Why Rethink Infrastructure Financing?

January 28, 2026

Financing infrastructure, whether it involves maintaining the infrastructure we’ve inherited, building the infrastructure we need today, or anticipating the infrastructure that will be required in the future, is one of the greatest challenges facing modern societies. Civil, industrial and energy infrastructure are essential assets for the common good, and their maintenance and modernization require colossal investments. However, public finances are limited, which restricts the ability of governments to act alone. In this context, it is crucial to use all available financing methods, which means including private capital and designing innovative financial tools.

With this in mind, we will be publishing a series of six articles devoted to infrastructure financing in Quebec and Canada. In them, we will discuss the issues related to these strategic investments and highlight realistic solutions to address them. This first article begins by providing an overview of the situation in Quebec and Canada, and then looks at the current challenges and the solutions that will shape the infrastructure of tomorrow.

The Current Situation in Quebec and Canada

In Quebec, public investment in infrastructure is governed by the 2025-2035 Québec Infrastructure Plan (the “QIP”), which provides for the injection of $164 billion over 10 years. The QIP is a government planning document identifying and prioritizing major infrastructure projects in all public sectors. The most recent version of the QIP pays particular attention to the longevity of the existing infrastructure. Keeping current public assets in good condition despite the chronic maintenance backlog will absorb nearly 65% of the planned funding. The investments are primarily directed towards:

road transport ($36 billion);
healthcare ($28 billion);
education ($23 billion);
and public transit ($9 billion).

In terms of energy infrastructure, Quebec has embarked on a major transformation. According to Hydro-Québec’s Action Plan 2035, the province has set itself the objective of doubling its electricity generation capacity by 2050, with an intermediate target of 150 terawatt-hours (TWh) in 2035, compared to approximately 215 TWh currently. This plan involves investments of over $100 billion for the construction of new dams, wind farms, and electric transmission networks in order to meet the growing demand related to electric vehicles and the energy transition (source: Hydro-Québec, Action Plan 2035).

Energy issues are a top priority across Canada. We are witnessing a resurgence of nuclear power, with several provinces (Ontario, New Brunswick, Alberta and Saskatchewan) choosing to develop small modular reactors (SMRs) to decarbonize their energy generation and ensure energy security. At the same time, there is strong pressure to build new pipelines for hydrocarbon exports, particularly to Asia and Europe, for the energy transition and supply security.

At the federal level, upon taking office, the new Prime Minister Mark Carney announced his investment ambitions to address crucial issues such as housing, public transit, climate resilience, and accessibility. One of the flagship programs at the federal level is the creation of Build Canada Homes, a new agency established in September 2025 with a budget of $13 billion. This program aims to “supercharge” the construction of affordable housing, to leverage public land, and to make use of modern techniques such as modular and mass timber construction. Meanwhile, on September 11, the Prime Minister announced an initial nationwide series of energy, port, and mining projects. He also expressed the desire to add other projects in the coming years. This list includes the expansion of the Port of Montreal in Contrecœur.

Current Challenges

The asset maintenance deficit, that is, the estimated amount of infrastructure in poor or very poor condition, is estimated by the Quebec government to be over $40 billion in 2025. That’s the amount that would need to be invested today simply to bring systems back to an acceptable state.

In addition to rehabilitating aging infrastructure, it’s also important to make existing infrastructure more resilient; for example, in 2024, the flooding further to Hurricane Debby caused $2.5 billion in damage in southern Quebec. And infrastructure must be low-carbon, in order to allow Quebec to achieve its climate objectives in terms of greenhouse gas emission reduction. Furthermore, modernization must incorporate climate change adaptation, cybersecurity, and smart grids.

We need to accelerate the construction of new infrastructure to ensure Canada’s prosperity. In 2023, the Canada Mortgage and Housing Corporation noted that 3.5 million new homes will be needed by 2030 to restore affordability in the country. Added to this are the needs for energy, transportation and healthcare infrastructure, which are intensifying due to population growth, the energy transition, the desired reindustrialization and, in the future, the increasing use of energy-intensive artificial intelligence.

However, in addressing these challenges, governments are facing a critical lack of liquidity. Ottawa has just tabled a budget with a deficit of $100 billion, while the Quebec government announced a record deficit of $13.6 billion at the beginning of the year. These structural deficits considerably limit their budgetary leeway and force them to choose between the different issues our societies face. At the municipal level, municipalities are legally required to table a balanced budget. Given the rising expenses and the electoral need to not increase taxes significantly, potential investments are limited.

