Vol. 148, No. 10 — May 7, 2014
SOR/2014-94 April 17, 2014
CANADA TRANSPORTATION ACT
Rules of Procedure for Rail Level of Service Arbitration
The Canadian Transportation Agency, pursuant to subsection 169.36(1) (see footnote a) of the Canada Transportation Act (see footnote b), makes the annexed Rules of Procedure for Rail Level of Service Arbitration.
GEOFFREY C. HARE
Canadian Transportation Agency
Canadian Transportation Agency
RULES OF PROCEDURE FOR RAIL LEVEL OF SERVICE ARBITRATION
INTERPRETATION, DEFINITIONS AND APPLICATION
1. (1) The purpose of these Rules is to enable the parties to a dispute to achieve a resolution that is commercially fair and reasonable to the parties.
Just, expeditious, inexpensive
(2) These Rules are to be interpreted and applied in a manner that facilitates, through arbitration, the just, expeditious and inexpensive resolution of the dispute.
2. The following definitions apply in these Rules.
« Loi »
“Act” means the Canada Transportation Act.
« jour ouvrable »
“business day” means a day on which the Agency is ordinarily open for business.
« jour »
“day” means a calendar day.
« document »
“document” includes any information recorded or saved in any form.
3. These Rules set out the procedure for an arbitration conducted under Division II of Part IV of the Act.
Dispensing and amending
4. (1) The arbitrator may dispense with or amend any of these Rules if to do so will improve the efficiency and effectiveness of the arbitration procedure.
(2) The arbitrator may extend or abridge any time limit established under these Rules either before or after the time limit expires.
5. If any information relating to the arbitration is to be kept confidential, every person who will have access to the information in the course of the arbitration must sign a confidentiality agreement before they obtain access to the information.
6. The last day for doing an act or meeting any other requirement under these Rules applies even if that day is not a business day.
Language of arbitration — agreement of parties
7. (1) If the parties are in agreement on the official language in which the arbitration is to be conducted, they must advise the Agency accordingly by submitting a written notice along with each of their proposals.
Determined by arbitrator
(2) If the parties fail to provide notice to the Agency, the language of the arbitration is to be determined by the arbitrator.
(3) A party that requires translation services in order to consult any document produced in either official language by the other party must make arrangements to obtain those services.
Simultaneous translation services
(4) A party that requires simultaneous translation services in order to participate in the arbitration, or in order that one of their witnesses may present evidence in the language of the arbitration, must, at least seven days before the services are required, provide notice in writing of the requirement to the Agency.
8. (1) Documents to be provided to a party under these Rules must be delivered or transmitted by email or facsimile.
Delivery — effective
(2) Delivery of a document to a party is effective on the day on which the document is received at the address of the party or of their legal counsel or other authorized representative, if any.
Email or facsimile — effective
(3) Email or facsimile transmission of a document is effective at the time that the email or facsimile is transmitted.
(4) If a document that is transmitted by email or facsimile is not received or is only partially received, the sender must, as soon as feasible after receiving a request from the recipient, deliver a paper copy of the document to the recipient.
Oral communication with arbitrator
9. (1) A party or their legal counsel or authorized representative must not speak with the arbitrator in the absence of the other party or the other party’s legal counsel or authorized representative.
(2) A party or their legal counsel or authorized representative must not write to the arbitrator without providing a copy of the communication to the other party at the same time.
Arbitrator’s mandatory disclosure
10. Within 24 hours after the day on which a matter is referred for arbitration under subsection 169.35(1) of the Act, the arbitrator must provide a signed declaration to the parties that discloses any situation of which he or she is aware that could place him or her in a conflict of interest or that could give rise to a reasonable apprehension of bias in the context of the arbitration.
Lack of impartiality or conflict of interest
11. (1) If a party is of the view that an arbitrator is unable to perform his or her duties impartially or is in a conflict of interest in the context of the arbitration, the party must advise the Agency by written notice without delay, setting out the reasons for their claim.
Decision within three days
(2) The Chairperson must decide on the claim and notify the parties within three business days after the day on which written notice of the claim is received by the Agency.
