Agricultural Law Netletter - 7 November 2016

HIGHLIGHTS

* A Justice of the Federal Court has overturned a decision of an arbitrator appointed under s. 169.37 and 169.38 of the Canada Transportation Act. The arbitrator had rejected Canadian National Railway's argument that it was entitled to ration the number of cars supplied during peak periods of demand and inclement winter weather. The Court held that by eliminating the possibility of rationing cars in appropriate circumstances, the arbitrator ignored CN's obligations to other shippers and its operational restrictions, both of which are mandatory statutory considerations under the Act. (Canadian National Railway Company v. Louis Dreyfus Commodities Canada Ltd., CALN/2016-026, [2016] F.C.J. No. 1163, Federal Court)

NEW CASE LAW

Canadian National Railway Company v. Louis Dreyfus Commodities Canada Ltd.;

CALN/2016-026,

Full text: [2016] F.C.J. No. 1163;

2016 FC 1190,

Federal Court,

J. O'Reilly J.,

October 25, 2016.

Rail Transportation -- Allocation of Rail Cars for Grain Transport -- Railway's Right to Ration Cars.

The Canadian National Railway Company ("CN") applied to the Federal Court for the judicial review of a decision made by an arbitrator pursuant to s. 169.37 and 169.38 of the Canada Transportation Act, SC 1996, c 10 (the "Act").

CN provides transportation services to Louis Dreyfus Commodities Canada Ltd. ("Dreyfus"), which is a seller and shipper of grain.

After CN and Dreyfus failed to agree on contractual terms for the 2015-2016 crop year, Dreyfus requested arbitration with the Canadian Transportation Agency (the "Agency"). The Agency referred the matter to an arbitrator in 2015.

Sections 169.37 and 169.38 of the Act provide as follows:

169.37 The arbitrator's decision must establish any operational term described in paragraph 169.31(1)(a), (b) or (c), any term for the provision of a service described in paragraph 169.31(1)(d) or any term with respect to the application of a charge described in paragraph 169.31(1)(e), or any combination of those terms, that the arbitrator considers necessary to resolve the matters that are referred to him or her for arbitration. In making his or her decision, the arbitrator must have regard to the following:

the traffic to which the service obligations relate; the service that the shipper requires with respect to the traffic; any undertaking described in paragraph 169.32(1)(c) that is contained in the shipper's submission; the railway company's service obligations under section 113 to other...