The recent labour strike by British Columbia (“BC”) port workers (the “Strike”) highlights important legal implications for carriers, freight brokers, shippers and other parties who rely heavily on the operations of Canadian ports.
Background
In July 2023, the International Longshore & Warehouse Union (the “Union”) began the Strike after federally mediated discussions were stalled with their employer, the BC Maritime Employers Association. According to the Union, the employer’s unwillingness to negotiate on key issues, namely contracting out, port automation and wages, necessitated a strike. Following unsuccessful negotiations, over 7,400 port workers walked off the job on July 1st, 2023, sparking nationwide apprehension about the impacts of the Strike on Canadian business-owners and the national economy at large.
The Strike affected over 7000 cargo loaders and more than 30 BC ports including the Port of Vancouver, which connects Canada to hundreds of economies around the world. A diverse range of cargo and commodities including bulk containers, construction materials, electronics and appliances pass through the Vancouver Port on a daily basis and contributes approximately $11.9 billion dollars[1] to Canada’s GDP. Experts forecast price increases across multiple sectors due to the Strike and have estimated an economic impact surpassing $250 million.[2]
On August 5, 2023, the majority of Union members approved a tentative agreement, which formally ended the Strike. Although the Strike has come to an end, it will have lasting economic consequences, especially for small and medium-sized businesses.
Practical considerations
A large number of carriers, freight brokers and shippers have failed to meet their contractual obligations as a result of the significant delay the Strike has caused in importing and exporting goods from BC ports. A wave of breach of contract claims against entities whose business operations were paralyzed by the Strike is likely on the horizon. Property damage claims may also be imminent if certain goods perished or were otherwise damaged while waiting to be unloaded. The lasting legal impacts of the walkout ought to incentivize businesses to take preventative action to protect their interests in the event of a future strike.
Those who have been impacted by interruptions in port operations due to the Strike ought to review their contractual agreements to assess whether they contemplate and provide for non-performance of the contract. For example, contracts may contain force majeure provisions which discharge a party from its obligations when an event beyond the reasonable control of either party (such as the Strike) makes performance of that contract impossible. The specific wording of a force majeure provision should be carefully scrutinized as it may allow parties to prioritize some obligations over others, release parties from certain obligations or terminate the agreement altogether.
If a contract does not contain a provision which relieves a non-performing party, the doctrine of frustration may apply to excuse both parties from performance where it has become legally or physically impossible to execute the original terms of the contract. Both force majeure clauses and the doctrine of frustration, however, require the party seeking the contemplated relief to prove that the performance of the contract was rendered impossible, not simply problematic or onerous. In the context of a strike, a party would need to show that the strike made it impossible for the contractual obligations to be fulfilled. The application of either a force majeure provision or the doctrine of frustration will also depend on the specific factual matrix at issue.
Should you have any questions regarding the legal implications that are likely to flow from the Strike, please feel free to reach out to any member of Miller Thomson LLP’s Transportation & Logistics team.
The author would like to thank Lara Jung, 2023 Miller Thomson Summer Student for their contributions to this article.
[1] Port of Vancouver, “About Us”, online: <www.portvancouver.com/about-us/>.
[2] CBC News, “What you need to know about the B.C. port strike” (7 July 2023), online: <www.cbc.ca/news/canada/british-columbia/what-you-need-to-know-bc-port-strike-1.6898101>.
