Exxon’s Liability Insurance Case: AG says State should be added as a protective measure
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Attorney-General and Minister of Legal Affairs, Anil Nandlall, S.C
THE Court of Appeal will soon rule on the Attorney-General and Minister of Legal Affairs, Anil Nandlall’s motion to be added as a party to the Environmental Protection Agency’s (EPA) appeal to overturn Justice Sandil Kissoon’s decision that the agency and oil giant ExxonMobil breached obligations relating to its oil spill insurance policy.
During a Zoom hearing, Chancellor (ag) of the Judiciary, Yonette Cummings-Edwards, and Justices of Appeal Dawn Gregory and Rishi Persaud, Nandlall contended that the Attorney General is the guardian of the public interest in litigations and should be added as a party in the case.
In his submissions, the AG argued that Justice Kissoon’s decision has a direct impact on, and adverse consequences for, the State’s contractual rights in a Petroleum Agreement between the Government of Guyana and Esso Petroleum and Petroleum Guyana Limited (EEPGL) and co-venturers CNOOC Nexon Petroleum Limited and Hess Guyana Exploration Limited.
“Likewise, the decision which this Honourable Court is likely to make consequent upon the hearing and determination of the two appeals, will have a similar direct impact on, and adverse consequences for, the Government/ State’s said contractual rights,” Nandlall said.
He added that Justice Kissoon’s ruling raises serious issues of grave public interest and importance, so much so that the judge himself said: “I find as a matter of law and fact that the issues canvassed by the applicants, the grounds of the challenge and the evidence placed before this court, raise as a matter of fundamental importance in the public interest with potential disastrous consequences to the environment, the citizens of Guyana and ultimately, the State.”
Senior Counsel Seenath Jairam
Nandlall pointed out that Justice Kissoon, having come to this conclusion, ought to have added the Attorney General as the legal representative of the Government and the State and the guardian of the public interest.
He pointed out that the provisions of Section 31 of the Environmental Protection Act and Clause 14.10 of the Environmental Permit aggregate to confer upon the Permit Holder a duty to provide financial assurance and indemnity to the State and the Government respectively.
This reality, he said, confers on the Attorney General, as legal representative of the Government and the State, a right to be heard and to participate in legal proceedings which essentially challenge the nature, purport and adequacy of this financial assurance and indemnity.
Among other things, he contended that indirectly, the Permit Holder, the EPA and the Government of Guyana/ State are the three parties and therefore are required by the Environmental Protection Act to negotiate the terms and conditions of the financial assurance and indemnity.
“One of the quintessential issues which the two appeals raises is the adequacy of the financial assurance and indemnity. The Attorney General as representative of the Government/ State, being one of the parties involved in negotiating the financial assurance, is entitled to be heard on this crucial issue,” he said in his submissions.
He assured the court that his addition as a party will neither delay the hearing of the appeals nor prejudice the rights of the applicants and respondents in the two appeals.
‘UNDOUBTED POWER’
On the grounds of the jurisdiction of the court of appeal to hear the case, Nandlall said that the court has the “undoubted” power to permit interventions which are catered for in the Judicial Review Act.
In further laying out his submissions, Nandlall said that it is not disputed that the Government of Guyana has a Petroleum Agreement with the Permit Holder and the co-venturers. It is from this agreement that the Government of Guyana earns 50 per cent of the profit oil and two per cent royalty of the operations from the exploration and production of petroleum conducted under a Petroleum Production Licence to which the Environmental Permit relates.
“The billions of dollars in revenue that the government receives, the intricate connection of this revenue stream to national development and private sector investments, and their cumulative effect on the public interest and public good, so elaborately set out in the Affidavit in support of our Notice of Motion, all flow from the aforesaid agreement.
“The decision of the Learned Hearing Judge that the Environmental Permit stands suspended unless an unlimited Parent Guarantee is furnished will not only result in a suspension of the operations of the Permit Holder but will halt the government’s entitlement under the aforesaid contract and will indeed frustrate the performance of that contract. It is common ground that interference with contractual relations is a tortious wrong and a person so wronged ought to be heard. It may well be that the wrong can be justified or is justifiable but same is not the basis to deny a hearing to a party likely to be affected,” the AG said in his submissions.
He further contended that by no means is this an “ordinary contract” since it is one which generates hundreds of billions of dollars, which the government uses in its budgetary allocations for the general development of Guyana and the public good, as provided in the Natural Resource Fund Act.
“This singular contact in this one sector has catapulted Guyana’s economic growth rate from 5.4 per cent to over 62.5 per cent, making it by far the largest-growing economy in the world. The government’s interest in this contract is therefore not merely contractual, but it is proprietary and pecuniary in nature,” he said.
However, Senior Counsel Seenath Jairam who represents the litigants (Frederick Collins and Godfrey Whyte) in the substantive case strongly objected to Nandlall’s application and asked the court to reject same.
“You must set your collective faces against it,” the Trinidadian lawyer said as he told the court that the appeal could delay the proceedings.
After hearing the submissions, the Appeal Court judges reserved their judgements in the case. A date for the ruling is yet to be set.
Earlier this month, Justice Persaud granted a stay of Justice Kissoon’s order that required EEGPL, a local affiliate of ExxonMobil, to provide an unlimited parent company guarantee for its offshore oil operations.
He also mandated the company to lodge a US$2 billion guarantee, while the appeal against the lower court’s decision is being heard and determined.
In his ruling, the judge stressed that it seems on the face of the case that Justice Kissoon misconstrued the processes in relation to the acquisition of insurance here.
In this particular case, the judge said that the EPA can be considered an expert body which ought to have prompted judicial restraint since the body is better placed to evaluate such complex legal matters within its expertise.
On May 3, Justice Kissoon found that the oil giant “engaged in a disingenuous attempt” to dilute its obligations under its environmental permit for its Liza One project, by not fully meeting insurance requirements relating to environmental protections.
Attorney Sanjeev Datadin had moved to the Appellate Court arguing that Justice Kissoon made an error in interpreting and applying two legal provisions related to an environmental permit issued to a company called Esso Exploration and Production Guyana Ltd.
The first provision is Clause 14 of the Environmental Permit, which is a condition the company must comply with to operate in Guyana.
The second provision is Section 31(2) of the Environmental Protection Act, which sets out requirements for financial assurances that companies must provide in relation to environmental permits.
