Service Withdrawal Arbitrations

On February 8, 2010 an arbitrator’s decision determined the extent of the jurisdiction of a service withdrawal arbitration under section 813.13 of the Local Government Act in City of Vernon v. Regional District of North Okanagan and District of Coldstream.

In this case, the City of Vernon had requested a partial withdrawal from the Greater Vernon Water Service, namely withdrawal from the distribution component only of the service. The Minister directed that this partial withdrawal request be dealt with through a binding arbitration process. The question arose whether or not the Local Government Act authorized a partial service withdrawal. After hearing argument on this question of jurisdiction, the arbitrator held that it did not.

The Local Government Act provides:

813.09 (1) After receiving a notice under section 813.08 [initiating service withdrawal]…the minister must do one of the following:

(d) if satisfied that agreement is unlikely under paragraph (a), (b), or (c) direct that the terms and conditions for withdrawal from the service be resolved by arbitration under section 813.13 [arbitration].

813.13 (1) If agreement in relation to service withdrawal cannot otherwise be reached under this Division, the terms and conditions for withdrawal must be resolved before a single arbitrator.

On reviewing the legislation, the arbitrator held that “withdrawal” means a complete withdrawal from a service, not a partial withdrawal. Accordingly, the arbitrator decided that a partial withdrawal could not be dealt with by arbitration under the legislation.

The arbitrator concluded that the legislation did not permit what the Minister had ordered, namely a partial withdrawal, and, therefore, the arbitrator did not have the jurisdiction to do what he had been directed to do by the Minister.

The arbitrator also determined that the legislation permits an arbitrator to determine only the terms and conditions for a withdrawal from a service, not the terms and conditions for an ongoing partial relationship.

Finally, the arbitrator concluded that if Vernon wanted to seek a complete withdrawal it must make a new request to the Minister.

This decision is significant because (a) it is the first decision by an arbitrator under section 813.13 of the Local Government Act and (b) it clearly establishes the extent of this aspect of the arbitrator’s jurisdiction under the statute.