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Rail Transportation : Final Offer Arbitration![](/web/20060203053231im_/http://www.cta-otc.gc.ca/images/common/spacer.gif)
Final Offer Arbitration
Issues Determined During Final Offer Arbitration
For some of the Final Offer Arbitration (FOA) requests filed with the Canadian Transportation
Agency (Agency), preliminary questions were raised regarding the Agency's jurisdiction to refer
these matters for arbitration. Since FOA is a private and a commercial matter between parties, the
Agency keeps information relating to arbitration confidential. The Agency believes, however,
that it may be helpful to the industry to have information on FOA matters which have come
before and been decided by the Agency. The following list is a description of the preliminary
issues, presented in a form which omits all references to parties to the FOA, as well as specific
origins, destinations and commodities of the traffic involved.
FOA
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ISSUES AND DISPOSITION
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FOA # 1 filed pursuant to the NTA, 1987
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Issue 1: Raised before referral to arbitrator: The
carrier objected to the FOA process on the ground that the rate offered by
the shipper was noncompensatory and therefore not in compliance with the
requirement of the NTA 1987 that all rates be compensatory. Agency
Disposition: The Agency determined that there was no rate in existence
and the matter was referred to the arbitrator.
Issue 2: Raised after arbitrator ruled: The carrier applied to
have the arbitrator's decision set aside because the rate selected was
noncompensatory. Agency Disposition: The Agency determined that
the Decision of the arbitrator was final and binding.
Issue 3: Raised after Agency Decision: The carrier appealed to
Federal Court, submitting that the arbitrator had no authority to select a
noncompensatory rate and that the arbitrator had breached rules he had
established and the principles of procedural fairness by obtaining
information from the shipper's counsel without advising the carrier of the
information obtained. Federal Court Disposition: The Court ruled
that the arbitrator was not bound to have regard to the noncompensatory
provision of the NTA 1987, but that principles of procedural fairness had
been breached. The decision of the arbitrator was set aside and the matter
was remitted to the arbitrator to give the carrier the opportunity to
respond to the supplementary information provided by the shipper and then
to confirm or vary his decision. The parties subsequently agreed to
withdraw the arbitration.
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FOA # 2 filed pursuant to the NTA, 1987
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Issue: Raised before referral to arbitrator: The carrier
submitted that the FOA request did not contain the carrier's last offer.
The carrier maintained that no offer could be made because the parties had
a contract which stated that a rate proposal could only be offered 60 days
prior to the contract's expiry. The rate submitted by the shipper as the
carrier's last offer was a rate calculated by increasing the contract rate
by a certain percentage. Agency Disposition: The Agency
determined that the rate submitted by the shipper as the carrier's last
offer was not a rate offered by the railway. The shipper's submission was,
therefore, incomplete and not in conformity with the requirements of the
NTA 1987
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FOA #3 filed pursuant to the NTA, 1987
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Issue 1: Raised before referral to arbitrator: The carrier
objected stating that the freight rates submitted for FOA were governed by
a confidential contract and therefore not eligible for FOA without the
consent of both the parties. Agency Disposition: The Agency
noted that the matter of price was not governed by the confidential
contract since that issue was to be negotiated between the parties on a
yearly basis. The Agency denied the carrier's request to dismiss and
referred the matter for arbitration.
Issue 2: Raised before referral to arbitrator: The carrier
appealed to Federal Court for leave to appeal the Agency's decision. The
parties agreed to hold the arbitration proceedings in abeyance while the
matter was before the court.
FOA Issue and Disposition
Federal Court Disposition: The Federal Court ruled that the FOA
provisions are available when there is no confidential contract or when
the confidential contract is silent or indefinite as to a term or
condition of its execution. The Court ruled that the Agency's
interpretation was reasonable and correct.
Issue 3: Raised before referral to arbitrator: The carrier
applied to the Supreme Court of Canada for leave to appeal the decision of
the Federal Court of Appeal and requested that the Agency hold the
arbitration proceedings in abeyance until the legal proceedings were
completed. Agency Disposition: The carrier's request was denied.
