Evidence of meeting #61 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 shippers.
A recording is available from Parliament.
5 p.m.
Conservative
Ed Holder Conservative London West, ON
Thank you.
Mr. Facette?
Sorry, Ms. Cook. You have the wisdom, obviously.
5 p.m.
Director, Business and Economics, Chemistry Industry Association of Canada
I don't know whether it's 95%. I can say that service has improved, but again I qualify that. The economy is not doing very well. Conditions are very different from what they were between 2005 and 2008, when we were having to slow down plants.
5 p.m.
President and Chief Executive Officer, Canadian Propane Association
I don't have the exact number, Mr. Holder. I couldn't say if it was 95% or 90%. It's much better than it was five years ago, though.
5 p.m.
Conservative
Ed Holder Conservative London West, ON
Thanks to all of you. I wish I had more time to ask questions.
5 p.m.
Conservative
The Chair Conservative Larry Miller
Thank you, Mr. Holder.
I thought I had heard just about every saying there was, but I now....
5 p.m.
Voices
Oh, oh!
5 p.m.
NDP
Jack Harris NDP St. John's East, NL
Thank you, Chair.
Thank you for your presentations. This is obviously pretty important work, with pretty high stakes in terms of the overall value of the product being shipped and the possibility and consequences of disagreement.
First of all, am I right in assuming that the first question of arbitration is to arbitrate the nature of the agreement or the service contract?
Second, you're calling it dispute resolution. I would call it an arbitration of the agreement, the enforceability of the agreement. If I'm right about that, shouldn't there, or couldn't there, be a model for that put in place, instead of having to negotiate each time with a dispute resolution mechanism? Wouldn't it make sense to put into either legislation or regulation a standard dispute resolution or method of resolving differences over the enforcement of an agreement once you have it?
Perhaps you can tell me first of all about the content of the agreement itself, the elements that can be included, and secondly, whether you can have a mechanism to enforce that agreement. Do I have that right?
5 p.m.
President, Canadian Fertilizer Institute
Yes. If I may, I'll take the first shot at answering that. The legislation includes the right to ask an arbitrator to establish an agreement. In that sense, Bill C-52 is an improvement and it needs to be passed. What it doesn't provide for is an ability to have the terms enforced, and that is exactly what you're describing, a mechanism to be able to.... There are commercial contracts, I've been told, that do include the ability to go to an arbitrator, and for a very low cost, within 30 days.
There's an internal escalation between the two companies, let's say. If they can't agree on how to interpret a particular clause in an agreement, then they move forward and go to a mediator or an arbitrator. They get it settled and they live with that decision for the term of the agreement.
This is not to be a punitive and retroactive penalty kind of system. This is a matter of someone saying they think the agreement says they need to have 150 cars delivered every week to their mine. In order to move their product to market, they're asking for that, and they've only had 80 cars per week for the last three months, so they're saying that they want this corrected and they want the terms to be enforced in the future.
Shippers are not interested in just penalizing—
5 p.m.
NDP
Jack Harris NDP St. John's East, NL
I don't want to interrupt you. I just wanted.... I guess I am right: you need a mechanism. This is not rocket science; they're all over the place. If you have an expropriation and can't agree on what something is worth, there's a mechanism to set the expropriation value. It's not something that's unreasonable to expect, so I agree with you on that.
I do have one question, though. I heard Monsieur Mongeau talk about his concern that they don't have control over what other people in the network do. It sounds like he's raising a sensible question: how can I be responsible for someone else's failure? I might end up with an agreement that makes me pay for the fact that somebody else screwed up. Is that a real problem for you guys that you should have to answer, or is it something that doesn't end up in the agreement anyway?
5:05 p.m.
President, Canadian Fertilizer Institute
Those are facts that the arbitrator would consider in an arbitration. Whose fault is it? Is it the fault of the—
5:05 p.m.
NDP
Jack Harris NDP St. John's East, NL
So you're satisfied that it has to be CN's fault, not the fact that a terminal or some third party in the network....
5:05 p.m.
President, Canadian Fertilizer Institute
That's right. It needs to be related to their commercial contract and what they've committed to.
5:05 p.m.
Representative, Lawyer, McMillan LLP, Mining Association of Canada
That's right.
5:05 p.m.
NDP
Jack Harris NDP St. John's East, NL
All right. I was just trying to understand this.
I have a lot of sympathy for what you were saying, Mr. Mongeau, that you do have a network and you don't have control over all of these things.
There would be some value, by the sounds of this, in having perhaps the standard dispute resolution mechanism, as you've called it. I would just call it enforceability of the agreement. You have a contract, and you'd rather have it resolved in an efficient, reasonable, sensible way than leave it up for grabs and potentially have all different kinds of dispute resolution mechanisms on a one-off, and every time you go to an arbitration to get a service agreement, you have this whole argument of what kind of agreement you're going to do. It sounds like a waste of time.
I used to practise law a lot, so I might have some sympathy for Mr. Tougas over there. It seems to be unnecessary. Shouldn't there be a standard-form dispute resolution? Maybe the railways should agree with that.
Doesn't that make sense to you too?
5:05 p.m.
President and Chief Executive Officer, Canadian National
I would tell you that if life were simple, maybe you'd be right, but the reality of a network business is that the devil is in the details. That is actually why asking an arbitrator, whether he's named by the CTA or whether he's just a lawyer on a roster of arbitrators, to try to decide on such a complex issue, when normally this is done in a commercial market context, is not the right way to go.
5:05 p.m.
NDP
Jack Harris NDP St. John's East, NL
I'm talking about enforcement of an agreement now. I'm not talking about what the contents of the agreement are. I can see that might be different circumstances.
Surely for an enforcement mechanism, or a dispute resolution mechanism, there must be a model that you would agree with that would make sense to the shippers.
5:05 p.m.
President and Chief Executive Officer, Canadian National
Actually, we have a commercial dispute resolution that's available to all our customers. They can opt in for any issues we have with them. We've made a commitment, as part of the rail service review, to make it available. They can use it.
Some shippers would like it—
5:05 p.m.
NDP
Jack Harris NDP St. John's East, NL
You're saying that this is our agreement, and if you like it, fine; if you don't, too bad.
5:05 p.m.
President and Chief Executive Officer, Canadian National
No, it's a commercial dispute resolution to resolve issues—