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Montreal successfully defends Hydro Québec before the Supreme Court of Canada

November 20, 2018 Client: Hydro-Québec

Our Montreal office successfully defended Hydro-Québec before the Supreme Court of Canada against a claim brought by Churchill Falls (Labrador) Corporation Limited (CFLCo) seeking to increase the price paid by Hydro-Québec for electricity purchased from the Churchill Falls Power Plant pursuant to a 65-year contract entered into in 1969 (Power Contract). 

In a judgment rendered on November 2, 2018, the Supreme Court of Canada rejected CFLCo’s attempt to reopen the Power Contract thereby confirming earlier rulings by the Quebec Court of Appeal and the Quebec Superior Court. In a landmark ruling, the majority of the Supreme Court held that the significant increase in the market value of electricity since the  Power Contract was entered into did not impose on Hydro-Québec an obligation to renegotiate the agreement’s pricing terms. In this regard, the Court confirmed that Quebec civil law does not recognize the doctrine of “unforeseeability” and noted, in any event, that the Power Contract did not create a situation of hardship for CFLCo.

Moreover, the majority of the Court rejected CFLCo’s argument that the civil law concepts of contractual good faith and equity required the Power Contract’s renegotiation.  According to the majority, the duty to cooperate with the other contracting party does not mean that one must sacrifice one’s own interests. In insisting that the bargain reflected in the Power Contract’s pricing terms be respected, Hydro-Québec was not acting unreasonably.  Over the remaining term of the contract, which runs until 2041, the Supreme Court’s judgment is estimated to represent several billion dollars in value for Hydro-Québec.

The Norton Rose Fulbright team that represented Hydro-Québec before the Quebec Superior Court, the Quebec Court of Appeal and the Supreme Court of Canada includes Pierre Bienvenu, Ad.E., Sophie Melchers, Andres C. Garin, Horia Bundaru, William Hesler, Q.C., Vincent Rochette and Dominic Dupoy. Lucie Lalonde, in-house counsel with Hydro-Québec, also acted before the Quebec courts and the Supreme Court of Canada in this matter. Hydro-Québec’s in-house and external counsel worked under the direction of Sandro Cellucci, General Counsel and Vice President – Legal Affairs.

The same team is also representing Hydro-Québec in separate  legal proceedings against CFLCo seeking to confirm Hydro-Québec’s rights under the Power Contract since its automatic renewal in 2016. Having obtained a favourable judgment from the Quebec Superior Court in 2016, the team is currently preparing for a hearing before the Quebec Court of Appeal in early December.