The Agency referred the matter to an arbitrator chosen by the parties.
Issue 4: Raised after referral to arbitrator: The carrier filed
a motion challenging the suitability of the chosen arbitrator, objecting
to the disclosing of confidential information to the arbitrator and
requesting a stay in the proceedings. Agency Disposition: The
Agency determined that since the matter had been referred to the
arbitrator, it was not for the Agency to decide these issues. Rather the
arbitrator should decide what information was relevant to the arbitration;
the parties should raise the issue of the arbitrator's suitability with
the arbitrator; and any stay of proceedings was a matter to be decided
between the parties and the arbitrator.
Issue 5: Raised after referral to arbitrator: Following the
Agency's decision, the arbitrator withdrew from the proceedings, requiring
the arbitration selection process to begin again. The carrier declined to
submit a new list of names. Agency Disposition: Agency selected
and appointed the arbitrator. Carrier objected on the basis that the last
offer of the carrier cannot be the published tariff.
Issue 6: Raised after referral to arbitrator: The carrier
applied to the Supreme Court of Nova Scotia and was granted an
interlocutory injunction. The parties were enjoined from presenting to the
arbitrator submissions in support of their final offers until the Court
decided the carrier's claim for an injunction against disclosure to the
arbitrator information contained in the confidential contracts. The
arbitrator was also enjoined from hearing the arbitration until receipt of
the parties' submissions. The carrier was ordered not to make any changes
to the rate in effect until the decision of the arbitrator was rendered or
until January 1, 1997, whichever was earlier.
Issue 7: Raised after Referral to arbitrator: The parties
subsequently agreed to withdraw the arbitration.
Agency Disposition: The Agency acknowledged the withdrawal and
terminated the FOA proceedings.
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FOA #4 filed pursuant to the NTA, 1987
Submission 2 (re-file of 1997 rate dispute)
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Issue 1: Raised before referral to arbitrator: The carrier
requested that this FOA submission be dismissed on the basis that the last
offer of the carrier cannot be the published tariff. Agency
Disposition: The Agency determined that there was nothing in the FOA
legislation to prevent a published tariff from being considered as the
carrier's last offer. The matter was referred to an arbitrator chosen by
the Agency.
Issue 2: Raised before arbitrator decided matter: The carrier
applied to the Supreme Court of Nova Scotia and was granted an
interlocutory injunction. The parties were enjoined from presenting to the
arbitrator submissions in support of their final offers until the Court
decided the carrier's claim for an injunction against disclosure to the
arbitrator information contained in the confidential contracts. The
arbitrator was also enjoined from hearing the arbitration until receipt of
the parties' submissions. The carrier was ordered not to make any changes
to the rate in effect until the decision of the arbitrator was rendered or
until January 1, 1997, whichever was earlier.
Issue 3: The parties subsequently agreed to withdraw the
arbitration. Agency Disposition: The Agency acknowledged the
withdrawal and terminated the FOA proceedings.
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FOA #5 filed pursuant to the CTA
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Issue 1: Raised before referral to arbitrator: The carrier
requested that the offer of the shipper be declared ineligible for FOA
because the submission included international rates. Agency
Disposition: The Agency determined that the final offers must apply to
goods within the jurisdiction of the CTA. The shipper was advised that it
could re-file the submission reflecting final offers for domestic
movements as well as offers for other traffic that is moved by railways
and which is governed by the CTA.
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FOA #6 filed pursuant to the CTA
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Issue 1: Raised before referral to arbitrator: The carrier again
objected to the shipper's final offer as it included rates to U. S.
points. Carrier also requested that supporting documents filed with the
shipper's submission be struck from the record. Agency Disposition:
Agency determined that valid final offers had been received for both
domestic and international movements. The Agency noted that the final
offers were reflective of standard railway practice for quoting
international rates; the shipper had structured the international portion
of its final offer so that any adjustments would apply against the
Canadian portion of the movements, and the rates offered on the Canadian
portion of the movements could also be specifically calculated. The
Agency found that the issue of supporting documents filed by the shipper
was a matter for the arbitrator to consider and not the Agency. The matter
was referred to an arbitrator chosen by the Agency.
