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Trotman allowed ExxonMobil to strangle Guyana in stability clause of contract – Ram

Dec 31, 2017 News

When ExxonMobil’s Country Manager, Rod Henson, addressed the media, he said that Guyana secured a “fair” contract. He said that it was internationally competitive and that the interest of Guyana is being protected in the contract.
That was on Thursday when the contract was released. Now that other minds have been able to peruse the contract that was kept secret for over a year, they have found it to be quite the opposite of what Henson said.
Attorney at law, Christopher Ram, has said that the government has managed to make a bad contract even worse. He said that the provisions of the contract leaves Guyana wounded.
He said that the 2016 Agreement binds the country to this Trotman Agreement into perpetuity. Ram noted the government’s hands are tied and it is effectively prevented from exercising one of the most fundamental and sovereign duties of any state in relation not only to the oil companies but also to their successors and assignees.
This was done through Article 32 of the contract “Stability of Agreement.”
Ram noted that that article has been increased from one paragraph in the Janet Jagan contract to four paragraphs in the Trotman contract. And, all the paragraphs that have been included in the Trotman contract are of considerable consequences for Guyana.
Ram noted, “This column has not been too excited about the Janet Jagan’s Agreement Stability Article but those now appear benign compared with the Granger-Trotman Stability Article.”
He said that the 2016 changes are designed not only to protect the interests of the oil companies but more importantly, to limit the role of the government in applying new laws in so far as the oil companies are concerned.
Under the new provisions, if Guyana decided to make any amendments to its laws, whether through the amendment of existing laws (including the hydrocarbon laws, the customs code, or tax code) or the enactment or new laws, any of which has a material effect on the oil companies, the Government is required to take prompt and effective action to restore the benefits so lost.
Ram said that the new Article requires that the foregoing obligation of the Government includes: “to resolve promptly, by whatever means may be necessary any conflict or anomaly between the Agreement and any new or amended legislation, including by way of exemption, legislation, decree and/or other authoritative acts.”
Ram noted that the Stability Clause provides, inter alia, “that any delay by the government to respond to any notification from the contractor that they may have suffered any adverse effects can result in the contractor taking the matter to arbitration.”
The Chartered Accountant added, “In such a case, the arbitral tribunal is authorized to modify the agreement to reestablish the economic benefits under the Agreement to the Contractor. Where such restoration is not possible, the tribunal has the power to award damages to the Contractor that fully compensates for the loss of economic benefits under the Agreement, both for past as well as future losses.” Kaieteur News had published a story that focused on the Stability Clause as well. Read the full story by following this link https://www.kaieteurnewsonline.com/2017/12/30/committed-business-relationships-exxonmobil-exempted-from-any-new-tax-or-law/.

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