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Arbitration Next Step in Rail Access Negotiations

Friday, July, 10, 2015

CBH Group is likely going to seek independent arbitration to determine the cost for its grain trains to use the state’s southern rail network. Its current negotiations with Brookfield Rail came to a close recently with no resolution after 90 days of discussions. Whatever agreement is eventually reached will be in place for a decade.


Brookfield Rail was not expected to reduce its price offering, the only action that could have settled negotiations and removed the need to proceed to arbitration.


CBH publicly stated it wants to continue negotiation and believes they have and will continue to negotiate in good faith. They are not, however, will let Brookfield Raid force WA growers into an unreasonable deal.


There are now three options available to CBH. It can notify code regulator, the Economic Regulation Authority, about the dispute and request arbitration, at which point the ERA is required to appoint at least one independent arbitrator. Within 10 days, that arbitrator would arrange a conference with the disputing parties to establish a timeline going forward.  The arbitrator would have the ability to specify terms, conditions, and costs for the arrangement that would be binding on Brookfield Rail. CBH would have 14 days to determine whether it wanted to reject or accept the deal.


The remaining two options for CBH would be to ask Brookfield to agree to extend the negotiation period or to initiate new discussions outside of the code. Neither option puts CBH in a strong position and most agree they are unlikely to pursue either option. CBH acknowledges arbitration could be time-consuming and costly, but they are willing to take that risk to protect its growers.