Canadian National Railway Company v. Western Canadian Coal Corporation, 2007 FC 371

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2007 FC 371

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Date: 20070411

Docket: T-1744-05

Citation: 2007 FC 371

Ottawa, Ontario, April 11^th, 2007

PRESENT: The Honourable Mr. Justice Kelen

BETWEEN:

CANADIAN NATIONAL RAILWAY COMPANY

Applicant

and

WESTERN CANADIAN COAL CORPORATION

Respondent

and

ATTORNEY GENERAL OF CANADA and
ATTORNEY GENERAL OF BRITISH COLUMBIA

Interveners

REASONS FOR JUDGMENT AND JUDGMENT

[1] This application for judicial review of an arbitrator’s decision requires the Court to determine if the procedural fairness imposed by paragraph 2(e) of the Canadian Bill of Rights, S.C. 1960, c. 44 [reproduced in R.S.C. 1985, App. III] applies to the final offer arbitration (FOA) regime enacted by Parliament under sections 159 to 169 of the Canada Transportation Act, S.C. 1996, c. 10 (the Act). The applicant, Canadian National Railway Company, submits that the FOA regime deprived it of the right to a fair hearing in accordance with the principles of fundamental justice under the Canadian Bill of Rights because:

1. The accelerated time limits for filing materials and responding to a notice of arbitration do not allow the applicant sufficient time to prepare its case or to know the case it has to meet;

2. The Act provides no intelligible legal criteria to be applied by the arbitrator in making his or her decision; and

3. The Act denies the applicant access to the arbitrator’s reasons for decision.

The Parties

[2] The respondent, Western Canadian Coal Corporation (WCCC), is a public company which operates a coal mine in north-eastern British Columbia called the Dillon Coal Mine. WCCC ships its coal to customers in overseas markets. It is entirely dependant on rail service to transport the coal from the Dillon Mine to terminals in Prince Rupert, British Columbia where it is loaded onto vessels. The Dillon Mine only came into production in 2004.

[3] The applicant, Canadian National Railway Company (CN), acquired BC Rail in 2004 and is the only railroad serving the area of the Dillon Mine.

[4] The Attorney General of Canada and the Attorney General of British Columbia have intervened in support of the position of WCCC, and submit that the Canadian Bill of Rights does not apply to the final offer arbitration regime in the Act, and, in the alternative, it does not deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice as required by paragraph 2(e) of the Canadian Bill of Rights.

About the Final Offer Arbitration Regime

[5] In 1987 Parliament deregulated railroad freight rates and established provisions designed to facilitate the resolution of rate and service disputes between carriers and shippers. The FOA, which is set out in Part IV of the Act, provides one means of resolving such impasses through the use of an arbitrator or a panel of three arbitrators.

[6] The Federal Court of Appeal has considered the FOA, and I paraphrase, as follows:

1. the FOA provisions are aimed at resolving disputes in contractual relations of a commercial nature between shippers and railway carriers;

2. the FOA regime introduces a remedy to a dispute between the private parties through the use of an arbitrator;

3. the FOA regime is part of the legislative scheme chosen by Parliament to regulate freight rates without government authorities intervening;

4. FOA is a quick, simple and out-of-Court settlement of contractual disputes (see Canadian National Railway Company v. Canada (National Transportation Agency), [1996] 1 F.C. 355 (F.C.A.).

[7] The FOA may be invoked by a shipper if a contract with the carrier cannot be negotiated. The shipper invokes the FOA by filing the shipper’s “final offer” in confidence with the National Transportation Agency. The carrier then files its final offer. Both offers are then shown to the parties. The arbitrator must select one of the offers after the parties have exchanged information in support of their offers, interrogatories, responses to interrogatories, rebuttal evidence, if any, and presented evidence and submissions at a hearing before the arbitrator. Thus, the FOA is unlike regular arbitration where the parties mutually agree to submit a dispute to an arbitrator. In regular arbitrations, the arbitrator decides what is the reasonable amount for the contract.

[8] Since FOA forecloses the option of the arbitrator choosing a compromise position between the two offers, the design of FOA encourages the parties to settle the dispute through their own negotiations.

[9] The FOA process disciplines the parties to advance tempered offers because the more far reaching a party’s position, the greater likelihood that the other party’s final offer will be selected by the arbitrator. The FOA decision only applies for contracts one year or less. Accordingly, it is to be used as a stop-gap so that the parties can conduct their business with efficiency and certainty under the National Transportation Act, which introduced FOA as a provision to enhance the bargaining power of shippers, particularly captive shippers served by only one railway and with no alternative transportation services. The Act stipulates that the FOA process must be completed within 60 days of its initiation and that the arbitrator not issue any reasons for his or her selection of one of the two offers unless requested by both parties. The Act provides that the FOA decision will be final and binding and that there is no appeal except for judicial review.

Background Facts

[10] In 2004, WCCC began negotiations with CN over rail rates and conditions with respect to the movement of coal from the Dillon Mine. In September 2004, CN asked WCCC to pay upfront capital costs for upgrades required in order for CN to move the coal from the WCCC mine. WCCC rejected these conditions in September 2004 and raised the prospect of a FOA.

[11] Since no agreement could be reached, WCCC executed a seven month contract with CN from December 1, 2004 to June 30, 2005. WCCC took the position that the rates charged were excessive but that it had no option but to ship at those rates since CN was the only service provider, and WCCC had made commitments to customers. Following the December contract, negotiations began toward a new rail contract. Since the negotiations did not succeed, on June 23, 2005 WCCC served its notice of intention to proceed to FOA with respect to rail rates and other conditions of rail service.

Steps and timeframes in this FOA

[12] Sections 159 to 169 the Act details the steps and timeframes for the FOA. The respondent submitted the following summary of the eight steps in this arbitration:

1. Notice of Intention to submit the matter for FOA must be sent by the shipper to the carrier at least five days before the submission is filed with the Agency. (sub-section 161(3))

In the arbitration before Mr. Roberts, notice of intention was served June 23, 2005.

2. The submission for FOA containing the shipper’s final offer without dollar amounts is filed with the Agency and served on the railway. (paragraph 161(2)(a))

In the arbitration before Mr. Roberts, the submission for FOA containing the shipper’s final offer without dollar amounts was filed with the Agency July 2, 2005.

3. Within 10 days after the FOA submission is filed, the shipper and the railway file their final offers with dollar amounts with the Agency. (section 161.1) The Agency distributes the final offer of each party to the other.

In the arbitration before Mr. Roberts, the final offers of both parties with dollar amounts were filed July 12, 2005.

4. Within five days from the receipt of the final offers with dollar amounts, the Agency refers the matter to an arbitrator. (sub-section 162(1))

In the arbitration before Mr. Roberts, the Agency referred the matter to the arbitrator July 18, 2005.

5. Within 15 days from the appointment of the arbitrator, the parties exchange the information they intend to submit in support of their final offers. (sub-section 163(3))

In the arbitration before Mr. Roberts, the parties exchanged the information they intended to submit in support of their final offers August 2, 2005.

6. Within seven days after the exchange of information, each party may direct interrogatories to the other (sub-section 163(4))

In the arbitration before Mr. Roberts, the parties directed interrogatories to each other August 9, 2005.

7. Within 15 days after receipt of the interrogatories, the parties exchange their answers to the interrogatories (sub-section 163(4))

In the arbitration before Mr. Roberts, the parties exchanged the answers to interrogatories August 24, 2005.

8. Unless otherwise agreed by the parties, the decision of the arbitrator is rendered within 60 days after the filing of the submission for arbitration. (paragraph 165(2)(b))

In the arbitration before Mr. Roberts, the hearing was held August 30, August 31, September and September 2, 2005. The decision of the arbitrator was rendered September 6, 2005.

[13] By letter dated September 13, 2005, CN sought WCCC’s concurrence under subsection 165(5) of the Act to request from the arbitrator reasons for his decision dated September 6, 2005. By letter dated the same day, WCCC refused to concur with the applicant in its request for reasons.

Relevant Legislation

[14] The legislation relevant to this application is:

1. the Canada Transportation Act, S.C. 1996, c. 10; and

2. the Canadian Bill of Rights, S.C. 1960, c. 44 [reproduced in R.S.C. 1985, App. III].

The relevant excerpts of these statutes are reproduced at Appendix “A” to these Reasons.

Issues

[15] The issues raised in this application are as follows:

1. Does paragraph 2(e) of the Canadian Bill of Rights apply in respect of the FOA decision-making process?

2. Is the FOA process established under sections 159 to 169 of the Act incompatible with paragraph 2(e) of the Canadian Bill of Rights on the basis that it does not allow the applicant adequate time to prepare its case or to know the case it has to meet?

3. Are the FOA sections of the Act incompatible with paragraph 2(e) of the Canadian Bill of Rights on the basis that they provide no legal criteria to be applied by an arbitrator in making his or her decision?

4. Is subsection 165(4) of the Act incompatible with paragraph 2(e) of the Canadian Bill of Rights on the basis that it denies the applicant reasons for the arbitrator’s decision?

