For nearly two decades, a prolonged legal battle has unfolded between two major companies over a small village in central Alberta. This dispute, centered on a jointly-owned ethylene production facility in Joffre, has led to significant financial losses and record-breaking judgments totaling billions of dollars in damages.
Dow Chemical Canada and Nova Chemicals Corporation are the key players in this ongoing legal saga, with accusations of breach of contract being at the heart of the matter. Dow alleges that Nova unlawfully obtained ethylene, while Nova claims that Dow violated their agreement by procuring ethane from third-party suppliers in the region.
After a recent court ruling, Dow was awarded a staggering $3.56 billion in damages, marking a significant development in the case. Despite the hefty judgment, Nova has filed multiple appeals challenging the decision.
The origins of the conflict date back to 1997 when Nova partnered with Union Carbide to establish an ethane cracker in Joffre. This venture, known as E3, marked a significant addition to Nova’s existing ethylene plants in the area. However, complications arose when Dow acquired Union Carbide in 2001, transforming the partnership into an uneasy alliance between competitors.
The ensuing legal battle saw Dow accusing Nova of deliberately operating the E3 facility below its capacity, impacting Dow’s financial interests. Additionally, allegations surfaced regarding the improper diversion of ethylene by Nova. Nova, on the other hand, countered with claims of contract violations by Dow related to ethane procurement.
Following a lengthy trial in 2015, a court ruled in favor of Dow, citing Nova’s misconduct and negligence. Subsequent appeals and legal maneuvers continued over the years, culminating in a recent judgment awarding Dow $3.56 billion in damages for the entire period from the plant’s inception to the initial ruling in 2018.
Despite the prolonged legal battle, the two companies remain business partners under a contract with several decades left. While the saga continues, legal experts emphasize the need for a more constructive approach to resolve the conflict and avoid prolonged litigation that benefits lawyers but hampers business interests.