12. (1) The Chairperson must appoint a substitute arbitrator as soon as feasible after
- (a) the arbitrator becomes unable to continue to perform his or her duties;
- (b) the arbitrator informs the Agency that he or she is no longer able to act as arbitrator or considers himself or herself unable to perform the duties of arbitrator without giving rise to a reasonable apprehension of bias or because of a conflict of interest; or
- (c) the Chairperson decides, following written notice from a party, that the arbitrator cannot continue to perform his or her duties without giving rise to a reasonable apprehension of bias or because of a conflict of interest.
Hearings to be repeated
(2) If an arbitrator is replaced, any hearings previously held must be repeated.
GENERAL POWERS OF ARBITRATOR
Role of arbitrator
13. The arbitrator may, among other things,
- (a) encourage and assist the parties in settling the dispute or any of the matters in dispute at all times until the end of the first pre-arbitration meeting;
- (b) order the adjournment of the arbitration, if required;
- (c) order the inspection of documents, goods or other property, including a site visit;
- (d) give directions on questions of procedure that do not deal with the substance of the dispute, including those that arise in the course of pre-arbitration meetings;
- (e) request further statements to clarify matters in dispute;
- (f) in exceptional circumstances and if there is no prejudice to the parties, dispense with an oral hearing and order that all arguments and evidence be presented in writing; and
- (g) as required, appoint one or more independent external experts to report on specific issues.
STEPS PRECEDING HEARING
First pre-arbitration meeting
14. (1) Within four days after the day on which the arbitrator is chosen in accordance with subsection 169.35(1) of the Act, he or she must convene a pre-arbitration meeting for the purpose, among other things, of
- (a) encouraging settlement by the parties of the dispute, or of any matter in dispute;
- (b) clarifying matters in dispute;
- (c) determining whether there is consensus between the parties on any relevant facts, and if so, ordering the parties to produce an agreed statement of facts;
- (d) determining the time required for the arbitration hearing, which should normally not exceed five days;
- (e) fixing the date of the arbitration hearing;
- (f) establishing a timetable for the completion of all pre-arbitration matters, including
- (i) the exchange of arbitration briefs,
- (ii) the exchange of questions referred to in subsection 169.36(3) of the Act, and
- (iii) the holding of a second pre-arbitration meeting, if the arbitrator considers it appropriate;
- (g) establishing the order of proceedings at the arbitration hearing; and
- (h) deciding any other procedural matters in respect of the arbitration.
Type of meeting
(2) The meeting may be conducted in person or by means of electronic communication, such as webcasting, video conferencing or teleconferencing.
(3) Within three days after the day on which the meeting takes place, the arbitrator must provide a summary of the meeting to the parties that outlines, among other things, any agreements reached and decisions rendered, the time, date and place, if applicable, of the second pre-arbitration meeting and the time, date and place of the arbitration hearing.
Exchange of arbitration briefs
15. (1) Each party must provide their arbitration brief to the arbitrator and to the other party in accordance with the timetable established at the first pre-arbitration meeting.
(2) Each party’s arbitration brief must contain
- (a) the material facts in support of the party’s position;
- (b) the agreed statement of facts ordered by the arbitrator, if applicable;
- (c) documentary evidence that the party intends to produce at the arbitration hearing in support of their position and that is selected from information exchanged under subsection 169.34(3) of the Act, including, in respect of any written opinion from an expert who is to give evidence at the hearing,
- (i) the qualifications of the expert,
- (ii) the expert’s opinion, and
- (iii) the facts upon which the expert’s opinion is based;
- (d) a description of the oral evidence to be presented at the arbitration hearing or signed witness statements; and
- (e) the arguments in support of the party’s position, set out in concise numbered paragraphs, including references linking each argument to the relevant evidence referred to in paragraph (c) or (d).
Failure to deliver arbitration brief
(3) A party that fails to deliver an arbitration brief in accordance with the established timetable is not entitled to participate further in the arbitration and the arbitration continues without that arbitration brief.
