TransCanada Energy Ltd v Balancing Pool, 2016 ABQB 658

Court of Queen’s Bench of Alberta Citation: TransCanada Energy Ltd v Balancing Pool, 2016 ABQB 658 Date: 20161122 Docket: 1601 10939 Registry: Calgary Between: TransCanada Energy Ltd. and ASTC Power Partnership Plaintiffs (Applicants/Cross-Respondents) - and - Balancing Pool Defendant (Respondent/Cross-Applicant) _______________________________________________________ Memorandum of Decision of the Honourable Chief Justice Neil Wittmann _______________________________________________________ Introduction [ 1 ] TransCanada Energy Ltd. (“TCE”) and ASTC Power Partnership (“ASTC”), have brought an application by way of Amended Originating Notice, filed September 22, 2016, for the appointment of arbitrators pursuant to

section 19.4(

a) of the Power Purchase Arrangements (“PPAs”) to which they are parties. [ 2 ] The Balancing Pool (“the BP”) has brought a cross-application for a stay of the three proposed arbitrations (“the

Arbitrations”) that TCE and ASTC have filed Notices of Arbitration for. By my August 29, 2016 Order, the Attorney General of Alberta (“AG”) was granted leave to file a written brief of argument in support of the BP’s cross-application. [ 3 ] There are two actions related to the one before the Court: 1603-13041/1601-12358: Attorney General of Alberta v Alberta Power

(2000) Ltd. and others (the AG Application) and 1601-01689: ENMAX PPA Management Inc v Balancing Pool (the Enmax Application). Both of these actions involve a question of law central to the one which forms a backdrop to the applications before the Court. [ 4 ] In the AG Application, the AG filed an Originating Application for Declaratory Relief and Originating Application for Judicial Review on July 25, 2016 against the Respondents Alberta Power

(2000) Ltd., ASTC Power Partnership, ATCO Power

(2000) Ltd., ATCO Power

(2010) Ltd., ATCO Power Canada Ltd., Capital Power PPA Management Inc., ENMAX PPA Management Inc., TransCanada Energy Ltd., Balancing Pool, and the Alberta Utilities Commission. The AG seeks declarations as to the proper

interpretation of the PPA, including the validity of certain regulations and various orders, specifically the Power Purchase Arrangements Determination Regulation , AR 175/2000, which the AG argues is ultra vires and void ab initio , and which would prevent the Balancing Pool from allowing ENMAX PPA Management Inc. to terminate the PPA for Battle River. [ 5 ] The Enmax Application concerns the effective date of the termination of the Battle River PPA. The BP, by letter dated January 27, 2016, accepted ENMAX’s termination of the Battle River PPA, pursuant to

section 4.3(

j) of the Battle River PPA, but disagreed on its effective date. ENMAX had terminated the Battle River PPA on the basis that a “Change in Law” had occurred that could reasonably be expected to render continued performance by the Parties to the Battle River PPA unprofitable or more unprofitable. On June 14, 2016, ENMAX filed an application to determine a question of law regarding the effective date of termination.

This application was adjourned sine die by Consent Order, but ENMAX has recently applied to have the application set down for hearing. [ 6 ] Subsequent to the hearing of the above-referenced applications on October 20, 2016, in an October 31, 2016 letter, counsel for the BP advised the Court that if directed to arbitration, the BP would exercise its right under

section 19.4(

i) of the PPA to have a question of law determined by this Court. TCE and ASTC’s November 1, 2016 reply stated that BP’s October 31, 2016 correspondence to the Court is a further example of the BP avoiding the dispute resolution process, is a continuation of the tactical delay by the BP, and is a threat by the BP when this Court is under reserve on its decision from the October 20, 2016 hearing. Issues [ 7 ] The issue in the application by TCE and ASTC is whether an order should be granted appointing second arbitrators to the board of arbitrators for the Arbitrations.

A preliminary question to that issue is whether there is a “dispute” between the parties which would trigger the arbitration provisions in the PPAs. [ 8 ] The issue in the cross-application by the BP is whether a stay of the Arbitrations should be granted pending a determination of the AG Application for a declaration on the question of law.

