Executive Summary: Key Legal and Evidentiary Issues

• Inter Pipeline Ltd. applied to set aside a commercial arbitration award won by Teine Energy Ltd., and alternatively sought leave to appeal that award.
   
• Teine's failure to produce certain forecasting records, known as the Boomerang Forecasts, during the underlying arbitration became a central issue in the set aside application.
   
• Justice Feasby determined that the Dixon/BC Women's Hospital standard, rather than the stricter Palmer standard, governs admission of new evidence on a set aside application.
   
• Several of IPL's proposed grounds for leave to appeal turned on whether the issues raised were questions of law, fact, or mixed fact and law.
   
• Interpretation of the Equalization Procedures Guide in the damages context was found to be a question of mixed fact and law rather than a pure question of contractual interpretation.
   
• Both the application to set aside the arbitration award and the application for leave to appeal were dismissed.
   

Facts of the case

Teine Energy Ltd. ships light crude oil produced in southwestern Saskatchewan on the Mid-Saskatchewan Pipeline System (the "MS Light"), which is owned and operated by Inter Pipeline Ltd. Teine and IPL are parties to a Pipeline Connection Agreement dated June 24, 2014, which incorporates IPL's published tariff and contains an arbitration clause. Teine commenced arbitration in May 2022, alleging IPL breached the agreement and tariff by blending products for its own benefit and using an improper method to calculate equalization, a financial adjustment accounting for differences between the quality of crude delivered and received. The Arbitral Tribunal dismissed most of Teine's claims but found in Teine's favour on the equalization claim, issuing an award in August 2024 with damages and interest totalling approximately $80 million. IPL applied to set aside that award, and in the alternative sought leave to appeal it. Central to the set aside application was IPL's discovery, through a separate arbitration between the same parties, that Teine had failed to produce certain forecasting records prepared by its marketing consultant Boomerang, despite these records falling within the scope of the Tribunal's production orders. This non-production issue led to a Court of Appeal decision requiring production of the records, after which the applications proceeded on an expanded record including expert and lay evidence about the significance of the Boomerang Forecasts.

Policy and legislative provisions at issue

The application to set aside the award was brought under the Arbitration Act, RSA 2000, c A-43, specifically sections 45(1)(f) and (g), which permit a court to set aside an award where a party was treated manifestly unfairly or where arbitration procedures did not comply with the Act or the arbitration agreement. IPL also sought to amend its pleading to characterize the arbitration clause of the Pipeline Connection Agreement as an independent contract subject to a duty of good faith performance, raising the question of whether this engaged the 30-day time limit in Arbitration Act s 46. The application for leave to appeal was governed by Arbitration Act s 44(2) and s 44(2.1), which restrict appeals to questions of law and require that the matters at stake justify an appeal and that the legal question will significantly affect the parties' rights. The equalization dispute itself turned on the Equalization Procedures Guide, an industry standard incorporated into the tariff and connection agreement, along with the limitation period analysis under Limitations Act, RSA 2000, c L-12, s 3(1)(a).

Reasoning and analysis

Justice Feasby permitted IPL's late pleading amendment, finding it added no new cause of action outside the statutory time limit because it merely supplied factual particulars supporting the existing statutory grounds for set aside, rather than seeking an independent contractual remedy. On the standard for admitting new evidence, the court departed from the stricter Palmer standard applicable to conventional appeals, adopting instead the more lenient Dixon/BC Women's Hospital approach, which asks whether there is a reasonable possibility the new evidence would have affected the outcome or the fairness of the underlying proceeding. Applying that standard, the court found no reasonable possibility that the Boomerang Forecasts would have changed the Tribunal's limitations findings, since the new argument IPL wished to make could have been advanced during the arbitration using already-disclosed comparable records, and since the Tribunal had found nothing provided by IPL could have alerted Teine to non-compliance with the equalization guide. The court also found Teine's non-production of the records was inadvertent rather than intentional, and that the records were not "crucial" to the case as originally presented, so the arbitration was not rendered unfair. Turning to leave to appeal, the court applied the framework from Teal Cedar Products Ltd v British Columbia, 2017 SCC 32 for distinguishing legal, factual, and mixed questions, and repeatedly found that IPL's grounds — including the limitations finding, the interpretation of the equalization guide in the damages context, reliance on expert evidence elicited through a hypothetical scenario, the alleged commercial absurdity of the award, and an alleged failure to consider evidence — were factual or mixed fact-and-law determinations not amenable to appeal, applying the deferential standard set out in Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53.

Ruling and overall outcome

Justice Feasby dismissed both of IPL's applications, finding no basis to set aside the arbitration award and no arguable ground of law warranting leave to appeal. Teine was accordingly the successful party on both applications. The judgment does not state a specific monetary amount awarded in these proceedings; the court noted only that if the parties cannot agree on costs, they may contact the court to establish a process for determining costs, meaning no quantified award can be identified from this decision.