Justice of Appeal Rishi Persaud today granted ExxonMobil a stay of execution of an order by the High Court that it supply an “unlimited” financial guarantee for its Liza-1 well.
Had ExxonMobil not secured the stay, the Environmental Protection Agency (EPA) permit for the Liza-1 well would have been terminated for non-compliance as of Saturday, June 10th.
The judge today also said that he believes that the appeal lodged by EPA has prospects of succeeding.
Following that finding, Justice Persaud then went on to declare that in the interest of justice, the EPA will be granted a stay of execution of the order of the lower court which had declared that the permit issued to Exxon’s local affiliate—Esso Exploration and Production Guyana Limited (EEPGL)—be suspended by June 10th.
The stay of execution is to last until the full hearing and determination of the appeal, but Justice Persaud did make it clear that Esso in the meantime is to lodge a US$2 billion security deposit within the next 10 days, failing which the stay will be dismissed.
The Judge said that this is to allay any anxiety by those who are of the belief that there could be an environmental catastrophe of some sort.
The parties are now to await a date for the hearing of the appeal before the Full Bench of the Guyana Court of Appeal.
On May 31st, Justice Persaud heard submissions from counsel for the EPA and Exxon’s local affiliate—Esso Exploration and Production Guyana Limited (EEPGL)—who argued that the trial judge had committed a number of errors in his ruling.
Senior Counsel Edward Luckhoo for Esso, made the point that the trial judge misapplied the law in arriving at the conclusions he did; and so, it is now for the appellate court to remedy those wrongs.
Because of those misrepresentations, Luckhoo held that his client’s appeal does not merely have a prospect of succeeding but an “excellent” prospect.
High court Judge Sandil Kissoon in delivering his judgment on May 3rd, said that in the course of the proceedings, the Court found on the evidence that EEPGL was engaged in a “disingenuous attempt which was calculated to deceive, when it sought to dilute its liabilities,” while simultaneously optimising production.
In his ruling, Justice Kissoon said of the EPA, “It has abdicated the exclusive statutory responsibilities entrusted to it by Parliament under the Environmental Protection Act 1996 and the Environmental Protection Regulations 2000 to ensure due compliance by Esso Exploration and Production Guyana Limited.”
Much of the court’s attention on May 31st was directed to the issue of the “unlimited” financial guarantee which the lower court ruled that Esso is to provide for its oil extraction operations here.
Sanjeev Datadin for the EPA sought to reemphasize his client’s position, arguing among other things that the judge’s finding that the financial assurances set out in the permit were “unlimited; “was a flawed line of reasoning.
He said that the financial assurance is an estimate—a quantifiable sum—which is not unlimited, for which he argued the terms of the permit provided.
He said that Justice Kissoon’s ruling wrongly gives the impression that an unlimited guarantee somehow prohibits the environmental ills referenced, from occurring.
Datadin said that the existence of insurance is never to prevent the ill from happening, but rather to compensate after the fact. He said that this is how the insurance needs to be viewed and not as a shield from what would be the ill.
Datadin argued that the trial judge interpreted the statute and permit incorrectly, which led to the resultant incorrect conclusion at which he arrived; even as he argued that nowhere in the permit is provision made for “unlimited.”
He said that that word was imported by the trial judge because of a misunderstanding and misinterpretation of the law; which he said further resulted in overreach on the part of the court in the orders made against EPA which he said are “coercive.”
Echoing the sentiments expressed by Datadin, Luckhoo said that the condition in the permit clearly contemplated an estimate; while adding that the judge took into consideration extraneous considerations.
Senior Counsel Seenath Jairam who represents the respondents by whom the initial action was brought against the EPA argued, however, that both Datadin and Luckhoo were “cherry-picking” aspects of the permit that suited their arguments, and not looking at it holistically.
He said that Justice Kissoon’s ruling was clear that the permit-holder is to be liable for “all” costs in accordance with condition 14 of the permit, for which no mere estimate would suffice.
Jairam described the chances of the appeal succeeding as that of the chances of “a snowball in hell.”
The EPA described the order made by the court that the permit stands suspended for breach of the Environmental Protection Act as “coercive.”
Like the EPA, Esso says that the order, which further states that failure to enforce would result in the permit being suspended, is “coercive.”
Describing its appeal as a “very arguable” one, Esso advances that the trial judge erred in law when he determined that Esso was required by the permit to provide an unlimited parent company guarantee and indemnity agreement or affiliate company guarantee.
Background
President of the Transparency Institute of Guyana Inc (TIGI) Frederick Collins together with another concerned citizen—Godfrey Whyte—had moved to the court last year to get the EPA to enforce the liability clause in the permits it had issued to ExxonMobil.
The litigants have said that the resort to the court was their bid to ensure that the company take full financial responsibility for possible resulting harm, loss and/or damage to the environment.
Esso has agreed in the permit to provide insurance and an unlimited parent company indemnity to cover all environmental loss and damage that might result from a well blowout, oil spill or other failures in the Liza 1 Development Project in Guyana’s Stabroek Block.
Colins and Whyte had argued through their attorneys that “…the agency, through its human minds, including its officers has failed or omitted to carry out or to show that it has carried out its legal duties and or obligations thereby amounting to misfeasance in public office by them and by failing or omitting to act, has acted unreasonably, irregularly or improperly and or has abused its power.”