Potential Solutions: Private Capital and Financial Innovation

Faced with increasing pressure on public finances, particularly at the municipal level, governments can no longer bear the cost of modernizing and developing infrastructure alone. In this context, looking to private capital and financial innovation can bridge the gap between public financial needs and capacities.

Some of the top solutions are public-private partnerships, smart pricing (tolls, usage fees, dynamic pricing), and mobilizing institutional savings, particularly through pension funds, insurance companies and investment funds.

Pension funds and insurance companies are particularly attracted to infrastructure projects. Their long-term investment horizon is well aligned with the lifespan of the projects and the stable revenue streams they generate. For example, the Fonds de solidarité FTQ has a fund dedicated to real estate.

Banks are key partners in infrastructure projects. They offer hybrid financing, combining low-interest loans and government backing to secure investments in critical projects such as highways, bridges and railways.

It is also worth noting that investment funds are increasingly turning to infrastructure financing, as evidenced by the example of BlackRock. BlackRock recently strengthened its position in this sector by acquiring Global Infrastructure Partners for $12.5 billion, creating a leading investment platform in private infrastructure markets. This acquisition, combined with strategic partnerships with players like Microsoft, aims to meet the growing demand for essential digital and energy infrastructure to support technological advances and the digital economy. Furthermore, the purchase of key Panama Canal ports for $23 billion demonstrates BlackRock’s commitment to critical infrastructure assets globally. These investments, motivated by the desire to diversify portfolios and protect against inflation, allow for the integration of professionals in the execution of projects.

While these approaches make it possible to diversify funding sources, accelerate project completion and distribute risks between the public and private sectors, they also raise issues of governance, transparency and social acceptability, which require special attention to protect the long-term public interest.

Infrastructure financing in Quebec and Canada must evolve to address the maintenance deficit, the requirements of the energy transition, and increasing budgetary constraints. Private capital, whether from pension funds, banks or specialized funds, offers indispensable support for collective efforts.

Beyond the diversification of funding sources, the emergence of contractual and financial innovations, such as performance contracts, green bonds and risk-sharing models, opens up new ways to attract private investors while protecting the public interest. Our next article will discuss these new tools and mechanisms in detail, as well as the conditions for their success in Quebec and Canada.

Government of Québec (March 25, 2025). Plan québécois des infrastructures 2025-2035 : le gouvernement du Québec se donne les moyens de réaliser ses engagements et de soutenir l’économie québécoise. https://www.quebec.ca/nouvelles/actualites/details/plan-quebecois-des-infrastructures-2025-2035-le-gouvernement-du-quebec-se-donne-les-moyens-de-realiser-ses-engagements-et-de-soutenir-leconomie-quebecoise-61815
Government of Canada (September 14, 2025). Prime Minister Carney launches Build Canada Homes to supercharge homebuilding across the country. https://www.pm.gc.ca/en/news/news-releases/2025/09/14/prime-minister-carney-launches-build-canada-homes
Government of Canada (September 13, 2024). The costliest severe weather event in Quebec’s history – August flooding caused nearly $2.5 billion in insured damage. https://www.ibc.ca/news-insights/news/the-costliest-severe-weather-event-in-quebec-s-history-august-flooding-caused-nearly-2-5-billion-in-insured-damage
Canada Mortgage and Housing Corporation (June 23, 2023). Housing Shortages in Canada – Update on how much housing we need by 2030. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/housing-research/research-reports/2023/housing-shortages-canada-updating-how-much-we-need-by-2030-en.pdf
La Presse (September 15, 2025). Budget fédéral : vers un déficit de 100 milliards? https://www.lapresse.ca/affaires/2025-09-15/budget-federal/vers-un-deficit-de-100-milliards.php
Royal Bank of Canada (March 25, 2025). Quebec Budget 2025: Record deficit and a long and conditional path to balance. https://www.rbc.com/en/economics/canadian-analysis/provincial-and-fiscal-outlooks/provincial-budgets-and-economic-statements/quebec-budget-2025-record-deficit-and-a-long-and-conditional-path-to-balance/
Fonds immobilier de solidarité FTQ (2025). Who we are. https://www.fondsftq.com/en/business/fonds-immobilier/who-we-are?utm_source=chatgpt.com
Business Economy (March 6, 2025). Why BlackRock is Investing Heavily in Infrastructure. https://www.businesseconomy.com/latest-news/why-blackrock-is-investing-heavily-in-infrastructure/
Hydro-Québec (November 2, 2023). Plan d’action 2035 d’Hydro-Québec – voici l’essentiel. Plan d’action 2035 d’Hydro-Québec – voici l’essentiel
Canada Energy Regulator (August 20, 2025). Market Snapshot: Canada’s role in small modular reactor (SMR) technology. CER – Market Snapshot: Canada’s role in small modular reactor (SMR) technology
Underground Infrastructure (September 2025). Canada eyes new pipelines to boost energy security, cut U.S. reliance. Canada eyes new pipelines to boost energy security, cut U.S. reliance | Underground Construction

