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Canadian Pacific Railway and shipper Elk Valley Coal Corp. have agreed to settle a rate dispute through mediation. The first mediation meeting will be held Jan. 20.

The parties disagree on applicable rates to move export coal from Elk Valley Coal's southeastern British Columbia mines to the Port of Vancouver.

The parties agreed to place open legal proceedings on hold until the mediation process is completed. In July 2004, CPR filed a claim against Elk Valley in a federal court alleging the shipper failed to pay the full amount of freight charges pursuant to a contract covering all five of the B.C. mines.

Last month, an arbitrator chose the railroad's final rate offer, which was to be effective until Oct. 5. CPR officials had asked the Canadian Transportation Agency to deny Elk Valley access to final offer arbitration because a confidential transportation contract exists between the parties.