Background The Parties and the PPAs [ 9 ] Power Purchase Arrangements are legislative instruments enacted through the Power Purchase Arrangements Determination Regulation , Alta Reg 175/2000, with statutory force through section 96(1) of the Electric Utilities Act , SA 2003, c E-5.1 [ EUA ]. [ 10 ] TCE describes itself as the former Buyer under the PPA for Sundance A, Units 1 and 2, at the Sundance Generating Station, as well as under the PPA for the Sheerness Generating Station, while the BP describes TCE as currently holding the position of Buyer under those PPAs. [ 11 ] ASTC describes itself as the former Buyer under the PPA for Sundance B, Units 3 and 4, at the Sundance Generating Station, while the BP describes ASTC as currently holding the position of Buyer under that PPA. [ 12 ] The BP is a non-profit statutory corporation established by

section 75 of the EUA . The BP has certain statutory mandates that are set out in the EUA , the Balancing Pool Regulation , Alta Reg 158/2003, and the Alberta Utilities Commission Act , SA 2007, c A-37.2. Termination Provisions [ 13 ] The Buyer under a PPA may terminate the PPA when an “extraordinary event” occurs.

Section 1 (

d) of the Balancing Pool Regulation defines “extraordinary event” as:

(

i) an event, other than the termination of an arrangement, in respect of which the arrangement provides for a payment to or by the Balancing Pool, or (ii) an event that results in (

A) the termination of an arrangement in accordance with its terms and conditions, and (

B) the Balancing Pool becoming a party to the arrangement; [...]. [ 14 ] TCE and ASTC assert that an example of an “extraordinary event” is a Change in Law that renders the arrangement “unprofitable or more unprofitable” for the Buyer for the remainder of the PPAs’ terms.

Section 4.3(

j) of the PPAs reads: Notwithstanding any of the foregoing, to the extent that a Change in Law, after giving effect thereto and to this

Section 4.3, could reasonably be expected to render continued performance by the Parties to this Arrangement for the balance of the Effective Term unprofitable to the Buyer in respect of a Unit, having taken account of any compensation entitlement under

Section 4.3(

i) or any amount due from the Balancing Pool, then the Buyer may terminate this Arrangement and shall not be liable for, nor entitled to any Termination Payment. [ 15 ] On August 1, 2000, AEUB Order 2000-190 (dated May 8, 2000, made pursuant to

section 45.91(1) (

a) of the Electric Utilities Act , SA 1995, c E-5.5), was varied by way of Errata [the “Errata”] by adding the phrase “or more unprofitable” to

section 4.3(

j) of the PPAs. The validity of the Errata is the “question of law” in the AG Application (the Errata question of law). [ 16 ]

Section 4.3(

j) was thus considered amended, and by incorporating the Errata, reads: Notwithstanding any of the foregoing, to the extent that a Change in Law, after giving effect thereto and to this

Section 4.3, could reasonably be expected to render continued performance by the Parties to this Arrangement for the balance of the Effective Term unprofitable or more unprofitable to the Buyer in respect of a Unit, having taken account of any compensation entitlement under

Section 4.3(

i) or any amount due from the Balancing Pool, then the Buyer may terminate this Arrangement and shall not be liable for, nor entitled to any Termination Payment. [emphasis added] [ 17 ] For the Sundance B, Units 3 and 4, the Errata was incorporated into the PPA by way of

section 1.3 which reads: On August 1, 2001 [ sic ] the Board amended Board Order U2000-190 to include the errata/clarifications identified by the independent assessment team in each of its two letters dated June 26, 2000 and July 31, 2000 and attachments, respectively. Both sets of errata/clarifications are to be considered as being attached to and forming part of this Arrangement, as applicable. Notices of Termination [ 18 ] On March 7, 2016, both TCE and ASTC advised the BP that they had each determined that they were entitled to terminate, and were terminating, the Sundance A and B PPAs, and the Sheerness PPA, pursuant to