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Written by

David Tournier
Partner, Lawyer
Jessy Menard
Lawyer

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September 25, 2025

Lavery's expertise recognized by Chambers Global 2026

We are pleased to announce that Lavery has once again been recognized in the 2026 edition of Chambers in the following sectors: Coporate/Commercial (Quebec, Band 1) Employment & Labor (Quebec , Band 2) Energy & Natural Ressources : Mining (Nation wide Canada, Band 3) Intellectual Property (Nationwide Canada, Band 4) Insurance : Dispute Resolution (Nationwide Canada, Band 5) These recognitions are further demonstration of the expertise and quality of legal services that characterize Lavery's professionals. Nine lawyers have been recognized as leaders in their respective areas of practice in the 2026 edition of the Chambers Global guide. Areas of expertise in which they are recognized: René Branchaud : Energy & Natural Ressources : Mining (Nationwide Canada, Band 5) Brittany Carson: Employment & Labour (Up and Coming) Nicolas Gagnon: Construction (Nationwide Canada, Band 2) Édith Jacques: Corporate/Commercial (Québec, Band 5) Marie-Hélène Jolicoeur: Employment & Labour (Québec, Band 4) Guy Lavoie: Employment & Labour (Québec, Band 2) Martin Pichette: Insurance: Dispute Resolution (Nationwide Canada, Band 3) Sébastien Vézina: Energy & Natural Ressources : Mining (Nationwide Canada, Band 5) Camille Rioux: Employment & Labour (Associates to watch) About Chambers Since 1990, Chambers and Partners' ranks the best law firms and lawyers across 200 jurisdictions throughout the world. The lawyers and law firms profiled in Chambers are selected following through a rigorous process of research and interviews with a broad spectrum of lawyers and their clients. The final selection is based on clearly defined criteria such as the quality of client service, legal expertise, and commercial astuteness. About Lavery Lavery is the leading independent law firm in Québec. Its more than 200 professionals, based in Montréal, Québec City, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Québec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm's expertise is frequently sought after by numerous national and international partners to provide support in cases under Québec jurisdiction.