Optional second pre-arbitration meeting
16. (1) If a second pre-arbitration meeting is to be held, the arbitrator must convene it for the purpose, among other things, of
- (a) further clarifying matters in dispute;
- (b) confirming the time required for the arbitration hearing;
- (c) settling an agreed statement of facts, if applicable;
- (d) determining which witnesses will attend the arbitration hearing and the dates and times of their attendance;
- (e) confirming the order of proceedings at the arbitration hearing; and
- (f) deciding any other procedural matters in respect of the arbitration.
Type of meeting
(2) The meeting may be conducted in person or by means of electronic communication, such as webcasting, video conferencing or teleconferencing.
(3) Within three days after the day on which the meeting takes place, the arbitrator must provide a summary of the meeting to the parties that outlines, among other things, any agreements reached and any decisions rendered.
Place of arbitration hearing
17. (1) Subject to subsections (2) and (3), the arbitration hearing is to be held at the head office of the Agency.
(2) The arbitrator may, if circumstances justify it, conduct all or part of the hearing by means of electronic communication, such as webcasting, video conferencing or teleconferencing.
Change of location
(3) On the request of a party, the arbitrator may conduct all or any part of the arbitration hearing at another location for the purpose of hearing witnesses, experts or the parties or of inspecting documents, goods or other property, if he or she determines that it would be more practical or that it is necessary to do so.
Transcript of arbitration hearing
18. (1) No transcript of the arbitration hearing is to be taken, unless requested by the parties.
Copy to arbitrator
(2) If a transcript is requested by the parties, they must provide a copy to the arbitrator as soon as it is available.
Final oral argument
19. Subject to subsection 15(3) and section 23, each party must be permitted to present final oral arguments at the arbitration hearing.
20. Information that has not been exchanged under subsection 169.34(3) of the Act is not to be introduced as evidence.
Manner of examination
21. (1) The manner in which witnesses are to be examined is to be determined by the arbitrator.
Exclusion of witness
(2) On the request of a party, the arbitrator may require a witness to be absent from the arbitration hearing during the testimony of other witnesses.
Signed witness statement
(3) If it was included in the party’s arbitration brief, a signed witness statement may replace the examination in chief of a party’s witness, in which case the witness is subject only to cross-examination and re-examination in respect of the statement.
Absence of party
(4) All witness testimony is to be given in the presence of the arbitrator and, except if a party is voluntarily absent or has defaulted in the context of subsection 15(3), in the presence of both parties.
Alternative to witness attendance
22. The arbitrator may, on the agreement of both parties, accept in evidence a signed witness statement or the affidavit of a witness in lieu of the attendance of the witness at the arbitration hearing.
Default of party
23. The arbitrator will continue the arbitration hearing despite the absence of a party if the party, without sufficient cause and in the absence of notice to the arbitrator, fails to appear at the hearing.
Close of hearing
24. The arbitrator may close the arbitration hearing if the parties, after inquiry by the arbitrator, confirm that they have no further evidence to present or submissions to make or if the arbitrator determines that, because he or she has sufficient understanding of the matters and of each party’s position, it is unnecessary to continue the hearing.
Record of arbitration hearing
25. The record of the arbitration consists of the following documents:
- (a) the written notice referred to in paragraph 169.33(1)(a) of the Act;
- (b) the shipper’s submission for arbitration;
- (c) each party’s proposal;
- (d) each party’s arbitration brief;
- (e) exhibits produced at the hearing; and
- (f) any applicable order made by the Agency under section 169.43 of the Act.
26. (1) The arbitrator’s decision must be made within seven days after the day on which the arbitration hearing ends.
Copy of decision to parties
(2) The arbitrator must provide each party with a signed copy of the decision.
27. Within two business days after the day on which they receive the arbitrator’s decision, a party may apply to the arbitrator to correct
- (a) a clerical or typographical error;
- (b) an accidental error, slip, omission or other similar mistake; or
- (c) an error in calculation.
COMING INTO FORCE
28. These Rules come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Rules.)
Subsection 169.36(1) of the Canada Transportation Act (CTA), S.C. 1996, c. 10, enables the Canadian Transportation Agency (Agency) to make rules of procedure for arbitrations requested by shippers with respect to rail level of service agreements. Accordingly, the Agency is enacting the Rules of Procedure for Rail Level of Service Arbitration (Rules).