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Submission 2 re-file of the above FOA submission
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Issue 1: Raised before referral to arbitrator: The carrier
requested that this submission be declared ineligible for FOA since it
included rates to U. S. points. Agency Disposition: The Agency
ruled that only part of the offer presented by the shipper was eligible
and would be considered for FOA. The shipper requested that the valid
portion of its offer be referred for arbitration. The shipper also sought
agreement from the carrier to allow the decision of the arbitrator to be
effective from the date of the shipper's submission to the Agency. The
carrier refused and the matter was therefore not referred to
arbitration.
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FOA # 7 filed pursuant to the CTA
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Issue 1: Raised before referral to arbitrator: The carrier
expressed concern with the Notice of Intent filed by the shipper and with
the reference made to its final offer. The carrier argued that the shipper
presented as the carrier's last offer the final offer made by the carrier
in the context of the earlier submission and as such this offer could not
now constitute the carrier's last offer. Agency Disposition: The
Agency determined that the carrier was aware of the shipper's intention to
submit the matter for FOA since the parties had not reached an agreement
between the time the shipper filed its Notice of Intent and the time it
re-filed its FOA submission with the Agency.
The Agency noted that the carrier had availed itself of its right to
submit another offer to the shipper and the Agency for the purposes of the
FOA proceedings and since there were clear final offers from both the
carrier and the shipper, the Agency ruled that the matter would be
referred for arbitration. The Agency advised the parties that unless there
was an objection to the disclosure statement filed by the arbitrator, the
matter would be referred to this arbitrator.
Issue 2: Raised before referral to arbitrator: An objection to
the appointment of the chosen arbitrator was filed based on the disclosure
statement provided by the arbitrator. Agency Disposition: The
Agency appointed an alternative candidate chosen by the parties from their
respective lists of preferred arbitrators and referred the matter to this
arbitrator.
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FOA # 8 filed pursuant to the CTA
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Issue 1: Raised before referral to arbitrator: A preliminary
motion was filed by the carrier stating that the shipper had not
established that it was the shipper entitled to make a request for FOA.
The carrier requested that the FOA proceedings be stayed until this
question was determined and until a related matter before the Queen's
Bench of New Brunswick was decided. The carrier also requested a broad
investigation be conducted by the Agency into the relationship between the
shipper and its parent company.
Agency Disposition: The Agency found it unnecessary to conduct
the type of investigation and analysis proposed by the carrier given the
nature of the definition of shipper provided for in the CTA. The Agency
noted that to find otherwise would permit the carrier, by its own action,
to frustrate the ability of the shipper to obtain an arbitrated result
from the FOA process.
In examining the documents filed by the shipper, the Agency found
nothing to indicate that the shipper filing the FOA submission was not the
owner of the goods produced or that the shipper had relinquished control
of the traffic. The Agency rejected the carrier's motion to stay the FOA
proceedings and referred the matter to the arbitrator.
Issue: Raised before referral to arbitrator: The carrier
objected to the FOA submission on three grounds: a submission for FOA
cannot make reference to the terms of a previous confidential contract;
the shipper's submission cannot contemplate that the results of the
arbitration be incorporated in a confidential contract unless agreed to by
the carrier and; the shipper's submission cannot rely on the terms of a
confidential contract which go beyond the statutory obligations of a
railway company.
Agency Disposition: Ground 1: The Agency found that there were
no barriers in the legislation which prevent a shipper from mentioning
matters contained in an expired contract in its FOA submission. The Agency
noted that the shipper had framed its submission to protect against public
disclosure any commercially sensitive information contained in the
contract.