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February 12, 2026

Real impact of Bill 5 on the acceleration of mining projects in Quebec

Bill 5,1 An Act to accelerate the granting of the authorizations required to carry out priority national-scale projects (Bill 5), tabled by Finance Minister Éric Girard, is part of a broader government strategy to accelerate the completion of strategic projects in Quebec. Inspired by federal law C-5,2 Bill 5 aims to streamline the administrative process behind major projects so that they can be rolled out more rapidly. Purpose of Bill 5: make it easier to grant authorizations for strategic projects The government’s stated intention is to stimulate the Quebec economy by accelerating the administrative process underlying strategic economic and energy projects to be designated by it. These projects must: generate major economic spinoffs; create jobs; and further the energy transition. During his opening speech of the session, Premier François Legault stressed the fact that lead times need to be shortened and administrative processes need to be streamlined, while maintaining high standards. The goals are clear, but does Bill 5 actually make it possible to achieve them? Framework and scope of Bill 5: transition to a single authorization for large-scale projects Bill 5 will allow the government to change how various laws are applied to accelerate national-scale projects in Quebec without circumventing environmental assessment processes and the rights of Indigenous communities. It provides for the granting of a single authorization allowing both the project and all of the operations necessary for its completion to be carried out. In the context of a mining project, this means the granting of environmental authorizations under the Environment Quality Act (“EQA”)3 and mining titles under the Mining Act,4 as well as the approval of a preliminary version of the rehabilitation and restoration plan required by the Mining Act5 and any other authorization required by the Natural Heritage Conservation Act6 of the Act respecting the conservation and development of wildlife,7 among others. Indigenous communities Why James Bay and Northern Quebec are excluded Section 2 of Bill 5 stipulates that the Bill applies subject to any act aimed at implementing the Agreement concerning James Bay and Northern Québec8 and its amendments,9 as well as the Northeastern Québec Agreement. These agreements are put into practice in particular under Title II of the EQA, which establishes an environmental and social impact assessment and review procedure in which Indigenous communities must participate, as prescribed by the agreements. Title II of the EQA is part of the list of provisions that the government cannot add to the list of laws having an authorization process that can be replaced by the authorization granted under Bill 5. The constitutional obligation to consult Indigenous communities Bill 5 stipulates that it must be interpreted in a manner consistent with the obligation to consult Indigenous communities, and that these communities must be consulted separately when circumstances warrant doing so.10 Consulting Indigenous communities is one of the government’s constitutional obligations. As such, it could not in any case have set that obligation aside. In short, an authorization cannot be granted more rapidly under Bill 5 at the expense of the obligation to consult the Indigenous communities of southern Quebec. Also, in its assessment of an application for the designation of a project, the government may in particular consider whether the project takes the interests of local and Indigenous communities into account.11 This implies prior consultation work by the project proponent, further to which it can document the concerns and interests of Indigenous communities and adapt its project accordingly. In James Bay and Northern Quebec, mining projects are generally subject to the environmental and social impact assessment and review procedure provided for in Title II of the EQA. They fall completely beyond the scope of Bill 5.12 Contradictions in Bill 5 and implementation challenges The challenges of the two-year implementation deadline Although the Bill is presented as a way to fast-track projects, not a way to circumvent the law, a number of issues remain where mining projects are concerned. Exclusion of mining projects in James Bay and Northern Quebec The text of Bill 5 is clearly intended to apply to mining projects. Take section 4 para. 2(1) which mentions, among the points that can be considered for the designation of a project, the fact that it would consolidate Québec’s autonomy and resilience, in particular as regards energy, critical and strategic minerals or infrastructure. However, Bill 5 cannot apply to projects governed by Title II of the EQA, that is, those located in the territory covered by the James Bay and Northern Quebec Agreement. As such, many mining projects are excluded by default. This contradiction raises questions about the overall effectiveness of the Bill for mining projects, the implementation of which it claims to accelerate. Prerequisites for granting authorization maintained By its very nature, Bill 5 is intended to apply to large-scale projects, and section 1 of the Bill describes these as priority, national-scale projects. However, large-scale projects such as these are likely to be subject to the environmental impact assessment and review procedure or, at minimum, to the EQA’s ministerial authorization regime. It is important to note that, in order for an authorization to be granted under Bill 5, all the steps prior to that authorization must have been completed. Section 10 of Bill 5 stipulates that the application for authorization “must mention the permissions allowing the proponent to carry out the project ... and must be accompanied by the information and documents required as well as the payment of the duties and fees payable for the granting of those permissions.” If the project is subject to the environmental impact assessment and review procedure, the procedure must be completed before an authorization under Bill 5 can be granted. The only difference in the procedure is in section 30 of Bill 5, which stipulates that, when the impact statement for a designated project is deemed admissible, the Minister of the Environment mandates the BAPE to hold a public hearing, and the BAPE then proceeds without holding an information period. With the recent amendments made to the EQA by the Act to amend various provisions relating to the environment (also known as Bill 81), which, according to representations made by representatives of the MELCCFP, aim to reduce the impact assessment and review procedure from 18 months to 9 