section 4.3(

j) of the respective PPA, effective 12:01 a.m. on March 8, 2016, due to a “Change in Law.” The Change in Law was specified to be recent changes to the Specified Gas Emitters Regulation , Alta Reg 139/2007, and to the operation and administration of the Climate Change and Emissions Management Fund established under the Climate Change and Emissions Management Act , SA 2003, c C-16.7. [ 19 ] In the Notices of Termination, TCE and ASTC explained that they had determined that the Change in Law could reasonably be expected to render continued performance of the PPAs by the parties for the balance of the PPAs’ terms unprofitable, or more unprofitable, to them as Buyer. [ 20 ] TCE and ASTC also advised the BP that pursuant to section 2(1) (

g) and 2(1)(

h) of the Balancing Pool Regulation , their view was that the BP was required to conduct any investigation it determined appropriate. [ 21 ] On March 7, 2016 the BP replied to the Notices of Termination advising that it would be commencing an investigation and assessment in respect of the claimed “extraordinary events” stipulated in the Notices of Termination. [ 22 ] In return correspondence dated March 7, 2016, TCE and ASTC advised that they considered there to be a “deemed dispute” pursuant to

section 19.1 of the PPAs and were thereby providing notice of the disputes pursuant to

section 19.2 of the PPAs. Escalation Notices [ 23 ] On March 15, 2016, TCE wrote to the BP with Escalation Notices, pursuant to

section 19.2 of the PPAs. These Escalation Notices advised the BP that since the parties were unable to resolve their disputes within 5 Business Days, they were referring their disputes to a member of senior management for resolution. [ 24 ] Also on March 15, 2016, the BP confirmed that, in accordance with section 2(1) (

i) of the Balancing Pool Regulation , it would begin making payments under the relevant PPAs until all matters arising pursuant to sections 2(1)(

g) and 2(1)(

h) of the Balancing Pool Regulation were agreed to or resolved. Notices of Arbitration [ 25 ] Following an exchange of correspondence between the parties in regard to information requests, arbitral demands were issued by TCE and ASTC on July 22, 2016​​​. In accordance with

section 19.4(

a) of the PPAs, TCE and ASTC appointed the first arbitrator to each of the three-member boards of arbitrators for the Arbitrations.

[ 26 ] Following a further exchange of correspondence between the parties in regard to a potential standstill agreement, on August 16, 2016, the BP advised TCE and ASTC that since it did not consider there to be a dispute, it would not be appointing any arbitrators. The letter also advised that the BP was in the process of conducting its investigation and assessments of the claimed terminations of the PPAs. Legislation and Relevant PPA sections Appointment of Arbitrators [ 27 ]

Article 19 of the PPAs is entitled “Dispute Resolution Procedure”.

Section 19.1 provides that: Where this Arrangement requires the Parties to come to an agreement with respect to any matter, the failure of the parties to come to such agreement within the time specified, or if no time is specified within a reasonable period, shall be deemed to be a dispute between the parties which shall be resolved in accordance with the provisions of this

Article 19. [ 28 ]

Section 19.4 of the PPAs is entitled “Submission to Arbitration” and reads: Subject to

Section 19.3, all disputes with respect to this Arrangement shall, after the provisions of

Section 19.2 have been followed, be forwarded to and resolved by binding arbitration in accordance with the Arbitration Act , SA 1991, c A-43.1 (The “Arbitration Act”), by a board of arbitrators in accordance with the following provisions: (

a) Each party shall appoint its own arbitrator, who shall be qualified by education and training and have appropriate technical expertise with respect to the matter in dispute, within ten

(10) Days after the expiry of the second five

(5) Business Day period referred to in

Section 19.2 or such longer period agreed to by the Parties pursuant to

Section 19.2. If either Party shall fail to appoint an arbitrator within such ten

(10) Day period, then upon application by the Party that has appointed an arbitrator, the second arbitrator shall be appointed by any Justice of the Court of Queen’s Bench of Alberta. [...] [....] (

i) either Party may refer a question of law to a court of competent jurisdiction for final and binding determination notwithstanding that it may be part of a dispute before the board of arbitrators. [ 29 ]

Section 10 of the Arbitration Act , entitled “Appointment of arbitral tribunal” provides that:

(1) The court may appoint the arbitral tribunal, on a party's application, if (

a) the arbitration agreement provides no procedure for appointing the arbitral tribunal, or (

b) a person with power to appoint the arbitral tribunal has not done so within the time provided in the agreement or after a party has given the person 7 days' notice to do so, whichever is later.

