding shall be made by a First Nation or its duly authorized representative.

Where the First Nation has given a mandate to a representative to submit a funding application on its behalf, a Band Council Resolution, or other means of written mandate is to be provided to support the funding request.

9.2 Accessing preliminary negotiation costs

A request for funding to allow a First Nation to review Canada's offer to negotiate, and to develop a work plan with Canada's negotiator, must be submitted by the First Nation or its authorized representative to the Negotiation Support Directorate at dsn-nsd@rcaanc-cirnac.gc.ca. Requests for funding can be submitted no later than February 1 of the fiscal year for which the preliminary negotiation activities are planned.

The request must include:

  • Canada's offer to negotiate (a copy of the letter)
  • a Band Council Resolution from the First Nation seeking to access preliminary negotiation funds (a letter from the First Nation providing the authorization to seek loan funding will be accepted if a Band Council Resolution is not yet available)
  • a list of planned activities and reasonable estimated costs by cost category (for example, First Nation, legal, professional and other costs) for the fiscal year to support preliminary negotiation costs

9.3 Accessing other negotiation funding: basic funding, studies and reports and ratification costs

To support the loan application process, a detailed annual work plan is to be signed by the First Nation and Canada by September 30 of the fiscal year for which the negotiation activities are planned.

To access funding to support negotiation activities, a request for funding must be submitted by the First Nation, or its authorized representative, to the Negotiation Support Directorate at dsn-nsd@rcaanc-cirnac.gc.ca by November 30 of the fiscal year for which the negotiation activities are planned. The request must include:

  • Canada's offer to negotiate (a copy of the letter)
  • a Band Council Resolution from the First Nation accepting to negotiate or other documentation such as a formal letter of support
  • a detailed annual work plan including time frame and level of effort, such as the number of hours or days estimated for each activity, with clear objectives and deliverables for the fiscal year signed by the First Nation and Canada
  • an annual estimated budget listing the activities and reasonable costs required for the fiscal year to support the activities set out in the annual approved work plan
  • a description of the activities and deliverables for the professional costs for the fiscal year along with the level of effort (for example, the number of hours as agreed to in the annual work plan), rates and estimated costs
  • the terms of reference including time frame for each activity with clear objectives and deliverables for the fiscal year and service provider's annual statement of work or contract information supporting any studies and reports included in the annual approved work plan

The annual work plan and budget shall at a minimum specify the participants, the duration (number of days) and the location of meetings, as well as travel and other requirements to support negotiation activities outlined in the work plan example to ensure funding support can be offered towards these activities.

9.4 Amendments and supplemental requests

Amendments and supplemental requests for negotiation loan funding are possible, particularly when aspects of a joint work plan are unknown at the beginning of the year. An amended joint work plan identifying the changes or additions should be jointly approved and submitted with a revised budget and relevant supporting documentation for the Negotiation Support Directorate's consideration. The process and requirements identified in subsection 9.3 also applies to amendments and supplementary requests.  

9.5 Management of unexpended loan funding

The process and requirements identified in subsection 9.3 also applies for the use of any unexpended funding, which is to be authorized and supported by an approved work plan and budget request.

9.6 Exceptions to the established deadline

Where Canada's offer to negotiate a claim is communicated to a First Nation after September 30, the First Nation will have until February 1 to submit a funding request to support preliminary negotiation costs or negotiation costs.

Documentation confirming the anticipated activities and expenditures identified in the approved work plan (such as the terms of reference, statement of work, signed contract, etc.) for which a funding request was received by November 30, will have to be submitted by the First Nation by no later than February 1 to be considered.

9.7 Loan funding subject to a signed agreement and promissory note

A promissory note, loan funding agreement, and financial summary which provides more information on the determination of the amount being offered to support eligible activities for specific claim negotiation, signed by the funding recipient, will be required prior to issuing a loan advance.

To authorize the use of unexpended loan funding in subsequent fiscal years, a financial summary setting out the eligible expenditures and amount of loan that can be used toward negotiation activities, jointly agreed in an annual work plan, is to be signed by the funding recipient.

Interest will not be charged by the Government of Canada for loan funding. Specific claims negotiation loans will continue to be accounted for within Canada's offer of settlement and then deducted from the final settlement grant payments.

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.
    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.
  3. 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.
  4. Compensation shall not include any additional amount for the forcible taking of land.
  5. 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.
  6. Where it can be justified, a reasonable portion of the costs of negotiation may be added to the compensation paid.
  7. 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.
  8. 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.
  9. 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.

First Nation costs

Honorarium and salaries (for non-salaried individuals)

The recipient may claim costs for the following individuals:

  • Chief (up to $250 per day)
  • First Nation councilor (up to $200 per day)
  • negotiator (up to $500 per day)
  • researcher (up to $300 per day)
  • Elder (up to $200 per day)
  • communication officer (up to $250 per day)
  • advisor (up to $300 per day)

Travel costs (as per Treasury Board Secretariat's Travel Directive)

For main table meetings, community meetings, or other meetings specified in the work plan, the recipient may claim:

Please note incidentals are not eligible to be claimed.

Facility rental costs

The recipient may claim costs for:

  • hall or boardroom rental (up to $500 per day at a maximum of 3 days per meeting)

Legal costs

A maximum of 50% of the maximum basic funding (50% of $200,000 = $100,000) of legal costs can be claimed.

Fees

For main table meetings, negotiations, teleconferences, community meetings, initial meetings, or drafting specified in the work plan, the recipient may claim:

  • up to $350 per hour or $2,450 per day (a day equaling up to 7 hours)

Please note incidentals are not eligible to be claimed.

Professional costs

Fees

The recipient may claim costs for:

  • consultants, experts, and contractual representatives (up to $500 per day)

Other costs

The recipient may claim costs for:

  • audits and financial reporting (a maximum of $5,000 per fiscal year)
  • administration fees (a maximum 10% of First Nations costs)
  • meeting catering (up to $210 per person, not exceeding $3,000 per year)
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