months, we wonder whether Bill 5 will actually contribute to accelerating the administrative process underlying projects already subject to the impact assessment and review procedure. Short-term implementation criterion The requirement for short-term implementation (approximately two years taking into account the combined effect of sections 4 para. 2(5) and 20 of Bill 5) seems unrealistic for large-scale projects requiring comprehensive consultations and assessments. In the case of mining projects, the granting of an authorization including a mining lease must be preceded at a minimum by the approval of a preliminary version of the rehabilitation and restoration plan and the payment of a provisional financial guarantee. Despite the fact that section 46 of Bill 5 scales down requirements,13 the preparation, even of a preliminary version of such a plan, requires time and the collaboration of experts in the field to meet the expectations of the MRNF. Thoughts and outlook While it may be appealing to think it possible to reduce the time required to grant the necessary authorizations for large-scale projects that could generate major economic spinoffs for Quebec, it appears that, in terms of environmental protection, Bill 5 does little to address a key issue, namely the time it takes to prepare application files, whether for a ministerial authorization or as part of the environmental impact assessment and review procedure. Add to this the fact that, to complete these processes, additional studies are generally required, depending on the questions and requests for clarification raised during the analysis phase. Bill 5 offers no solution to the issue, which, however, is probably the most significant issue when we consider the time and energy that project proponents must devote to the file preparation phase. Conclusion: We don’t know whether proponents will see greater efficiency Bill 5 shows that the government is indeed trying to increase government efficiency and spur economic growth. However, it leaves mining project proponents hanging by immediately excluding projects located in the James Bay area and further north, and by not addressing the time it takes to prepare environmental impact assessment and review files or applications for authorization. Takeaways Does Bill 5 make it possible to avoid BAPE hearings? In a word, no. The BAPE process continues to apply to designated projects, but the public information stage is eliminated to jump directly to the hearing stage, slightly reducing the time needed to complete the process. Which mining projects will benefit most from Bill 5? Primarily projects involving critical and strategic minerals located in southern Quebec, provided that proponents can demonstrate that short-term implementation is possible (approximately two years). Why does Bill 5 not apply to James Bay and Northern Quebec? Because the separate environmental and social assessment processes (Title II, EQA) that apply to these territories were established by agreements that Bill 5 cannot unilaterally amend. Bill 5, An Act to accelerate the granting of the authorizations required to carry out priority national-scale projects: https://www.assnat.qc.ca/en/travaux-parlementaires/projets-loi/projet-loi-5-43-2.html Federal Bill C-5: https://www.parl.ca/documentviewer/en/45-1/bill/C-5/first-reading Environment Quality Act: https://www.legisquebec.gouv.qc.ca/fr/document/lc/Q-2?langCont=en Mining Act: https://www.legisquebec.gouv.qc.ca/fr/document/lc/m-13.1?langCont=en Section 46 of Bill 5 scales down requirements regarding the rehabilitation and restoration plan, providing for the granting of an authorization instead of a mining lease without such a plan having been approved—that is, if a preliminary version of such plan has been approved by the Minister of Natural Resources and Wildlife and a provisional financial guarantee has been paid. The rehabilitation and restoration plan will likely still need to be considerably advanced. A mining authorization establishes the time limits within which the rehabilitation and restoration plan must be approved and the financial guarantee paid. Natural Heritage Conservation Act: https://www.legisquebec.gouv.qc.ca/fr/document/lc/C-61.01?langCont=en Act respecting the conservation and development of wildlife: https://www.legisquebec.gouv.qc.ca/fr/document/lc/c-61.1?langCont=en James Bay and Northern Quebec Agreement: https://www.canada.ca/en/impact-assessment-agency/corporate/james-bay-northern-quebec-agreement.html Section 2 of Bill 5 refers to section 1 of the Act approving the Agreement concerning James Bay and Northern Québec, which states the following: “In this Act, unless the context indicates a different meaning, the expression “Agreement” means the Agreement reached between the Grand Council of the Crees (of Québec), the Northern Québec Inuit Association, the Government of Canada, the Société d’énergie de la Baie James (the James Bay Energy Corporation), the Société de développement de la Baie James (the Société de développement de la Baie James), the Commission hydroélectrique du Québec (the Commission hydroélectrique du Québec) and the Gouvernement du Québec, dated 11 November 1975, and the Amending Agreement dated 12 December 1975, tabled in the National Assembly, 9 June 1976, as Sessional Documents, Nos 101 and 102.” Section 2 of Bill 5 also refers to section 1 of the Act approving the Northeastern Québec Agreement, which states: “In this Act, unless the context indicates otherwise, the expression “Agreement” means the Northeastern Québec Agreement reached between the Band of Naskapis of Schefferville and its members, the Gouvernement du Québec, the Société d’énergie de la Baie James (the James Bay Energy Corporation), la Société de développement de la Baie James (the James Bay Development Corporation), the Commission hydroélectrique de Québec (the Québec Hydroelectric Commission) (Hydro-Québec), the Grand Council of the Crees (of Québec), the Northern Québec Inuit Association and the Government of Canada, dated 31 January 1978, tabled in the National Assembly on 18 April 1978, as Sessional Papers, No. 113.” Section 3 of Bill 5 Section 4 para. 2(3) of Bill 5 Schedule A of the EQA provides that “all mining developments, including the additions to, alterations or modifications of existing mining developments” are subject to the mandatory assessment and review procedure provided for in sections 153 to 167 and 187 to 204 of the EQA. Section 46 of Bill 5 provides for the approval of a preliminary version of the rehabilitation and restoration plan and the payment of a provisional financial guarantee instead of the financial guarantee established on the basis of the final version of the rehabilitation and restoration plan.