The Agency is an independent, quasi-judicial tribunal. It makes decisions and determinations on a wide range of matters involving modes of transportation under the authority of Parliament, as set out in the CTA. The Agency’s vision is a competitive and accessible national transportation system that fulfills the needs of Canadians and the Canadian economy.
The Agency’s mission is to be a respected and trusted tribunal and economic regulator through efficient dispute resolution and essential economic regulation.
Our values include integrity, fairness, transparency and quality of service. The Agency is committed to expand client-oriented resources and develop new ones to facilitate access to dispute resolution services.
Legislative amendments to the CTA, as set out in Bill C-52, the Fair Rail Freight Service Act, provide a right to shippers to establish rail service agreements with railway companies by way of arbitration where the agreements cannot be negotiated commercially. Taking into account these important principles and values, the Agency is establishing these rules of procedure for arbitrations requested by shippers under section 169.31 of the CTA.
The introduction of these new arbitration provisions has augmented existing dispute resolution options for shippers and railway companies. As an alternative dispute resolution mechanism, arbitration is faster and less formal than adjudication, allowing for a more expedited resolution. The Rules have been developed to support this mechanism, to be understandable and predictable in their application and to provide a just, expeditious and inexpensive process that can be completed within the legislative time limits.
The following summary of features of the new dispute resolution mechanism is based on provisions contained in both the legislative provisions of the CTA as well as in the Rules.
The legislative provisions of the CTA outline the framework for arbitration, including the time limit for issuing a decision, the contents of the submission for arbitration, the appointment of the arbitrator by the Agency, the applicable confidentiality regime and the parties’ obligations with respect to the exchange of information and the submission of proposals.
The Rules support the application of these provisions by, among other things, establishing the procedures and other time limits applicable, for example, to the filing and delivery of documents by the parties, the language of the arbitration, and the various steps of the pre-hearing and hearing stages of an arbitration. In addition, the Rules set out mechanisms that ensure the impartiality and transparency of the process, including addressing the procedure that would apply where an arbitrator may be in a conflict of interest.
The general powers of the arbitrator during the arbitration process are outlined in the Rules. The arbitration process will be subject to the Rules or to any agreement between the arbitrator and the parties as to the procedure to be followed.
The shipper and the railway company must each submit arbitration proposals to the Agency, and the parties must exchange information and arbitration briefs. Arbitration hearings will be held at the head office of the Agency. However, the arbitrator may, if circumstances justify it, conduct all or part of the hearing by means of electronic communication, such as webcasting, video conferencing or teleconferencing, or the arbitrator may decide, on the request of a party, to conduct all or any part of the hearing at another location if the arbitrator determines that it would be more practical or that it is necessary to do so. No transcripts will be taken unless requested and paid for by the parties.
Arbitration decisions will be made within seven days after the close of the arbitration hearing. Unlike in the final offer arbitration process, the arbitrator will not be limited to choosing between one or the other party’s position — the decision may be consistent with the position of either party or may be different from the positions of the parties. Arbitration decisions will be final and binding on the parties, subject only to a limited opportunity for the arbitrator to correct clerical or typographical errors; accidental errors, slips, omissions and the like; or errors in calculation.
The “One-for-One” Rule does not apply to these Rules, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply as the Rules would not increase administrative or compliance burden on small business.
On July 4, 2013, the Agency launched its consultation on the proposed Rail Arbitration Rules for Arbitrations under Section 169.31 of the Canada Transportation Act. Interested parties were given until August 2, 2013, to submit their comments. The Agency received six written submissions from industry stakeholders.