(2) There is no appeal from the court's appointment of the arbitral tribunal. (3) Subsections (1) and (2) apply to the appointment of individual members of arbitral tribunals. [...]. Stay of Arbitrations [ 30 ]

Section 6 of the Arbitration Act is entitled “Court intervention limited” and reads: No court may intervene in matters governed by this Act, except for the following purposes as provided by this Act:

a) to assist the arbitration process;

b) to ensure that an arbitration is carried on in accordance with the arbitration agreement;

c) to prevent manifestly unfair or unequal treatment of a party to an arbitration agreement;

d) to enforce awards. [ 31 ]

Section 7 of the Arbitration Act provides that:

(1) If a party to an arbitration agreement commences a proceeding in a court in respect of a matter in dispute to be submitted to arbitration under the agreement, the court shall, on the application of another party to the arbitration agreement, stay the proceeding.

(2) The court may refuse to stay the proceeding in only the following cases: (

a) a party entered into the arbitration agreement while under a legal incapacity; (

b) the arbitration agreement is invalid;

(

c) the subject-matter of the dispute is not capable of being the subject of arbitration under Alberta law; (

d) the application to stay the proceeding was brought with undue delay; (

e) the matter in dispute is a proper one for default or

summary judgment.

(3) An arbitration of the matter in dispute may be commenced or continued while the application is before the court.

(4) If the court refuses to stay the proceeding, (

a) no arbitration of the matter in dispute shall be commenced, and (

b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court'srefusal is without effect.

(5) The court may stay the proceeding with respect to the matters in dispute dealt with in the arbitration agreement and allow theproceeding to continue with respect to other matters if it finds that (

a) the agreement deals with only some of the matters in dispute in respect of which the proceeding was commenced, and (

b) it is reasonable to separate the matters in dispute dealt with in the agreement from the other matters.

(6) There is no appeal from the court's decision under this section. Application to Appoint Arbitrators TCE and ASTC [32] TCE and ASTC are applying to the Court for an order appointing arbitrators for the Arbitrations commenced by arbitraldemands issued July 22, 2016 to the BP. In support, they rely on the affidavit of Kenneth W. Kunz, Vice President and GeneralManager, Canadian Power and Gas Storage for TCE, filed August 22, 2016. [33] TCE and ASTC argue that there are two disputes between them and the BP: an express dispute and a deemed dispute.

Theexpress dispute is in regard to the Effective Time of Termination. They consider there to be a deemed dispute between the parties inrespect of the Sundance A, B and Sheerness PPAs, pursuant to

section 19.1 of the PPAs, since the BP had not confirmed its agreementwith TCE and ASTC’s position that the relevant PPAs had been terminated as of the Effective Time of Termination. TCE and ASTCstate that they advised the BP of this in a letter dated March 7, 2016. [34] TCE and ASTC argue that on July 22, 2016, their counsel sent correspondence to the BP in relation to each of the disputes,advising that they were forwarding the disputes to be resolved through binding arbitration since the BP had not nominated its seniormanagement representative or responded to the Escalation Notices. The correspondence also advised of the arbitrators that they hadappointed pursuant to

section 19.4 of the PPAs, and requested that by ten days after the date of the correspondence, that the BP was toadvise as to its appointed arbitrators. [35] TCE and ASTC argue that although they have followed the provisions of

Article 19 of the PPAs in relation to the disputes,the BP refused to appoint arbitrators to the board of arbitrators for any of the Arbitrations, and is therefore in default of

section 19.4 ofthe PPAs. [36] TCE and ASTC rely on both

section 19.4(

a) of the PPAs – which requires this Court to appoint the second arbitrator to theboard of arbitrators for each of the Arbitrations – as well as

section 10 of the Arbitration Act, RSA 2000, c A-43, which says that thecourt “may” appoint arbitrators. [37] TCE and ASTC have proposed four qualified arbitrators to be appointed, all of whom have confirmed that they are availableand willing to serve. TCE and ASTC suggest that it would be helpful for the Court to appoint specific arbitrators to specific boards.

