Dow Chemical Canada ULC v. NOVA Chemicals Corporation

Alberta awards US$1.06 billion to Dow Chemical Canada in its suit against NOVA Chemicals

On June 20, 2018, Justice Barbara Romaine of the Court of Queen’s Bench of Alberta awarded US$1.06 billion to Dow Chemical Canada ULC and an affiliate (“Dow”) in an action for breach of contract against NOVA Chemicals Corporation (“NOVA”). The dispute arose from the operation of an ethylene plant at Joffre, Alberta, jointly owned by Dow and NOVA.


The Alberta ethane-based petrochemical industry began in the 1970s. Dow and Dome Petroleum Limited proposed to construct and operate an ethylene plant, but the Alberta government decided instead to have a Crown corporation (now NOVA) construct the plant. That ethylene plant, known as El, commenced operations at Joffre in 1978. In 1984, NOVA opened a second plant, E2, at Joffre and in 1994 Dow constructed its own ethylene plant at Fort Saskatchewan.

In 1997, NOVA and Union Carbide Canada Inc. (“UCC”) entered into a joint venture to build a third ethylene plant, E3, at Joffre. Twelve project agreements set out the rights and obligations of the parties regarding the ownership, management, operation and use of E3, including the appointment of NOVA as Operator. In August 1999, a merger between Dow and UCC was announced. Concerned about the merger’s impact on the co-ownership of E3, NOVA’s senior management formed a working group to consider options. The group produced a “wish list” that included “minimize ethylene to Dow” and “back Dow out of E3.” In early 2001, E3 commenced commercial operations. 

In 2006 Dow sued NOVA, alleging that NOVA had failed to run E3 at full rates and had taken for itself, by a non-contractual  ethane allocation scheme, part of Dow’s share of E3’s ethylene production.

NOVA counterclaimed, arguing that by the terms of one of the parties’ agreements UCC (and therefore Dow) was prohibited from acquiring ethane in Western Canada for its own plant.


Following a trial that took place over much of a year, Justice Romaine awarded Dow US$1.06 billion in damages.

NOVA’s counterclaim was dismissed. In assessing Dow’s claims, Justice Romaine found no justification in the parties’ agreements for NOVA’s ethane allocation scheme, by which NOVA had claimed a shortage of ethane, purported to ration ethane among E3 and its own two plants, and then allocated the total ethylene production among the three plants.

Noting that several witnesses had conceded that NOVA had always had enough ethane to run E3 at full capacity, she found that NOVA’s conduct amounted to conversion and ruled that NOVA had failed to “act honestly and in good faith and in accordance with the provisions” of the agreements. She found that NOVA “ran E3, not to optimize production of Product, but to optimize NOVA’s profit and ... the entire Joffre Site.”

Although NOVA had argued that various mechanical difficulties had limited production, Justice Romaine disagreed. NOVA also argued that it had not acted with “gross negligence” or “wilful misconduct,” but the judge found that NOVA’s failure to run E3 to capacity and its conversion of Dow’s E3 ethylene had been deliberate, or at best had shown an “utter disregard for harmful, foreseeable and avoidable consequences.”

The decision is believed to be the largest award for damages in the history of Alberta.

Bennett Jones LLP acted as lead trial counsel for Dow, with a team that included Blair Yorke Slader, QC, April Grosse, Russell Kruger, Desislava Docheva and Ciara Mackey, with assistance from Barry Crump and Scott Tallman of Burnet, Duckworth & Palmer LLP, and Randall Hofley, Kevin MacDonald and Micah Wood of Blake, Cassels & Graydon LLP.

NOVA was represented by William Kenny, QC, Sean Kelly and Fergus Schappert of Miller Thomson LLP, Colin Feasby and Tamara Prince of Osler, Hoskin & Harcourt LLP, and Mary Comeau and Bryan Walker of Norton Rose Fulbright Canada LLP.