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November 6, 2025

Federal Budget of November 4, 2025: Enhancements to the Critical Minerals Exploration Tax Credit and renewal of the Mineral Exploration Tax Credit

The federal budget presented on November 4, 2025 (the “Budget”), proposes a significant change to the Critical Mineral Exploration Tax Credit (CMETC). As a reminder, the CMETC is equal to 30% of “specified mineral exploration expenses”1 incurred in Canada that a company has renounced to flow-through share investors. Critical minerals currently eligible for the CMETC The critical minerals currently eligible for the CMETC are nickel, cobalt, graphite, copper, rare earth elements, vanadium, tellurium, gallium, scandium, titanium, magnesium, zinc, platinum group metals, uranium and lithium (including lithium from brine deposits). Critical minerals added to the list The Budget proposes to expand the definition of “critical mineral” to include the following additional critical minerals: bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin and tungsten. Impact of this measure on mining exploration expenses The measure will make the 30% CMETC apply to exploration expenses relating to these new types of critical minerals that a mining exploration company would renounce to flow-through share investors. The measure will cover exploration expenses renounced under flow-through share agreements entered into after Budget Day and on or before March 31, 2027. The Budget also confirms the renewal of the Mineral Exploration Tax Credit until March 31, 2027 (METC). Please feel free to contact our professionals for more information Canadian exploration expenses incurred by a company after April 7, 2022, as part of mineral exploration activities conducted from or above the surface of the earth targeting mainly critical minerals.

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October 16, 2025

Natural Hydrogen: Energy Potential and Legal Context in Quebec and France

What is natural hydrogen? Natural hydrogen, also called native hydrogen, does exist. It refers to hydrogen found naturally in the environment, often as a gas trapped underground. Unlike industrially produced hydrogen, which results from chemical processes, natural hydrogen is extracted directly from nature. This naturally occurring resource is generating growing interest as a potential source of clean, renewable energy. However, exploration and large-scale production are still in the early stages. Discovery of natural hydrogen The first major discovery of natural hydrogen occurred in 1987 in Bourakébougou, Mali, by the company Hydroma Inc. In this village, a well revealed naturally occurring hydrogen in the subsurface. This discovery sparked global interest in hydrogen’s potential as an energy source. The region continues to be studied to better understand and develop this promising resource. Regulation and exploration in Quebec n Quebec, natural hydrogen exploration is not currently covered by the Mining Act, which governs the exploration and exploitation of mineral substances. Because natural hydrogen represents an emerging resource, it will eventually need to be addressed through new regulations or incorporated into an existing legal framework. For now, since hydrogen is mainly studied in the context of renewable energy, it may fall under environmental or energy-related regulations. Legal framework in France In France, the legal status of natural hydrogen differs significantly. Natural hydrogen is classified as a mineral resource, meaning that its exploration and extraction are governed by the provisions of the French Mining Code. Initiatives in Quebec Although natural hydrogen exploration in Quebec is not yet covered by the Mining Act, several companies have obtained exclusive exploration rights (formerly known as “claims”) and are actively conducting fieldwork. Through their efforts, they are helping to advance the legal and regulatory framework surrounding this new energy resource. The Government of Quebec is currently examining potential legislative amendments to the Mining Act to include natural hydrogen, or the adoption of a new, dedicated law to regulate it