The Agency also noted that the carrier's last offer included a
reference to the expired contract. Since the shipper's submission must
include both offers, the Agency concluded that should such information be
barred from an FOA submission, a carrier could, by including a reference
to a confidential contract in its offer to the shipper, prevent any matter
from ever being arbitrated.
Ground 2: The Agency accepted the shipper's statement that the
results of the arbitration would only be incorporated in a confidential
contract if both parties consented. The Agency noted that should the
carrier not wish to have the arbitrator's decision contained in a
confidential contract then the rates and conditions associated with the
movement would be published in a public tariff.
Ground 3: The Agency determined that the appropriateness of the
conditions associated with the movement of the goods proposed by either
party was a matter to be considered and determined by the
arbitrator.
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FOA #9 filed pursuant to the CTA
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Issue 1: Raised before referral to arbitrator: The carrier
objected claiming that the applicant was not entitled to make a submission
for FOA because it was not a "shipper" since the traffic was not its
property.
Agency Disposition: The Agency concluded that the applicant was
a "shipper" within the meaning of section 6 of the CTA.
Issue 2: Raised before referral to arbitrator: The carrier
subsequently requested a review of the Agency's decision based on new
information that confidential contracts existed between the carrier and a
third party which governed the traffic in question and as such precluded
the matter from being submitted for FOA. The third party made a submission
to the Agency supporting the carrier's position and requesting intervenor
status.
Agency Disposition: The Agency denied the application for review
on the basis that the information was in existence prior to the carrier's
initial objection and thus did not constitute new facts or circumstances.
In declining to review the decision, the Agency found that the application
for intervenor status was moot. The matter was referred for
arbitration.
Issue 3: Raised after referral to arbitrator: The arbitration
could not be completed within the statutory time and therefore the
arbitration concluded without a decision being rendered. The carrier
applied to the Federal Court for leave to appeal the Agency's confidential
letter decisions in respect of Issues 1 and 2.
Federal Court Disposition: The application for leave to appeal
was dismissed with costs.
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FOA #10 resubmission of FOA
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Issue 1: Raised before referral to arbitrator: Theshipper
refiled an FOA submission as a result ofits initial submission having
concluded without an arbitrated decision. Upon receiving this submission,
theAgency issued procedural directions and advised the third party that it
would be granted intervenor status should the carrier raise the same issue
regarding the existence of a confidential contract.
The carrier objected to the second request for FOA stating that the
submission was deficient on five grounds: - the submission did not
contain the last offer made by the shipper to the carrier; - the
carrier did not submit a last offer to the shipper and theshipper erred in
submitting the existing tariffs asthe carrier's last offer; - the
applicant is not the shipper of the grain and thus does not qualify to
make an FOA submission; - the existence of confidential contracts
between the carrier and the third party prevent the applicant asan agent
for thethird party from making an FOA submission and; - referral of the
submission would be illegal and would contravene public policy.
Agency Disposition: Although the Agency accepted that the
applicant was a shipper within the meaning of the CTA, the submission of
the intervenor raised the question of whether the applicant had the
authority to act for the intervenor in this matter. The Agency, in
reviewing an Agency agreement between the applicant and the intervenor,
found that there was no express authority provided to the applicant with
respect to the negotiation of freight rates. In view of the intervenor
submission, the Agency was compelled to deny the applicant's request for
FOAon this preliminary issue alone. Consequently, the Agency found it
unnecessary to deal with the other objections raised by the
carrier.
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FOA #11 filed pursuant to the CTA
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Issue 1: Raised before referral to arbitrator: The carrier
objected that the freight rates in question were not eligible forFOA, and
that prior to any FOA on the matter, the Agency should have to first
determine whether the Terms of Union between the governments of
Newfoundland and Canada still had application.
