Churchill Falls (Labrador) Corporation Limited v. Hydro-Québec

(Quebec) (Civil) (By Leave)

(Sealing order)


Contracts - Performance.


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Contracts – Performance – Good faith – Imprévision – Whether obligation in Quebec civil law to act in good faith imposes duty on respondent to renegotiate terms of contract entered into with applicant in 1969 – Civil Code of Québec, CQLR, c. CCQ 1991, arts. 6, 7 and 1375.

On May 12, 1969, the applicant Churchill Falls (Labrador) Corporation Limited and the respondent Hydro Québec entered into a contract pursuant to which the respondent undertook to purchase almost all the energy generated by a hydroelectric plant that was to be built on the Churchill River in Labrador. That contract, which had a 65 year term, set a fixed price for the energy that was to decrease in stages over time.

On February 23, 2010, the applicant instituted an action against the respondent in the Quebec Superior Court, arguing that the magnitude of the respondent’s profits because of the current value of electricity had been unforeseeable in 1969 and was causing an injustice. It submitted that the obligation to act in good faith provided for, inter alia, in the C.C.Q. imposed a duty on the respondent to renegotiate the terms of the contract.

The Superior Court dismissed the action and the Court of Appeal affirmed the judgment. It found that, except in cases of real hardship, the general principle of good faith set out in arts. 6, 7 and 1375 C.C.Q. was of no assistance to a party in the applicant’s situation (para. 159).