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October 3, 2025

Public construction: Prompt payments and simplified dispute resolution

On July 30, 2025, the Regulation respecting prompt payments and the prompt settlement of disputes with regard to construction work (hereinafter the “Regulation”) was published in the Gazette officielle du Québec. Since September 8, 2025, the Regulation has been coming into force gradually,1 in response to requests from some involved the construction industry. The Regulation applies to the majority of construction contracts concluded with public bodies covered by the Act respecting contracting by public bodies (chapter C-65.1, r. 8.01) (hereinafter the “ACPB”). The Regulation aims to fix chronic payment delays in the construction industry by establishing binding standards to speed up the payment process for contractors and subcontractors involved in public contracts covered by the ACPB. It also introduces a rapid dispute resolution process. The Regulation thus complements An Act mainly to promote Québec-sourced and responsible procurement by public bodies, to reinforce the integrity regime of enterprises and to increase the powers of the Autorité des marchés publics.2 The following is a summary of some of the Regulation’s key provisions. Cases of application and exclusions The Regulation applies to all public construction contracts and subcontracts subject to the ACPB, with the following exceptions:3 contracts entered into in an emergency because of a threat to the safety of persons or property contracts entered into for the purpose of activities on foreign soil of a delegation general, a delegation or another form of representation of Québec abroad a monetary claim to compensate for a loss of profit, productivity or a business opportunity that a contractor considers it has suffered because of a change relating to the scope of the work specified in a public contract or public subcontract, or to the conditions for its performance Deadlines and schedule imposed by the Regulations The Regulation establishes a rigid payment request, refusal and payment schedule: Request for payment4 Sent by the general contractor to the public body: 1st day of the month Sent by the subcontractor to the general contractor: 25th day of the month Refusal to pay5 Sent by the general contractor to the subcontractor: 21st day of the month Sent by the public body to the general contractor: Last day of the month Payment deadline (if applicable)6 By the public body to the general contractor: Last day of the month By the general contractor to the subcontractor: 5th day of 2nd month From a subcontractor to another: 10th day of 2nd month If the subcontracting chain has more than two subcontracting levels, the payment deadline is extended by five days for each additional level. These deadlines are intended make the payment process uniform and predictable. It is possible for parties to amend their requests after they have been sent.7 Request for payment A request for payment must be in writing and contain the following information : the name and address of the contractor and the contact information of the representative of the contractor the number of the public contract a detailed description of the work carried out, the expenses incurred and any other element for which a sum of money is claimed the periods associated with elements claimed a breakdown of the total amount claimed8 If the public body requires the presentation of supporting documents with a request for payment from a contractor party to a contract, it must include such condition in the contract and specify which documents are required. The same principle applies to subcontracts between contractors and their subcontractors.9 Importantly, the public body may allow the contractor to amend the request for payment to correct any deficiency, except for requests rendered invalid by the date on which they were sent. If no question of invalidity has been raised with the contractor before the deadline to indicate a refusal to pay, the payment request will be deemed valid.10 Refusal to pay A refusal to pay must be expressed in a written notice containing the following information: the part of the total amount claimed that is refused a description of the work, expenses or elements of the request for payment to which the refusal applies the grounds for the refusal and the contractual or legal provisions on which they are based11 The refusal of a request for payment cannot be based solely on the fact that the work carried out is the result of a change to the contract and that, when the request for payment was sent, the value of the change had yet to be agreed on or determined.12 Payments and withholdings In certain circumstances, the public body may withhold any sum claimed by the contractor: A sum sufficient to cover any reservations for apparent defects or poor workmanship in the work.13 A sum sufficient to repair any damage caused by the general contractor or a subcontractor to the work.14 A sum previously paid to the general contractor for work performed by one of its subcontractors to ensure that the latter’s claims are paid by the general contractor or to enable the public body to pay these claims itself. This right to withhold exists regardless of whether the subcontractor can invoke a legal hypothec on the construction or not.15 A sum sufficient to pay the claims of persons other than the contractor’s subcontractors can invoke a construction legal hypothec on the work and who have given notice of their contract to the contractor, for work completed or the materials or services supplied after the notice was given.16 Up to 10% of the sum owed to ensure performance of the contract, provided that this possibility and its terms are stipulated in the contract. A general contractor may, in turn, withhold sums from its subcontractors, provided that a written agreement allows this and that the withholding does not exceed the withholding applied to the contractor by the public body. Each level of subcontracting can avail itself of this right, with the necessary