Proposed provisions not carried forward in the Rules
Several proposed provisions on which stakeholders commented were not carried forward in the Rules. The removal of the proposed provisions was not directly related to the comments provided. Rather, it was determined that the provisions were not necessary, often because the issue was adequately addressed in the CTA. The proposed provisions that were commented on but not carried forward are as follows:
- Proposed subsection 3(1) stating that the arbitrator will be bound by any applicable written agreement;
- Proposed section 9 concerning submissions for arbitration;
- Proposed section 11 concerning proposals on the matters submitted for arbitration;
- Proposed section 12 concerning the appointment of the arbitrator by the Agency;
- Proposed section 18 concerning the settlement of the dispute;
- Proposed section 20 concerning information exchange;
- Proposed section 22 concerning amendments to arbitration briefs;
- Proposed section 31 concerning costs; and
- Proposed section 32, concerning corrections to a decision, insofar as the provision imposed a time limit of five days for the arbitrator to make the correction.
Proposed provisions carried forward in the Rules
Several stakeholders commented on the calculation of time, noting that the proposed provisions were not consistent with the Interpretation Act, R.S.C., 1985, c. I-21. The Rules specify the manner in which time is to be calculated, and thus differentiate the calculation of time in the Rules from the Interpretation Act. The calculation of time set out in the Rules — that is, to include holidays in calculating time frames — is necessary given the legislative time constraints imposed on the arbitration process.
Several stakeholders commented on a proposed provision that would allow the arbitrator to extend or shorten time limits. Comments were that parties should be able to make such requests; that it should be clarified that no such changes can affect the time limits established in the CTA; and that criteria should be established to determine whether such requests will be granted.
It is implicit that parties may make requests to extend or shorten time limits. The Rules explicitly provide for the change of time limits established under the Rules while respecting the time constraints imposed on the process in the CTA. In order to be transparent, the Agency will embed criteria in a resource tool that the arbitrator may consider when determining whether to change the time limits set out in the Rules.
Some stakeholders commented on the proposed confidentiality provision, noting that in their view, it extended beyond the confidentiality regime set out in section 169.4 of the CTA. This provision has now been limited in the Rules to address only a procedural requirement to sign a confidentiality agreement before obtaining access to confidential information.
Several stakeholders commented on the provision concerning the language of the arbitration, noting, for example, that the cost of simultaneous translation should be addressed and clarified. The Official Languages Act, R.S.C., 1985, c. 31 (4th Supp.), sets out the language provisions applicable to federal tribunals, and the Agency is bound by these provisions. If the language to be used for the arbitration is not identified by the parties, the Rules provide that the arbitrator is to determine the language of the arbitration. The Rules now address the issue of simultaneous translation services to allow parties to participate in or allow witnesses to present evidence at an arbitration hearing. With respect to the cost of simultaneous translation, this is considered to be a cost related to the arbitration to be shared equally between the parties pursuant to subsection 169.39(3) of the CTA.
Several stakeholders commented on the proposed document delivery provision and stated that it could give rise to uncertainty with respect to when delivery or transmittal is deemed to have been effected; that an acknowledgement of receipt should be required; and that there was some uncertainty relating to requests to receive a hard copy of any document.
The Rules specify when delivery and transmittal by electronic means are deemed to have been effected. The Rules provide further details on the circumstances and timing of a request to receive a paper copy of a document. However, the Rules do not require an acknowledgement of receipt. The provision is drafted in such a way that the sender will have met its obligation when sending the document on time. If a recipient does not receive the documents or part thereof, the provision sets out the parties’ obligations.
One stakeholder commented on a proposed provision concerning the signing of a conflict of interest statement by the arbitrator, indicating that it was not clear that the statement would be provided to the parties. This provision has been clarified in the Rules to state that the arbitrator must provide the signed statement to the parties within 24 hours after the day on which the matter is referred for arbitration.
Several stakeholders commented on the proposed provision outlining the arbitrator’s general powers. It is noted that several of the proposed provisions commented upon were not carried forward in the Rules, namely the power to interpret and apply the terms of any written agreements, which is already provided for in paragraphs 169.37(d) and (e) of the CTA. Several other proposed provisions granting the arbitrator powers not explicitly provided for in the legislation have been removed.
