DOES a Court of Appeal judge have the authority to order the Environmental Protection Agency (EPA) to show proof of the US$2 billion parent company guarantee that ExxonMobil (Guyana) has lodged to indemnify Guyana against an oil spill? This is what Justice of Appeal Rishi Persaud has been asked to determine.

In this particular case, Guyanese citizens Frederick Collins and Godfrey Whyte, by way of a summons dated November 1, 2023, have asked the judge to compel the EPA to disclose documentation of the financial guarantee the US oil giant has lodged for the offshore oil operations it and its co-venturers are carrying out in the Stabroek Block.

Collins and Whyte had filed a lawsuit in September 2022 in the High Court, requesting that the EPA uphold the liability clause in the environmental permit it had issued to ExxonMobil.

They had asked the court to guarantee that Exxon bears full financial responsibility in the event that an oil spill, well blowout, or other failure causes harm, loss, or environmental damage.

And in a landmark decision handed down on May 3, 2023, High Court Judge Sandil Kissoon ruled that the oil company had “engaged in a disingenuous attempt” to dilute its obligations under its environmental permit issued by the EPA for its Liza One project, by not fully meeting insurance requirements according to international standards relating to environmental protections.

Consequently, he issued an order directing the EPA to issue ExxonMobil (Guyana) with an Enforcement Notice on or before May 9, 2023 for the company to provide, within 30 days thereof, an 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. Failing to do so, would have resulted in the permit being suspended.

The EPA obeyed the court’s order, but soon after, it appealed Justice Kissoon’s decision to the Court of Appeal. Later, the agency went to the same court to ask for a stay of the order while the appeal was heard and decided. On June 8, 2023, however, Justice Persaud stayed Justice Kissoon’s judgment requiring the oil company to offer an unlimited parent company guarantee.

But to “allay any anxiety as to any impending doom,” Justice Persaud ordered ExxonMobil to submit a US$2 billon guarantee in the interim.

Then on November 1, 2023, Collins and Whyte filed a summons at the Appellate Court requesting that the guarantee document be released to them as the EPA and ExxonMobil are refusing to show them the documentation of the parent company guarantee.

INHERENT JURISDICTION

When the matter came up before Justice Persaud on Thursday, Attorney-at-law for the EPA, Sanjeev Datadin, argued that a single judge does not have inherent jurisdiction to order EPA and ExxonMobil to produce a copy of the US$2 billion guarantee.

Senior Counsel Seenauth Jairam, however, rejected Datadin’s argument, contending that a single judge has the authority to issue the order his clients are asking for in accordance with both old and new case laws.

“How a single High Court Judge can have inherent jurisdiction and you can’t have?” Senior Counsel Seenauth questioned while addressing Justice Persaud with his inquiry.

He said that starting in June 2023, his colleagues Abiola Wong-Inniss and Melinda Janki started requesting copies of the guarantee in letters to the EPA. He mentioned that the organisation had received a follow-up letter from them in October 2023, but to no avail.

Jairam said that his request is “intertwined” with the ruling of Justice Persaud.

After hearing arguments, Justice Kissoon promised to issue his written decision in two weeks because the Court of Appeal is “swamped” with cases.
Justice Persaud had instructed Seenauth to follow up with the Supreme Court of Judicature’s Registrar in order to obtain a copy of the US$2 billion guarantee during a previous hearing.

Judge Persaud had previously stated that he did not believe there was any justification for what he referred to as the EPA’s “hesitancy or resistance” to provide a copy of the guarantee.

The primary point of contention between the government and ExxonMobil about Justice Kissoon’s decision seems to be whether the assurance mandated by the amended Liza Phase 1 environmental permit provides for “unlimited” insurance.

They are arguing before the Court of Appeal that the environmental permit does not require the company to furnish an unlimited parent company guarantee agreement and/or affiliate company guarantee agreement but rather, it merely provides for a “fixed sum.”

Senior Counsel Jairam, however, argued otherwise, stating that ExxonMobil and its partners, Hess and CNOOC are required by law to provide unlimited parent company assurance—that they have the financial resources to clean up and rehabilitate the environment in the event of an oil spill.

According to him, this comes at no cost to the corporation and is necessary to protect Guyana in the event of an oil spill, which he said, can send the country back to the “Ice Age”.

He further contends that the chances of EPA’s grounds of appeal succeeding is like a “snowball in hell fire”.

ExxonMobil is being represented by Edward Luckhoo SC, and Andrew Pollard SC.

The government has said that Justice Kissoon’s ruling can have profound ramifications and grave economic and other impacts on the public interest and national development. Hence, it has moved to have his decision overturned.