A chemicals company has been ordered to pay US$1.06 billion for damages to a chemicals producer following a dispute over an ethylene plant in central Alberta.
Dow Chemical Canada and Nova Chemicals – both based in Calgary – entered into a joint venture agreement to run the E3 production facility in Joffre in 2000; Nova was tasked to run the facility.
It was Dow Canada that later alleged breach of contract over the joint venture, claiming that Nova had taken a portion of the ethylene and other products that belonged to Dow, on top of failing to run the E3 facility at full production. Nova maintained that it faced an ethane shortage at the time, and ran the facility as fully as it could, subject to mechanical issues that inhibited production.
Both companies would continue to file claims and counterclaims for damages between 2001 and 2012. But last week, Court of Queen’s Bench Justice Barbara Romaine finally ruled in favour of Dow Canada and against a countersuit filed by Nova Chemicals.
“Dow has established these facts and has proved on a balance of probabilities that Nova has breached the joint venture agreements both as operator and as co-owner and has converted some of the ethane that Dow was entitled to from E3,” Romaine wrote in her judgment Wednesday.
“I also grant Dow a declaration that the conduct of Nova as operator constitutes wilful misconduct and gross negligence,” the judge added.
The damages against Dow amount to approximately US$1.06 billion, the court assessed, but the amount has to be converted into Canadian dollars.
A spokesperson for Nova Chemicals confirmed with The Canadian Press that the corporation will appeal within a month.
“While this decision is extremely disappointing, it has no impact on our announced growth plans,” Nova Chemicals representative Jenn Nanz said in an email.
