Decision No. 417-R-2010

October 14, 2010

File No. T7340/10-1

---

Introduction and issues

Application

[1] The Quebec North Shore & Labrador Railway Company (QNS&L) filed an application with the Canadian Transportation Agency (Agency) pursuant to section 162.1 of the Canada Transportation Act (CTA) with respect to the final offer arbitration (FOA) submission by New Millennium Capital Corp. (NML).

Issues

[2] The issues to be determined by the Agency are as follows: 1. Is the FOA process set out in Division IV of the CTA contrary to paragraph 2(e) of the Canadian Bill of Rights, S.C., 1960, c. 44 (Bill of Rights)?; 2. Is NML's submission for FOA theoretical and premature?; 3. Is NML a "shipper" within the meaning of the CTA?; and 4. Is NML's submission for FOA invalidated because its undertaking under subsection 161(2) of the CTA is invalid?

[3] As indicated in the reasons that follow, the Agency dismisses QNS&L's application.

Background

[4] NML is a publicly-traded mining company that has mining properties in northern Quebec and Newfoundland and Labrador, near Schefferville, Quebec, and is currently developing the "Direct Shipping Ore" project (DSO project).

[5] QNS&L is a common carrier railway company, wholly-owned by the Iron Ore Company of Canada, operating between Sept-Îles, Quebec and Emeril Junction, Newfoundland and Labrador; Emeril Junction and Wabush Lake Junction, Newfoundland and Labrador; and Wabush Lake Junction and Labrador City, Newfoundland and Labrador.

[6] NML and QNS&L have been negotiating unsuccessfully for rates and conditions of service over QNS&L's railway line. In February 2010, NML terminated the negotiations and in March 2010, as required by subsection 161(3) of the CTA, NML served on QNS&L a written notice indicating that it intended to submit to the Agency for an FOA the matter of the rates proposed to be charged by QNS&L.

[7] On April 7, 2010, NML filed a submission for FOA concerning the rates proposed to be charged by QNS&L for the movement of iron ore by rail, and the conditions associated with it, from the connection between QNS&L and the railway of Tshiuetin Rail Transportation Inc., at or near Emeril, Newfoundland and Labrador, to the connection between QNS&L and the railway of the Arnaud Railway Company at or near Arnaud Junction, Quebec.

[8] On April 16, 2010, QNS&L filed with the Agency an application pursuant to section 162.1 of the CTA requesting the Agency to refrain from referring NML's FOA submission to FOA, or alternatively that the FOA be discontinued or that the FOA decision be set aside. As an alternative remedy, QNS&L asked that the request for a rate for "multiple car shipments in unit trains of 240 cars, each car containing 95 metric tonnes, shipping 4.2 million metric tonnes annually" be excluded from the FOA. QNS&L articulated four grounds for application, namely that the Agency does not have the required jurisdiction to refer NML's FOA submission to FOA because: (1) the FOA process set out in Part IV (sections 159 to 169.3) of the CTA infringes constitutional and quasi-constitutional principles which guarantee a person a fair hearing in accordance with the principles of fundamental justice; (2) the submission to FOA is premature and theoretical; (3) NML is not a "shipper" within the meaning of the CTA; and (4) NML's undertaking under subsection 161(2) of the CTA is invalid.

[9] On April 19, 2010, QNS&L served a Notice of Constitutional Question on the Attorney General of Canada.

[10] Subsection 162(1) of the CTA states that notwithstanding any application filed with the Agency by a carrier in respect of a matter, within five days after final offers are received under subsection 161.1(1), the Agency shall refer the matter for arbitration.

[11] Therefore, on April 21, 2010, the Agency referred the matter to the arbitrator chosen from lists of preferred arbitrators provided by the parties.

[12] On May 4, 2010, counsel for the Attorney General of Canada notified the Agency of its intention to not intervene in the proceeding. On May 19, NML communicated with Agency staff and raised a concern that the Notice of Constitutional Question had not been served on the Attorney Generals of the provinces.

Positions of the parties

Constitutional issue – paragraph 2(e) of the Bill of Rights

[13] According to QNS&L, the Agency does not have the required jurisdiction to refer the matter to arbitration because the provisions of the CTA providing for FOA contravene paragraph 2(e) of the Bill of Rights, which provides that no law of Canada shall be construed or applied so as to deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations.

