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Trotman waives Guyana’s sovereign immunity in PSA with ExxonMobil
By Abena Rockcliffe-Campbell
The 2016 Petroleum Sharing Agreement (PSA) signed by Minister of Natural Resources, Raphael Trotman, is far worse than the 1999 Agreement signed by former President Janet Jagan.
This was expressed by Attorney-at-law, Christopher Ram, as he pointed out what he saw as another worrying provision in the 2016 agreement.
Ram has turned his attention to Article 26 of the contract titled “Sole Expert and Arbitration.”
Ram said that Article 26 has been subject to several changes. Those start with paragraph one which under the 1999 Agreement required the parties to make best efforts to settle disputes but which now only requires the parties to make “reasonable efforts”. This process can last for 60 days after which any party may proceed to have the dispute determined by arbitration.
Ram also noted that references in Article 26.2 of the 1999 Agreement dealing with “sole expert” has been amended and the new Article 26.2 mandatorily requires that “Any claim, demand, cause of action, dispute, or controversy arising out of or in connection with this Agreement, including any question regarding its formation, existence, validity, enforceability, performance, termination, or alleged breach (“Dispute”) which cannot be settled amicably by negotiation shall be resolved by arbitration.”
Ram said that his interpretation of the amendment is that the role of a sole expert has been downgraded in the 2016 Agreement in favour of arbitration. “This is certainly a more costly option than sole expert and one must wonder about the reason.” The process requires approaching the International Centre for the Settlement of Investment Disputes (ICSID) for arbitration before three arbitrators.
Further, Article 26 requires the Government “to irrevocably waive any claim to immunity for itself, its agencies, its enterprises, and any of its assets”.
According to New World Encyclopedia, immunity confers a status on a person or body that places them above the law and makes that person or body free from otherwise legal obligations such as liability for torts or damages, or prosecution under criminal law for criminal acts.
Minister of Natural Resources, Raphael Trotman
Attorney-at-law, Christopher Ram
There are various types of immunity, such as that given to sovereigns, parliament officials, diplomats, prosecutors, or witnesses to crimes.
This exemption from an obligation or being penalised was formed for instances wherein the gravity of finding the perpetrators or the elements of a crime or situation far out-weighed the penalty for the individual who was being considered for immunity. Public benefits usually play an important role in decisions in the attempts to solve certain matters and a balancing act is created in favour of the development.
The Encyclopedia states that sovereign immunity is based on the idea that a sovereign is superior to all in authority and power. It prevents, in advance, a suit or prosecution against a sovereign, being a monarch, ruler, or government, without the sovereign’s consent.
While the origin of sovereign immunity derives from forms of government led by a monarch, it can nonetheless be applied to any sovereignty, where “sovereign” is understood as the supreme lawmaking authority. Thus, sovereign immunity may be applied to any government, preventing it from being sued without its consent.
In the United States, where ExxonMobil is from, the federal government has sovereign immunity and may not be sued unless it has waived its immunity or consented to suit.
Ram noted that immunity waiver is not usually taken lightly.
“Here is another kicker. Under the 1999 Agreement, the fees and expenses of the Sole Expert as well as the charges for the use of the International Centre for the Settlement of Investment Disputes or other facilities, were to be borne equally by the Contractor and the Minister. The role of the Sole Expert under Trotman’s Agreement seems hazy but what is not hazy is the provision of a new Article 26.8 that the ‘arbitrators shall assess the expenses incurred by the Parties, the fees and expenses of the arbitrators, the charges for the use of the facilities and any other costs related to the arbitration and shall decide by whom such costs shall be paid.
“Given that Trotman would be terrified at the prospect of arbitration, the potential expenses and at an unfavourable ruling by the Arbitrators, makes one wonder why he would have agreed to some of these changes. The depth of the mystery makes the exploration by Anadarko in ultra-deep water look like a neighbourhood pool.”
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