CoA to rule on AG joining challenge for EEPGL’s unlimited guarantee

The Court of Appeal is expected to rule soon on whether Attorney General Anil Nandlall, SC, would be allowed to join litigation challenging a High Court order for ExxonMobil’s local affiliate, Esso Exploration and Production (Guyana) Limited (EEPGL), to provide unlimited parent company guarantee for its and its co-venturers oil operations offshore Guyana.
The appeal against that order was filed by the Environmental Protection Agency (EPA).
On Thursday, the court’s full Bench heard submissions from Nandlall, who argued that he ought to be intervened because of his obligations to the citizenry and the Government.
The court also entertained submissions from Seenath Jairam, SC, lawyer for the respondents, as well as from the EPA’s lawyer, Sanjeev Datadin.
The Attorney General argued, among other things, that as the legal representative of the State, and as the guardian of the public interest, he has a direct contractual and public law interest in the instant appeals, and therefore should be added without further deliberation.

To make his case, he reasoned that Guyana earns 50 per cent of profit oil and 2 per cent of royalty of the operations from the exploration and production of petroleum conducted under a Petroleum Production Licence to which EEPGL’s Environmental Permit relates.
He was keen to point out that 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 are all reasons why the court should exercise its discretion and add him to the appeal.
The Bench, led by Chancellor of the Judiciary (ag), Justice Yonette Cummings-Edwards, and consisting of Justices of Appeal Dawn Gregory and Gino Persaud, have reserved their ruling.
On May 3, Justice Sandil Kissoon issued an order, inter alia, directing the EPA to issue EEPGL with an Enforcement Notice on or before May 9, for the company to provide, within 30 days, unlimited Parent Company Guarantee Agreement and/or unlimited liability Affiliate Company Guarantee, together with environmental liability insurance, as is customary in the international petroleum industry; failing which, the Environmental Permit granted to the company stands suspended.
After complying with that court order, the EPA shortly after filed an appeal against Justice Kissoon’s ruling, and later went to the Court of Appeal to request a stay of the said order, pending the hearing and determination of the appeal filed by the agency.
Then on June 8, Appeal Court Judge Rishi Persaud stayed the order issued by Justice Sandil Kissoon for the oil company to provide an unlimited parent company guarantee. In the interim, EEPGL was ordered by him to lodge a US$2B guarantee in “an effort to allay any anxiety as to any impending doom”. The company has already lodged that guarantee as required.
Finding that the EPA’s appeal has a reasonable prospect of success, Justice Persaud reasoned, “It seems, on the face of it, that [Justice Kissoon] misconstrued the processes in relation to the acquisition of insurance, and ignored the [EPA’s] discretion under Condition 14 (5) [of the Environmental Permit] to consider any rating equivalent, as it deems appropriate.”
He pointed out that Justice Kissoon’s coercive order against the EPA is a cause for concern. “It is well established that, in judicial review proceedings, a court is restricted to a consideration of whether the procedural requirements in the exercise of regulatory power was followed, and not its decision…” he said.
According to him, in this particular case, it seems the EPA can be considered “an expert body”, which ought to have prompted judicial restraint. “Surely, that body [EPA] is better placed to evaluate such complex and non-legal matters within its expertise,” he declared.
The High Court order has its origin in a case filed in September 2022 by the President of the Transparency Institute of Guyana Inc (TIGI), Frederick Collins, and Guyanese citizen Godfrey Whyte, who had moved to the court to get the EPA to enforce the liability clause in the permit. They want the court to ensure EEPGL takes full financial accountability in the case of harm, loss and damage to the environment from a well blowout, oil spill, or other failures.
Esso’s Senior Counsel, Edward Luckhoo, is contending that Condition 14 of the permit does not require an unlimited guarantee. Maintaining that Justice Kissoon had misinterpreted the clear language of this Condition, he had said that what the permit does provide for is an estimate of a finite sum, noting that the formula for arriving at that sum is set out therein.
But Senior Counsel Seenath Jairam, who is among the lawyers representing Whyte and Collins, begged to differ, arguing an unlimited parent company guarantee is necessary to protect Guyana in the event of an oil spill, which could have catastrophic effects on the environment.
“Esso has been carrying out oil operations in the open high sea without financial guarantee. An oil spill could send back Guyana to the Ice Age if there is no insurance, because it is not easy to contain. A parent company guarantee does not cost [Exxon] a cent, but just requires it to show that it has the financial capacity to restore and rehabilitate the environment in the event an oil spill occurs,” Jairam had submitted at a previous hearing.
According to him, the permit mandates that Exxon and its co-venturers shall be jointly and severally liable for any loss or damage, or pollution to the environment. In the absence of such a guarantee, he had argued, the permit should have already been cancelled by the EPA.
The EPA and Nandlall have maintained that the Environmental Permit granted to EEPGL imposes no obligation on the company to provide an unlimited parent company guarantee agreement and/or affiliate company guarantee agreement.
If Justice Kissoon’s ruling is not quashed, the Government fears it could have profound ramifications and grave economic and other impacts on the public interest and national development.
In arguing for the stay of execution, EPA lawyer Sanjeev Datadin had said the order for “unlimited guarantee makes a mockery of the clear words in the permit”, adding that the permit refers to a “fixed sum”, and not an unlimited guarantee.
Datadin had submitted, “Unlimited has come about through a misinterpretation. The court has invented an unlimited guarantee…and [held] this incorrect interpretation as a weapon…”
On the issue of whether the EPA had acted in breach of its statutory duty and unreasonably permitted Esso to carry out petroleum production operations in the absence of compliance with the terms of the permit, Justice Kissoon had ruled that the Agency had committed an illegality, acted unlawfully, ultra vires, unreasonably, in defiance of logic, irrationally, and without any jurisdiction.
He found, inter alia, that EEPGL was engaged in a “disingenuous attempt” which was calculated to deceive when it sought to dilute its liabilities and settled obligations stipulated and expressed in Condition 14 of the permit, while simultaneously optimising production in the Stabroek Block.
“The insurance obtained by the EEPGL from its affiliate company, AON UK Ltd, both for the Liza Phase 1 and Phase 2 Projects, does not satisfy the stipulation and obligation set out at Condition 14:5 of the Environmental Permit, or even what is considered environmental liability insurance according to international standards of the petroleum industry,” Justice Kissoon had held.