[14] QNS&L argues that the FOA process is contrary to paragraph 2(e) of the Bill of Rights because the mandatory FOA process of the CTA is biased against carriers and therefore violates the carriers' rights protected by paragraph 2(e) of the Bill of Rights because the scheme of the FOA process is set out in a manner that infringes the rights of the carriers. QNS&L adds that the FOA process does not allow carriers to have full knowledge of the case that they have to make and it does not provide them with an opportunity to respond to the shippers' evidence. In addition, QNS&L states that the CTA deprives the parties of their right to obtain reasons for an award. QNS&L argues that this is in violation of paragraph 2(e) of the Bill of Rights and the principles of natural justice as the arbitrator is legally prohibited from disclosing the reasons upon which his decision is based unless all the parties to the arbitration agree. QNS&L submits that without reasons, the parties, or any court sitting in judicial review of the arbitrator's decision, cannot assess the rationality of the arbitrator's decision and, therefore, the absence of reasons deprives the parties of the means necessary to determine the validity of the arbitrator's decision and, perhaps most importantly, to assess whether the rules of procedural fairness were respected.

[15] QNS&L submits that the Federal Court's judgment in Canadian National Railway Company v. Western Canadian Coal Corporation [2007] F.C. 371 (CN case) should not be followed, and that the Federal Court should have come to a different conclusion as it had found that the FOA process is subject to paragraph 2(e) of the Bill of Rights because it constitutes a hearing for the determination of the carrier's rights and obligations.

[16] NML indicates that the provisions of the CTA creating the FOA do not contravene paragraph 2(e) of the Bill of Rights. NML adds that as admitted by QNS&L in its application, the issues raised in the application concerning the FOA process being unconstitutional have already been the subject of a decision of the Federal Court of Canada, in 2007, in the CN case. NML states that the Federal Court, in the CN case judgment, held that the FOA process provided for by the CTA does not contravene paragraph 2(e) of the Bill of Rights. NML submits that the Agency cannot accede to QNS&L's request to not follow this judgment as the Agency is bound by it.

[17] NML submits that "Although the purpose and scheme of the FOA regime does not envisage a process in the nature of judicial proceedings and does not therefore call for the highest degree of procedural fairness, the FOA regime affords nonetheless a high degree of procedural fairness."

[18] NML concludes that the provisions of the CTA do not contravene paragraph 2(e) of the Bill of Rights.

[19] QNS&L argues that the Agency is not bound by the judgment rendered by the Federal Court in the CN case as the Federal Court does not sit as an appellate or review court of an Agency decision. QNS&L adds that in any event, the Agency is justified to depart from the judgment in the CN case as it differs from this case.

Theoretical and premature matter

[20] QNS&L states that NML, by its own admission, will not tender any iron ore for shipment during the period to which the award of the arbitrator will apply. QNS&L adds that NML announced that it will not start iron ore production before the fourth quarter of 2011. According to QNS&L, it will be impossible for NML to ship iron ore during the term of the FOA award, which is between April 7, 2010 and April 6, 2011. QNS&L considers that NML's public release of May 3, 2010 announcing the fast tracking of the DSO project, contradicts earlier public statements made by NML showing that there will not be any shipments during the one-year period to which the arbitration decision would apply.

[21] QNS&L states that the doctrine of prematurity requires that a matter be concrete before it is adjudicated, and that courts have been extremely reluctant to get involved in issues that are theoretical, premature or moot. QNS&L adds that the Agency should properly apply this doctrine for, and in the context of, the necessary and proper exercise of its jurisdiction and not refer NML's FOA submission to FOA. QNS&L argues that in the absence of a live issue, the arbitration would simply be an academic debate.

[22] QNS&L is of the opinion that NML's attempt to trigger an FOA and obtain rates for the movement of a commodity that it will not in fact be moving during the period to which the award will apply is an improper use of the FOA process.

[23] NML submits that it is the matter in dispute between the parties that may be submitted to arbitration, i.e. the rate that is actually charged or that is proposed to be charged by a carrier for the movement of goods or with any of the conditions associated with the movement of goods. NML adds that there is no time limit attached to the matter to be settled by arbitration.

[24] NML indicates that, pursuant to sections 161, 161.1 and 162 of the CTA, which determine the jurisdiction of the arbitrator, the matter to be arbitrated is not restricted by any time limit or volume commitment, or volume commitment to be shipped in any given period.

[25] NML states that the one-year period provided for by the CTA has nothing to do with the matter to be resolved by arbitration, but deals strictly with the period during which the parties will be bound by the arbitrator's decision.

[26] NML submits that it is now expected that once the appropriate funding is in place, the DSO project will be fast tracked and production and shipping of iron ore will then begin faster than previously anticipated, within the year following the FOA award. NML adds that it is clear that within this one-year period, single-car shipments for various operational or commercial reasons will occur.