Although one stakeholder commented that a proposed provision allowing the arbitrator to encourage settlement of the dispute might detract from the arbitrator’s real or perceived ability to perform their independent adjudicative role, the provision enabling the arbitrator to encourage and assist the parties in settling the dispute or any matters in dispute has been retained in the Rules, in the interest of ensuring the just, expeditious and inexpensive resolution of the dispute.
Two stakeholders commented on the proposed provision that states that an arbitrator might, at the first pre-arbitration meeting, direct the parties to produce an agreed statement of facts. Comments centered on the challenge of being able to agree to the facts at issue. The Rules carry forward the suggestion made by one stakeholder that the arbitrator should determine whether there is consensus on any relevant facts, and if so, the arbitrator will order the parties to produce an agreed statement of facts. This mechanism is important given the time limits imposed by the CTA, as it will ensure that the time available is focused on the matters truly in dispute.
With respect to the proposed provision concerning the exchange of arbitration briefs, two stakeholders provided comments. One stakeholder expressed concern that the proposed provision might be read to permit a party to include information in its brief that was not previously exchanged in accordance with subsection 169.34(3) of the CTA. With respect to this, the Rules specify that documentary evidence is to be selected from the information exchanged under subsection 169.34(3) of the CTA and extends to expert opinions. Further, the Rules explicitly prohibit information that has not been exchanged under subsection 169.34(3) of the CTA from being introduced as evidence.
The other stakeholder was opposed to the proposal that a party that fails to deliver an arbitration brief is deemed to admit the allegations contained in the brief of the other party. The stakeholder was of the view that the requirement for simultaneous submission of the briefs would make it impossible to know in advance the allegations being admitted. The Rules have been amended to state that where a party fails to deliver an arbitration brief, the party is not entitled to participate further in the arbitration, and the arbitration continues without them.
One stakeholder suggested alternative wording with respect to the location of the oral hearing, and specifically the circumstances in which the hearing might be held by means of telecommunication or at a place other than the Agency’s head office. The language of the Rules now indicates that telecommunication may be used to conduct the hearing if the circumstances justify it, and that on the request of one party, the arbitrator may conduct some or all of the hearing at another location when it is determined that it is practical or necessary to do so.
One stakeholder commented that parties should be permitted to file a written argument in addition to making final oral arguments. This suggestion has not been retained due to the time limits for arbitration proceedings imposed by the CTA.
One stakeholder commented on the proposed provision respecting the closure of the hearing, indicating that it contained some inconsistencies as it seemed to provide for both closure by the arbitrator and closure on consent of the parties. The Rules have not carried forward the provision respecting closure on consent of the parties, and set out the limited circumstances in which the arbitrator may close the hearing.
Two stakeholders questioned the proposed provision indicating that the decision should contain reasons and be issued within seven days. The Rule has carried forward the seven-day time limit, which expresses a standard practice in arbitration. The proposed provision respecting the giving of reasons in the decision has been removed.
The Rules have been developed to support the arbitration mechanism provided for in Division II of Part IV of the CTA. As stated above, the Rules aim to provide a procedure for the parties that is predictable, easy to understand and consistent with the legislative provisions.
In addition, the Rules were developed with a view to being fair and efficient. The Rules explicitly state that their purpose is to enable the parties to a dispute to achieve a resolution that is commercially fair and reasonable and within the time constraints set out in the legislation. They also state that they are to be interpreted and applied in a manner that facilitates the just, expeditious and inexpensive resolution of the dispute through arbitration.
The Rules are designed to encourage the settlement of the dispute or to provide for a transparent procedure for its efficient resolution through an arbitration hearing. The Rules are expected to benefit the parties by setting out a transparent, effective and quick procedure to arbitrate issues arising in the negotiation and establishment of rail service agreements. The costs associated with arbitration procedures are expected to be relatively low, and the timeframes shortened. The Rules also provide sufficient flexibility to parties to reduce the time and costs through such mechanisms as hearings by way of telecommunication or settlement of the dispute prior to the arbitration hearing.
Implementation, enforcement and service standards
The Rules come into force on the day on which they are registered.
There are no compliance and enforcement strategies that would be specifically applicable to the Rules.
Legal Services Branch
Canadian Transportation Agency
15 Eddy Street