COME next week, the Court of Appeal is expected to hand down its ruling on the merits of 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 hearing on Wednesday before Justice of the Appeal, Rishi Persaud, Sanjeev Datadin, the lawyer representing the EPA, said that Justice Kissoon misdirected himself.
“This is a simple issue of interpretation. The existence of insurance has never prevented something from happening. Insurance is to compensate when the event occurs. The insurance will only be applicable whenever the ill befall. All that the guarantee will try to do is make it right after the fact,” he said.

He further argued that Justice Kissoon made a mistake by considering “extraneous matters” in his decision, specifically referring to the “unlimited guarantee” requirement.
Datadin submitted that the permit only mentions a “fixed sum” and not an unlimited guarantee, and that considering the guarantee as a protector of potential events is incorrect.
Datadin further argued that the respondents’ reliance on the contract imbalance between Exxon and the government is irrelevant to the current matter.

He pointed out that if someone is unhappy with the contract, there are other actions that can be taken, and it does not affect the issue at hand.
According to Datadin, the lower court made an error by implying an unlimited guarantee that does not exist in the permit or the Environmental Protection Act.
He claimed that the court invented the concept of an unlimited guarantee and used it as a weapon against the defendants.

According to Datadin, Justice Kissoon overstepped the functions of the EPA; bypassing other available options by issuing a coercive order.
Esso’s Senior Counsel, Edward Luckhoo, stated that Condition 14 of the Environmental Permit does not require an unlimited guarantee.
He maintained that Justice Kissoon misinterpreted the clear language of the condition and that it only provides for an estimate of a finite sum based on a formula outlined in the permit.
Luckhoo rejected the characterisation of the absence of an unlimited guarantee as “self-serving” and emphasised that the interpretation of Condition 14 is solely a matter of law.
He argued that no evidence was presented to support Justice Kissoon’s conclusion that Esso is an asset-less subsidiary of ExxonMobil.

Luckhoo also pointed out that the 2017 permit did not include a requirement for financial assurance, and it was only introduced when the permit was renewed in 2022.
Senior Counsel Seenath Jairam, representing Whyte and Collins, disagreed with Luckhoo and expressed doubts about the EPA’s grounds of appeal succeeding.
Jairam argued that an unlimited parent company guarantee is necessary due to the potential catastrophic effects of an oil spill on the environment.

He contended that Esso has been operating without financial guarantee in the open sea and that insurance coverage is not sufficient to cover all damages. Jairam emphasised the need for a parent company guarantee, which does not cost Exxon anything but shows its financial capacity to restore and rehabilitate the environment in the event of an oil spill.
“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,” he said.

Justice Persaud will rule in the week on the merit of the appeal, as well as Datadin’s application for a stay on the May 3 order that directed the EPA to issue an Enforcement Notice to ExxonMobil’s local affiliate, Esso Exploration and Production (Guyana) Limited (EEPGL), by May 9.
The order required EEPGL to provide an unlimited parent company guarantee agreement and/or unlimited liability Affiliate Company Guarantee, along with environmental liability insurance, within 30 days, as is customary in the international petroleum industry.

Justice Persaud had previously refused Datadin’s application to suspend the judgment until the appeal hearing, indicating his intention to evaluate the reasonable prospects of success and deliver his ruling before June 10, the deadline for complying with Justice Kissoon’s initial ruling.
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.

Datadin had moved to the Appellate court, seeking a stay of the ruling, among other things.
In the application, the EPA argued 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.
The appellant is contending that the trial court misinterpreted these provisions and wrongly concluded that the financial assurance required of Esso Exploration and Production Guyana Ltd. was unlimited.