The carrier objected to the submission on the following grounds: -
the shipper had not satisfied the requirements of subsection 161(2) of
the CTA in that he reserved the right to use an alternative carrier one
day per week; - the shipper had not agreed to pay one half of the costs of
the arbitration; - the application was incomplete as it was not for
therail onlyportion of the movement, and; - part of the movement was
on water or might involve ancillary charges for services performed by a
third party.
Agency Disposition: The Agency directed that the matter would be
dealt with in two parts, with the first part addressing FOA eligibility,
and the second part addressing the Terms of Union question.
The Agency held in favour of the shipper on all carrier objections and
determined that the rates in question were eligible for FOA. This decision
has been appealed by the carrier to the Federal Court of Appeal and the
matter is pending. With respect to the Terms of Union challenge by the
carrier, the Agency determined that the Terms continue to apply to the
subject traffic. Although the Agency ruled that the matter was referrable
for arbitration, FOA proceedings have yet to commence. The carrier was
granted leave to appeal the Agency's decision by the Federal Court of
Appeal and the matter is pending.
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FOA #12 filed pursuant to the CTA
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Issue: Raised before referral to arbitrator: The carrier filed
an objection stating that the FOA submis-sion was deficient and
inadmissible for FOA referral on several grounds: - the shipper's
submission for FOA was different from its advance notice of its intent to
file an FOA; - no last offer was provided by the carrier for the
movement of the traffic in question; - the shipper's submission lacked
a definition of the traffic, an indication of traffic volumes and service
requirements, or an undertaking to ship the traffic according to the
decision of the arbitrator.
Agency Disposition: The Agency reviewed the shipper's advance
notice and FOA submission and found that both documents referred to the
same traffic. In considering the issue of the carrier's last offer, the
Agency determined that the carrier is never prejudiced by the last offer
chosen by the shipper for inclusion in the FOA submission as the carrier
always has an opportunity to submit another offer for the purpose of the
arbitration. The Agency also noted that the term last offer cannot be
interpreted restrictively to require that a formal and matching offer be
received by the shipper from the carrier before the shipper can make use
of the FOA process. To permit such an interpretation would effectively
provide carriers with the ability to compromise the entire FOA process by
simply refusing to enter into negotiations with shippers or refusing to
make offers during negotiations. The Agency noted that the carrier
relied on the fact that there were no local rates, combination rates or
rates to be used in combination with Rule 11 of the AAR. (See note below
for description of Rule 11). The Agency found that the carrier cannot
be permitted to rely upon its own failure to fulfill its statutory
obligations under the CTA by not issuing requested rates to defeat a
submission for FOA.
The Agency determined that the submission contained a suitable
definition of the traffic, appropriate indications of both the anticipated
traffic volumes and service requirements, and a clear undertaking as
required by the CTA. The Agency dismissed the carrier's motion and
referred the matter for arbitration. The Agency later learned that the
arbitration was withdrawn.
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FOA #13 - filed pursuant to the CTA, 1996 |
Issues Raised Before Referral to Arbitrator: The carrier objected to the
FOA submission on the following seven grounds: 1) FOA can only be
demanded by a person to whom rates are charged and in this case no one
who pays rates has demanded FOA; 2) the rates in question are established
and fixed by confidential contract; 3) the parties have agreed to all terms in
an agreement and as such there is no matter left to refer for FOA; 4) the
existing agreement expresses that any difference that might arise between
the parties is to be resolved in accordance with the arbitration clause in the
agreement; 5) the undertaking given by counsel for the applicant was not a
proper undertaking and does not satisfy the requirement of section 161(2)(c)
of the CTA; 6) the applicant's request for rebates off contract charges is not
a proper subject matter for FOA; and 7) the use of a railway company's
infrastructure and charges for use of the infrastructure are not matters for
FOA since they are not for the movement of goods.
The carrier requested, pursuant to subsection 162(1.2) of the CTA, the
consent of the applicant that the Agency defer referring the matter to an
arbitrator until its application was dealt with. The applicant did not consent
and, in accordance with the law, the matter was referred to an arbitrator
before the Agency's decision was rendered.
