In 1997, Union Carbide and NOVA Chemicals entered a joint venture to build a facility in Joffre, Alberta, Canada, with an 80-year contract to produce ethylene, a key ingredient for producing plastics. Dow Chemical, a competitor of NOVA, acquired Union Carbide’s ownership of the joint venture in 2001, expecting NOVA to honor the existing contract. However, in 2006, Dow sued, alleging that NOVA was diverting some of Dow’s ethylene for itself and was not running the plant at full capacity as they were required to do.
FTI Consulting was engaged by Dow in 2011, and the case went to trial in 2015. In June 2018, the Court awarded CAD1.43 billion in damages covering the period from 2001 through 2012 and ordered an additional calculation for damages through June 2018. NOVA paid Dow in 2019.
In September 2020, however, the Alberta Court of Appeal directed that Dow’s damages be recalculated, resulting in several years of court proceedings to determine the full amount of the damages award to Dow.
FTI Consulting’s expert industry knowledge of the ethylene facility’s competitive environment made it possible to construct an informed damages assessment that was accepted by the Court of King's Bench of Alberta.
Dow was awarded total damages of CAD3.56 billion, covering the period between 2001 to 2018 and inclusive of pre-judgment interest and prior payments, for lost value due to NOVA’s failure to meet its contractual obligations — the largest non-class-action commercial award in Canadian history.1
The judgment is another step toward eventually operating the facility at its full capability as previously agreed, restoring Dow’s rightful access to ethylene from its co-owned facility and supporting the company’s growth in Western Canada.
In the July decision on costs, the Court justified its decision to require NOVA to reimburse Dow for expert witness fees due to “the enormous task of reviewing millions of records, and the amount of damages claimed and ultimately awarded.”
Dow was awarded the largest non-class-action commercial award in Canadian history.
FTI Consulting used and calculated more than 1 million datapoints in our revised damages model.
The court case has continued for 20 years, beginning with the statement of claim filed in 2006.
In its initial damages opinion, FTI Consulting’s experts built a complex and dynamic damages model that was used in testimony to calculate damages related to both how the produced ethylene was improperly allocated between NOVA and Dow and the economic impact of reduced output due to suboptimal operation of the facility.
Following the appeal, FTI Consulting re-evaluated damages based on the appellate court’s opinion and the portions of the trial court’s findings that remained undisturbed.
FTI Consulting’s experts earned credibility with the Court by demonstrating not only vast industry knowledge, but also a commitment to our duty and responsibility to the Court.
The Court’s costs decision called out FTI Consulting’s testifying expert as having “qualifications [that] were not just related to his calculations. He was also an industry expert. NOVA had to call several experts to respond to his reports.”
“FTI’s work proved invaluable throughout the course of this decades-long dispute. The FTI team expertly unpacked and synthesized complex information for the Court regarding the ethylene business in Alberta as well as Dow’s own business practices within the ethylene industry.”
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