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(Reuters) - A Manitoba court cleared away some of the uncertainty surrounding Western Canada's move to an open grain market on Friday, rejecting a request to suspend a federal law that ends the Canadian Wheat Board's marketing monopoly.
The court case, one of several challenges to Ottawa's decision to scrap the Canadian Wheat Board's monopoly, was launched by eight former directors of the CWB who wanted farmers to decide whether to keep the monopoly.
The directors' case, which was heard before the Court of Queen's Bench of Manitoba, in Winnipeg, had left the grain industry uncertain about whether the monopoly would end in August as scheduled and whether they should sign contracts with producers.
The judge dismissed the directors' motion and said there would be no injunction to suspend the new law.
"I have concluded that the plaintiffs have not demonstrated that there is a serious question to be tried," wrote Judge Shane Perlmutter in the 29-page court document.
The Canadian government passed legislation in December ending the CWB's marketing monopoly over Western Canada's wheat and barley for milling or export. Once the law passed the government took control of the board by removing the eight farmer-elected directors.
The new law also allowed grain handlers, millers and farmers to sign forward-delivery contracts for 2012 crops.
The Manitoba decision will give grain handlers and farmers more confidence to move ahead with contracts for this year's crops, said Wade Sobkowich, executive director of the Western Grain Elevators Association.
"It's one more hurdle that we're past that provides an increased level of certainty for farmers and the agricultural sector," he said.
But there are still challenges ahead. A Federal Court ruled in December that Agriculture Minister Gerry Ritz had breached the existing law by not consulting with the Wheat Board or holding a farmer vote before introducing the legislation. Ottawa has appealed that ruling.
The Federal Court decision did not kill the bill, but the board's supporters subsequently asked the Manitoba court to suspend the law until another court could decide whether it is valid.
Friday's court decision to not suspend the law was heralded by the agriculture minister, who says the open grain market will attract investment to Western Canada, encourage innovation and create value-added jobs.
"This decision allows farmers the best possible opportunities to succeed as they transition to an open market," Ritz said in a statement.
Canada is the top exporter of spring wheat, durum and malting barley, which fell under the CWB monopoly.
The eight directors are still challenging the validity of the new law and two other groups are launching class action suits against Ottawa to recoup damages for farmers from the monopoly's removal.
A representative of the former directors said they will review the ruling with their legal team and then make a decision on their next step.
"We have two other motions; one before the Federal Court and one before another court on the constitional side," said former CWB director Bill Toews. "So it's not as if this is a game-breaker or anything."
The case is Court File CI 11-01-75257 before the Court of Queen's Bench of Manitoba, Winnipeg Centre. It is between Allen Oberg, Rod Flaman, Cam Goff, Kyle Korneychuk, John Sandborn, Bill Toews, Stewart Wells and Bill Woods; and the Attorney General of Canada.
Reporting by Rod Nickel and Julie Gordon; editing by Peter Galloway and Rob Wilson