Canada top court rules against Churchill Falls Corp. in dispute over energy deal News
Canada top court rules against Churchill Falls Corp. in dispute over energy deal

The Supreme Court of Canada ruled 7-1 on Friday that two Canadian electric companies, Hydro-Quebec and Churchill Falls Corporation, had no obligation to renegotiate a contract from 1969.

Churchill Falls Corp. brought the suit, claiming that the contract should be renegotiated due to changes in the electricity market which occurred after the signing. Under the current contract, Hydro-Quebec receives “substantial profits,” while Churchill Falls Corp. does not.

In dismissing Churchill Falls Corp.’s appeal, the majority wrote, “Given the nature of the contract and the duties of good faith and equity, Hydro‑Québec did not have a duty to renegotiate the contract when the contract proved to be an unanticipated source of substantial profits for it.” The majority went on to say that the contract contains no implied duty of renegotiation. The justices disagreed with the idea that the contract should be renegotiated because of unforeseeability, saying that Churchill Falls Corp. had accepted the risk. They also pointed out that Churchill Falls Corp. had gotten “exactly what it was owed under the contract.”

The sole dissenting justice said that by refusing to renegotiate, Hydro-Quebec had breached its duty of cooperation.

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