In 1961, the Government of Newfoundland and Labrador granted the Hamilton Falls Power Corporation a 99-year lease to the 67,340 square kilometres watershed of the Upper Churchill.

CF(L)Co began construction on Churchill Falls Generating Station in 1966 and on May 12, 1969, signed a power contract[2] with Hydro-Québec.

The agreement committed Hydro-Québec to buy most of the plant's output at one-quarter of a cent per kilowatt-hour—the exact rate is 0.25425¢ per kilowatt-hour until 2016 and 0.20¢ for the last 25 years of the contract[3]—to build and maintain power lines to carry the power to market and to enter into a risk-sharing agreement whereas the Quebec Crown corporation would cover part of the interest risk and buy some of BRINCO's debt, in exchange for an increased share in CF(L)Co.

Both legislations and the contract itself were subject to protracted legal battles between the two neighbouring provinces, ending up before the Supreme Court of Canada.

The court declared the Upper Churchill Water Rights Reversion Act ultra vires in 1984,[5] and twice affirmed the validity of the 1969 contract in 1988.