Standard of Review

[16] All of the objections raised in this application concern issues of procedural fairness. The Supreme Court of Canada has held that questions of procedural fairness or natural justice are subject to the correctness standard: Ellis-Don Ltd. v. Ontario (Labour Relations Board), [2001] 1 S.C.R. 221 at paragraph 65. If a breach of the duty of fairness is found, the decision must be set aside: see, e.g., Congrégation des témoins de Jéhovah de St-Jérôme-Lafontaine v. Lafontaine (Village), [2004] 2 S.C.R. 650 at 665.

Analysis

Issue No. 1: Does paragraph 2(e) of the Canadian Bill of Rights apply in respect of the arbitrator’s decision-making process?

[17] Before addressing the alleged breaches of the right to a fair hearing in accordance with the principles of fundamental justice raised in this application, it is necessary to determine whether paragraph 2(e) of the Canadian Bill of Rights applies in respect of the arbitrator’s decision-making process. Paragraph 2(e) reads:

Construction of law

2. Every law of Canada shall, unless it is expressly declared by an Act of the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgment or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to […]

(e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations;

Interprétation de la législation

2. Toute loi du Canada, à moins qu’une loi du Parlement du Canada ne déclare expressément qu’elle s’appliquera nonobstant la Déclaration canadienne des droits, doit s’interpréter et s’appliquer de manière à ne pas supprimer, restreindre ou enfreindre l’un quelconque des droits ou des libertés reconnus et déclarés aux présentes, ni à en autoriser la suppression, la diminution ou la transgression, et en particulier, nulle loi du Canada ne doit s’interpréter ni s’appliquer comme […]

e) privant une personne du droit à une audition impartiale de sa cause, selon les principes de justice fondamentale, pour la définition de ses droits et obligations;

[18] The Canadian Bill of Rights was enacted in 1960 by the Diefenbaker government as an ordinary statute of the federal Parliament applying only to federal laws. The Bill of Rights lost most of its importance in 1982 with the adoption of the Canadian Charter of Rights and Freedoms as most of the rights and freedoms guaranteed by the Bill of Rights are now guaranteed by the Charter.

[19] Two provisions of the Bill of Rights that are not duplicated by the Charter are (1) the “due process” clause in paragraph 1(a), which extends to the protection property, and the guarantee in paragraph 2(e) of a fair hearing for the determination of rights and obligations. Both these provisions go beyond the guarantees in the Charter and remain operative constraints on federal activity. See Hogg, Peter W., Constitutional Law of Canada, Toronto: Carswell, loose-leaf ed. at 32-2.

[20] In Hogan v. The Queen, [1975] S.C.R. 282, 294-295, Laskin J. (as he then was) described the Bill of Rights status in these terms: “The Canadian Bill of Rights is a half-way house between a purely common law regime and a constitutional one; it may aptly be described as a quasi-constitutional instrument.” The description of the Bill of Rights as “quasi-constitutional legislation” was affirmed by the Supreme Court of Canada in Bell Canada v. Can. Telephone Employees Assn., [2003] 1 S.C.R. 884 at paragraph 28.

[21] A more recent application of the Bill of Rights occurred in Authorson v. Canada (Attorney General), [2003] 2 S.C.R. 40, in which a group of disabled veterans argued that they were denied due process through the passage of federal legislation which barred claims for interest payable on pension accounts before 1990. The veterans in Authorson were unsuccessful because the Court held that paragraph 2(e) did not apply to the legislative process itself. The veterans were not entitled to a “fair hearing” before Parliament expropriated their property through legislation. The Court’s comments on the Bill of Rights, per Major J., provide useful direction:

10 The Bill of Rights is a federal statute that renders inoperative federal legislation inconsistent with its protections. […]

[…]

32 Where federal legislation conflicts with the protections of the Bill of Rights, unless the conflicting legislation expressly declares that it operates notwithstanding the Bill of Rights as required by s. 2, the Bill of Rights applies and the legislation is inoperative; R. v. Drybones, [1970] S.C.R. 282 […]

[…]

34 With the constitutional amendment and the adoption of the Charter in 1982, many of the protections of the Bill of Rights gained constitutional status. The Bill of Rights, however, provides two protections not expressly available in the Charter. Section 1(a) protects the enjoyment of property, the deprivation of which must occur through the due process of law. Section 2(e) guarantees a fair hearing in accordance with the principles of fundamental justice for the determination of rights and obligations. These two provisions are the essence of this appeal.

[Emphasis added]

[22] As a matter of statutory interpretation, four basic conditions must be met in order for paragraph 2(e) to operate in respect of the arbitrator’s decision:

1. the applicant must be a “person” within the meaning of paragraph 2(e);

2. the arbitration process must constitute a “hearing […] for the determination of [the applicant’s] rights and obligations”;

3. the arbitration process must be found to violate “the principles of fundamental justice”; and

4. the alleged defect in the arbitration process must arise as a result of a “law of Canada” which has not been expressly declared to operate notwithstanding the Canadian Bill of Rights.

1^st Requirement

[23] No controversy arises out of the first of these requirements. As a corporation, the applicant is entitled to the benefits of paragraph 2(e): see Canada (Attorney General) v. Central Cartage Co., [1990] 2 F.C. 641; 71 D.L.R. (4th) 253; 109 N.R. 357; 45 Admin. L.R. 1 (F.C.A.) at para. 32; Brown D.J.M., Q.C. and Evans J.M. (The Honourable), Judicial Review of Administrative Action in Canada, Toronto: Canvasback, 2004 at 8-31.

2^nd Requirement

[24] The second requirement is that the arbitration process constitute a “hearing […] for the determination of [the applicant’s] rights and obligations”. The respondent argues that the final offer arbitration process does not afford the applicant any right or impose on it any obligation, and thus falls outside the scope of paragraph 2(e).

[25] In my view, the impugned arbitration process is one that determines the rights and obligations of the parties involved. In particular, the arbitrator is tasked with determining the obligations of the applicant—namely the obligation to provide freight service as a carrier, the conditions associated with the service, and the rate at which it is to be compensated for providing the service.

[26] In 2003, the Québec Court of Appeal held in Air Canada v. Canada (Attorney General) (2003), 222 D.L.R. (4^th) 385, that rights and obligations of a purely economic nature affected by a law of Canada are protected by the Bill of Rights. Accordingly, the affected party is entitled to a fair hearing in accordance with the principles of fundamental justice. The Court of Appeal stated:

¶ 40. From the outset, the Attorney General of Canada (respondent) argues that Air Canada cannot rely on the Canadian Bill of Rights. The Attorney General argues that this law is outdated, and that generally the courts refuse to use it to strike down laws subsequently enacted. The respondent adds that it is impossible to determine what right of Air Canada has been infringed and it is far from uniform or accepted law that s. 2(e) of the Canadian Bill of Rights protects rights of a purely economic nature.

¶ 41. I do not share this restrictive approach argued by the respondent, which for all intents and purposes would have the effect of sterilizing the Canadian Bill of Rights. [ …]

[ …]

¶ 49. To be entitled to the protection of s. 2(e), a party is not required to allege infringement of a fundamental right. Once it is established that the complainant’s rights or obligations are affected in the broadest sense, he or she is entitled to a fair hearing of his or her case.

[27] The respondent’s argument is that the FOA process merely settles disputes of a private and commercial matter between the parties. My view is that the unique nature of the FOA scheme imposed by law distinguishes it from ordinary commercial arbitration. This is not a situation in which the parties freely consent to settling their dispute by arbitration or to have the terms of their contract determined by the arbitrator. Instead, I would characterize the process as one in which a contract is, in effect, formed as soon as the matter is submitted by the shipper to the Agency for referral to FOA. At that point, the carrier is bound to the terms of whichever offer is selected by the arbitrator – an obligation imposed on it by statute.

[28] The arbitrator’s determination is unlike the granting of a mere “privilege” such as citizenship or a discretionary licence, to which paragraph 2(e) has been held to be inapplicable: see Dowhopoluk v. Martin, [1972] 1 O.R. 311 (Ont. H.C.J.); McCaud, Ex p., [1970] 1 O.R. 772 (Ont. H.C.J.). As will be discussed in greater detail below, section 5 of the Act declares certain objectives to be considered by an arbitrator in reaching his or her decision. In my view, the final offer arbitration regime gives rise to “the application of law to individual circumstances in a proceeding before a court, tribunal or similar body” and therefore attracts the protections of paragraph 2(e) of the Canadian Bill of Rights: Authorson v. Canada (Attorney General), above, at paragraph 61.

4^th Requirement

[29] The third requirement is considered below in issues 2, 3, and 4. The final requirement is that the defect giving rise to conflict with paragraph 2(e) must arise by operation of a “law of Canada” not expressly declared to operate notwithstanding the Canadian Bill of Rights. I reject the respondent’s submission that the private nature of the parties’ dispute indicates that the arbitration lacks the governmental action necessary to bring it within the scope of the Canadian Bill of Rights. The arbitration regime has as its legal source sections 159 to 169 of the Act. Participation in the arbitration process and compliance with its result has been mandated by the Parliament of Canada; therefore, the protections of paragraph 2(e) apply.

[30] Accordingly, I conclude that paragraph 2(e) applies in respect of the arbitrator’s decision-making process.