[27] QNS&L states that NML is making an improper use of the FOA process in triggering an FOA, to try to demonstrate that its DSO project is viable and to obtain the capital infusion needed to complete the said project, instead of obtaining rates for actual movement of commodity during the period to which the arbitration award will apply. QNS&L adds that the Agency is justified to apply the doctrine of prematurity and to discontinue the arbitration, or in the alternative, if the arbitrator has rendered its decision, to set it aside because the matter is theoretical and premature.

Shipper

[28] QNS&L submits that NML is not a "shipper" within the meaning of the CTA because it is not in a position to actually ship iron ore while the arbitrator's award would be applicable. Therefore, NML cannot be considered as a person who "intends to ship", as per the definition in section 6 of the CTA.

[29] QNS&L states that although the definition of "shipper" includes more shippers than those who are actually and presently sending or receiving goods, it surely does not include mere speculative shippers whose shipping will not be accomplished while the FOA award is applicable. QNS&L adds that the definition of "shipper" in section 6 of the CTA must be read in the context of the other provisions of the CTA using the term "shipper", which relate to actual and concrete traffic (even if it is not immediately tendered) as opposed to speculative traffic.

[30] NML indicates that it is a "shipper" within the meaning of section 6 of the CTA because it "intends to send goods", namely iron ore. NML adds that as a shipper, it is entitled to request and obtain from the rail carrier a tariff for the movement of its goods, under section 118 of the CTA. NML explains that as a shipper dissatisfied with the rate proposed to be charged, it submitted the matter to arbitration, as it is clearly entitled to do pursuant to sections 161 and 169 of the CTA.

[31] QNS&L states that the money spent by NML to develop the DSO project does not mean that it "intends to ship", and explains that an intention requires an element of ability to ship. QNS&L argues that NML does not have such ability nor will it have it within the period during which the award will apply.

Undertaking

[32] QNS&L submits that the Agency should not refer the matter to arbitration because NML's submission is illegal and invalid as it does not contain a valid undertaking pursuant to paragraph 161(2)(c) of the CTA.

[33] QNS&L indicates that NML cannot validly make such an undertaking because it will not be in a position to ship iron ore during the period to which the FOA award will apply, as NML has many onerous milestones that must be achieved before it is in a position to commence shipping. According to NML's own public disclosure, it will not start iron ore production and will have no goods to tender for carriage before the third week of October 2011. QNS&L questions how NML can validly undertake to ship the goods to which the arbitration relates in accordance with the decision of the arbitrator if it will not be in a position to ship anything during the term of the FOA award. QNS&L concludes that NML's FOA submission is illegal and invalid because one essential condition of a submission for FOA is missing: a valid undertaking pursuant to paragraph 161(2)(c) of the CTA.

[34] QNS&L submits that if the Agency does not find NML's FOA submission illegal and invalid, an undertaking pursuant to paragraph 161(2)(c) of the CTA cannot validly be made by NML with respect to the rate for unit-train shipments as it knows from the outset that it will not be in a position to ship "multiple car shipments in unit trains of 240 cars, each car containing 95 metric tonnes, shipping 4.2 million metric tonnes annually" before April 6, 2011. QNS&L adds that the Agency should therefore, at the very least, properly fix the terms and conditions of the arbitration to exclude from the FOA and from the arbitration award the aforementioned rate.

[35] According to NML, it absolutely needs to know the rate that will apply to the movements of goods for the 240-car unit trains for the viability of the DSO project to be demonstrated.

[36] NML indicates that a valid undertaking is not a requirement affecting the arbitrability of a dispute concerning the rates charged or proposed to be charged for the movement of goods and the associated conditions.

[37] NML states that pursuant to paragraph 161(2)(c) of the CTA, the shipper's submissions must contain an undertaking by the shipper to ship the goods to which the arbitration relates in accordance with the decision of the arbitrator, and adds that this is exactly what it did in its submission to arbitration. NML adds that it will need to operate single-car loads for various commercial and operations purposes even before full production and during the one-year period of the FOA decision.

[38] NML submits that the undertaking in its final offer is to ship 100 percent of the commodity produced and shipped from its iron ore deposits in the Schefferville area. NML adds that it will comply with that undertaking by shipping all of the commodity produced from its iron ore deposits either under the single-car rate, or if the DSO project is fast tracked, by shipping also under the unit-train rate.

