Gibraltar Mines loses CN freight-rate challenge despite procedural errors

Gibraltar Mines has lost its challenge to an arbitration decision selecting Canadian National Railway’s final offer for shipping copper concentrate from its British Columbia mine, even though the Federal Court found errors in how new graphs were admitted during closing arguments.

In Gibraltar Mines Ltd. v. Canadian National Railway Company, 2026 FC 1243, released October 7, Justice Patrick Gleeson concluded that Gibraltar nevertheless knew the case it had to answer and had a full and fair opportunity to respond. He dismissed the judicial review application and awarded CN costs under Tariff B, Column 2 of the Federal Courts Rules.

The ruling leaves the arbitrator’s selection of CN’s offer undisturbed. The court did not itself set a new freight rate or award damages.

An all-or-nothing rate dispute

Gibraltar operates an open-pit copper mine in south-central British Columbia and ships concentrate by rail to the Vancouver Wharves terminal in North Vancouver. CN has provided that service since 2004.

Rates established through an earlier arbitration expired in April 2024. After negotiations failed, the companies submitted competing final offers under the Canada Transportation Act. They disagreed about freight rates, the mileage used for fuel and carbon surcharges, and the rules governing CN’s liability.

Final-offer arbitration requires the arbitrator to choose one party’s offer. It is designed to encourage settlement and moderate the parties’ positions by making the outcome an all-or-nothing choice. Ordinarily, the decision cannot contain reasons unless all parties request them.

Following a six-day hearing in February 2025, the arbitrator selected CN’s offer on March 31, 2025. Gibraltar challenged the fairness of the proceedings, argued that the arbitrator had improperly supplied reasons, and said she misunderstood the statutory scheme.

New evidence, but a fair chance to respond

The central evidentiary dispute concerned three graphs CN’s counsel presented in closing submissions. Gibraltar’s expert favoured an index-based approach to evaluating rates; CN preferred comparisons with market rates. Counsel’s graphs changed the starting year and an adjustment in Gibraltar’s analysis to demonstrate how the results varied.

Gibraltar said counsel had introduced new technical opinion evidence after the evidentiary hearing ended. CN answered that the graphs were mathematical illustrations supporting an argument it had made throughout the arbitration, rather than new evidence.

Justice Gleeson rejected both characterizations in part. The graphs were not opinion evidence: counsel had not made the subjective choices needed to propose a particular rate increase. But they were evidence because they generated new numerical information that was not in the expert’s report and had not been put to her during testimony.

Admitting the graphs was inconsistent with the arbitrator’s procedural order, which generally restricted evidence to information exchanged beforehand and prescribed how witnesses could use visual aids. The record did not show that the arbitrator expressly relied on the order’s discretionary exceptions to justify departing from that process.

Those errors did not, by themselves, establish procedural unfairness. The decisive question was whether Gibraltar understood CN’s case and had a meaningful opportunity to answer it.

CN had already attacked the index-based methodology through its expert evidence and cross-examination of Gibraltar’s expert. The latter had been questioned about the effects of changing the starting point and adjustments. Gibraltar could respond during the hearing and closing submissions, and the arbitrator gave it a further opportunity to reply after admitting the graphs. It used that opportunity.

Background was not an explanation of the result

Gibraltar also argued that the arbitrator’s four-page decision breached the Act’s prohibition on reasons. It pointed to references describing the process as similar to commercial arbitration and noting that this was the parties’ fifth final-offer arbitration.

The court found that those statements did not explain how or why CN’s offer was chosen. They therefore did not amount to reasons. Justice Gleeson did not endorse CN’s alternative submission that giving prohibited reasons would merely be a minor misstep; he noted the difficulty of defending a direct contravention of a clear statutory constraint.

The judge also rejected Gibraltar’s argument that the arbitrator misunderstood her mandate by failing to expressly mention the statutory requirement to consider whether the shipper had an effective, adequate and competitive transportation alternative.

That consideration, sometimes called a shipper’s captivity, was one of several relevant factors and was not given automatic priority by the legislation. It was not in issue here, and a decision that did not require reasons did not have to expressly cite the provision.

Nor did the references to commercial arbitration or CN’s assumed liability demonstrate a misunderstanding. The competing offers genuinely differed over whether liability would be governed by the Railway Traffic Liability Regulations without limitation or by CN’s tariff.

The decision illustrates why a procedural departure and an unfair hearing are not necessarily the same thing. Its conclusion depended on the opportunities Gibraltar actually had to meet CN’s argument, rather than a general permission to introduce new evidence at the end of an arbitration.