D Sookdeo’s letter “Sanctity of Contract” published in Guyana Times on September 26, 2022, sparked my interest in responding, although belatedly.
Sookdeo wrote “am aware that a contract was signed between the previous Government and Exxon that some considered lopsided in favour of Exxon and are strenuously advocating for the current Government to re-negotiate the contract. So, let us assume that the Government did approach Exxon for a change but Exxon refused on the basis that the terms in the contract are legally binding, can the Government then give Exxon an ultimatum to either re-negotiate or pack up and leave?”
Editor, I am not a lawyer, but I have read, that many in the news, including a lady who is described as an expert in international law, are insisting that the contract the coalition Government signed can be renegotiated. Many in the news including Glen Lall, publisher of the waterfall newspaper, advocated this position. But editor, Sookdeo hit the proverbial nail on the head when he wrote that a contract, unless otherwise stated, cannot be renegotiated, if one of the signatory parties refuses to renegotiate. It is in the self-interest of Exxon not to agree to renegotiate the contract with the Government of Guyana.
Editor, here are two well-known cases to support Sookdeo’s contention. These cases show that the present Government cannot force Exxon to renegotiate the signed contract if Exxon does not desire to do so.
Case 1: Guantanamo Bay. In February 1903, the US Government signed an agreement with Cuba to lease Guantanamo Bay for life, as a naval base. The initial payment was 2000 dollars in gold per year. In 1974, the amount was increased to US$4084. Given the 45 square miles of land and water of the Bay, now nicknamed GITMO, this was almost equivalent to a free deal.
When Castro came to power in 1959, he tried to renegotiate the contract, but the US refused to this day. In 2002, GITMO was used as a detention centre for prisoners captured in Afghanistan.
Case 2: Churchill Falls contract. In 1971, the Government of Quebec and Newfoundland and Labrador signed a contract that states the following: “the contentious contract that requires almost all of the 5,428 megawatts of electricity generated at Churchill Falls be sold to Hydro-Québec at an extremely low price”. As a result, Quebec earned 30 billion to Newfoundland 2 billion Canadian dollars. Needless to say, Newfoundlanders and Labrador have been very bitter and angry at this one-sided deal. They took the agreement all the way to the Supreme Court of Canada but lost. The court ruled that, essentially, an agreement cannot be abrogated unless both parties to the agreement agree. The court ruled that the agreement can only be renegotiated when it expires in 2040.
Editor, does this ring the bell?