Sydney QC to step in on rail dispute

Kevin Lindgren QC, whose practise was mainly commercial law before he became a judge, was appointed by the Economic Regulation Authority (ERA) last month to conduct the confidential arbitration.

It is understood Mr Lindgren has held a preliminary conference with CBH and Brookfield negotiating teams to establish a time-frame for the arbitration process.

CBH has an interim access arrangement for its grain trains fleet, which is costing it about $6 million a month during the busy first-half of the year while it is clearing regional grain depots to Kwinana port.

That interim arrangement expires on December 31, but it is not yet known whether Mr Lindgren will be able to present his written determination to CBH and Brookfield before that date.

The determination is expected to outline complex freight network access arrangements and costs for grain trains for the next 10 years.

Once Mr Lindgren has provided his determination, CBH has 14 days to decide whether to take up the access arrangements determined by him or to reject them.

If CBH elects to accept his determination, it becomes binding on Brookfield.

This is the first time since the State's freight rail network was leased out to private operators in 2000 that the arbitration dispute process defined in the WA Rail (Access) Code 2000 has been tested.

CBH is the first rail customer to attempt to use the code provisions to negotiate an access agreement.

It started the process in October 2013.

Last year CBH and Brookfield used up the full 90-day period specified under the code for negotiations, but failed to reach agreement.

On February 17, a week after Mr Lindgren and five other QCs were added to a panel from which arbitrators could be appointed, CBH formally notified the ERA a dispute with Brookfield existed in relation to access.

It elected to continue down the track chosen in 2013, by proceeding with arbitration, although an alternative became available after February 11 when certification of the WA freight rail access regime under the Competition and Consumer Act (CCA) expired.

CBH or any other organisation aggrieved by pricing or access arrangements stipulated by freight rail network operator Brookfield, now has the option of applying to the National Competition Council to have the network, or parts of it, declared under the CCA.

Once the network is declared, the Australian Competition and Consumer Commission (ACCC) could be called in - rather than the ERA initially and then an independent arbitrator - to adjudicate on access disputes.

Certification of the WA access regime as an "effective" regime from February 2011 to 2016, prevented the ACCC becoming involved in CBH's dispute with Brookfield.

In hearing and determining the dispute, the rail code stipulates Mr Lindgren "must give effect" to it and the WA Railway (Access) Act 1998, any matters determined by the ERA and take into account the 2010 Competition Principles Agreement.

In appointing Mr Lindgren, the ERA acknowledged it "does not have any further role in the arbitration process" unless he asks for its opinion.

The arbitration will be conducted in accordance with the Commercial Arbitration Act 2012.

Farm Weekly sought comment from Mr Lindgren, CBH and Brookfield but none was received.

In December, the ERA provided Treasurer Mike Nahan with 10 recommendations from its third statutory review of the rail code.

The major recommendation was the State Government should consider options to bring interstate services offered by Brookfield on the Kalgoorlie-Kwinana standard-gauge route under regulations consistent with a national rail access regime applying east of Kalgoorlie.

Australian Rail Track Corporation (ARTC) operates standard-gauge lines east of Kalgoorlie, linking with eastern states' capital cities and major ports, as well as the Hunter Valley coal network in NSW, under a national access regime administered by the ACCC.

A commercial agreement between Brookfield Rail and ARTC allows interstate trains to run west of Kalgoorlie.

An ARTC undertaking to the ACCC - effectively the basis of the national regime - provides a range of reference tariffs for standard freight rail services allowing relatively rapid resolution of access disputes.

CBH has supported all 10 recommendations, including another which allows asset depreciation to be taken into account when the ERA is determining a "ceiling price" for disputed access.

On Monday Dr Nahan said the ERA recommendations were still being considered.

"If there are to be any changes to the code or the Railways (Access) Act 1998, this would only be done after consultation with industry and stakeholders," Dr Nahan said.

"The government is also yet to make a decision on whether to re-apply to the National Competition Council for re-certification of the WA rail access regime."