Federal Court Proceeding: Following the referral of the matter to the
arbitrator, the carrier applied to the Federal Court, Trial Division, seeking
an order restraining the arbitrator from proceeding with the arbitration. The
carrier's motion was granted by the Court.
Agency Disposition: Issue 1: Agent-Principal Relationship: The Agency
noted that both parties recognized that it was the applicant who pays the
rates to the carrier and that the applicant is the entity responsible for the
management and operation of the service being provided. The Agency
found, on this issue, that the applicant could properly file a submission.
Issue 2: Confidential Contract: The Agency found that the contract
between the carrier and the applicant was not a confidential contract within
the meaning of section 111 of the CTA as the applicant was not a shipper
per the term of the Act. As such, the Agency found that the exception
provided for by subsection 126(2) of the CTA could not be raised by the
carrier in this case.
Issue 3: Agreement Between the Parties: The Agency found that the
wording of subsection 160(1) of the CTA implies that the existence of a
valid and binding contract between parties should be an exception to FOA
for the matter agreed upon by the parties in the agreement.
The Agency found no evidence to support the applicant's argument that the
legislative amendments to section 160 of the CTA was enacted in order for
certain entities to reopen binding negotiated agreements. The Agency
further disagreed with the applicant's argument that the wording of section
160 indicated an immediate application of the statute to all contracts, including all those which are already in existence. The Agency found that the wording of section 160 of the CTA, which provides that: sections 161 to 169
apply...in respect of rates charged or proposed to be charged", is identical to
the wording of section 161 of the Act. The Agency noted that if it were to
determine that the applicant has the ability to reopen binding negotiated
agreements based on the wording of section 160, then it would also have to
allow other shippers dissatisfied with rates to reopen their agreements. As
section 160 must be read in accordance with section 161 and as section 161
clearly provides that only when a matter cannot be resolved between the
shipper and the carrier may the Agency refer the matter for arbitration, the
Agency found that the applicant was subject to the limitation provided for in
section 161. The Agency determined that the FOA request to obtain rebates
on operating charges and on shared infrastructure use charges provided for
in an agreement between the parties is not a matter that can be referred to
arbitration.
The Agency found that there was no need to examine the carrier's other
arguments.
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FOA #14 - filed pursuant to the CTA, 1996 |
Issue 1: Raised Before Referral to Arbitrator: The carrier objected to the
FOA submission stating that it was not a matter which the Agency has
jurisdiction to refer to an arbitrator. The carrier submitted that part of the
movement occurs over the line of a provincial carrier not governed by the
CTA nor the Agency. The carrier stated that section 3 of the CTA provides
that the Act apply only to transportation matter that are under the legislative
authority of Parliament, and as such the CTA only applies to federally
regulated railways under the purview of Parliament. Since the provincial
railway, in this circumstance, is not subject to the legislative authority of
Parliament and does not hold a certificate of fitness under section 92 of the
CTA, the carrier argued that the CTA does not apply to the provincial
railway nor to any movements on the provincial railway's line.
The carrier further submitted that the portion of the movement from origin
to the interchange with the provincial railway could be eligible for FOA.
The carrier argued that should the Agency allow more than this portion then
the Agency would be extending federal jurisdiction to the carriage of traffic
by a provincial railway company.
Agency Disposition: Issue 1: Jurisdiction
The Agency found that the applicant had offered a single through rate and
service package from origin to destination and the carrier had countered
exactly on that basis. Although the point of destination was not on the
carrier's railway line, the proposed movements were still quoted as the
carrier through movement. That is, there were no separate offers or counter
offers which somehow excluded or segregated the portion of the through
movement which took place on the provincially regulated railway's trackage
or, otherwise, brought the provincial railway in as one of the contracting
parties. Consistent with what the Agency appreciates is common rail
industry practice in Canada, the provincial railway acts as a subcontractor to
the carrier for the tail end segment of the movement.
