Canadian Plastics

Court orders recalculation of $1.4 billion in damages in lawsuit between Dow and Nova Chemicals

The dispute centres around the operating agreement for a jointly owned ethane cracker at the Joffre petrochemical complex in central Alberta.

September 18, 2020   Canadian Plastics

The Alberta Court of Appeal has ordered a recalculation of a decision that awarded $1.4 billion in damages to Dow Chemical Canada in a dispute with Nova Chemicals Corp.

As is being reported by The Canadian Press, the appeal court agreed with the original judge who ruled that Dow was correct in its interpretation of an operating agreement for a jointly owned ethane cracker at the Joffre petrochemical complex in central Alberta.

The cracker, one of three at the complex and dubbed “E3”, was built by Nova and Union Carbide through a 1997 joint venture agreement and designed to supply ethylene feedstock for a new polyethylene plant being built by Union Carbide. In 2001, Dow merged with Union Carbide in 2001 and took over its half ownership of the ethane cracker.

Dow argued that the Joffre petrochemical complex had been operated by Nova at less-than-agreed-upon volumes for a 10-year period until 2012.

“The Court of Appeal of Alberta affirmed the trial court’s ruling that E3 must be run to its full productive capability, and that Nova committed gross negligence and wilful misconduct in failing to do so,” Dow spokeswoman Ashley Mendoza said in an email to The Canadian Press. “The trial court’s finding in Dow’s favour on Nova’s liability has been affirmed, as has its ruling on the great majority of Dow’s damages through 2012.”

The appeal court found that the trial judge’s inclusion of lost polyethylene profits from the lack of ethylene production was improper and Dow should only be compensated for direct damages, to be calculated by the trial court.

“We are pleased with the appellate court’s decision on our appeal, and we look forward to continuing to improve the ongoing operations and relationships at our world-class Joffre facility,” Nova spokeswoman Jennifer Nanz said in an emailed statement to The Canadian Press.


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