Home Top Stories Ruling on oil-spill insurance coverage: Hearing of EPA’s request for stay of...
– Speaker rejects Opposition’s motion to discuss ruling, cites sub judice rule
The Court of Appeal will on Monday entertain a motion by the Environmental Protection Agency (EPA) to stay an order made by puisne Judge Sandil Kissoon for ExxonMobil to provide unlimited insurance for offshore oil operations it is engaged in with its co-venturers in the Stabroek Block.
The ruling essentially means that the EPA must enforce the liability clause in the Environmental Permit granted to ExxonMobil.
In his judgement dated May 3, the High Court Judge issued an Order of Mandamus directed to EPA for that state agency to issue ExxonMobil’s local affiliate, Esso Exploration and Production (Guyana) Limited (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. Failure to comply would result in the suspension of the permit dated May 31, 2022.
On Tuesday, the EPA filed a Notice of Appeal in which it advanced several grounds on which it is seeking to set aside the ruling of Justice Kissoon, among them being that the lower court’s reasoning was flawed, and that the Environmental Permit was in keeping with the law. It wants Justice Kissoon’s orders to be stayed pending the hearing and determination of the appeal.
“The trial court erred in law in its interpretation, consideration and application of the combined effect of Clause 14 of the Environmental Permit…and erroneously concluded that the financial assurance to be provided by the third respondent herein, EEPGL, in relation to the said permit was unlimited,” one of the agency’s grounds of appeal outlined.
Another ground states, “The trial court erred in law and misconstrued the Environmental Protection Act and its regulations to determine that the appellant [EPA], a statutory body, had specific statutory powers which in fact it did not have.”
Another contention of the EPA is that the court wrongly ascribed a meaning to the Environmental Protection Act that was contrary to specific provisions in that very Act.
It is also contended that the court “in effect substituted its own discretion as the decision of the appellant when the appellant, at all material times, had exercised its discretion and acted well within its statutory and regulatory powers.”
According to the EPA’s legal documents, the orders granted by Justice Kissoon are coercive, and entirely remove the EPA’s discretion, which would have severe consequences. According to the agency, there would be severe disruption to the national economy if the order is allowed to stand.
EPA has been keen to point out that the very permit at the heart of the case is critically important to Guyana’s economic growth. It argues that should the permit which pertains to the Liza 1 and 2 fields be cancelled, this would have catastrophic consequences on the economy.
“Guyana as a nation now earns billions of dollars annually from the petroleum activities conducted on the Liza 1 and Liza 2 fields, both of which are subject to the permit. The suspension or cancellation will have a catastrophic effect on national funds for development, and also the Private Sector which supports the activities on the said Liza 1 and 2 fields,” EPA avers.
In September 2022, President of the Transparency Institute of Guyana Inc (TIGI), Fredericks Collins, and Guyanese citizen Godfrey Whyte moved to the court to get the EPA to implement the liability clause in the permit issued to ExxonMobil for its operations. They wanted the court to ensure Esso Exploration and Production Guyana Limited (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 in the Stabroek Block.
On the issue of whether the EPA 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 Sandil Kissoon ruled that the EPA has committed an illegality, acted unlawfully, ultra vires, unreasonably, in defiance of logic, irrationally, and without any jurisdiction.
Justice Kissoon, inter alia, found that Esso 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,” he held.
In the end, EPA and Esso were ordered to pay Whyte and Collins $1.5M in court costs.
Attorney General and Legal Affairs Minister Anil Nandlall, SC, had pointed out after the ruling that the Environmental Permit imposes no obligation on the permit holder to provide an unlimited Parent Company Guarantee Agreement and/or Affiliate Company Guarantee Agreement.
The AG also pointed out that this ruling can have profound ramifications and grave economic as well as other impacts on the public interest and national development.
He noted that the EPA and EEPGL had spent almost a year negotiating a Parent Guarantee and Indemnity Agreement to the tune of US$2 billion in liability coverage, in compliance with EEPGL’s financial assurance obligations under the Environmental Permit and the Environmental Protection Act.
“These negotiations only concluded [recently]. These negotiations and their material details were placed before the Court for its consideration, but unfortunately to no avail,” a statement from the Attorney General’s Chambers had disclosed.
Attorney-at-Law and Government Parliamentarian Sanjeev Datadin filed the appeal on EPA’s behalf. It is unclear if Senior Counsel Seenath Jairam and Attorneys-at-Law Melinda Janki and Abiola Wong-Inniss, who appeared for Whyte and Collins at the trial, are still representing them.
There are several court cases challenging various aspects of ExxonMobil’s operations offshore Guyana.
Meanwhile, at Wednesday’s sitting of the National Assembly, Speaker Manzoor Nadir disallowed Opposition Parliamentarian Ganesh Mahipaul’s request to discuss what he, Mahipaul, termed a matter of urgent public importance concerning a motion to discuss oil spill liability coverage.
“The matter did not qualify as a definite matter of urgent importance, since I was of the view that the matter was sub-judice. It should be noted that I had previously ruled that a matter becomes sub-judice if a judge is assigned to the case, a date is given, and the case has reached a stage of evidence before the court,” the House Speaker clarified in a statement on Thursday.
Nadir emphasised that it was “mischievous” for Mahipaul to bring the motion when he fully knew that the matter did not qualify. He added that Mahipaul had just wanted to “grandstand and play for an audience”, a tactic with which the APNU-AFC are familiar.
Moreover, the Speaker said, “I wish to state that at 7:17 pm on Tuesday, May 9, 2023 I received the request from Hon. Mahipaul for the adjournment of the Assembly. I was already aware, through an INews release at 5:10 p.m., two (2) hours before the Hon. Mahipaul’s email, that an appeal was filed. Subsequently, I was informed at 10:30 a.m. on Tuesday, May 9, 2023 that the matter was fixed before a judge.”
According to Nadir, since assuming office, he has been consistent with his application of the sub-judice rule.
“Further, even if there was no appeal before the court, the motion would have disqualified itself under the urgency criterion, as the judge had given the parties thirty days to remedy themselves. Had the judgement said ‘immediately’ instead of thirty days, then the Hon. Member moving the motion would have been in order,” Nadir explained.