Issue No. 2: Is the FOA process established under sections 159 to 169 of the Act incompatible with paragraph 2(e) of the Canadian Bill of Rights on the basis that it does not allow the applicant adequate time to prepare its case or to know the case it has to meet?

[31] The applicant argues that various aspects of the FOA regime have the effect of denying it the opportunity to prepare adequately its case and to know the case it has to meet. In particular, the applicant challenges the following features of the arbitration regime, which it argues are unfairly prejudicial and constitute a violation of paragraph 2(e) of the Canadian Bill of Rights:

1. Paragraph 161(2)(a) excludes for 10 days from the shipper’s final offer the dollar price it is willing to pay for the rail service contained in the offer. Accordingly, the carrier must respond to the shipper’s final offer without knowing the dollar price the shipper is willing to pay;

2. The Act does not provide for the disclosure by the shipper of the initial submission of facts and legal grounds on which it intends to rely in support of its offer. Accordingly, the carrier must respond to the shipper’s final offer without knowledge of the facts upon which the offer is based;

3. The final offers of the parties, once submitted to the Agency, cannot be withdrawn or amended;

4. The carrier has only 30 days from the first filing of the FOA by the shipper to provide the evidence upon which the carrier intends to rely in support of its final offer; and

5. The carrier is unable to obtain an extension of time or suspension of the arbitration process without the shipper’s consent.

[32] As the Supreme Court of Canada held in R. v. Duke, [1972] S.C.R. 917, paragraph 2(e) requires that a federal tribunal adjudicating upon rights must “act fairly, in good faith, without bias and in a judicial temper, and must give to [a party] the opportunity adequately to state his case.” In Canada (Attorney General) v. Central Cartage Co., above, Chief Justice Iacobucci stated:

¶40 There is no doubt that procedural fairness generally implies the right to state one's case adequately. This right is part of the broader rule commonly expressed by the Latin expression of audi alteram partem -- to hear the other side.

¶41 But it has been well recognized that there can be circumstances where the audi alteram partem rules can be qualified, and these qualifications have developed over time both by the common law and by statute. […]

[33] The duty of procedural fairness varies with the context of each case, the particular statute and the rights affected. In Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, Justice L’Heureux-Dubé stated at page 837:

The existence of a duty of fairness, however, does not determine what requirements will be applicable in a given set of circumstances. … [T]he concept of procedural fairness is eminently variable and its content is to be decided in the specific context of each case. All of the circumstances must be considered in order to determine the content of the duty of procedural fairness.

The Court in Baker identified the following non-exhaustive factors as relevant in determining the content of the duty of fairness:

a) the nature of the decision being made and the process following in making it;

b) the nature of the statutory scheme and the terms of the statute pursuant to which the body operates;

c) the importance of the decision to the individuals affected;

d) the legitimate expectations of the person challenging the expectation; and

e) the choices of procedure made by the agency itself.

[34] In order to examine the contextual nature of the decision-making process at issue in this application, it is helpful to review the Federal Court of Appeal’s description of the FOA provisions under the former National Transportation Act, 1987, R.S.C. 1985 (3rd Supp.), c. 28, in Canadian National Railway Co. v. Canada (National Transportation Agency), above, at paragraph 15:

[…] It is true that the impugned provisions are aimed at contractual relations of a commercial nature between shippers and carriers, that they introduce a remedy to a dispute between private parties without any public interest issue being engaged and that they create a scheme which gives the Agency a direct role only at the outset, the decision of the arbitrator being final and binding. But it is trite law, absent colourability, that legislation on a subject-matter within federal jurisdiction can affect matters within provincial jurisdiction, including property and civil rights. The final offer arbitration provisions of the NTA 1987 establish a method of determining rates in special instances and, as such, are an integral part of the whole legislative scheme chosen by Parliament to regulate freight rates in the new economic and commercial context now prevailing in Canada. They are specifically addressed to disputes relating to rates or conditions associated with the movement of goods, issues that are integral to the operation of the railways. The quick, simple and out-of-court settlement of those disputes, with indirect involvement of the Agency, is no doubt a means, and an important one, to achieve the object and purpose of the new National Transportation Act, 1987 which, as stated in more detail in section 3 [as am. by S.C. 1992, c. 21, s. 33] thereof, is aimed, in effect, at rendering the railway industry, in particular, more efficient and more competitive, and the transportation system, generally, more economical. The fact that the issues of rates and conditions of carriage arise in the course of or with respect to the execution of a private contract cannot have the effect of nullifying their significance with respect to a legitimate and valid federal objective and, as a result, take them out of the federal legislative competence.

[Emphasis added]

[35] Final offer arbitration has been described as “an intentionally high risk form of arbitration” that encourages settlement and tempers final positions. The arbitration resolves isolated disputes over rates to be charged by a carrier for a period of one year when the parties are unable to agree. The arbitrator’s task is to select the more reasonable of the two offers submitted. As is indicated in paragraph 165(6)(a) of the Act, the arbitrator’s decision is intended to bring finality to the dispute. The limited duration of the decision’s binding effect on the parties is closely linked to the limited timeframe within which the arbitration process occurs. The issue raised by the applicant is whether, by virtue of this limited timeframe, the arbitration regime unlawfully deprives the applicant of an adequate opportunity to prepare and present its case.

[36] The chart attached as Appendix “B” sets out the number of days in which the parties had to complete the different steps in this FOA including:

1. 31 days to file evidence in support of the final offers;

2. 7 days to direct interrogatories (after receiving the evidence in support of the final offer);

3. 5 days to respond to the interrogatories;

4. in this arbitration the parties had the opportunity to file rebuttal evidence 10 days prior to the hearing which evidence was considered at the hearing; and

5. 58 days between the commencement of the arbitration proceedings and the beginning of the four day hearing conducted by the arbitrator.

[37] Additionally, I note that in the course of this particular arbitration, there were two pre-hearing conferences with the arbitrator regarding admissibility of evidence and procedures to be followed at the arbitration. CN did not express any objection about any aspect of the FOA. As well, during the arbitration, the arbitrator asked for cost information from CN for the movement of the coal. CN declined. Then the arbitrator requested an extension of the time for the conduct of the arbitration so that he could obtain technical assistance from the Agency. CN declined to grant the extension.

[38] The crux of the applicant’s argument on this issue is that the final arbitration process unfairly disadvantages carriers which are compelled to participate in arbitration proceedings once initiated by a shipper. The shipper, by choosing when to submit a matter to the Agency for arbitration, has the advantage of being able to prepare its witnesses, evidence and submissions before filing the FOA. Meanwhile, the applicant argues, the carrier is forced to respond in a short timeframe to an offer without knowing the dollar amount involved and without having had a similar opportunity to prepare its case for arbitration.

[39] Although the statutory framework provides for an expedited arbitration process, it cannot be said that the applicant’s participation in these proceedings began only when the respondent served notice of its intention to submit an issue to arbitration. Section 161 of the Act provides that final arbitration is available “if the matter cannot be resolved between the carrier and the shipper”. The Act contemplates that the parties will have negotiated, or at least communicated, in an attempt to set the applicable shipping rate and conditions. In this case, the respondent’s negotiations with the applicant over rates and conditions began shortly after the applicant acquired B.C. Rail on July 14, 2004. In a letter dated September 15, 2004, the applicant submitted to the respondent a proposal relating to rates, fuel surcharges, a demand for upfront capital for upgrades, a demand for the respondent to provide capital for communication systems, and a sharing of rail upgrade costs. As early as September 22, 2004, the respondent raised with the applicant the prospect of submitting the issues of rates and conditions to final offer arbitration. This was 9 months before the respondent submitted the issue to FOA.

[40] The respondent submits that, as a captive shipper, it was left with no choice but to capitulate to the applicant’s demands and, accordingly, it entered into a confidential 7 month transportation contract effective December 1, 2004 to June 30, 2005. The parties then entered negotiations toward a new rail contract. The information submitted to the arbitrator documents these negotiations, which lasted until June 23, 2005 when the respondent served its notice of intention to proceed to FOA. Among the issues that were negotiated were the rail rates, the payment for the applicant’s infrastructure, scheduling, train sizes, types of cars and frequency, the applicant’s level of service, and the length of the contract.

[41] Based upon the statutory scheme, the fact that both parties were obviously prepared for the hearing in that they both filed extensive complex and technical information, and the fact that CN at no point during the course of the FOA process raised any objection to not having the opportunity of knowing the case they had to meet because of time constraints, the Court concludes that this basis for the alleged breach of the right to a fair hearing is without merit.

[42] In preparing a final offer, the carrier has the benefit of general market information, and I see no reason for concluding that the arbitration regime enacted by Parliament deprives the carrier of material information necessary to submit a reasonable offer. The applicant’s lack of full knowledge of the rates and conditions contained within the respondent’s final offer does not give rise to a violation of the principles of fundamental justice. The FOA regime is designed to require that the carrier submit its final offer before knowing the dollar amount of the shipper’s final offer. This feature makes the arbitration a high risk for the carrier and it is designed to cause the carrier to temper its offer by making it as reasonable as possible. While CN does not think this is fair, it is Parliament’s regime to balance the bargaining power between a railroad in a monopolistic position and a shipper totally dependent on that railroad.