[39] NML concludes that it will ship all of the commodity produced from its DSO project during the arbitral period in full compliance with its undertaking.

[40] QNS&L disagrees with NML's submission concerning a valid undertaking and indicates that such an interpretation of paragraph 161(2)(c) of the CTA ignores and does not give effect to its clear wording related to the FOA submission.

ANALYSIS AND FINDINGS

The law

[41] All relevant legislative references are set out in the Appendix to this Decision.

This case

Challenge under paragraph 2(e) of the Bill of Rights

[42] According to QNS&L, the Agency should decline jurisdiction and refrain from referring NML's submission to FOA as the FOA process "infringes constitutional and quasi-constitutional principles". The Agency notes that QNS&L essentially reargues the same arguments examined and dismissed by the Federal Court in the CN case judgment.

[43] The Agency is a creature of statute and, as such, has no inherent jurisdiction allowing it to scrutinize statutory provisions to determine their validity with constitutional or quasi-constitutional principle. As is the case for all administrative tribunals, the Agency's jurisdiction to apply the constitution and other Acts of Parliament is accessory and included in its jurisdiction to deal with questions of law arising in matters that are properly before it: Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5 (Cuddy Chicks case); Nova Scotia (Workers' Compensation Board) v. Martin, [2003] 2 S.C.R. 504 (Martin case); and Tranchemontagne v. Ontario (Director, Disability Support Program), [2006] 1 S.C.R. 513 (Tranchemontagne case).

[44] Pursuant to subsection 161(4) of the CTA, the FOA is not a proceeding before the Agency. Therefore, consistent with the principles set out in the Cuddy Chicks, Martin and Tranchemontagne cases, the Agency is not the competent tribunal where allegations concerning the validity of the FOA process having regard to constitutional or quasi-constitutional principles must be brought, as the matter is before the arbitrator and not the Agency.

[45] In the CN case, the Federal Court dealt with the issue of the validity of the FOA process in the context of a judicial review of an FOA decision. The fact that the Federal Court seized itself of the matter shows that the proper forum for making such a challenge is within the FOA proceeding, not through an application before the Agency under section 162.1 of the CTA.

[46] Considering that a superior court of competent jurisdiction confirmed that the FOA process does not violate paragraph 2(e) of the Bill of Rights, the referral of NML's submission to FOA cannot now be found by the Agency to be contrary to the same provision of the Bill of Rights.

[47] For these reasons, this ground for application must fail. Considering that the Agency is not making a finding of constitutional invalidity or a finding of a breach of quasi-constitutional principle, any irregularity with the requirement of a Notice to Attorney Generals under the Federal Courts Act, R.S.C., 1985, c. F-7 is immaterial and irrelevant, and thus need not be examined and ruled on by the Agency.

Is the FOA submission theoretical and premature?

[48] QNS&L submits that the FOA submission is theoretical and premature because NML "by its own admission, will not tender any iron ore for shipment during the period to which the award of the arbitrator will".

[49] It is undisputable that pursuant to paragraphs 165(2)(c) and 165(6)(a) of the CTA, unless the parties had agreed otherwise, rates set in an FOA decision will be applicable between them for a period not exceeding one year from receipt of the submission for the FOA, which is April 7, 2010 in this case.

[50] The purpose of the FOA regime was described as follows in Canadian National Railway Co. v. Canada (National Transportation Agency), [1996] 1 F.C. 355:

The final offer arbitration provisions of the NTA 1987 establish a method of determining rates in special instances and, as such, are an integral part of the whole legislative scheme chosen by Parliament to regulate freight rates in the new economic and commercial context now prevailing in Canada. They are specifically addressed to disputes relating to rates or conditions associated with the movement of goods, issues that are integral to the operation of the railways. The quick, simple and out-of-court settlement of those disputes, with indirect involvement of the Agency, is no doubt a means, and an important one, to achieve the object and purpose of the new National Transportation Act, 1987 which, as stated in more detail in section 3 [as am. by S.C. 1992, c. 21, s. 33] thereof, is aimed, in effect, at rendering the railway industry, in particular, more efficient and more competitive, and the transportation system, generally, more economical.

[51] Considering the scheme of Part IV of the CTA, its purpose and the provisions restricting the period of application of FOA decision to a year, it is clear that the FOA regime was designed to bring a solution to real actual and concrete shipping rate disputes. Parliament has created a dispute settlement mechanism which is not a proceeding before the Agency and in which the Agency's role has been deliberately limited.

