CBH seeks ruling on rail line access

CBH Group has triggered an arbitration process in its dispute with Brookfield Rail over 10-year grain train access to the WA freight rail network, almost eight months after formal negotiations broke down.

Last week CBH formally notified the Economic Regulation Authority (ERA), which administers the network under the Railway (Access) Code 2000, a dispute existed and asked for an arbitrator to be appointed.

Both Brookfield and ERA had expected the move, but the timing was up to CBH which had started seeking an access agreement under the code 28 months ago.

ERA chief executive officer Greg Watkinson said it would now liaise with CBH and Brookfield over choice of an arbitrator or arbitrators from a 20-member, male-only panel of senior lawyers, including retired supreme, federal and appeals court judges.

While the formal request is for an arbitrator, it is possible CBH and Brookfield may not agree on the same person to arbitrate.

Mr Watkinson said more than one arbitrator could be appointed.

Appointing an arbitrator will end ERA involvement in the process unless it was formally asked to provide an opinion during arbitration.

Mr Watkinson expects the arbitrator to be appointed "soon".

He confirmed costs of arbitration would be borne by CBH and Brookfield.

Arbitration under the WA rail code has not been tested before.

It will be conducted under Commercial Arbitration Act 2012 provisions with the arbitrator bound to consider the State rail code and Railway (Access) Act 1998, as well as the national Competition Principles Agreement.

The arbitrator has 10 days to call a meeting with CBH and Brookfield to work out a schedule.

At the end of the process, the arbitrator is to provide a written determination setting out terms and conditions for access that CBH has 14 days to accept.

If they are accepted the terms and conditions automatically become binding on Brookfield.

The request for arbitration came two days after the ERA announced it had added another six Queens Counsel lawyers to the panel of possible arbitrators.

It also came a week before the CBH annual meeting.

A statutory 90-day formal negotiating period ended last June without CBH and Brookfield reaching agreement on 10-year access.

Both CBH and Brookfield initially expressed concern about the range of expertise available with only five arbitrators on the panel at that time.

The chairman of the WA chapter of the Institute of Arbitrators and Mediators and, from mid December, the Perth Centre for Energy and Resources Arbitration Ltd, have since recommended more panel members.

Farm Weekly understands CBH's delay in asking for arbitration was due to it waiting on the State Government to amend the rail code in relation to who could recommend arbitrators and for more expertise to then be appointed to the panel by the ERA.

CBH issued a brief statement last week announcing it had triggered the arbitration process.

"CBH has referred the dispute with Brookfield Rail over access to the grain freight rail network to arbitration under section 26(1) of the Railways (Access) Code 2000," it said.

"CBH has notified the (ERA) who will appoint an arbitrator.

"Due to confidentiality obligations under the arbitration process further details cannot be disclosed at this time.

"CBH does not have an indication of how long arbitration will take, so we ask growers to be patient as we progress through this process."

After formal negotiations ended in June, Brookfield indicated it thought arbitration could take between one and two years and be a "costly and time-consuming process for both parties".

This week Brookfield chief executive Paul Larsen said they were looking forward to getting the process underway and reaching a swift and mutually-beneficial resolution.

"The key objective for Brookfield Rail is to provide certainty for CBH, and by extension WA farmers, through the provision of a safe and reliable freight rail network throughout regional WA," Mr Larsen said.

He said Brookfield maintained its position that rail access fees needed to increase to ensure the network could continue to operate safely, efficiently and sustainably in the long term.

"Brookfield Rail has never shied away from the need to increase pricing on the rail network as historical pricing for CBH's access to the network is not sustainable, and we will be maintaining this view as we enter the arbitration process," Mr Larsen said.

"We recognise and respect the role of the ERA in this process as, in effect, the State's pricing umpire and we look forward to working under its decisions following arbitration."

CBH is currently paying about $6 million a month under an interim agreement to run its grain trains until the end of the year.