Specific claim negotiation costs funding guidelines
Effective as of April 1, 2020
- 1. Introduction
- 2. Objective
- 3. Eligible expenditures for negotiation and ratification costs as a component of a final settlement
- 4. Funding recipients
- 5. Eligible expenditures and maximum amount for negotiation costs loan funding
- 6. Determination of the amount of funding and stacking
- 7. Specific claim negotiation loan funding request process
- 8. Reporting requirements
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.
These guidelines apply to claims which Canada has accepted for negotiation in the specific claims process.
The guidelines are intended to bring transparency, consistency and clarity to both the calculation of the costs component in a final settlement (part 3) and loan funding during negotiations (parts 4 to 8).
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 policy 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 (as an example, interpreter, mail-outs and hall rental)
- ratification costs (as an example, ratification officer and hall rental).
In cases where the claim must be ratified other than by a band council resolution, an amount not exceeding $37,500 or $25 per voting member, whichever 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 5.7 of these guidelines.
Where a First Nation does not seek loan funding for its negotiation costs, Canada will still include in its settlement offer an amount for reasonable negotiation costs.
4. Funding recipients
Eligible funding recipients subject to these guidelines are First Nations who are bands pursuant to the Indian Act and any Indigenous group which has a claim that 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 loan funding is available:
- preliminary negotiation costs
- basic funding
- studies and reports
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. In exceptional circumstances, First Nations may seek more than $200,000 of basic funding. This will require:
- an annual workplan approved by the Senior Director of Negotiations, Specific Claims Branch
- a funding decision approved by the Director General, Fiscal Branch.
Within a fiscal year, First Nations may reallocate funds received within the different types of costs under the basic funding category only based on First Nations priorities, but must report on actual expenditures (part 8). Funding may not be reallocated between basic costs, studies and reports, and ratification.
a) Legal costs
Includes legal fees, legal disbursements and travel.
Maximum of 50% of basic costs
b) First nations costs
Includes costs associated with activities necessary for a First Nation's participation in negotiations, community meetings, etc. (as an example, travel, honoraria for non-salaried individuals, facility rentals).
Maximum of 40% of basic costs
c) Professional costs
Includes costs associated with activities such as employing specialists or experts such as financial advisors to conduct work related to a particular area of expertise supported by terms of references. This category does not include costs related to studies and reports, as these costs are covered under the studies and reports category.
Maximum of 40% of basic costs
d) Other costs
Other costs include technical or advisory committees, meeting costs and communications.
Maximum of 10% of basic costs
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 workplan signed by the First Nation and Canada. Studies and reports are usually joint between Canada and the First Nation. In rare circumstances, a non-joint study or report may be eligible for loan funding, but in all cases the study or report must appear on the annual jointly approved workplan. Land surveys and environmental site assessments which must occur during the course of the negotiation process are also included in this category. Travel costs required to conduct studies and reports are included in the cost of the study or report.
While there is a maximum amount of $50,000 annually that applies to non-joint studies and reports, 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 associated with the terms of reference for the fiscal year identified in the approved annual workplan and the total loan funding budget available.
5.4 Ratification costs
In cases where the claim must be ratified other than by a band council resolution, an 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 (such as 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|
First Nation costs
|Studies and reports||No maximum for joint studies and reports||Funding subject to:
|Maximum of $50,000 annually for non-joint 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
5.6 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.
5.7 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 potentially 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.
6. Determination of the amount of funding and stacking
Annual amount of funding to a funding recipient will be determined based on a jointly approved workplan, availability of loan funding and the funding recipient budget describing the activities, deliverables and reasonable costs to support the negotiation of the claim.
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 for in the directive are not eligible for funding.
The annual amount will reflect a First Nation's participation in negotiations or 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 and additional meetings by conference call are permitted.
Amount of funding might be adjusted based on the review of the previous years' expenditures and identification of unexpended funding.
The maximum funding that will be provided to a First Nation are 100% of the eligible costs associated with the negotiation of the claim.
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.
7. Specific claim negotiation loan funding request process
7.1 Accessing preliminary negotiation costs
A request for funding to allow a First Nation to review Canada's offer to negotiate and to develop a workplan with Canada's negotiator must be submitted by the First Nation to Negotiation Support Directorate at email@example.com. The request must include:
- Canada's offer to negotiate: 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 for the fiscal year to support preliminary negotiation costs
7.2 Accessing other negotiation funding: basic funding, studies and reports and ratification costs
A request for funding must be submitted by the First Nation to Negotiation Support Directorate at firstname.lastname@example.org by September 1 each fiscal year. The request must include:
- Canada's offer to negotiate: copy of the letter
- a band council resolution from the First Nation accepting to negotiate or other documentation such as formal letter of support
- a detailed annual workplan including time frame for each activity with clear objectives and deliverables for the fiscal year and signed by the First Nation and Canada
- an annual budget listing the activities and reasonable costs required for the fiscal year to support the activities set out in the annual approved workplan
- to get an annual budget template example, email the Negotiation Support Directorate at email@example.com
- the terms or reference, including time frame for each activity with clear objectives and deliverables for the fiscal year, and service provider's statement of work or contract information supporting any studies and reports included in the annual approved workplan
The annual budget and workplan must at the 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.
A promissory note and loan funding agreement signed by the funding recipient will also be required prior to issuing a loan advance.
Interests 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.
8. Reporting requirements
The reporting requirements (program and financial reports) are listed in the recipient's loan agreement and details on these requirements are available in the reporting guide.
Loan funding must be reported separately from any other funding received by the First Nation to support the negotiations.
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.