By Clestine Juan

JUSTICE of Appeal Rishi Persaud, on Thursday, granted a stay of a High Court order that required Esso Exploration and Production (Guyana) Limited (EEGPL), a local affiliate of ExxonMobil, to provide an unlimited parent company guarantee for its offshore oil operations.

He also mandated the company to lodge a US$2 billion guarantee, while the appeal against the lower court’s decision is being heard and determined.

During the delivery of his judgment on Thursday regarding the merits of the appeal filed by the Environmental Protection Agency (EPA), Justice Persaud highlighted that the EPA’s appeal has a good chance of success.

He emphasised that his order for Esso to provide the guarantee, aims to alleviate any concerns or worries about potential adverse consequences.

Justice Persaud’s decision seeks to strike a balance by granting a temporary stay on the requirement for an unlimited parent company guarantee while still ensuring that a substantial guarantee is in place to address any potential risks associated with the ongoing oil operations.

During his ruling at the Kingston-based court, Justice Persaud said that the court had the jurisdiction to hear the appeal.

In his ruling, the judge stressed that it seems on the face of the case that Justice Kissoon misconstrued the processes in relation to the acquisition of insurance here.

In this particular case, the judge said that the EPA can be considered an expert body which ought to have prompted judicial restraint since the body is better placed to evaluate such complex legal matters within its expertise.

Having considered all the above, the judge conceded that the appeal has the prospect of success.

Considering the interest of justice, the judge placed weight on Exxon’s submission that the revenue loss to the permit holder and more importantly Guyana, may have serious implications and devastating consequences in the event of a permit suspension.

In an effort to allay any anxiety as to impending doom, as conceived by some and moreover, in the interest of justice, Justice Persaud ordered Esso to provide the guarantee in the sum of US$2 billion within 10 days or the stay would be dismissed.

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.

MISINTERPRETATIONS

Attorney Sanjeev Datadin had moved to the Appellate Court arguing 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.

“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 further 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.

Additionally, he said 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.

Meanwhile, Esso’s attorney, Senior Counsel Edward Luckhoo, submitted 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.