Pulp and Paper Canada

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Supplier must repay $1.8 million to Domtar


January 3, 2012
By Pulp & Paper Canada

The B.C. Supreme Court has decided in favor of Domtar in a dispute between the papermaker and chemicals distributor Univar Canada over the application of force majeure in a caustic soda contract.

The B.C. Supreme Court has decided in favor of Domtar in a dispute between the papermaker and chemicals distributor Univar Canada over the application of force majeure in a caustic soda contract.

The contract between Domtar and Univar Canada in 2008 capped the price of caustic soda at $545/dry tonne.

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During 2008 the global price of caustic soda rose dramatically, and Univar chose to apply force majeure.

In her judgement, delivered Dec. 23, Madam Justice Fisher stated:

“Accordingly, I have concluded that the increased price of caustic soda in 2008 did not constitute an event of force majeure within the terms of clause 15A of the contract. Univar was not entitled to be excused from performance and it remained obligated to supply caustic soda to Domtar at the contract price until the contract expired on December 31, 2008.”

During the six-month period from the declaration of force majeure and the end of the contract on Dec. 31, 2008, Domtar paid the requested price, under protest, because the supply of caustic soda was vital to the operation of the mill. Prices charged by Univar during that period ranged from $730 to $860/dry tonne. The difference between the contractual maximum and the actual prices paid is $1.871 million plus GST, which Univar must repay to Domtar.

Domtar has since changed suppliers of caustic soda.

The full text of the judgement is available at http://www.courts.gov.bc.ca/jdb-txt/SC/11/17/2011BCSC1776cor1.htm.


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