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The capacity limit of a thermally controlled fiber Bragg grating-based chromatic dispersion compensator, which was initially designed for 10 Gb/s operation, was investigated in a 40 Gb/s system. A CS-RZ DQPSK polarization division multiplex (PolDM) system was used as a testbed. An equivalent quasi error-free 5.94 Tb/s capacity was demonstrated when dispersion of up to 73.8 km of SSMF was compensated. The dispersion slope compensation was satisfactory for C-band operation. Additionally, it was found that the compensator introduced band-pass filtering behaviour, which reduced the compensator bandwidth as the dispersion setting was increased. It was also found that even after 41.5 km, there was around 2 dB penalty introduced to DQPSK system while 5 dB penalty to DQPDK-PolDM, referring to BER of 10-5.