Dow awarded $1bn in damages against Nova

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Photo by Nova Chemicals The Joffre, Alberta, production site run by Nova Chemicals.

A Canadian court has awarded Dow Chemical Co. more than $1bn (€850m)in an ethylene feedstock dispute with Nova Chemicals, but Nova already plans to appeal that ruling.

The two firms rank among North America's largest makers of polyethylene resin. In a 334-page ruling issued 20 June, Justice BE Romaine of the Court of Queen's Bench in Alberta ruled that Calgary-based Nova "had wrongfully taken products from [Dow] and failed to run the jointly owned Joffre Ethylene-3 plant at its full capacity," Dow officials said in a 21 June news release.

The decision included an award of $1.06bn (€910m) for damages incurred from 2001-12 from the ethylene unit in Joffre and for additional damages going forward.

"This decision will increase Dow's access to its full share of cost-advantaged Alberta ethylene from this jointly owned asset," officials added.

Nova officials responded in a June 22 statement to Plastics News by saying that they "are extremely disappointed and will appeal within 30 days."

"While this decision is extremely disappointing, it has no impact on our announced growth plans," they added. "Nova Chemicals is confidently moving forward with a Corunna cracker expansion and AST2 [process technology] in the Sarnia-Lambton region and with a joint venture with Total and Borealis in the US Gulf Coast, which closed on 23 May."

In the Dow release, officials said that Nova was contractually required to run the co-owned ethylene facility in Joffre at full productive capability and to provide Dow its 50 percent share of ethylene and co-product production.

Blair Yorke- Slader, lead trial counsel for Dow, added in the release that the court "has ruled that Nova breached its obligations, resulting in reduced productivity and reduced sales of Dow's downstream derivatives for more than 10 years."

In a 20 June court summary, officials said that Dow and Nova "claimed and counterclaimed against each other for damages in the hundreds of millions of dollars" for the period from 2001 to 2012.

According to the court summary, Dow claimed that Nova took part of the ethylene and other products produced in Joffre that belonged to Dow under the terms of the joint venture for its own use. Dow also claimed that Nova failed to run the plant — which opened in 2000 — at full rates, as it alleged Nova had a duty to do under the joint venture agreements.

Nova responded, according to the summary, by claiming that an ethane feedstock shortage justified its development and use of ethane allocation among the three ethylene production facilities at the Joffre site, and that Dow knew about this allocation as it was occurring and failed to object to it.

Nova also claimed, according to the summary, that it operated the plant to its productive capability, subject to mechanical issues that constrained production.

Nova officials said in their statement to Plastics News that damages for the period beyond 2012 to the date of judgment will be determined independently by the court. They added that the firm does not expect resolution of the issue before mid to late-2019.

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