Peace River v Petrowest: Lessons Learned For The Construction & Infrastructure Industry

In Peace River Hydro Partners v. Petrowest Corp.,  (“Peace River”), the Supreme Court of Canada rendered a decision that provides guidance in addressing the operation of arbitration agreements in the context of insolvency proceedings – a topic of interest in the broader economic context of rising insolvencies. Here, we consider the implications of this decision in the construction context.

Background

Peace River was a partnership of several construction companies that was formed to build the Site C hydroelectric dam and generating station in British Columbia. Peace River subcontracted some of its scope of to work to Petrowest, an Alberta construction company (who was also a constituent member of Peace River), and certain of Petrowest's affiliates. As part of this arrangement, Peace River and the Petrowest companies executed several clauses confirming that any disputes between the parties would be referred to arbitration (the “Arbitration Agreements”).