Alectra Utilities Corporation sought to set aside an arbitration award of $12.3 million in favour of Solar Power Network Inc. (SPN), while SPN sought to enforce it.
The arbitration arose from a dispute over the termination of a Fee-In Tariff Programme agreement (PAMA) by Alectra's predecessor, PowerStream, which the arbitrator found to be in bad faith.
The court upheld the arbitrator's jurisdiction to consider bad faith in the exercise of a contractual right, finding that the PAMA's "sole discretion" and "not subject to dispute" clauses did not insulate bad faith termination.
However, the court found the arbitrator exceeded his jurisdiction by awarding damages for loss of profits, as the PAMA explicitly excluded such damages for breaches of covenant, and SPN's claim was deemed a breach of an implied covenant of good faith.
Alectra's application to set aside the award regarding damages for loss of profits was granted, and SPN's application to enforce the award was denied.