Surety and Bonding

First Nation contractors with assets on reserve continue to face legislative barriers which prevent them from signing an enforceable indemnity agreement which is mandatory to obtain the surety and bonding insurance required for bidding on virtually all construction projects.

First Nations Finance Authority (FNFA) has called upon Canada to establish a backstop fund to provide a pathway for First Nations contractors to sign indemnity agreements. Change is needed now to ensure that First Nations contractors are prepared to participate in the move to close the growing infrastructure gap, currently quantified at $350 billion. Furthermore, this change is needed to ensure First Nations contractors who are located on reserve can participate in economic opportunities arising in their territories as part of Canada’s “build agenda”.

89 (1) Subject to this Act, the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge, mortgage, attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian or a band.

Without collateral, First Nations contractors, with assets located on reserve, cannot sign an enforceable indemnity agreement; without indemnity agreements, they cannot obtain surety and bonding insurance, a prerequisite for virtually all major housing, infrastructure, and resource projects. The result is predictable: First Nation contractors are often pushed into subcontractor roles, unnecessary joint-ventures or excluded entirely from the bidding process.