Case Study

Team wins high-stakes arbitration for major transportation company

May 23, 2013

A team of McGuireWoods lawyers from Jacksonville and Atlanta secured a significant arbitration victory for a leading North American supplier of rail transportation services.

Pursuant to a long-term trackage rights agreement, our client operated trains on tracks owned by a short-line railroad in exchange for a contractually agreed compensation rate per car mile. After several decades under this arrangement, the short-line railroad demanded a five-fold increase in trackage rights compensation from our client to operate on the short-line railroad’s tracks.

After extensive written and deposition discovery, voluminous briefing, and a final hearing and oral argument before a three-member panel from the Surface Transportation Board's list of approved arbitrators, the panel ruled in favor of our client and denied all of the short-line's claims. The panel's well-reasoned opinion agreed with our client on every issue, concluding that our client has no contractual obligation to pay the increased trackage rights compensation demanded by the short-line railroad. If the short-line had succeeded in resetting the industry standard and agreed trackage rights compensation, the resulting economics would have jeopardized our client's ability to continue serving its customers on the rail line.