modifications.17 All sums payable to the contractor if it has not provided all closeout documents, including the certificate issued by the CNESST in accordance with the law and final acquittances from subcontractors.18 Except in the last two cases, a general contractor may offer the public body sufficient security in lieu of the withholding, such as a bond or a letter of guarantee from a bank. In turn, the general contractor may deduct from a payment owed to one of its subcontractors an amount representing the sum claimed by that subcontractor for work, where that work has been identified in a notice of refusal issued by another debtor in the contracting chain. To avail itself of this right, the contractor must first have sent the subcontractor a copy of the notice of refusal on which it is relying.19 Subcontractors, for their part, must send the notice of deduction to their own subcontractors, if any, within two days of receiving the notice.20 In all cases, the Regulation provides for the release of the deductions applied when the conditions for release are met. Prompt dispute settlement The Regulation introduces a dispute settlement process by which the parties have recourse to a third-person decider after having attempted to settle the dispute amicably.21 Initiated by a “request for intervention,” the process is intended to be rapid, with decisions to be made within 50 days of the designation of the third-person decider.22 More specifically, this mechanism provides for the following stages and deadlines: Stages Time allowed Request for intervention 90 days after work accepted or completed* Other contracting party’s response 5 days Designation of the third-person decider 5 days Outline of claims by applicant 5 days Detailed response from other contracting party 15 days Decider’s decision 50 days from the designation date (this period may be extended for a maximum of 15 days) Payment, if any 20 days after decision rendered * In the case of a contract between a general contractor and a public body, the request for intervention must be notified to the other contracting party no later than 90 days after the date on which the work was accepted without reservation, or, if accepted with reservation, the date on which the public body declares that it is satisfied with the repairs or corrections made to the work. In the case of a subcontract, the request for intervention must be notified no later than 90 days from the date the work the parties agreed on is completed.23 The Regulation also provides for the following: One dispute, one request for intervention – Although a request for intervention can relate to one dispute alone, a party cannot dissociate the constituting elements of the dispute in order to file multiple requests or otherwise act to abuse the right to have recourse to a third-person decider. Choice of third-person decider – Only persons whose names appear in the register kept by the Minister of Justice under the Regulation may act as third-person deciders. It is up to the party proposing a third-person decider to ensure that the person is available. In the event of disagreement, the parties draw lots. Procedure – As long as they ensure that the procedure is equitable and complies with the principle of proportionality, the third-person decider can conduct the intervention according to the procedure they determine. Also, unless the third-person decider decides otherwise, the proceedings are conducted orally, whereas testimony is given by way of a written affidavit. No lawyers – Parties cannot be represented by a lawyer during proceedings, although a lawyer may advise them. Confidentiality – The entire intervention remains confidential, subject to agreement between the parties or legal obligations. Third-person decider’s fees – As a general rule, the third-person decider’s fees are allocated equally between the parties (50-50), although the third-person decider may depart from this allocation if they consider that a party’s actions during the intervention were harmful, in particular because of abusive conduct or failure to meet deadlines. The third-person decider’s fees are capped according to the value of the dispute. Conclusion This new compulsory scheme now imposes, for cases covered, a prompt payment process and speeds up the settlement of disputes arising during the performance of the majority of public construction contracts. It will have major repercussions on the practices of contractors, subcontractors and public bodies alike. The imposition of the strict deadlines by the Regulation could require contractors and subcontractors to improve their internal processes to better process payment requests and properly document potential claims. Although the Regulation is intended to simplify and accelerate payments, some contractors and subcontractors may find it difficult to meet the imposed deadlines, especially in large-scale projects involving many stakeholders, as delays are likely to be passed on from one level of subcontractor to another. Whether this system will be successful will depend on the ability of the parties to quickly adapt to the new requirements and to make effective use of the third-person decider to resolve disputes. If you have any questions or need advice, we invite you to contact a member of our specialized construction law team at Lavery. Section 94 of the Regulation. SQ, 2022, c. 18. Sections 32 and 33 of the Regulation. Section 5 of the Regulation. Section 10 of the Regulation. Section 15 of the Regulation. Sections 7 and 8 of the Regulation. Section 5 of the Regulation. Section 6 para. 1 of the Regulation. Section 6 of the Regulation. Section 11 of the Regulation. Section 12 para. 1 of the Regulation. Section 22 of the Regulation. Section 23 of the Regulation. Section 25 of the Regulation. Section 26 of the Regulation. Section 20 of the Regulation. Section 28 of the Regulation. Section 16 of the Regulation. Section 16 of the Regulation. Sections 34 to 76 of the Regulation. Section 63 of the Regulation. Section 34 of the Regulation.

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