[43] In view of Parliament’s intent that this FOA process be expedited, and upon the Court reviewing the voluminous information filed by both parties at this arbitration, the Court is satisfied that the applicant had adequate time to prepare its case and to know the case it had to meet. Accordingly, the applicant’s challenge on this basis cannot succeed.

Issue No. 3: Are the impugned sections of the Act incompatible with paragraph 2(e) of the Canadian Bill of Rights on the basis that they provide no legal criteria to be applied by an arbitrator in making his or her decision?

[44] The applicant argues that the Act provides no legal criteria and no legal standard to be applied by the arbitrator in reaching a decision. The absence of legal criteria, the applicant argues, is contrary to the principles of fundamental justice since it can lead to an arbitrary decision by the arbitrator.

[45] A review of the Act as a whole, and the arbitration provisions in particular, reveals that there are legal criteria to be considered by the arbitrator in reaching a decision. Subsection 164(2) of the Act provides:

Arbitration considerations

(2) Unless the parties agree otherwise, in rendering a decision the arbitrator shall have regard to whether there is available to the shipper an alternative, effective, adequate and competitive means of transporting the goods to which the matter relates and to all considerations that appear to the arbitrator to be relevant to the matter.

Éléments à prendre en considération

(2) Sauf accord entre les parties à l’effet contraire, l’arbitre tient également compte de la possibilité pour l’expéditeur de faire appel à un autre mode de transport efficace, bien adapté et concurrentiel, des marchandises en question ainsi que de tout autre élément utile.

In addition, section 5 of the Act declares certain objectives of the National Transportation Policy. These objectives would appropriately be addressed by the parties in framing their submissions and considered by the arbitrator in determining the relative reasonableness of the parties’ final offers:

Declaration

5. It is hereby declared that a safe, economic, efficient and adequate network of viable and effective transportation services accessible to persons with disabilities and that makes the best use of all available modes of transportation at the lowest total cost is essential to serve the transportation needs of shippers and travellers, including persons with disabilities, and to maintain the economic well-being and growth of Canada and its regions and that those objectives are most likely to be achieved when all carriers are able to compete, both within and among the various modes of transportation, under conditions ensuring that, having due regard to national policy, to the advantages of harmonized federal and provincial regulatory approaches and to legal and constitutional requirements,

(a) the national transportation system meets the highest practicable safety standards,

(b) competition and market forces are, whenever possible, the prime agents in providing viable and effective transportation services,

(c) economic regulation of carriers and modes of transportation occurs only in respect of those services and regions where regulation is necessary to serve the transportation needs of shippers and travellers and that such regulation will not unfairly limit the ability of any carrier or mode of transportation to compete freely with any other carrier or mode of transportation,

(d) transportation is recognized as a key to regional economic development and that commercial viability of transportation links is balanced with regional economic development objectives so that the potential economic strengths of each region may be realized,

(e) each carrier or mode of transportation, as far as is practicable, bears a fair proportion of the real costs of the resources, facilities and services provided to that carrier or mode of transportation at public expense,

(f) each carrier or mode of transportation, as far as is practicable, receives fair and reasonable compensation for the resources, facilities and services that it is required to provide as an imposed public duty,

(g) each carrier or mode of transportation, as far as is practicable, carries traffic to or from any point in Canada under fares, rates and conditions that do not constitute

(i) an unfair disadvantage in respect of any such traffic beyond the disadvantage inherent in the location or volume of the traffic, the scale of operation connected with the traffic or the type of traffic or service involved,

(ii) an undue obstacle to the mobility of persons, including persons with disabilities,

(iii) an undue obstacle to the interchange of commodities between points in Canada, or

(iv) an unreasonable discouragement to the development of primary or secondary industries, to export trade in or from any region of Canada or to the movement of commodities through Canadian ports, and

(h) each mode of transportation is economically viable,

and this Act is enacted in accordance with and for the attainment of those objectives to the extent that they fall within the purview of subject-matters under the legislative authority of Parliament relating to transportation.

Déclaration

5. Il est déclaré que, d’une part, la mise en place d’un réseau sûr, rentable et bien adapté de services de transport viables et efficaces, accessibles aux personnes ayant une déficience, utilisant au mieux et aux moindres frais globaux tous les modes de transport existants, est essentielle à la satisfaction des besoins des expéditeurs et des voyageurs — y compris des personnes ayant une déficience — en matière de transports comme à la prospérité et à la croissance économique du Canada et de ses régions, et, d’autre part, que ces objectifs sont plus susceptibles de se réaliser en situation de concurrence de tous les transporteurs, à l’intérieur des divers modes de transport ou entre eux, à condition que, compte dûment tenu de la politique nationale, des avantages liés à l’harmonisation de la réglementation fédérale et provinciale et du contexte juridique et constitutionnel :

a) le réseau national des transports soit conforme aux normes de sécurité les plus élevées possible dans la pratique;

b) la concurrence et les forces du marché soient, chaque fois que la chose est possible, les principaux facteurs en jeu dans la prestation de services de transport viables et efficaces;

c) la réglementation économique des transporteurs et des modes de transport se limite aux services et aux régions à propos desquels elle s’impose dans l’intérêt des expéditeurs et des voyageurs, sans pour autant restreindre abusivement la libre concurrence entre transporteurs et entre modes de transport;

d) les transports soient reconnus comme un facteur primordial du développement économique régional et que soit maintenu un équilibre entre les objectifs de rentabilité des liaisons de transport et ceux de développement économique régional en vue de la réalisation du potentiel économique de chaque région;

e) chaque transporteur ou mode de transport supporte, dans la mesure du possible, une juste part du coût réel des ressources, installations et services mis à sa disposition sur les fonds publics;

f) chaque transporteur ou mode de transport soit, dans la mesure du possible, indemnisé, de façon juste et raisonnable, du coût des ressources, installations et services qu’il est tenu de mettre à la disposition du public;

g) les liaisons assurées en provenance ou à destination d’un point du Canada par chaque transporteur ou mode de transport s’effectuent, dans la mesure du possible, à des prix et selon des modalités qui ne constituent pas :

(i) un désavantage injuste pour les autres liaisons de ce genre, mis à part le désavantage inhérent aux lieux desservis, à l’importance du trafic, à l’ampleur des activités connexes ou à la nature du trafic ou du service en cause,

(ii) un obstacle abusif à la circulation des personnes, y compris les personnes ayant une déficience,

(iii) un obstacle abusif à l’échange des marchandises à l’intérieur du Canada,

(iv) un empêchement excessif au développement des secteurs primaire ou secondaire, aux exportations du Canada ou de ses régions, ou au mouvement des marchandises par les ports canadiens;

h) les modes de transport demeurent rentables.

Il est en outre déclaré que la présente loi vise la réalisation de ceux de ces objectifs qui portent sur les questions relevant de la compétence législative du Parlement en matière de transports.

[46] In my view, the Act provides meaningful direction to the arbitrator and the parties with respect to the relevant criteria to be considered in the arbitration process. Indeed, a review of the material before the arbitrator indicates that the parties’ submissions were framed in light of these criteria notwithstanding the applicant’s assertion that the arbitration regime lacks an intelligible standard against which to decide the issues in dispute. In paragraphs 31 and 32 of the respondent’s memorandum, the respondent sets out eight criteria referred to by CN in its evidence and nine criteria referred to by WCCC in its evidence. From the record, it is clear that the parties did identify the relevant criteria to the arbitrator of this case. Therefore, I cannot conclude that the Act violates paragraph 2(e) of the Canadian Bill of Rights on the basis that it fails to provide legal criteria to be applied by the arbitrator in reaching his decision.

Issue No. 4: Is subsection 165(4) of the Act incompatible with paragraph 2(e) of the Canadian Bill of Rights on the basis that it denies the applicant access to reasons for the arbitrator’s decision?

[47] Subsection 165(4) prevents the arbitrator from providing reasons for decision unless requested by all parties within a prescribed time period. In this case, the respondent declined to concur with the applicant’s request for reasons. The applicant argues that the denial of reasons constitutes a breach of procedural fairness and a violation of paragraph 2(e) of the Canadian Bill of Rights.

[48] In Baker, above, Justice L’Heureux-Dubé commented on the contextual nature of the inquiry into whether reasons are required in a given set of circumstances:

¶43 In my opinion, it is now appropriate to recognize that, in certain circumstances, the duty of procedural fairness will require the provision of a written explanation for a decision. The strong arguments demonstrating the advantages of written reasons suggest that, in cases such as this where the decision has important significance for the individual, when there is a statutory right of appeal, or in other circumstances, some form of reasons should be required. This requirement has been developing in the common law elsewhere.

[Emphasis added]

[49] In this case, at issue is a form of interest arbitration operating under a statutory framework that expressly states that no reasons are to be provided except where both parties consent. At stake are purely commercial interests, rather than fundamental personal liberties. There is no right of appeal from the arbitrator’s decision. It is final and binding. Moreover, time is of the essence. The arbitrator is not bound by precedent, and accordingly the issues to be decided by the arbitrator do not transcend the interests of the parties involved. For the Court to impose a requirement of reasons in the context of an arbitration conducted under the Act, the applicant must demonstrate that there are some “other circumstances” that require it.

