In Paramount Resources Ltd. v Chubb Insurance Company of Canada, 2023 ABKB 627, Paramount, an oil and gas company, sued its insurers as a result of their denial of coverage with respect to an incident involving environmental contamination following a leak in a pipeline carrying natural gas condensate. The insurers asserted that the leak was “detected” outside the period required for coverage under the policy. This action proceeded in parallel with an arbitration between Paramount and its co-owner and operator of the pipeline, over whether Paramount was required to share in the remediation costs. Paramount settled the arbitration, paying less than the amount claimed by the operator. In the action, Paramount sought damages from the insurers in an amount equal to the settlement payment. The insurers defended, in part, on the basis that Paramount had made admissions in the arbitration which were fatal to its action against the insurers. The court rejected those arguments. First, Paramount was entitled to make alternative arguments in the arbitration. Second, there was a risk of inconsistent results in the two proceedings, including on whether there was coverage under the policies, which was important context. Third, Paramount was fully transparent in its strategy and the insurers did not rely upon Paramount’s “admissions”. Finally, Paramount’s “admissions of fact” as to when the leak was “detected” in the arbitration were issues of mixed fact and law in the action because they turned on the interpretation of the words “detected” and “discover” under the policy. The court found that the settlement was reasonable and awarded Paramount damages equal to the settlement amount for the insurers’ breach of contract.
Continue reading “Alberta – “Admissions” made by party in arbitration did not bind it in action – #795”