[52] However, as stated by the Federal Court in the CN case, it was also created with a view to restoring any imbalance of power between the shippers and the carriers, and to protect captive shippers:

The FOA process disciplines the parties to advance tempered offers because the more far reaching a party's position, the greater likelihood that the other party's final offer will be selected by the arbitrator. The FOA decision only applies for contracts one year or less. Accordingly, it is to be used as a stop-gap so that the parties can conduct their business with efficiency and certainty under the National Transportation Act, which introduced FOA as a provision to enhance the bargaining power of shippers, particularly captive shippers served by only one railway and with no alternative transportation services.

[...]

The FOA regime is designed to require that the carrier submit its final offer before knowing the dollar amount of the shipper's final offer. This feature makes the arbitration a high risk for the carrier and it is designed to cause the carrier to temper its offer by making it as reasonable as possible. While CN does not think this is fair, it is Parliament's regime to balance the bargaining power between a railroad in a monopolistic position and a shipper totally dependent on that railroad.

[53] When determining whether to exercise discretion under section 162.1 of the CTA to discontinue the FOA or to set aside the FOA decision, the Agency must be mindful of the legislation's underlying intent to ensure balance between the power of the carriers and shippers. Therefore, the Agency must refrain from exercising discretion to end an FOA proceeding on the basis that it is theoretical or premature, when the evidence is not conclusive that there will be no movement to which the carriage rates set in the FOA award rates will apply given the award's one-year period of application, as is the case here. This is more so when, as in this case, the carrier is not only in a monopolistic position being the only mode of transportation available to serve the shipper in the area, but also when the rail carrier is actually owned by a direct competitor of the shipper in the iron ore production industry. To do so would unnecessarily restrict shippers' access to the FOA process, which would be inconsistent with the goals for which the FOA regime is designed to achieve.

[54] When evidence shows that, during the period of application of the FOA decision, there is a serious and reasonable possibility that goods will need to be shipped, the FOA should not be interfered with. Greater harm could be caused to the shippers if the Agency were to end an FOA proceeding precipitously if it is discovered later that the shipper indeed needed goods to be shipped during the year that the award would have applied to. On the other hand, should no shipment of goods need to be transported during the award period, the award's rates will have applied to no shipment, and thus no harm will have been caused to the carrier. It is for this reason also that excluding the rate for multicar shipments is not appropriate or warranted in this case, as no harm will result for the carrier if the rate for multicar shipment is not ultimately used.

[55] The Agency recognizes that there are inconveniences associated with the participation of the carrier in the FOA proceeding, including the FOA fees and costs. However, this is not in and of itself sufficient to warrant discontinuing an FOA or setting aside an FOA decision. In effect, pursuant to section 166 of the CTA, these fees and costs are supported and shared equally between the carrier and the shipper. In addition, under the scheme of the CTA, carriers can challenge the submission to FOA by way of an application under section 162.1 of the CTA, but the CTA does not contain any provision providing for the interruption of an FOA proceeding already underway pending a determination of the Agency on such an application. Instead, irregular submission to FOA can be remedied after the fact by the Agency through the exercise of its power under subsection 162.1(a) to discontinue an FOA proceeding or to set aside an FOA decision. This indicates that the legislator was mindful of the possibility that a carrier could ultimately support costs and fees associated with an FOA, the submission of which is later successfully challenged.

[56] With respect to the advancement of the DSO project, the Agency disagrees with QNS&L that NML's report of May 3, 2010 contradicts NML's previous publicly-disclosed information regarding the start of the iron ore production. Start-up mining projects such as that described in this application, in the Agency's opinion, by nature, evolve and the expected stages of development may very well change rapidly. In this case, NML indicated that production and shipping of iron ore will begin within the year following the FOA award. QNS&L did not provide any evidence to refute the newly released information indicating the accelerated development of the DSO project. The Agency therefore considers that more recent evidence indicating that the DSO project may be fast tracked only reflects NML's project developing faster than its earlier public statement.

[57] The Agency finds that the evidence demonstrates that there is a serious and reasonable possibility that iron ore will be produced and will need to be shipped during the period of application of the arbitrator's decision. For these reasons, the Agency considers that the FOA award should not be discontinued or set aside as premature or theoretical.

Is NML a "shipper"?