[50] While there is no opportunity under the Act to appeal the arbitrator’s decision, as an administrative decision the decision is subject to judicial review. The applicant argues that the absence of reasons renders nugatory its opportunity to seek judicial review.

[51] It is evident to the Court that there are several reasons why the FOA regime dictates “no reasons”. First, the delivery of reasons may delay the decision, which under the Act must be rendered expeditiously. The purpose of the FOA is to resolve a contract dispute and impose binding conditions on the parties for a limited time period not exceeding one year.

[52] The FOA process is intended to bring certainty and finality to a contract dispute. Reasons invite applications for judicial review, which create uncertainty for a period of one year or more. The Court is satisfied that Parliament has provided for no reasons because:

1. the FOA process is intended to be expeditious, inexpensive, final and binding;

2. since the arbitrator cannot select a “reasonable” middle ground between the two offers or a compromise position, the arbitrator does not have to rationalize his decision. His decision is obvious, namely that the offer selected by the arbitrator is considered more reasonable than the other offer taking into account the relevant factors; and

3. the lack of reasons further encourages the parties to reach a negotiated contract settlement before FOA or at least to discipline the parties to temper their respective offers. The parties realize they have to make their offers as “reasonable” as possible in order to be selected.

[53] In Hudson’s Bay Company v. British Columbia (Labour Relations Board) (1996), 31 B.C.L.R. (3d) 317, the Supreme Court of British Columbia recognized that dispute settlement arbitration can take many forms. With respect to “interest arbitration” where the arbitrator functions as a surrogate for collective bargaining and the arbitral awards take the form of and serve the same purpose as collective agreements, the Court said the arbitrator’s decision does not normally contain reasons for the decision: see paragraph 20 citing J. M. Brown and David M. Beady, Canadian Labour Arbitration, 3^rd Edition (Agincourt, Ontario: Canada Law Book, 1988) at page 1-1.

[54] The Court was referred by the Attorney General of Canada to Williams v. Canada (Minister of Citizenship and Immigration), [1977] 2 F.C. 646 per Strayer J.A., who held that:

1. the principles of fundamental justice never imposed a duty on tribunals to give reasons where a statute has not specifically so provided (paragraph 39);

2. the Court can judicially review a decision in the absence of reasons where the decision, on its face, is perverse or where there is evidence of facts being before the tribunal which manifestly required a different result or which were irrelevant yet apparently determinative of the result;

3. the decision was based on an obvious error of law (paragraph 40);

4. reasons are not necessary to show that a decision is unlawful where it can be shown that the decision is patently perverse, patently unlawful or explicable only on the assumption of bad faith (paragraph 43);

5. while paragraph 2(e) of the Canadian Bill of Rights requires a “fair hearing”, the absence of reasons for decision does not affect the “hearing”.

[55] In addition, the two Attorneys General argue that the absence of reasons does not prevent the Court from quashing decisions that constitute an excess of jurisdiction. If, for example, the arbitrator determines the conditions of transportation on his own, rather than selecting one of the two offers, the decision would be erroneous on its face and subject to intervention by the Court. With respect to breaches of procedural fairness in the course of the arbitration process, affidavit evidence would likely be more probative than written reasons for the arbitrator’s decision.

[56] Accordingly, I must conclude that the absence of reasons for the arbitrator’s decision in the context of an FOA does not violate paragraph 2(e) of the Canadian Bill of Rights.

Conclusion

[57] For these reasons, this application for judicial review is dismissed. The respondent is entitled to its costs to be paid by the applicant. The interveners shall each bear their own costs.

JUDGMENT

THIS COURT ORDERS that:

1. This application for judicial review is dismissed; and

2. The applicant shall pay the respondent’s costs.

“Michael A. Kelen”

Judge

APPENDIX “A”

1. Canada Transportation Act, S.C. 1996, c. 10

Declaration

(a) the national transportation system meets the highest practicable safety standards,

(b) competition and market forces are, whenever possible, the prime agents in providing viable and effective transportation services,

(g) each carrier or mode of transportation, as far as is practicable, carries traffic to or from any point in Canada under fares, rates and conditions that do not constitute

(ii) an undue obstacle to the mobility of persons, including persons with disabilities,

(iii) an undue obstacle to the interchange of commodities between points in Canada, or

(h) each mode of transportation is economically viable,

[…]

Definitions

6. In this Act, […]

"carrier" means a person who is engaged in the transport of goods or passengers by any means of transport under the legislative authority of Parliament; […]

"goods" includes rolling stock and mail; […]

"shipper" means a person who sends or receives goods by means of a carrier or intends to do so; […]

DIVISION IV

RATES, TARIFFS AND SERVICES

Interpretation

Definitions

111. In this Division, […]

"confidential contract" means a contract entered into under subsection 126(1);

[…]

Rates and Conditions of Service

Commercially fair and reasonable

112. A rate or condition of service established by the Agency under this Division must be commercially fair and reasonable to all parties.

Level of Services

Accommodation for traffic

113. (1) A railway company shall, according to its powers, in respect of a railway owned or operated by it,

(a) furnish, at the point of origin, at the point of junction of the railway with another railway, and at all points of stopping established for that purpose, adequate and suitable accommodation for the receiving and loading of all traffic offered for carriage on the railway;

(b) furnish adequate and suitable accommodation for the carriage, unloading and delivering of the traffic;

(d) furnish and use all proper appliances, accommodation and means necessary for receiving, loading, carrying, unloading and delivering the traffic; and

(e) furnish any other service incidental to transportation that is customary or usual in connection with the business of a railway company.

[…]

Confidential contract between company and shipper

(4) A shipper and a railway company may, by means of a confidential contract or other written agreement, agree on the manner in which the obligations under this section are to be fulfilled by the company.

[…]

116. […]

Confidential contract binding on Agency

(2) If a company and a shipper agree, by means of a confidential contract, on the manner in which service obligations under section 113 are to be fulfilled by the company, the terms of that agreement are binding on the Agency in making its determination.

[…]

Confidential contracts

126. (1) A railway company may enter into a contract with a shipper that the parties agree to keep confidential respecting

(a) the rates to be charged by the company to the shipper;

(b) reductions or allowances pertaining to rates in tariffs that have been issued and published in accordance with this Division;

(c) rebates or allowances pertaining to rates in tariffs or confidential contracts that have previously been lawfully charged;

(d) any conditions relating to the traffic to be moved by the company; and

(e) the manner in which the company shall fulfill its service obligations under section 113.

No investigation or arbitration of confidential contracts

(2) No party to a confidential contract is entitled to submit a matter governed by the contract to the Agency for final offer arbitration under section 161, without the consent of all the parties to the contract.

[…]

PART IV

FINAL OFFER ARBITRATION

Application

Application of sections 161 to 169

159. (1) Sections 161 to 169 apply only in respect of matters arising between shippers and carriers that involve

[…]

(b) the carriage of goods by railways to which this Act applies, other than the carriage of goods in trailers or containers on flat cars unless the containers arrive by water at a port in Canada, served by only one railway company, for further movement by rail or arrive by rail at such a port in Canada for further movement by water; or

[…]

Rail passenger services

160. Sections 161 to 169 also apply, with such modifications as the circumstances require, in respect of the rates charged or proposed to be charged by, or any of the conditions associated with the provision of services by, a railway company to

(a) a commuter rail authority designated by the government of a province; or

(b) a railway company engaged in passenger rail services.

Final Offer Arbitration

Submission for final offer arbitration

161. (1) A shipper who is dissatisfied with the rate or rates charged or proposed to be charged by a carrier for the movement of goods, or with any of the conditions associated with the movement of goods, may, if the matter cannot be resolved between the shipper and the carrier, submit the matter in writing to the Agency for a final offer arbitration to be conducted by one arbitrator or, if the shipper and the carrier agree, by a panel of three arbitrators.

Contents of submission

(2) A copy of a submission under subsection (1) shall be served on the carrier by the shipper and the submission shall contain

(a) the final offer of the shipper to the carrier in the matter, excluding any dollar amounts;

[…]

(c) an undertaking by the shipper to ship the goods to which the arbitration relates in accordance with the decision of the arbitrator;

(d) an undertaking by the shipper to the Agency whereby the shipper agrees to pay to the arbitrator the fee for which the shipper is liable under section 166 as a party to the arbitration; and

(e) the name of the arbitrator, if any, that the shipper and the carrier agreed should conduct the arbitration or, if they agreed that the arbitration should be conducted by a panel of three arbitrators, the name of an arbitrator chosen by the shipper and the name of an arbitrator chosen by the carrier.

Arbitration precluded in certain cases

(3) The Agency shall not have any matter submitted to it by a shipper under subsection (1) arbitrated if the shipper has not, at least five days before making the submission, served on the carrier a written notice indicating that the shipper intends to submit the matter to the Agency for a final offer arbitration.

Final offer arbitration not a proceeding

(4) A final offer arbitration is not a proceeding before the Agency.

Submission of final offers

161.1 (1) Within 10 days after a submission is served under subsection 161(2), the shipper and the carrier shall submit to the Agency their final offers, including dollar amounts.