The Agency found that if it were to accept the carrier's argument that an
FOA is only available for the portion of a through movement that occurs on
the carrier's infrastructure, it would force the shipper to somehow determine
the portion of the through rate relating to the movement over the federally
regulated carrier's lines. The Agency noted that this would be virtually
impossible in the absence of any segregated offer by the railway. The
Agency found that if this burden was imposed upon a shipper it would
denude the FOA provisions under the CTA of the desired effect in
determining shipper/ carrier rate disputes.
The Agency found the shipper's submission to be eligible on the basis that
the carrier's through offer subsumes charges for services that are performed
by a third party pursuant to an arrangement with the federal railway.
With respect to the carrier's constitutional argument, the Agency found that
the relief sought before the arbitrator in this circumstance does not involve
the regulation of the provincial railway or the imposition of rates or service obligations on the provincial railway. Any decision of the arbitrator would
only bind the carrier and the shipper in accordance with subsection 165(6)
of the CTA.
The matter was referred to the arbitrator chosen by the parties.
|
FOA # 15 filed pursuant
to the CTA, 1996 |
The carrier filed an interlocutory motion seeking an Agency ruling that
the FOA submission filed by the shipper on a Saturday is null and of
no effect or that it be deemed to have been served on the carrier on the
next day that is not a Saturday, Sunday or holiday. The carrier asserted
that if the Saturday submission were to be accepted, its right to the full
period of time to prepare its final offer would be prejudiced.
The carrier further submitted that the submission relates in part to a
matter governed by a confidential contract and was filed without the
consent of the carrier.
Agency Disposition: Issue 1 - Saturday Filing: As part of its
analysis, the Agency referred to the General Rules and noted that while
the General Rules do address matters of filing, service and holidays,
the General Rules are silent on the time when an application,
submission or similar document can be served on a person. Subsection
10(3) of the General Rules provides that where the time limited for the
doing of any thing pursuant to the General Rules expires or falls on a
Saturday or holiday, the thing may be done on the next following day
that is not a Saturday, Sunday or holiday. However, subsection 10(3)
of the General Rules did not apply in this case as the shipper was under
no obligation pursuant to the General Rules to act on a Saturday,
Sunday or holiday. The Agency added that the filing and serving of a
document on a Saturday is not prohibited by the Interpretation Act, as
the word "holiday", as defined in the Act, does not include a Saturday.
The Agency further noted that it had in previous instances accepted
filings on a Saturday.
With respect to the carriers assertions of prejudice, the Agency found
that the carrier ignored the advance notice given to it by the shipper
prior to the actual filing of the submission.
The Agency noted that given the silence of the General Rules with
respect to filing and service time, and the wording of subsection 126(2)
and 165(6) of the CTA, there may be a period of time between the
expiry of confidential contracts and the filing of an FOA submission,
during which no agreed rate would be in effect. In these circumstances
and absent legislation change, the shipper may have no choice but to
file its submission on a Saturday in order to avoid this type of
situation, unless parties agree otherwise in their contractual
arrangements.
In view of these findings, the Agency determined that the shipper acted
legally in filing and serving its submission for an FOA on a Saturday.
Issue 2 - Confidential Contract: Prior to the referral of the matter to
the arbitrator, the parties advised the Agency that they had reached a
settlement and the FOA submission was withdrawn. The Agency did
not, therefore, rule on the second motion. |
FOA # 16 - filed pursuant to the CTA, 1996 |
Issue: Raised before referral to arbitrator: The carrier filed an objection stating that the FOA
application was concerned in part with the storage of goods. The carrier submitted that storage of
goods is not a matter which can be referred to FOA under the CTA, as "storage of goods" does not
fall within the meaning and scope of the words "carriage of goods" found in paragraph 159(1)(b) of
the CTA nor within the meaning and scope of the words "movement of goods, or with any conditions
associated with the movement of goods" found in subsection 161(1) of the CTA.