Theonly conflict they are aware of is that John Hunter, Q.C. and Marshall Rothstein, Q.C., should not be appointed to the same board ofarbitrators, because they are from the same Vancouver law firm. [38] Speaking generally, TCE and ASTC urge the Court to support arbitrations (see Haas v Gunasekaram, 2016 ONCA 744), andto not return to the “jealous guarding” by the courts of their jurisdiction against encroachment by arbitration (Deuterium of Canada Ltd vBurns & Roe Inc, (SCC), [1975] 2 SCR 124 at 45).

The Balancing Pool [39] Whereas TCE and ASTC argue that they have terminated the PPAs, the BP maintains that they responded to the Notices ofTermination by advising TCE and ASTC that they would be commencing an investigation and assessment in respect of the claimedtermination right. Further, the BP stated its expectation that both TCE and ASTC were to continue to offer electricity into the power poolin the capacity of Buyer until such time as the BP verified the alleged “extraordinary event”. As requested by TCE and ASTC, and asrequired by section 2(1)(

i) of the Balancing Pool Regulation, since receiving the Notices of Termination, the BP has been makingpayments to the Owners of the PPAs; payments which otherwise would have been made by TCE and ASTC. [40] From March 15, 2016 until at least June 24, 2016, the BP corresponded with TCE and ASTC in regard to a request for all

materials, data, assumptions and other information for use in the BP’s investigation and assessment. [41] On July 22, 2016, the BP received correspondence from TCE and ASTC seeking to refer the alleged “dispute” between theparties to arbitration. [42] In response to TCE and ASTC’s assertion that there are two disputes between the parties, the BP argues that with respect tothe “express dispute” – given that the termination rights of the PPAs have only been claimed by TCE and ASTC, but not yet verified bythe BP – any “dispute” regarding the effective time of termination is hypothetical.

Until such a determination is made, the BP maintainsthat no actual or express dispute exists between TCE and ASTC and the BP, and therefore

section 19.4 does not apply. With respect tothe deemed dispute, the BP’s argument is that it has not yet rejected TCE and ASTC’s position on its alleged termination right, and thusthere is no dispute between the parties as to whether TCE and ASTC have a right to terminate the PPAs pursuant to

section 4.3(j). [43] The BP explained that it would not have been prudent to appoint arbitrators when they were faced with the AG Application,which they characterize as being a challenge to the very heart of the law which would be adjudicated by the arbitrators. Application for Stay of Arbitrations The Balancing Pool [44] The BP applied for a stay of the Arbitrations (if ordered) pending the outcome of the AG Application. As indicated earlier,since the hearing, correspondence was received from counsel for the BP advising the Court that, if directed to arbitration, the BP wouldexercise its right under

section 19.4(

i) of the PPA to have a question of law determined by the Court. [45] In support of its application, the BP stresses novel circumstances which it says are significant. It states that the real questionfor the Court is that of the stay. [46] The BP submits that the PPAs are not contracts, but are statutory instruments, and as such it cannot be said that the parties tothe arrangements “bargained” for an arbitration process. [47] They argue that more importantly, unlike other arbitration clauses, the PPAs specifically contemplate referring “questions oflaw” to a court, notwithstanding that the question of law is part of a dispute before the board of arbitrators.

Section 19.4(

i) allows that“either Party may refer a question of law to a court of competent jurisdiction for final and binding determination notwithstanding that itmay be part of a dispute before the board of arbitrators.” [48] The BP distinguishes the majority of case law that considers the stay provisions of the Arbitration Act in that they werebrought where one party to an arbitration agreement sought to litigate, and the other party sought a permanent stay of the court action inorder for the matter to be resolved by way of arbitration (or vice versa).

