Not beyond reproach: Alberta court confirms jurisdiction over Alberta energy regulator

In a recent decision, the Alberta Court of King’s Bench confirmed that it has jurisdiction to grant injunctive relief against the Alberta Energy Regulator notwithstanding the AER’s broadly worded statutory privative clause. This case represents one of the first considerations of the Supreme Court of Canada’s recent decision in Democracy Watch.

This decision arises from an application by Sumerian Oil & Gas (Sumerian) seeking a stay of a July 20, 2026, suspension order issued by the Alberta Energy Regulator (AER). The order required Sumerian to suspend its licensed operations by August 4, 2026. Justice Little of the Alberta Court of King’s Bench granted an interim stay of the AER’s suspension order, with the most significant aspect of the decision being the Court’s finding that it possessed jurisdiction over the AER.

Background

The AER’s order required Sumerian to suspend approximately 900 wells pending compliance with certain payment obligations owed to the regulator. Sumerian argued that compliance with the order within the prescribed timeframe was impossible, particularly given the scale of the operations involved, including wells located on military lands with limited access. Sumerian also maintained that it had entered repayment arrangements and had already tendered certain payments toward the amounts claimed by the AER.

The jurisdiction issue

Justice Little identified jurisdiction as the central issue before the Court.

The AER relied on section 56 of the Responsible Energy Development Act (REDA), which contains a broad privative clause providing that decisions of the regulator are final and are not to be questioned or reviewed in any court by injunction, judicial review, declaratory relief or other proceedings. The AER argued that this provision effectively barred the Court from granting the relief sought by Sumerian. It also argued that Sumerian should pursue available internal remedies before seeking court intervention.

A significant feature of the Court’s reasoning was its reference to the Supreme Court of Canada’s recent decision in Democracy Watch, released the day before the hearing. Justice Little observed that the Supreme Court had “somewhat opened up” the jurisdiction of superior courts to review administrative decisions notwithstanding privative clauses that historically had been regarded as highly protective of tribunal decision-making.

Although Justice Little did not conduct an extensive analysis of Democracy Watch, he viewed the decision as supporting the proposition that a legislative privative clause may no longer be as effective in restricting superior court review as previously understood.

The core of the jurisdiction ruling is contained in Justice Little’s conclusion that the Court of King’s Bench possesses inherent jurisdiction.

Importantly, the Court distinguished Justice Wakeling’s decision in AlphaBow, which involved a stay application connected to proceedings before the Alberta Court of Appeal. In AlphaBow, the Court of Appeal refused to accept jurisdiction based on s. 56 of REDA. Justice Little noted that the Court of Appeal is a statutory court and does not possess inherent jurisdiction, whereas the Court of King’s Bench does. According to Justice Little, “I will assume jurisdiction because this Court has inherent jurisdiction, which is now arguably not fettered by the legislative privative clause…”

The decision therefore stands for the proposition that the superior court’s inherent jurisdiction may permit interim relief despite a broadly worded privative clause in REDA.

Horizontal stare decisis

In reaching its decision, the Court also relied on the principle of horizontal stare decisis – a legal requirement that a Court follow a previously made decision of a same-level court. Justice Little noted that another judge of the same Court had recently exercised jurisdiction over a dispute involving the same parties and substantially the same issues. This provided an additional reason for the Court to accept jurisdiction in the present application.

Stay application

After assuming jurisdiction, Justice Little applied the traditional three-part test for interlocutory relief. He found:

1. A serious issue to be tried regarding the reasonableness of requiring suspension of approximately 900 wells within the limited timeframe imposed by the AER
2. Irreparable harm because compliance could effectively destroy Sumerian’s business and eliminate its revenue stream
3. The balance of convenience favoured Sumerian because the AER’s concern was recovery of money, whereas the consequences for Sumerian were potentially existential

Key takeaways

The most important aspect of the decision is the Court’s willingness to exercise inherent jurisdiction despite the broad statutory privative clause. Justice Little relied on three considerations:

• The inherent jurisdiction of the Court of King’s Bench
• The Supreme Court of Canada’s recent comments in Democracy Watch, suggesting a broader role for superior courts notwithstanding privative clauses
• The absence of an effective alternative remedy, given the AER’s summary dismissal of the internal stay request

For future disputes involving AER orders, the decision may be cited as support for the proposition that the Court of King’s Bench retains a residual supervisory and remedial role, particularly where urgent interim relief is sought and administrative remedies are ineffective or unavailable.

Note: Sumerian was represented by Michael O’Brien and Sage Blacklavender of MLT Aikins LLP.

Share