(Adds comments from lawyers)
By Allison Lampert
MONTREAL, July 13 (Reuters) - A Quebec judge rejectedCanadian Pacific Railway Ltd's challenge to a settlementfor victims of the Lac-Megantic crude-by-rail disaster onMonday, helping clear the way for compensation payments.
Parties previously named in a class action lawsuit,including closely-held Irving Oil, General Electric,Shell Oil Company, ConocoPhillips, Marathon Oil and others, have agreed to contribute to a C$431 million($338.28 million) compensation fund for victims of the July 6,2013 rail disaster.
Forty-seven people were killed and the downtown core of thetown was destroyed following the derailment of a train carryingBakken crude oil.
CP transported the tank cars of oil involved in the accidentto Montreal before handing them over to the now insolventMontreal, Maine & Atlantic railway, which was operating thetrain at the time of the crash. Unlike other companies targetedby a Lac-Megantic-related class action lawsuit, CP did not agreeto the settlement and challenged the provincial court'sjurisdiction in approving the deal.
CP has 21 days to appeal Monday's rulings, said PatriceBenoit, lawyer for the defunct Montreal, Maine & Atlantic.
"I am very happy with the decision and think the 4,000victims of the disaster will be as well," Benoit said.
CP, which said it is not responsible for the disaster anddid not contribute to the settlement, is now the only companybeing threatened by the class action.
Joel Rochon, lawyer for the Quebec class action authorizedin May, said in an email: "We have not finalized our damagescalculations as yet in terms of CP, but the damages being soughtagainst CP will be significant."
Before funds from the C$431 million settlement can bedisbursed, a U.S. bankruptcy court in Maine must first confirm arelated Chapter 11 plan for the American parent company of theMontreal, Maine & Atlantic railway.
"The plans are integrated and work together," explained BobKeach, the railway's Chapter 11 trustee. "That's why both haveto be confirmed."
CP could raise similar objections during a US hearing onAugust 20, Keach said. If no objections to, or appeals of theCanadian and American plans are filed, then "we'll be ready todistribute the funds to the victims" in the fall, he said.
($1 = 1.2741 Canadian dollars) (With additional writing by Allison Martell; Editing byChristian Plumb)
