ABLawg - - Page 359

Case considered: Dalhousie Oil Company Limited, Section 40 Review of Abandonment Cost Order No. ACO 2008-1, Turner Valley Field, ERCB Decision 2010-19

In this decision the Energy Resources Conservation Board (ERCB, the Board) confirms that the current owner of an abandoned well has a continuing responsibility to pay for the re-abandonment costs associated with that well even though the well in question had not produced since the 1920s. The decision is particularly interesting in the context of the current discussion surrounding who should assume responsibility for the long term liabilities associated with carbon capture and storage projects.

Ontario Court of Appeal holds that oil and gas lease continued by virtue of (late) payments under a unitization agreement

By Nigel Bankes

On June 8, 2010

In Oil & Gas

PDF version: Ontario Court of Appeal holds that oil and gas lease continued by virtue of (late) payments under a unitization agreement

Case considered: Tribute Resources v McKinley Farms, 2010 ONCA 392

The Court of Appeal has varied in part the decision in Tribute Resources v McKinley Farms that I blogged here. The trial judge held that any rights that Tribute held under the terms of an oil and gas lease or under the terms of a gas storage agreement (GSA) had terminated.

The Court of Appeal agreed with the trial judge on the GSA point but held that trial judge had erred in holding that the lease was continued by the terms of the unitization agreement. The Court of Appeal concluded that this was an ordinary commercial contract and that the Court must give effect to its terms. The agreement provided that payments under the unitization agreement were effective to deem production on the leased lands. The fact that some payments were late was not significant since the lease did not provide for automatic termination; the default clause was evidence of that and the default clause seemed to allow the lessee the right to notice and the opportunity to cure a default. There had been no notice of default and ergo the deeming was effective.

Much Ado about Little: The Supreme Court’s Decision in Yugraneft Corp. v. Rexx Management Corp.

By Jonnette Watson Hamilton

On June 4, 2010

In Arbitration, Corporate / Commercial, Supreme Court of Canada

PDF version: Much Ado about Little: The Supreme Court’s Decision in Yugraneft Corp. v. Rexx Management Corp.

Case considered: Yugraneft Corporation v. Rexx Management Corporation, 2010 SCC 19

An Alberta company, Rexx Management Corporation, was ordered to pay an almost $1 million US arbitration award in favour of a Russian company, Yugraneft Corporation. Yugraneft waited more than three years before applying to the Alberta Court of Queen’s Bench for recognition and enforcement of that arbitration award. When Yugraneft failed to gain recognition from the Court of Queen’s Bench, it appealed to the Alberta Court of Appeal and, when unsuccessful again, was granted leave to appeal and did appeal to the Supreme Court of Canada. Thirteen judges have now heard the case and all thirteen judges have agreed: the two-year limitation period in section 3 of Alberta’s Limitations Act applied to Yugraneft’s application for recognition and enforcement and thus Yugraneft acted too late. With that degree of unanimity, one has to wonder what all the fuss in the international commercial arbitration community has been about. The case was monitored closely as it wound its way through the courts and several arbitration institutions intervened at the Supreme Court of Canada.

In this post, after briefly setting out the facts and procedural history, I will focus on one of the issues dealt with by the Supreme Court, the threshold issue. The key decision by all the levels of court that considered the matter was the decision that domestic legislation imposing any kind of limitation period was applicable. I will then deal with the question of which limitation period: ten years, six years or two years? After this discussion of the case itself, I will comment on two matters. The first is the question of whether this case really is a case of public importance. The second is speculation about what action proponents of international commercial arbitration might take now, following their loss in the Supreme Court.

Fraud and Concealment of Contaminated Land: Do Your Due Diligence, Purchaser

By Rob Omura

On June 2, 2010

In Environmental, Property

PDF version: Fraud and Concealment of Contaminated Land: Do Your Due Diligence, Purchaser

Cases considered: Motkoski Holdings Ltd. v. Yellowhead (County), 2008 ABQB 454 (Q.B.), Motkoski Holdings Ltd. v. Yellowhead (County), 2010 ABCA 72 (C.A.)

As both environmental standards and the demand for strategically located land increase, there is a greater likelihood that contaminated land will come on the market. What is clear from the case of Motkoski Holdings Ltd. v. Yellowhead (County) is that the burden of thoroughly investigating a site remains firmly on the purchaser’s shoulders, despite the sometimes inequitable difference in bargaining power between a vendor and a purchaser. Standard real estate contractual terms will often transfer land “as is” and exclude representations and warranties outside the four corners of the contract as well as exclude any collateral agreements. A contractual term that excludes any warranty as to the soil conditions, particularly in light of an engineering report that recommends further investigation, should put the purchaser on notice that further investigation may be necessary. If there are any concerns raised from preliminary investigation of the site, the purchaser neglects to follow up or investigate at its own peril.

Maintaining space for autonomy? Environmental assessments in the context of aboriginal land claims agreements

By Nigel Bankes

On May 28, 2010

In Aboriginal, Environmental, Supreme Court of Canada

PDF version: Maintaining space for autonomy? Environmental assessments in the context of aboriginal land claims agreements

Case considered: Quebec (Attorney General) v. Moses, 2010 SCC 17

This is the first decision of the Supreme Court of Canada to examine a modern land claims agreement; in this case the James Bay and Northern Quebec Land Claim Agreement (JBNQA or the Agreement) between Canada, Quebec and the James Bay Cree and the Northern Quebec Inuit. The argument in the case happens to relate to the nature of the environmental assessment process that should be applied to a particular project but there is a much broader issue at stake which is the capacity of federal and provincial governments to continue to make and apply laws within the territory covered by the Agreement to matters “covered” by the terms of the Agreement. By adopting an artificial distinction between that which is covered by the Agreement and that which falls outside it, the majority recognize that governments have retained significant authority to “supplement” the terms of the Agreement. But the government’s authority to do so is not completely unlimited since the majority also recognizes that such authority must be exercised consistently with the Crown’s duty to consult. By contrast, the dissent takes a more robust view of the coverage of the land claims agreement and as a result limits the capacity of governments to create a parallel normative world that sidelines negotiated arrangements for autonomy.

A century of liability for an abandoned well

Ontario Court of Appeal holds that oil and gas lease continued by virtue of (late) payments under a unitization agreement

Much Ado about Little: The Supreme Court’s Decision in Yugraneft Corp. v. Rexx Management Corp.

Fraud and Concealment of Contaminated Land: Do Your Due Diligence, Purchaser

Maintaining space for autonomy? Environmental assessments in the context of aboriginal land claims agreements