CN loses appeal in dispute with Louis Dreyfus

The railway questioned whether the Federal Court of Canada has the jurisdiction to consider a claim for damages

A protracted legal case stemming from a 2013-14 level of service dispute between Canadian National Railway and grain handling company Louis Dreyfus Canada is slowly nearing the end of the line.

On Jan. 17, Canada’s Federal Court of Appeal dismissed with costs an appeal by CN that questioned whether the Federal Court of Canada has the jurisdiction to consider a claim for damages initiated by Louis Dreyfus.

The dispute between the grain company and CN emerged in the 2013-14 crop year, nearly five years ago.

In early 2014, Louis Dreyfus sought a decision from the Canadian Transportation Agency on whether CN had failed to meet service obligations outlined in a 1999 contract between the two parties.

The 2013-14 grain shipping year involved an unusually large harvest in Western Canada followed by extremely harsh winter shipping conditions in late 2013 and early 2104.

In an October 2014 decision, the CTA ruled that CN had breached its service obligations to Louis Dreyfus.

Since then, settlement of the case has been delayed by numerous appeals, the latest of which was dismissed by the Federal Court of Appeal in Vancouver.

Subsequent to the CTA’s 2014 decision, Louis Dreyfus Canada asserted its statutory right to seek damages through the Federal Court of Canada, as outlined in the Canada Transportation Act.

In its statement of defence, CN pleaded that the Federal Court lacked jurisdiction to consider a claim for damages because the contract between CN and Louis Dreyfus was purely a matter of contract outside of the Federal Court’s jurisdiction.

Louis Dreyfus owns and operates grain elevators in Glenavon and Aberdeen in Saskatchewan and Joffre and Lyalta in Alberta.

The company relies on CN and its rail network to transport grain from these facilities to export terminals and processing facilities across Canada.

The Federal Court of Appeal decision said CN’s latest legal challenge is essentially an effort to discredit the correctness of the CTA’s 2014 decision, which has already been upheld through subsequent legal appeal processes.

“The only purpose of CN’s defence to LDC’s … damages action, in its own language, is to ‘correct’ the (CTA’s) decision that it (CN) was in breach of its service obligations, a ruling which it contends is wrong,” wrote Federal Court of Appeal justice Donald J. Rennie.

“In conclusion … I refrain from commenting on the Federal Court judge’s interpretation of the contract between CN and LDC. It is unnecessary to do so, and I would not want to fetter or influence how the Governor in Council might exercise its discretion, should CN pursue that avenue of recourse,” he added.

“I would dismiss the appeal, with costs.”

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