Copies to the parties

(2) Without delay after final offers are submitted under subsection (1) by both the shipper and the carrier, the Agency shall provide the shipper and the carrier with copies of each other’s final offer.

If no final offer from a party

(3) If one party does not submit a final offer in accordance with subsection (1), the final offer submitted by the other party is deemed to be the final offer selected by the arbitrator under subsection 165(1).

Arbitration

162. (1) Notwithstanding any application filed with the Agency by a carrier in respect of a matter, within five days after final offers are received under subsection 161.1(1), the Agency shall refer the matter for arbitration

(a) if the parties did not agree that the arbitration should be conducted by a panel of three arbitrators, to the arbitrator, if any, named under paragraph 161(2)(e) or, if that arbitrator is not, in the opinion of the Agency, available to conduct the arbitration or no arbitrator is named, to an arbitrator on the list of arbitrators referred to in section 169 who the Agency chooses and determines is appropriate and available to conduct the arbitration; and

(b) if the parties agreed that the arbitration should be conducted by a panel of three arbitrators,

(i) to the arbitrators named by the parties under paragraph 161(2)(e) and to any arbitrator who those arbitrators have, within 10 days after the submission was served under subsection 161(2), notified the Agency that they have agreed on, or if those arbitrators did not so notify the Agency, to an arbitrator on the list of arbitrators referred to in section 169 who the Agency chooses and determines is appropriate and available to conduct the arbitration, or

(ii) if an arbitrator referred to in subparagraph (i) is not, in the opinion of the Agency, available to conduct the arbitration, to the arbitrators named in that subparagraph who are available and to an arbitrator chosen by the Agency from the list of arbitrators referred to in section 169 who the Agency determines is appropriate and available to conduct the arbitration.

Interpretation

(1.1) If a matter was referred to a panel of arbitrators, every reference in subsections (1.2) and (2) and sections 163 to 169 to an arbitrator or the arbitrator shall be construed as a reference to a panel of arbitrators or the panel of arbitrators, as the case may be.

Delay in referral

(1.2) If the shipper consents to an application referred to in subsection (1) being heard before the matter is referred to an arbitrator, the Agency shall defer referring the matter until the application is dealt with.

Assistance by Agency

(2) The Agency may, at the request of the arbitrator, provide administrative, technical and legal assistance to the arbitrator on a cost recovery basis.

Decision or order affecting a matter being arbitrated

162.1 The Agency may, in addition to any other decision or order it may make, order that an arbitration be discontinued, that it be continued subject to the terms and conditions that the Agency may fix or that the decision of the arbitrator be set aside if

(a) the Agency makes a decision or an order arising out of an application that is in respect of a matter submitted to the Agency for a final offer arbitration and that is filed by a carrier before the matter is referred to arbitration; and

(b) the decision or order affects the arbitration.

Procedure

163. (1) In the absence of an agreement by the arbitrator and the parties as to the procedure to be followed, a final offer arbitration shall be governed by the rules of procedure made by the Agency.

Procedure generally

(2) The arbitrator shall conduct the arbitration proceedings as expeditiously as possible and, subject to the procedure referred to in subsection (1), in the manner the arbitrator considers appropriate having regard to the circumstances of the matter.

Exchange of information

(3) Within fifteen days after the Agency refers a matter for arbitration, the parties shall exchange the information that they intend to submit to the arbitrator in support of their final offers.

Interrogatories

(4) Within seven days after receipt of the information referred to in subsection (3), each party may direct interrogatories to the other, which shall be answered within fifteen days after their receipt.

Withholding of information

(5) If a party unreasonably withholds information that the arbitrator subsequently deems to be relevant, that withholding shall be taken into account by the arbitrator in making a decision.

Arbitration information

164. (1) The arbitrator shall, in conducting a final offer arbitration between a shipper and a carrier, have regard to the information provided to the arbitrator by the parties in support of their final offers and, unless the parties agree to limit the amount of information to be provided, to any additional information that is provided by the parties at the arbitrator’s request.

Arbitration considerations

Summary process

164.1 If the Agency determines that a shipper’s final offer submitted under subsection 161.1(1) involves freight charges in an amount of not more than $750,000 and the shipper did not indicate a contrary intention when submitting the offer, sections 163 and 164 do not apply and the arbitration shall proceed as follows:

(a) within seven days after a matter is referred to an arbitrator, the shipper and the carrier may file with the arbitrator a response to the final offer of the other party;

(b) subject to paragraph (c), the arbitrator shall decide the matter on the basis of the final offers and any response filed under paragraph (a); and

(c) if the arbitrator considers it necessary, the arbitrator may invite the parties to make oral representations or may ask the parties to appear before him or her to provide further information.

Decision of arbitrator

165. (1) The decision of the arbitrator in conducting a final offer arbitration shall be the selection by the arbitrator of the final offer of either the shipper or the carrier.

Requirements re decision

(2) The decision of the arbitrator shall

(a) be in writing;

(b) unless the parties agree otherwise, be rendered within 60 days or, in the case of an arbitration conducted in accordance with section 164.1, 30 days after the date on which the submission for the final offer arbitration was received by the Agency; and

(c) unless the parties agree otherwise, be rendered so as to apply to the parties for a period of one year or any lesser period that may be appropriate, having regard to the negotiations between the parties that preceded the arbitration.

Incorporation in tariff

(3) The carrier shall, without delay after the arbitrator’s decision, set out the rate or rates or the conditions associated with the movement of goods that have been selected by the arbitrator in a tariff of the carrier, unless, where the carrier is entitled to keep the rate or rates or conditions confidential, the parties to the arbitration agree to include the rate or rates or conditions in a contract that the parties agree to keep confidential.

Reasons not required

(4) No reasons shall be set out in the decision of the arbitrator.

Reasons may be requested

(5) The arbitrator shall, if requested by all of the parties to the arbitration within 30 days or, in the case of an arbitration conducted in accordance with section 164.1, seven days after the decision of the arbitrator, give written reasons for the decision.

Application of decision

(6) Except where both parties agree otherwise,

(a) the decision of the arbitrator on a final offer arbitration shall be final and binding and be applicable to the parties as of the date on which the submission for the arbitration was received by the Agency from the shipper, and is enforceable as if it were an order of the Agency; and

(b) the arbitrator shall direct in the decision that interest at a reasonable rate specified by the arbitrator shall be paid to one of the parties by the other on moneys that, as a result of the application of paragraph (a), are owed by a party for the period between the date referred to in that paragraph and the date of the payment.

Payment by party

(7) Moneys and interest referred to in paragraph (6)(b) that are owed by a party pursuant to a decision of the arbitrator shall be paid without delay to the other party.

Arbitration fees

166. (1) The Agency may fix the fee to be paid to an arbitrator for the costs of, and the services provided by, the arbitrator in final offer arbitration proceedings.

Payment of fees and costs

(2) The shipper and the carrier shall share equally, whether or not the proceedings are terminated pursuant to section 168, in the payment of the fee fixed under subsection (1) and in the cost

(a) borne by the Agency for administrative, technical and legal services provided to the arbitrator pursuant to subsection 162(2); and

(b) of the preparation of any reasons requested pursuant to subsection 165(5).

Confidentiality of information

167. Where the Agency is advised that a party to a final offer arbitration wishes to keep matters relating to the arbitration confidential,

(a) the Agency and the arbitrator shall take all reasonably necessary measures to ensure that the matters are not disclosed by the Agency or the arbitrator or during the arbitration proceedings to any person other than the parties; and

(b) no reasons for the decision given pursuant to subsection 165(5) shall contain those matters or any information included in a contract that the parties agreed to keep confidential.

Termination of proceedings

168. Where, before the arbitrator renders a decision on a final offer arbitration, the parties advise the Agency or the arbitrator that they agree that the matter being arbitrated should be withdrawn from arbitration, the arbitration proceedings in respect of the matter shall be immediately terminated.

List of arbitrators

169. (1) The Agency shall, from time to time, in consultation with representatives of shippers and carriers, establish a list of persons who agree to act as arbitrators in final offer arbitrations. The list must state which of the persons have indicated that they have expertise that may assist them in conducting final offer arbitrations and the nature of that expertise.

List per mode

(2) A separate list of persons may be established under subsection (1) in respect of each or any mode of transportation, as the Agency considers appropriate.

Publication of list

(3) The Agency shall have the list of persons made known to representatives of shippers and carriers throughout Canada.

Déclaration

a) le réseau national des transports soit conforme aux normes de sécurité les plus élevées possible dans la pratique;

b) la concurrence et les forces du marché soient, chaque fois que la chose est possible, les principaux facteurs en jeu dans la prestation de services de transport viables et efficaces;

e) chaque transporteur ou mode de transport supporte, dans la mesure du possible, une juste part du coût réel des ressources, installations et services mis à sa disposition sur les fonds publics;

(ii) un obstacle abusif à la circulation des personnes, y compris les personnes ayant une déficience,

(iii) un obstacle abusif à l’échange des marchandises à l’intérieur du Canada,

(iv) un empêchement excessif au développement des secteurs primaire ou secondaire, aux exportations du Canada ou de ses régions, ou au mouvement des marchandises par les ports canadiens;

h) les modes de transport demeurent rentables.

