Canadian Manufacturing

Judge rejects Canadian Pacific challenge to Lac-Megantic settlement fund

Settlement process moving forward, could put CP at further liability risk



The charred remains of tank cars involved in the July 6 rail disaster in Lac-Megantic, Que. PHOTO Transportation Safety Board of Canada

The charred remains of tank cars involved in the July 6 rail disaster in Lac-Megantic, Que. PHOTO Transportation Safety Board of Canada

SHERBROOKE, QUE.—Quebec Superior Court Justice Gaetan Dumas has rejected Canadian Pacific Railway’s challenge to a settlement that would compensate the victims of the 2013 Lac-Megantic disaster. The oil train explosion killed 47 and destroyed much of the city’s downtown.

While Canadian Pacific was arguing the case should be heard in federal court, as opposed to the Quebec Superior Court, the judge ruled the process would go forward in Quebec. Canadian Pacific had also argued the settlement fund, into which 25 companies will contribute money for victims, was unfair because it would limit the the company’s ability to counter-sue other contributors. In the decision, the judge also added that CP should have raised its concerns about the settlement significantly earlier in the process.

Canadian Pacific will now have the option of appealing the decision before the settlement proceeds to the U.S. court.

Because the of the bankruptcy proceedings for the Montreal, Maine and Atlantic Railway, the settlement fund is tied to courts on both sides of the border. The company filed for bankruptcy protection after the disaster because it did not carry sufficient insurance to cover the damages.

Last month, Canadian Pacific became the only company tied to the disaster that has refused to put forward funds to compensate the victims. The company has said previously that while it believes the victims deserve compensation, it was not responsible for the disaster. The compensation fund sits at about $431-million.

Canadian Pacific is currently reviewing the decision, but has made no further comment.

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