[58] Pursuant to section 6 of the CTA, "shipper" means a person who sends or receives goods by means of a carrier or intends to do so. This definition expressly contemplates the situation of a person who does not currently ship but will in the future. If QNS&L's interpretation was accepted, it would mean that shippers would not have access to FOA until such time that they effectively started shipping. This would place the carriers in a dominant position, contrary to the purpose of the FOA which is to "balance the bargaining power between a railroad in a monopolistic position and a shipper totally dependent on that railroad". Therefore, "intends to do so" must necessarily have a meaning other than actual shipping, because actual shipping is covered by the first part of the definition. The legislator would not have needed to specify this situation if it intended to limit the FOA mechanism to exclude future shipments.

[59] In any event, the Agency notes the magnitude of the planning and development of the DSO project and the significant financial commitment made by NML toward the project, along with the widespread demand for a product like iron ore. This makes it clear that NML has an interest in the fast tracking of the DSO project so as to not unnecessarily delay the production of iron ore. It makes it clear also that NML's intention to ship is actual and serious. It also suggests that, although there is no set date for the beginning of the production and shipping of iron ore from the DSO project, such a beginning should conceivably start in the near future.

Is NML's undertaking to ship invalid?

[60] In its submission for FOA filed with the Agency on April 7, 2010, NML undertakes to "ship the goods to which the arbitration relates in accordance with the decision of the arbitrator, pursuant to paragraph 161(2)(c) of the Canada Transportation Act".

[61] The Agency considers that the fact that there may not be any carriage of goods needed at the outset of the one-year period does not affect the validity of the undertaking. The requirement of paragraph 161(2)(c) is met when the shipper effectively undertakes to ship, with the rail carrier, any of the goods captured by the arbitration award during the one-year period.

[62] In this case, NML has undertaken to ship through QNS&L any goods to which the decision of the arbitrator applies. Therefore, the Agency finds that NML's undertaking meets the requirement of paragraph 161(2)(c) of the CTA.

Conclusion

[63] The Agency dismisses QNS&L's application.

Members

• Raymon J. Kaduck
• J. Mark MacKeigan

---

Canada Transportation Act, S.C., 1996, c. 10, as amended

Interpretation

6. In this Act,

[..]

"shipper" means a person who sends or receives goods by means of a carrier or intends to do so.

Application

159.

1. Sections 161 to 169 apply only in respect of matters arising between shippers and carriers that involve :
   
   1. the carriage of goods by air to which Part II applies, other than their carriage internationally;
   2. the carriage of goods by railways to which this Act applies, other than the carriage of goods in trailers or containers on flat cars unless the containers arrive by water at a port in Canada, served by only one railway company, for further movement by rail or arrive by rail at such a port in Canada for further movement by water; or
   3. the carriage by water, for hire or reward, of goods required for the maintenance or development of a municipality or any permanent settlement for northern marine resupply purposes, other than goods required in relation to national defence or in relation to the exploration for or the development, extraction or processing of oil, gas or any mineral.
2. Paragraph (1)(c) applies only to resupply services on
   
   1. the rivers, streams, lakes and other waters within the watershed of the Mackenzie River;
   2. the territorial sea and internal waters of Canada that are adjacent to the coast of the mainland and islands of the Canadian Arctic and situated within the area bounded by the meridians of longitude 95 West and 141 West and the parallels of latitude 66 00 30 North and 74 00 20 North; and
   3. the internal waters of Canada comprised in Spence Bay and Shepherd Bay and situated east of the meridian of longitude 95 West.
3. Paragraph (1)(c) applies only if
   
   1. the total register tonnage of all ships used to provide the resupply service exceeds fifty register tons; or
   2. the resupply service originates from a point situated on the waters described in subsection (2).

160. Sections 161 to 169 also apply, with any modifications that the circumstances require, in respect of the rates charged or proposed to be charged by, and in respect of any of the conditions associated with the provision of services by, a railway company to any other railway company engaged in passenger rail services, except a public passenger service provider as defined in section 87.

Final Offer Arbitration

161.

(1) A shipper who is dissatisfied with the rate or rates charged or proposed to be charged by a carrier for the movement of goods, or with any of the conditions associated with the movement of goods, may, if the matter cannot be resolved between the shipper and the carrier, submit the matter in writing to the Agency for a final offer arbitration to be conducted by one arbitrator or, if the shipper and the carrier agree, by a panel of three arbitrators.

(2)A copy of a submission under subsection (1) shall be served on the carrier by the shipper and the submission shall contain

(a) the final offer of the shipper to the carrier in the matter, excluding any dollar amounts;

[...]