Agency's finding on carriage of goods and subsection 159(1)(b) of the CTA
The purpose and essence of section 159 of the CTA is to designate the type of movements, by mode,
which are eligible for final offer arbitration pursuant to sections 161 to 169 of the CTA. What is
apparent from the reading of section 159 of the CTA is that it does not concern itself with the details
of the service or matter that can or cannot be referred to arbitration, but rather to the types of
movements, by mode, which are eligible for the remedy of final offer arbitration. If it had been
Parliament's intention to use section 159 has a means to restrict the availability of FOA to specific
services or matters, it would certainly have used narrower language than that found in the introductory
part of section 159. The reference to expansive words such as "matter arising between shippers and
carriers that involves" is indicative of Parliament's intention to make final offer arbitration available
to resolve disputes between shippers and carriers that involve, include or are closely related to the
carriage of goods by a federal railway to which the CTA applies.
In this case, there is no doubt that the final offer submission filed by the shipper involves, includes
or is closely related to the movement of goods by a railway to which the CTA applies. There is also
no doubt that the portion of the shipper's final offer submission relating to storage involves, includes
or is closely related to the movement of goods by a railway to which the CTA applies. This stems
not only from what the Agency understands is a customary service often provided by the railways as
part of their overall rail service but also from the operational and commercial practice specifically
developed between the railway and the shipper involved in this application.
While paragraph 159(1)(b) of the CTA is broad in nature, it does not mean that any matter, service
or dispute arising between shippers and carriers that involves, includes or is closely related to the
carriage of goods by railway is eligible for final offer arbitration. Subsection 161(1) of the CTA
makes it clear that it is only disputes or matters involving the rates charged or proposed to be charged
by a carrier for the movement of goods or involving any of the conditions associated with the
movement of goods that can be referred to arbitration.
Agency's finding on storage of goods and subsection 161(1) of the CTA
There is no doubt in this case that the storage and the proposed charge associated with the storage of
the shipper's commodities at destination is a "rate charged or proposed to be charged by the carrier
for the movement of goods, or with any of the conditions associated with the movement of goods"
within the meaning of subsection 161(1) of the CTA.
It is difficult to understand how the railway can now claim that the storage of the shipper's
commodities at destination and the charges associated with such storage do not form part of the rates
charged or proposed to be charged for the movement of shipper's goods and/or the terms and
conditions associated with the movement of the shipper's goods when such services and charges have
always been part of the overall railway service package provided by the railway to the shipper.
Not only has it always been part of the overall railway service package provided to this shipper by the
railway but it also has always been part of the railway service package offered by the railway to the
shipper throughout the negotiation in order to renew the parties' railway service agreement.
In the opinion of the Agency, a carrier cannot offer a shipper a complete railway rate and service
package and then, upon failure of the negotiation and the subsequent filing of a final offer arbitration
submission by the shipper, claim that a portion or portions of the railway rate and service package
offered during negotiations is or are not "rates charged or proposed to be charged for the movement
of goods" and/or "terms and conditions associated with the movement of goods". If the railway
argument was to prevail, it would lead to a discontinuity between the negotiations between the carrier
and the shipper and the final offer arbitration. That is, it would force the shipper to somehow
determine the portion or portions of the railway rate and service package offered that is/are not
customarily extended by the railway as part of its overall railway service. This task would be virtually
impossible for shippers and would denude the final offer arbitration provisions under the CTA of any
efficacity in resolving shipper/carrier disputes. As stated by the Federal Court of Appeal in the
Moffat case, the possible discontinuity between negotiation and final offer arbitration was not a result
intended by Parliament when enacting final offer arbitration.
The carrier's objection was accordingly dismissed.
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Note: In general terms Rule 11 allows a shipper to
request that traffic be moved from origin to destination on a through bill of
lading with more than one carrier responsible for the assessment and collection
of freight rates. Shippers can have their traffic moving under a combination of
rates rather than a single through rate and the confidentiality of each rate is
ensured by separate billing on traffic moving under a unique bill of lading.
|