In this matter, they argue that a non-party, the AG, commencedan action in the court raising overriding questions of law central to the matter sought to be arbitrated. [49] The BP argues that sections 6 and 7 of the Arbitration Act delineate circumstances in which court intervention in thearbitration process is warranted. In particular they note that sections 7(2), 7(4), 7(5) and 6(

c) afford the Court discretion to intervene inarbitration. The BP’s position is that it would be manifestly unfair or would be unequal treatment to force the BP forward in theArbitrations. [50] The BP relies on New Era Nutrition Inc v Balance Bar Co, 2004 ABCA 280, for the proposition that an arbitration should bestayed in favour of litigation pursuant to

section 6(

c) of the Arbitration Act where there is an overlap between the two proceedings andthe matters cannot be reasonably separated so as to prevent unfairness. [51] The BP argues that the original test for staying a proceeding in favour of an overlapping proceeding was set out in Alberta vAUPE (1984), 1984 ABCA 130 , 53 AR 277 (ABCA): are the questions in the actions substantially similar? And if so, has theapplicant satisfied the court that a continuance of the action sought to be stayed would be oppressive or vexatious to him or would itotherwise abuse the powers of the court in some way?

And has the applicant satisfied the court that the stay would not cause an injusticeto the respondent? The BP contends that the test over time has come to be restated to the simple inquiry of whether granting the staywould be “just and reasonable”. [52] In drawing parallels between the tests in AUPE, New Era and

section 6 of the Arbitration Act, the BP argues that it would bemanifestly unfair or unequal treatment to allow a proceeding that is oppressive or vexatious to one party when staying it would cause noinjustice to the other.

Specifically the BP argues that it would be manifestly unfair to the BP to require it to participate in arbitrationwhile the AG Application is outstanding. [53] The BP submits cases where overriding questions of law were scheduled to be heard by a different court, and the AUPE testwas applied and a stay was granted: Vanbrabant v Alberta (Minister of Education), [1998] AJ No 830 (ABCA); Provincial Judges’Association (Alberta) v Alberta, (AB KB), [1996] 6 WWR 738; TransAlta Generation Partnership v CapitalPower PPA Management Inc, 2015 ABQB 793. [54] The BP further submits that the questions in the AG Application are substantially similar to the issues raised in the Notices ofArbitration and that it would be manifestly unfair to the BP to require it to participate in arbitration prior to determination of the AGApplication. [55] Finally, the BP points to section 7(2)(

c) of the Arbitration Act which requires the Court to stay an arbitration when the subjectmatter of the dispute is not capable of being the subject of arbitration under Alberta law. In this regard, the BP submits that an arbitratordoes not have jurisdiction to determine the legitimacy of legislative enactments.

[ 56 ] Since proceeding without a stay would risk running afoul of the objectives set out in New Era , the Judicature Act , RSA 2000, c J-2, and the Rules of Court – as well as wasting the parties’ resources and risking inconsistent decisions – the BP argues that the interests of justice, efficiency and fairness demand a temporary stay of the Arbitrations pending the Court’s determination of the AG Application.

The BP stresses that it is only seeking a temporary stay of the Arbitrations pending the Court’s guidance on the overriding questions of law; they are not seeking to circumvent the dispute resolution provisions of the PPAs. Attorney General [ 57 ] The AG supports the arguments advanced by the BP. [ 58 ] In addition to those arguments, the AG submits that as guardian of the public interest, it could be prejudiced if the Arbitrations proceed before the AG Application can be determined.

The AG further argues that “the benefits typically associated with arbitration are not engaged in the present circumstances.” [ 59 ] The AG echoes the BP in submitting that this case presents a unique set of circumstances as compared to the typical dispute regarding whether a matter should be determined by the Court or through arbitration, including that the PPAs are not private contracts, but instead are statutory instruments, and that the BP is a statutory non-profit entity that is tasked with minimizing risks to consumers.

TCE and ASTC [ 60 ] In reply to the BP’s application for a stay of the Arbitrations, the TCE and ASTC submit that the sole alleged basis for the stay is the AG Application. They submit that the AG is a “stranger” to these proceedings. [ 61 ] TCE and ASTC submit that this Court cannot grant a stay in the circumstances since the Court is bound by

section 19.4 of the PPA which makes it mandatory for the arbitrators to be appointed. That

section legislates that “...the second arbitrator shall be appointed by any Justice of the Court of Queen’s Bench of Alberta”. They also rely on

section 6 of the Arbitration Act , which states that: “No court may intervene in matters governed by this Act”, except for the few purposes as delineated in the Act, none of which they say apply to allow a stay to be granted in these circumstances. [ 62 ] In the event that the Court does have jurisdiction to grant the stay, TCE and ASTC argue that it should be denied for the strong public policy consideration that a party should not be allowed to avoid arbitration obligations simply because a third party has commenced a proceeding in court.

