Evidence of meeting #60 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was grain.
A recording is available from Parliament.
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
Yes. I guess the way we would see this working is that you would go to the arbitrator—
February 26th, 2013 / 4:30 p.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Where is this done? Can you give me an example of how this works? You said in the commodities exchange an arbitrator can fine one party and then award that fine to another party.
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
That's right.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
That is the model you wish to see transposed upon these service level agreements?
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
Yes. If you're asking me what I would want to see in a service level agreement, I might like a model like that and I might want it to be a final offer arbitration model, where the railway might say “Okay, this is what I'm offering on liquidated damages”. The shipper might say, “This is what I'm offering”. When I say “on liquidated damages”, what I'm talking about is a process for liquidated damages. To go to your first question, does the legislation do all of the three things that Richard asked for in his letter—one of which was an arbitration process—I say yes, there's an arbitration process but you can't ask the arbitrator to rule on a process for liquidated damages. You can't ask the arbitrator to rule on penalties.
There is an arbitration process, but there are many exclusions, and we're saying that we would like to give the arbitrator the ability to say that this is your service level agreement, I've heard what you said and I've heard both positions, and this is what I'm giving you for your service level agreement and this is the process by which you would resolve liquidated damages if there is a breach.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
The reason the concept seems foreign to me is that my understanding is that the fines handed down at an administrative level are almost exclusively forfeited to the consolidated revenue account of the government that hands them down, and that it is typically courts that award liquidated damages and not governments.
You've given me one example. I'd be curious to study it further, but I'm not familiar with that practice.
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
I have a written answer. I'm just going to make sure I covered it here:[The] Canadian Grain Commission arbitrates disputes between grain companies and producers. Commodity exchanges arbitrate disputes between commodity dealers. Canadian grain merchants and their international customers submit disputes to arbitration through their memberships and various trade associations.
And there is, in our view, no reason not to have an expeditious process.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
I understand, but there's a difference between administering or resolving a dispute and actually imposing a fine on one party and awarding it to another. That is the particular proposal that you are making and I'm not familiar with that practice.
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
No, we're saying that liquidated damages would be payable to the shipper.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Yes, I know that. I understand that, but the point is that if it is done through an arbitration process put in place by an agency of government, that is vastly different from the way damages are imposed on a normal basis. The damages that people receive are almost always in court.
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
Not really. Let me just make sure I'm communicating it properly.
Say, we're negotiating with a railway. We're going to arbitration because we can't reach an agreement. So the railway is going to have their position on the various elements of the service level agreement. The shipper is going to have its position on the various elements.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Yes, of course. And there's interspaced arbitration and so on.
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
Right. So the arbitrator's going to come up with a mechanism that's something in between what the railways and the shippers want for establishment of liquidated damages.
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
That would become the terms of the contract between the shipper and the railway. If there's a breach or if the shipper claims there's a breach, then they would go to the agency and ask that an arbitrator establish that and establish liquidated damages.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
In my briefing with officials, I asked if there were precedents for an arbitrator setting liquidated damages in an agreement prior to a breach and I have not heard any example of any other organization that does this.
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
Other than the example—
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Perhaps you could give me an example. You tell me the exchange commission does that. I'd be curious to see it. I'm not disagreeing with you. All of my experience is that it is courts that award damages against one party and in favour of another. That's different from a fine.
Conservative
The Chair Conservative Larry Miller
Maybe after this meeting, could you provide some examples for Mr. Poilievre?
Representative, Coalition of Rail Shippers, and Executive Director, Western Grain Elevator Association
For sure. I guess I just go back to the principle, regardless of precedent or whatever, but I'll get that information.
What is conceptually wrong with having a quick, easy, fair, expedited process to resolve a dispute?
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
There is a legal problem. That's why I'm looking for precedents.
Conservative
Conservative
Lawrence Toet Conservative Elmwood—Transcona, MB
Thank you, Mr. Chair.
Thank you to all of our witnesses here today. It's very interesting.
Ms. Cobden, in your statement you mentioned that ideally you'd never have to use this legislation. I'm taking it that you see it as a backstop to commercial negotiations.
Executive Vice-President, Forest Products Association of Canada
Yes, that's correct.
Conservative
Lawrence Toet Conservative Elmwood—Transcona, MB
Is there a basis on which you would say that? Have you seen a change in rail service over the last number of years that would give you some reason for that optimism?