(c) an undertaking by the shipper to ship the goods to which the arbitration relates in accordance with the decision of the arbitrator;

(d) an undertaking by the shipper to the Agency whereby the shipper agrees to pay to the arbitrator the fee for which the shipper is liable under section 166 as a party to the arbitration; and

(e) the name of the arbitrator, if any, that the shipper and the carrier agreed should conduct the arbitration or, if they agreed that the arbitration should be conducted by a panel of three arbitrators, the name of an arbitrator chosen by the shipper and the name of an arbitrator chosen by the carrier.

(3) The Agency shall not have any matter submitted to it by a shipper under subsection (1) arbitrated if the shipper has not, at least five days before making the submission, served on the carrier a written notice indicating that the shipper intends to submit the matter to the Agency for a final offer arbitration.

(4) A final offer arbitration is not a proceeding before the Agency.

161.1

1. Within 10 days after a submission is served under subsection 161(2), the shipper and the carrier shall submit to the Agency their final offers, including dollar amounts.
2. Without delay after final offers are submitted under subsection (1) by both the shipper and the carrier, the Agency shall provide the shipper and the carrier with copies of each other's final offer.
3. If one party does not submit a final offer in accordance with subsection (1), the final offer submitted by the other party is deemed to be the final offer selected by the arbitrator under subsection 165(1).

162.

1. Notwithstanding any application filed with the Agency by a carrier in respect of a matter, within five days after final offers are received under subsection 161.1(1), the Agency shall refer the matter for arbitration
   
   1. if the parties did not agree that the arbitration should be conducted by a panel of three arbitrators, to the arbitrator, if any, named under paragraph 161(2)(e) or, if that arbitrator is not, in the opinion of the Agency, available to conduct the arbitration or no arbitrator is named, to an arbitrator on the list of arbitrators referred to in section 169 who the Agency chooses and determines is appropriate and available to conduct the arbitration; and
   2. if the parties agreed that the arbitration should be conducted by a panel of three arbitrators,
   1. to the arbitrators named by the parties under paragraph 161(2)(e) and to any arbitrator who those arbitrators have, within 10 days after the submission was served under subsection 161(2), notified the Agency that they have agreed on, or if those arbitrators did not so notify the Agency, to an arbitrator on the list of arbitrators referred to in section 169 who the Agency chooses and determines is appropriate and available to conduct the arbitration, or
   2. if an arbitrator referred to in subparagraph (i) is not, in the opinion of the Agency, available to conduct the arbitration, to the arbitrators named in that subparagraph who are available and to an arbitrator chosen by the Agency from the list of arbitrators referred to in section 169 who the Agency determines is appropriate and available to conduct the arbitration.

(1.1) If a matter was referred to a panel of arbitrators, every reference in subsections (1.2) and (2) and sections 163 to 169 to an arbitrator or the arbitrator shall be construed as a reference to a panel of arbitrators or the panel of arbitrators, as the case may be.

(1.2) If the shipper consents to an application referred to in subsection (1) being heard before the matter is referred to an arbitrator, the Agency shall defer referring the matter until the application is dealt with.

(2) The Agency may, at the request of the arbitrator, provide administrative, technical and legal assistance to the arbitrator on a cost recovery basis.

162.1 The Agency may, in addition to any other decision or order it may make, order that an arbitration be discontinued, that it be continued subject to the terms and conditions that the Agency may fix or that the decision of the arbitrator be set aside if

1. the Agency makes a decision or an order arising out of an application that is in respect of a matter submitted to the Agency for a final offer arbitration and that is filed by a carrier before the matter is referred to arbitration; and
2. the decision or order affects the arbitration.

163.

1. In the absence of an agreement by the arbitrator and the parties as to the procedure to be followed, a final offer arbitration shall be governed by the rules of procedure made by the Agency.
2. The arbitrator shall conduct the arbitration proceedings as expeditiously as possible and, subject to the procedure referred to in subsection (1), in the manner the arbitrator considers appropriate having regard to the circumstances of the matter.
3. Within fifteen days after the Agency refers a matter for arbitration, the parties shall exchange the information that they intend to submit to the arbitrator in support of their final offers.
4. Within seven days after receipt of the information referred to in subsection (3), each party may direct interrogatories to the other, which shall be answered within fifteen days after their receipt.
5. If a party unreasonably withholds information that the arbitrator subsequently deems to be relevant, that withholding shall be taken into account by the arbitrator in making a decision.

164.

1. The arbitrator shall, in conducting a final offer arbitration between a shipper and a carrier, have regard to the information provided to the arbitrator by the parties in support of their final offers and, unless the parties agree to limit the amount of information to be provided, to any additional information that is provided by the parties at the arbitrator's request.
2. Unless the parties agree otherwise, in rendering a decision the arbitrator shall have regard to whether there is available to the shipper an alternative, effective, adequate and competitive means of transporting the goods to which the matter relates and to all considerations that appear to the arbitrator to be relevant to the matter.

