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Kaieteur News was not misleading

Feb 05, 2018 Features / Columnists, Peeping Tom

Kaieteur News in its article of January 30, 2018 entitled “Contract reveals… Guyana to foot bill for litigation brought against ExxonMobil” never once asserted that should there be an oil spill in relation to the operations of Exxon Mobil in Guyana that Guyana will have to pay the cost of any clean-up.
In a letter published in yesterday’s edition of the Stabroek News, one Sherwood Low accused Kaieteur News of misrepresentation of who bears the cost of an oil spill. Kaieteur News did not say that it was Guyana who has to bear the cost of any clean-up of an oil spill.
There are two sets of potential liabilities which will emerge in the event of an oil spill. The first is the clean-up costs and the second is cost of defending actions relating to litigation. The Kaieteur News article of January 30, 2018 spoke about litigation costs, not clean-up costs.
The Kaieteur News article of January 30th, 2018 deals strictly with the liability relating to litigation. Kaieteur News quoted the Annex C which states the following:
“All costs and expenses of litigation and legal or related series necessary or expedient for the procuring, perfecting, retention and protection of the contract area and in defending or prosecuting lawsuits involving the contract area or any third party claim arising out of the activities under the agreement or sums paid in respect to legal services necessary or expedient for the protection of the interest of the parties are recoverable.”
That section is clear. Any litigation or legal costs relating to activities in the contract area are recoverable.
Article 38 does not transfer this liability to Exxon in the event of an oil spill. All it does is address the issue of clean- up costs, not litigation costs.
Article 38 of the PSA deals with the obligation of Exxon to comply with the provisions of the Environmental Protection Act of Guyana. Subsection 38.4 states that if the Contractor fails to comply with the provisions of the EPA and this failure results in pollution and damage to the environment, the Contractor shall take reasonable measures to remedy the failure and the effects.
This sub-section deals strictly with Exxon’s obligation to stem and clean-up any oil spills. Exxon’s obligations here do not extend to litigation costs.
But even though Exxon is obligated to take action to clean-up after an oil spill, subsection 28.6 states that if the Contractor does not act promptly, the Minister, meaning the Minister of Natural Resources, shall take action and the reasonable costs of such action shall be borne by the Contractor.
It could not be clearer that the costs of actions taken by the Minister which has to be borne by the Contractor are the costs of mitigating the effects of any pollution or damage to the environment. It does not extend to the environment which takes place post-oil spill.
It is true that 3.3 (h) provides for the Contractor to bear the costs associated with willful misconduct or negligence. But these costs do not relate to litigation, legal fees, fines or compensation.
Legal expenses and claims are covered by a separate section in Annex C and these expenses and claims are recoverable. And even if, for the sake of argument, they are not, what happens if the oil spill is deemed to be accidental?

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