# Arbitration to establish a level of service agreement (rail)

The Canada Transportation Act provides a right to shippers to establish rail service agreements with railway companies by way of arbitration where the agreements cannot be negotiated commercially.

The arbitrator will be appointed by the Agency on receipt of proposals for arbitration and shall be wholly independent and impartial.

## How will the Agency process my dispute?

There is a specific arbitration process to establish a level of service agreement. For more information, refer to section 169.31 of the Canada Transportation Act.

## How to submit your dispute

Follow the application process for rail level of service arbitration

On June 26, 2013, the Canada Transportation Act was amended to provide for the appointment of an arbitrator by the Canadian Transportation Agency (Agency) to conduct an arbitration of the level of service to be provided by a railway company to a shipper.  At the conclusion of the arbitration, the arbitrator issues a decision that imposes level of service requirements on the railway company. This decision is final and binding on both parties, and is deemed a confidential contract that is valid for one year, unless the parties agree otherwise.

The amendments also provide that, where the railway company has contravened a requirement of the arbitration decision, it may be subject to an administrative monetary penalty (AMP) of up to $100,000 per violation. An AMP is a civil penalty that is intended to achieve compliance with legislative requirements. An AMP is applied by an enforcement officer, who is an employee of the Agency. A shipper may trigger an investigation by indicating in writing to the Agency Secretariat that a railway company has contravened an obligation contained in a level of service arbitration decision. Every complete and valid request for an investigation by a shipper that was a party to a level of service arbitration decision will be investigated by an Agency enforcement officer. However, the enforcement officer will not initiate investigations on her/his own motion or on the basis of requests made by other parties. If an enforcement officer is of the view that a railway company has contravened a requirement of an arbitration decision, a Notice of Violation will be issued and a penalty will be assessed. If the enforcement officer determines that no contravention has occurred, the investigation process is concluded and the parties are informed. Once the Notice of Violation is issued, the Agency will report the outcome of its enforcement action on its website Summaries of Enforcement Actions. This information will be reported in such a way as to preserve the confidentiality of the arbitration decision. No information regarding the specific obligation that was contravened, or the identity of the shipper, will be published. A railway company that is issued a Notice of Violation may request that it be reviewed by the Transportation Appeal Tribunal of Canada (TATC). • Details: Figure 1: AMPS for Rail LOS Arbitration Figure 1 is a flow diagram charting the administrative monetary penalty process for rail level of service arbitration. The process begins when the shipper informs the Agency Secretariat in writing of an alleged contravention. The Agency's designated enforcement officer (DEO) reviews the applicable provision(s) of the level of service arbitration decision. The DEO conducts a fact finding investigation, gathering information from the shipper and the railway company. If there is no violation, the case is closed and all parties are informed. If a violation is found to have occurred, the DEO issues a Notice of Violation and the Agency webpage is updated. The target timeline for this process is twenty business days. ## Questions and Answers ### What is an administrative monetary penalty? An AMP is a civil penalty that is intended to achieve compliance with legislative requirements through the application of monetary penalties. An AMP is applied by an enforcement officer, who is an employee of the Agency, following an investigation. ### Who triggers an investigation? A shipper triggers an investigation by alleging in writing to the Agency Secretariat that a railway company has contravened an obligation contained in an arbitration decision. ### How does the enforcement officer's investigation proceed? To determine whether a contravention has occurred, the enforcement officer will conduct an investigation in which he/she may seek information and evidence from both the shipper and the railway company. The investigation may involve on-site visits to the offices of the shipper and the railway company to gather evidence. At his or her discretion, the enforcement officer may share the evidence provided by one party to the other party for their information or to verify its veracity. However, the investigation does not constitute a pleadings process, nor will the enforcement officer oversee a process where the parties argue the meaning of provisions in the level of service arbitration decision. Following the investigation, if the enforcement officer is of the belief that a contravention has occurred, he/she may issue a Notice of Violation that identifies the violation and sets out the amount of the penalty that must be paid. No hearing is conducted. If the enforcement officer determines that no contravention has occurred, the investigation process is concluded and the parties are informed. ### How is the amount of the penalty assessed? The maximum amount of the penalty is$100,000 per violation. Should the enforcement officer determine that a railway company has contravened more than one requirement imposed in the arbitration decision, an AMP will be assessed for each violation. Further, a violation that is continued on more than one day constitutes a separate violation for each day. Therefore, a Notice of Violation that is issued following an investigation may assess a penalty well in excess of \$100,000.

Furthermore, the railway company is expected to bring itself into compliance with the requirement imposed in the arbitrator's decision immediately.

### How will the outcome of an investigation be reported?

If the enforcement officer finds that no violation has been committed by the railway company with respect to the allegations of the shipper, both parties will be informed through informal communication.

If a Notice of Violation is issued, the Agency will report the outcome of its enforcement action on its website Summaries of Enforcement Actions. This information will be posted as soon as the Notice of Violation is issued and will be reported in such a way as to preserve the confidentiality of level of service arbitration decision, if requested by either party.

The Agency will post the following information:

• the name of the railway company,
• the date of the contravention(s),
• a general statement related to the violated obligation(s), and
• whether it is under review by TATC.

No information regarding the specific obligation that was contravened or the identity of the shipper will be published.

### Where does the penalty go?

Funds paid by railway companies as administrative monetary penalties are deposited in Canada's Consolidated Revenue Fund, in accordance with the Financial Administration Act.

### Can a Notice of Violation be challenged?

Yes, a railway company may request TATC to review the Notice of Violation. TATC is a federal quasi-judicial administrative body that is separate from the Agency.  It reviews AMPS imposed by enforcement officers pursuant to various transportation related statutes including the Canada Transportation Act

In its review, TATC will conduct a hearing and will review the facts of the violation as well as the amount of the penalty assessed. Upon the conclusion of its review, TATC may determine that there has been no contravention in which case the AMP is cancelled or it may confirm the contravention and the amount of the AMP.

No review by TATC is available should the enforcement officer determine that no contravention has occurred.

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