[…]

Définitions

6. Les définitions qui suivent s’appliquent à la présente loi. […]

«expéditeur » Personne qui expédie des marchandises par transporteur, ou en reçoit de celui-ci, ou qui a l’intention de le faire. […]

«marchandises » Y sont assimilés le matériel roulant et le courrier. […]

«transporteur » Personne se livrant au transport de passagers ou de marchandises par un moyen de transport assujetti à la compétence législative du Parlement. […]

SECTION IV

PRIX, TARIF ET SERVICES

Définitions

111. Les définitions qui suivent s’appliquent à la présente section. […]

«contrat confidentiel » Contrat conclu en application du paragraphe 126(1). […]

Prix et conditions de service

Obligation

112. Les prix et conditions visant les services fixés par l’Office au titre de la présente section doivent être commercialement équitables et raisonnables vis-à-vis des parties.

Niveau de services

Acheminement du trafic

113. (1) Chaque compagnie de chemin de fer, dans le cadre de ses attributions, relativement au chemin de fer qui lui appartient ou qu’elle exploite :

a) fournit, au point d’origine de son chemin de fer et au point de raccordement avec d’autres, et à tous les points d’arrêt établis à cette fin, des installations convenables pour la réception et le chargement des marchandises à transporter par chemin de fer;

b) fournit les installations convenables pour le transport, le déchargement et la livraison des marchandises;

c) reçoit, transporte et livre ces marchandises sans délai et avec le soin et la diligence voulus;

d) fournit et utilise tous les appareils, toutes les installations et tous les moyens nécessaires à la réception, au chargement, au transport, au déchargement et à la livraison de ces marchandises;

e) fournit les autres services normalement liés à l’exploitation d’un service de transport par une compagnie de chemin de fer.

[…]

Contrat confidentiel

(4) Un expéditeur et une compagnie peuvent s’entendre, par contrat confidentiel ou autre accord écrit, sur les moyens à prendre par la compagnie pour s’acquitter de ses obligations.

[…]

116. […]

Contrat confidentiel

(2) Dans les cas où une compagnie et un expéditeur conviennent, par contrat confidentiel, de la manière dont la compagnie s’acquittera de ses obligations prévues par l’article 113, les clauses du contrat lient l’Office dans sa décision.

[…]

Conclusion de contrats confidentiels

126. (1) Les compagnies de chemin de fer peuvent conclure avec les expéditeurs un contrat, que les parties conviennent de garder confidentiel, en ce qui concerne :

a) les prix exigés de l’expéditeur par la compagnie;

b) les baisses de prix, ou allocations afférentes à ceux-ci, indiquées dans les tarifs établis et publiés conformément à la présente section;

c) les rabais sur les prix, ou allocations afférentes à ceux-ci, établis dans les tarifs ou dans les contrats confidentiels, qui ont antérieurement été exigés licitement;

d) les conditions relatives au transport à effectuer par la compagnie;

e) les moyens pris par la compagnie pour s’acquitter de ses obligations en application de l’article 113.

Arbitrage

(2) Toute demande d’arbitrage au titre de l’article 161 est subordonnée à l’assentiment de toutes les parties au contrat confidentiel.

[…]

PARTIE IV

ARBITRAGE

Application

Application des articles 161 à 169

159. (1) Les articles 161 à 169 s’appliquent exclusivement aux différends survenant entre expéditeurs et transporteurs dans les domaines suivants : […]

b) le transport des marchandises par chemin de fer sous le régime de la présente loi, à l’exception de leur transport par remorques ou conteneurs posés sur wagons plats, sauf si les conteneurs arrivent par eau à un port du Canada desservi par une seule compagnie de chemin de fer en vue du transport ultérieur par rail ou arrivent par rail à ce port du Canada en vue du transport ultérieur par eau; […]

Compagnies de chemin de fer

160. Les articles 161 à 169 s’appliquent également, avec les adaptations nécessaires, aux prix appliqués ou proposés par une compagnie de chemin de fer et aux conditions qu’elle impose pour la fourniture de services à une administration ferroviaire de banlieue désignée par le gouvernement d’une province ou à une compagnie de chemin de fer se livrant au transport de passagers.

Arbitrage

Recours à l’arbitrage

161. (1) L’expéditeur insatisfait des prix appliqués ou proposés par un transporteur pour le transport de marchandises ou des conditions imposées à cet égard peut, lorsque le transporteur et lui ne sont pas en mesure de régler eux-mêmes la question, la soumettre par écrit à l’Office pour arbitrage soit par un arbitre seul soit, si le transporteur et lui y consentent, par une formation de trois arbitres.

Contenu de la demande

(2) Un exemplaire de la demande d’arbitrage est signifié au transporteur par l’expéditeur; la demande contient :

a) la dernière offre faite par l’expéditeur au transporteur, sans mention de sommes d’argent;

[…]

c) l’engagement par l’expéditeur d’expédier les marchandises visées par l’arbitrage selon les termes de la décision de l’arbitre;

d) l’engagement par l’expéditeur envers l’Office de payer à l’arbitre les honoraires auxquels il est tenu en application de l’article 166 à titre de partie à l’arbitrage;

e) le cas échéant, le nom de l’arbitre sur lequel l’expéditeur et le transporteur se sont entendus ou, s’ils ont convenu que la question soit soumise à une formation de trois arbitres, le nom de l’arbitre choisi par l’expéditeur et le nom de celui choisi par le transporteur.

Arbitrage écarté

(3) L’arbitrage prévu au paragraphe (1) est écarté en cas de défaut par l’expéditeur de signifier, dans les cinq jours précédant la demande, un avis écrit au transporteur annonçant son intention de soumettre la question à l’Office pour arbitrage.

Soumission d’une question pour arbitrage

(4) La soumission d’une question à l’Office pour arbitrage ne constitue pas une procédure devant l’Office.

Délai de présentation

161.1 (1) L’expéditeur et le transporteur, dans les dix jours suivant la signification de la demande au titre du paragraphe 161(2), présentent chacun à l’Office leur dernière offre, en y incluant la mention de sommes d’argent.

Communication des offres

(2) Dès réception des offres présentées par l’expéditeur et le transporteur conformément au paragraphe (1), l’Office communique à chacun l’offre de la partie adverse.

Non-observation du paragraphe (1)

(3) Si une partie ne se conforme pas au paragraphe (1), la dernière offre de l’autre partie est réputée celle que l’arbitre choisit au titre du paragraphe 165(1).

Arbitrage

162. (1) Malgré la présentation par le transporteur de toute demande relative à la question, l’Office, dans les cinq jours suivant la réception des deux offres présentées conformément au paragraphe 161.1(1), renvoie la question :

a) à défaut de choix par les parties de soumettre la question à une formation de trois arbitres, à l’arbitre unique visé à l’alinéa 161(2)e), s’il est disponible pour mener l’arbitrage ou, en l’absence de choix d’arbitre ou cas de non-disponibilité, selon l’Office, de l’arbitre choisi, à un arbitre que l’Office estime disponible et compétent et qui est inscrit sur la liste établie en vertu de l’article 169;

b) en cas de choix par les parties de soumettre la question à une formation de trois arbitres :

(i) aux arbitres visés à l’alinéa 161(2)e) et, soit à celui dont ils ont conjointement soumis le nom à l’Office dans les dix jours suivant la signification de la demande visée au paragraphe 161(2), soit, dans le cas où ils ne soumettent aucun nom à l’Office dans ce délai, à l’arbitre que l’Office estime disponible et compétent et qui est inscrit sur la liste établie en vertu de l’article 169,

(ii) si l’un des arbitres visés au sous-alinéa (i) n’est pas, selon l’Office, disponible, à ceux qui le sont et à celui que l’Office estime disponible et compétent et qui est inscrit sur la liste établie en vertu de l’article 169.

Assimilation

(1.1) Aux paragraphes (1.2) et (2) et aux articles 163 à 169, la mention de l’arbitre vaut mention, le cas échéant, de la formation de trois arbitres.

Différé du renvoi à l’arbitrage

(1.2) Si l’expéditeur consent à ce que la demande visée au paragraphe (1) soit entendue avant le renvoi de l’affaire à l’arbitre, l’Office diffère le renvoi jusqu’au prononcé de la décision sur la demande.

Soutien

(2) À la demande de l’arbitre, l’Office lui offre, moyennant remboursement des frais, le soutien administratif, technique et juridique voulu.

Décision portant atteinte à l’arbitrage

162.1 S’il rend une décision ou prend un arrêté sur une demande présentée par un transporteur relativement à une affaire soumise à l’Office pour arbitrage avant que l’arbitre en soit saisi et que la décision ou l’arrêté porte atteinte à l’arbitrage, l’Office peut, par arrêté, en plus de tout autre arrêté qu’il peut prendre ou de toute autre décision qu’il peut rendre, mettre fin à l’arbitrage, l’assujettir aux conditions qu’il fixe ou annuler la décision de l’arbitre.

Procédure

163. (1) L’Office peut établir les règles de procédure applicables à l’arbitrage dans les cas où les parties et l’arbitre ne peuvent s’entendre sur la procédure.