164.1 If the Agency determines that a shipper's final offer submitted under subsection 161.1(1) involves freight charges in an amount of not more than $750,000 and the shipper did not indicate a contrary intention when submitting the offer, sections 163 and 164 do not apply and the arbitration shall proceed as follows:

1. within seven days after a matter is referred to an arbitrator, the shipper and the carrier may file with the arbitrator a response to the final offer of the other party;
2. subject to paragraph (c), the arbitrator shall decide the matter on the basis of the final offers and any response filed under paragraph (a); and
3. if the arbitrator considers it necessary, the arbitrator may invite the parties to make oral representations or may ask the parties to appear before him or her to provide further information.

165.

1. The decision of the arbitrator in conducting a final offer arbitration shall be the selection by the arbitrator of the final offer of either the shipper or the carrier.
2. The decision of the arbitrator shall
   
   1. be in writing;
   2. unless the parties agree otherwise, be rendered within 60 days or, in the case of an arbitration conducted in accordance with section 164.1, 30 days after the date on which the submission for the final offer arbitration was received by the Agency; and
   3. unless the parties agree otherwise, be rendered so as to apply to the parties for a period of one year or any lesser period that may be appropriate, having regard to the negotiations between the parties that preceded the arbitration.
3. The carrier shall, without delay after the arbitrator's decision, set out the rate or rates or the conditions associated with the movement of goods that have been selected by the arbitrator in a tariff of the carrier, unless, where the carrier is entitled to keep the rate or rates or conditions confidential, the parties to the arbitration agree to include the rate or rates or conditions in a contract that the parties agree to keep confidential.
4. No reasons shall be set out in the decision of the arbitrator.
5. The arbitrator shall, if requested by all of the parties to the arbitration within 30 days or, in the case of an arbitration conducted in accordance with section 164.1, seven days after the decision of the arbitrator, give written reasons for the decision.
6. Except where both parties agree otherwise,
   
   1. the decision of the arbitrator on a final offer arbitration shall be final and binding and be applicable to the parties as of the date on which the submission for the arbitration was received by the Agency from the shipper, and is enforceable as if it were an order of the Agency; and
   2. the arbitrator shall direct in the decision that interest at a reasonable rate specified by the arbitrator shall be paid to one of the parties by the other on moneys that, as a result of the application of paragraph (a), are owed by a party for the period between the date referred to in that paragraph and the date of the payment.
7. Moneys and interest referred to in paragraph (6)(b) that are owed by a party pursuant to a decision of the arbitrator shall be paid without delay to the other party.

166.

1. The Agency may fix the fee to be paid to an arbitrator for the costs of, and the services provided by, the arbitrator in final offer arbitration proceedings.
2. The shipper and the carrier shall share equally, whether or not the proceedings are terminated pursuant to section 168, in the payment of the fee fixed under subsection (1) and in the cost
   
   1. borne by the Agency for administrative, technical and legal services provided to the arbitrator pursuant to subsection 162(2);

[...]

167. Where the Agency is advised that a party to a final offer arbitration wishes to keep matters relating to the arbitration confidential.

1. the Agency and the arbitrator shall take all reasonably necessary measures to ensure that the matters are not disclosed by the Agency or the arbitrator or during the arbitration proceedings to any person other than the parties; and
2. no reasons for the decision given pursuant to subsection 165(5) shall contain those matters or any information included in a contract that the parties agreed to keep confidential.

168. Where, before the arbitrator renders a decision on a final offer arbitration, the parties advise the Agency or the arbitrator that they agree that the matter being arbitrated should be withdrawn from arbitration, the arbitration proceedings in respect of the matter shall be immediately terminated.

169.

1. The Agency shall, from time to time, in consultation with representatives of shippers and carriers, establish a list of persons who agree to act as arbitrators in final offer arbitrations. The list must state which of the persons have indicated that they have expertise that may assist them in conducting final offer arbitrations and the nature of that expertise.
2. A separate list of persons may be established under subsection (1) in respect of each or any mode of transportation, as the Agency considers appropriate.
3. The Agency shall have the list of persons made known to representatives of shippers and carriers throughout Canada.

Canadian Bill of Rights, S.C., 1960, c. 44

2. Every law of Canada shall, unless it is expressly declared by an Act of the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgment or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to

[...]

(e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations;

[...]