An independent arbitrator has confirmed that 407 Express Toll Route (407ETR) is not obliged to ask the Ontario government for permission to raise tolls
The independent arbitrator appointed to resolve the dispute over the rules for toll changes on the 407 Express Toll Route in Canada issued a ruling on 10 July 2004. The decision confirms that, under the concession contract, the concession-holder is not obliged to ask the Province of Ontario for permission in order to increase tolls. The decision can be appealed to the Superior Court of Ontario.
The arbitrator´s decision, issued as part of the procedure agreed between the Province of Ontario and 407ETR, confirms the concession company”s position and ratifies that the toll increase implemented on 1 February 2004 is fully valid.
The independent arbitrator´s findings are as follows:
– 407 Express Toll Route does not require any authorisation or approval from the Province of Ontario in order to modify its tolls
– The only pre-requisite for a change in tolls is 28 days´ advance notice to the Province of Ontario
– The toll increase implemented on 1 February 2004 is valid and conforms to the concession contract
– The toll change on 1 February 2004 does not constitute breach of the concession contract.
Cintra, Ferrovial´s toll road subsidiary, is the majority shareholder of 407ETR; it currently owns 67.09%.
Brief background
In application of the concession contract, 407 Express Toll Route raised its tolls on 1 February 2004. As a result, the government of the Province of Ontario (the concession-granting entity) notified 407 Express Toll Route that it considered that toll changes required prior authorisation from the Administration and that any modification without such authorisation constituted an event of default.
407ETR considered that the concession contract did not establish that the Province of Ontario had to authorise toll changes. This position, based on the legal opinions obtained by the company, was shared by all the parties which had bid for the concession in 1999, and it was the approach under which tolls had been increased since that time, without any interference.