Disposition générale

(2) L’arbitre mène l’arbitrage aussi rapidement que possible et, sous réserve des règles visées au paragraphe (1), de la manière qu’il estime la plus indiquée dans les circonstances.

Échange de renseignements

(3) Dans les quinze jours suivant le renvoi de l’affaire à un arbitre, les parties s’échangent les renseignements qu’elles ont l’intention de présenter à l’arbitre à l’appui de leurs dernières offres.

Interrogatoires

(4) Dans les sept jours suivant réception des renseignements visés au paragraphe (3), chaque partie peut adresser à l’autre des interrogatoires écrits auxquels il doit être répondu dans les quinze jours suivant leur réception.

Information dissimulée

(5) Si une partie dissimule de façon déraisonnable des renseignements que l’arbitre juge ultérieurement pertinents, l’arbitre tient compte de cette dissimulation dans sa décision.

Renseignements à prendre en considération

164. (1) Dans un cas d’arbitrage entre un expéditeur et un transporteur, l’arbitre tient compte des renseignements que lui fournissent les parties à l’appui de leurs dernières offres et, sauf accord entre les parties à l’effet de restreindre la quantité des renseignements à fournir à l’arbitre, des renseignements supplémentaires que celles-ci lui ont fournis à sa demande.

Éléments à prendre en considération

Procédure sommaire

164.1 Si l’Office établit que la valeur des frais de transport de marchandises visés par la dernière offre d’un expéditeur présentée conformément au paragraphe 161.1(1) est d’au plus 750 000 $, les articles 163 et 164 ne s’appliquent pas et l’affaire soumise à l’arbitrage est entendue selon la procédure sommaire ci-après, sauf si l’expéditeur a indiqué à l’Office son intention contraire lors de la présentation de l’offre :

a) l’expéditeur et le transporteur disposent de sept jours à compter du renvoi de l’affaire à l’arbitrage pour déposer une réponse à la dernière offre de l’autre partie;

b) sous réserve de l’alinéa c), l’arbitre rend sa décision sur le fondement des dernières offres et des réponses des parties;

c) s’il l’estime nécessaire, l’arbitre peut inviter les parties à lui présenter oralement des observations ou à comparaître devant lui pour lui fournir des renseignements.

Décision de l’arbitre

165. (1) L’arbitre rend sa décision en choisissant la dernière offre de l’expéditeur ou celle du transporteur.

Décision de l’arbitre

(2) La décision de l’arbitre est rendue :

a) par écrit;

b) sauf accord entre les parties à l’effet contraire, dans les soixante jours suivant la date de réception par l’Office de la demande d’arbitrage ou, dans le cas de la demande entendue conformément à l’article 164.1, dans les trente jours suivant cette date;

c) sauf accord entre les parties à l’effet contraire, de manière à être applicable à celles-ci pendant un an, ou le délai inférieur indiqué, eu égard aux négociations ayant eu lieu entre les parties avant l’arbitrage.

Insertion dans le tarif

(3) Le transporteur inscrit, sans délai après la décision de l’arbitre, les prix ou conditions liés à l’acheminement des marchandises choisis par l’arbitre dans un tarif du transporteur, sauf si, dans les cas où celui-ci a droit de ne pas dévoiler les prix ou conditions, les parties à l’arbitrage conviennent de les inclure dans un contrat confidentiel conclu entre les parties.

Motivation de la décision

(4) La décision de l’arbitre n’énonce pas les motifs.

Motivation de la décision

(5) Sur demande de toutes les parties à l’arbitrage présentée dans les trente jours suivant la décision de l’arbitre ou, dans le cas de la demande entendue conformément à l’article 164.1, dans les sept jours suivant la décision, l’arbitre donne par écrit les motifs de sa décision.

Application de la décision

(6) Sauf accord entre les parties à l’effet contraire :

a) la décision de l’arbitre est définitive et obligatoire, s’applique aux parties à compter de la date de la réception par l’Office de la demande d’arbitrage présentée par l’expéditeur et, aux fins de son exécution, est assimilée à un arrêté de l’Office;

b) l’arbitre indique dans la décision les intérêts, au taux raisonnable qu’il fixe, à payer sur les sommes qui, par application de l’alinéa a), sont en souffrance depuis la date de la demande jusqu’à celle du paiement.

Paiement

(7) Les montants exigibles visés à l’alinéa (6)b) sont payables sans délai à qui y a droit.

Honoraires de l’arbitre

166. (1) L’Office peut fixer les honoraires à verser à l’arbitre pour l’arbitrage et les frais afférents.

Paiement des frais et honoraires

(2) Les honoraires fixés en vertu du paragraphe (1), les frais de préparation des motifs demandés en application du paragraphe 165(5) et ceux relatifs au soutien administratif, technique et juridique offert à l’arbitre par l’Office au titre du paragraphe 162(2) sont à la charge de l’expéditeur et du transporteur en parts égales, même dans les cas d’abandon des procédures prévus par l’article 168.

Caractère confidentiel

167. La partie à un arbitrage qui désire que des renseignements relatifs à celui-ci demeurent confidentiels en avise l’Office et :

a) l’Office et l’arbitre prennent toutes mesures justifiables pour éviter que les renseignements soient divulgués soit de leur fait, soit au cours des procédures d’arbitrage à quiconque autre que les parties;

b) les motifs des décisions donnés en application du paragraphe 165(5) ne peuvent faire état des renseignements que les parties à un contrat sont convenues de garder confidentiels.

Abandon des procédures

168. Dans les cas où, avant la décision de l’arbitre, les parties avisent l’Office ou l’arbitre qu’elles s’accordent pour renoncer à l’arbitrage, les procédures sont abandonnées sur-le-champ.

Liste d’arbitres

169. (1) L’Office établit, en consultation avec les représentants des expéditeurs et des transporteurs, une liste de personnes qui acceptent d’agir à titre d’arbitres. La liste indique celles de ces personnes qui ont déclaré avoir des compétences susceptibles de les aider dans le cadre de l’arbitrage et la nature de celles-ci.

Listes distinctes

(2) L’Office peut établir, s’il l’estime indiqué, une liste d’arbitres pour chaque mode de transport.

Publication de la liste

(3) L’Office fait porter la liste d’arbitres à la connaissance des représentants des expéditeurs et des transporteurs dans tout le pays.

2. Canadian Bill of Rights, S.C. 1960, c. 44 [reproduced in R.S.C. 1985, App. III]

Construction of law

(e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations;

Interprétation de la législation

e) privant une personne du droit à une audition impartiale de sa cause, selon les principes de justice fondamentale, pour la définition de ses droits et obligations;

APPENDIX “B”

Activity Date Number of Days

Service of notice of intention

(paragraph 161(3))

Filing of FOA submission including shipper’s final offer without dollar amounts (paragraph 161(2)(a))

Filing of shipper’s and railway’s final offer with dollar amounts

(section 161.1)

Appointment of arbitrator

(subsection 162(1))

Exchange of information in support of final offers

(paragraph 163(3))

Direction of interrogatories

(paragraph 163(4))

Exchange of answers to interrogatories

(paragraph 163(4))

Hearing held

Decision rendered

(paragraph 165(2)(b))

June 23, 2005

July 2, 2005

July 12, 2005

July 18, 2005

August 2, 2005

August 9, 2005

August 24, 2005

August 30, 2005 to

September 2, 2005

September 6, 2005

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59 – 62

FEDERAL COURT

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: T-1744-05

STYLE OF CAUSE: CANADIAN NATIONAL RAILWAY COMPANY

Applicant

WESTERN CANADIAN COAL CORPORATION

Respondent

ATTORNEY GENERAL OF CANADA and ATTORNEY GENERAL OF BRITISH COLUMBIA

Interveners

PLACE OF HEARING: Montréal, Québec

DATE OF HEARING: March 26 and 27, 2007

REASONS FOR JUDGMENT: KELEN J.

DATED: April 11, 2007

APPEARANCES:

Mr. Raynald Langlois

Mr. Stéphane Nobert

FOR THE APPLICANT

Mr. Louis Zivot

Mr. Forrest C. Hume

Mr. Bernard Letarte

Ms. Nancy Brown

FOR THE RESPONDENT

FOR THE INTERVENER

(ATTORNEY GENERAL OF CANADA)

FOR THE INTERVENER

(ATTORNEY GENERAL OF B.C.)

SOLICITORS OF RECORD:

Langlois Kronstrom Desjardins

Montréal, Québec

FOR THE APPLICANT

Lang Michener LLP

Vancouver, British Columbia

Forrest C. Hume Law Corporation

Vancouver, British Columbia

Justice Canada

Commercial Law Directorate

Ottawa, Ontario

Minister of Attorney General

Legal Services Branch

Constitutional and Administrative Law

Victoria , British Columbia

FOR THE RESPONDENT

FOR THE INTERVENOR

(ATTORNEY GENERAL OF CANADA)

FOR THE INTERVENOR

(ATTORNEY GENERAL OF BRITISH COLUMBIA)

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Canadian National Railway Company v. Western Canadian Coal Corporation, 2007 FC 371

Citations2007 FC 371

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2007 FC 371