They further argue that the stay would be highly prejudicial to TCE and ASTC; that the BP has failed to provide any evidence in support of its stay application; and that there is a reasonable concern about the tactics being employed by the BP and the AG. Analysis Application to Appoint Arbitrators [ 63 ] Given that Notices of Termination were provided by TCE and ASTC to the BP in accordance with the provisions of the PPAs, and that there has been a failure of the parties to come to an agreement within either the time specified or within a reasonable time, I find that pursuant to

section 19.1 of the PPAs, a deemed dispute exists as between TCE and ASTC and the BP, which triggers the dispute resolution provisions under

Article 19 of the PPAs. [ 64 ]

Section 19.4(

a) of the PPAs provides that all disputes with respect to the PPAs shall, if the escalation provisions in 19.2 fail, (which they did in this case), be resolved by binding arbitration. Each party is to appoint their own arbitrator, and if either party fails to appoint an arbitrator within ten days, then upon application “the second arbitrator shall be appointed by any Justice of the Court of Queen’s Bench of Alberta”. TCE and ASTC appointed arbitrators; the BP did not. [ 65 ] Accordingly, pursuant to

section 19.4(

a) of the PPAs and

section 10 of the Arbitration Act , the following arbitrators are appointed to the existing boards of arbitrators: 1. J. Brian Casey is appointed as the second arbitrator on the Honourable Marshall Rothstein, Q.C. panel; 2. Gerald F. Scott, Q.C. is appointed as the second arbitrator on the Honourable W. Ian C. Binnie, C.C., Q.C. panel; 3. John J. L. Hunter, Q.C. is appointed as the second arbitrator on the Honourable Clifton D. O’Brien, Q.C. panel.

Application to Stay Arbitrations [ 66 ] Technically, prior to my decision to appoint arbitrators, there were no arbitrations to stay, so refusing to appoint the arbitrators would have acted as a stay of the Arbitrations. Having found though that a “dispute” exists, and that Notices of Arbitration have been issued, the Arbitrations can now proceed to their next step. The Arbitrations will not be stayed, however, as the application for a stay of the Arbitrations pending a determination of the AG Application is dismissed. [ 67 ] The BP had argued that under the tests in AUPE , New Era and

section 6 of the Arbitration Act , it would be manifestly unfair or unequal treatment to allow a proceeding that is oppressive or vexatious to one party when staying it would cause no injustice to the other. Specifically the BP argued that it would be manifestly unfair to the BP to require it to participate in arbitration while the AG Application is outstanding. I disagree. There are sufficient built-in mechanisms within the PPAs’ dispute resolution process – specifically

section 19.4(i) – for the question of law to be referred to the court.

Section 19.4(

i) of the PPAs allows either party to “refer a question of law to a court of competent jurisdiction for final and binding determination notwithstanding that it may be part of a dispute before the board of arbitrators.” Very able arbitrators have been appointed. The arbitration panels may or may not decide the Errata question of law is necessary for their decision. The Errata question of law can be decided by the arbitrators if they see fit. But in any event, a party may refer the Errata question of law to this Court.

Conclusion [ 68 ] The application to appoint arbitrators is granted; the cross-application for a stay of the Arbitrations is dismissed. The Errata question of law can be referred to the Court at the instance of a party. The AG Application can continue. [ 69 ] In the event that costs cannot be agreed upon between the parties, counsel may apply to the Court within 30 days. Heard on the 20 th day of October, 2016. Dated at the City of Calgary, Alberta this 22 nd day of November, 2016. Neil Wittmann C.J.C.Q.B.A.

Appearances: Bryan Duguid, QC Erin Baker for the Applicants Roger Smith Bernette Ho for the Respondent Joseph Arvay, QC Arden Beddoes for the AG Alberta