Groundbreaking court ruling has implications for mining agreements with foreign partners

Jun 23, 2019 News

In a pivotal ruling for the mining industry, Justice Fidela Corbin last week ruled to enforce a foreign arbitral award in favour of West Bank Demerara Gold Inc. against prominent miners, Chunilall Baboolall and Ramnarine.

Attorney-at-law Andrew Pollard, SC

The ruling said that a mining option agreement gave a company owned by foreign shareholders the rights to various medium scale and small scale permits.
West Bank Demerara Gold (“WBDG”) was represented by Devindra Kissoon and Andrew Pollard S.C.
Ramnarine and Baboolall were presented by Neil Boston S.C. and Pratesh Satram respectively.
WBDG, a mining company, reportedly entered into an Option Agreement with Baboolall and Ramnarine, registered holders of certain mineral properties and the mineral titles in the hinterlands whereby it was granted an option to acquire the mineral rights held by the respondents over certain tracts of state lands comprising the mineral properties.
The lands comprised medium scale properties, as well as several small-scale properties. Pursuant to the terms of the option agreement, WBDG, said to be Russian-controlled, paid the respondents sums in excess of US$2.1M.
Over the course of several years WBDG explored and developed the properties.

Attorney-at-law, Devindra Kissoon

However, a dispute arose between the parties. The dispute referred to binding arbitration at the London Court of International Arbitration, under the terms of the option agreement.
The Arbitral Tribunal issued an award in favour of WBDG.
However, according to court documents, when WBDG attempted to enforce the arbitral award in Guyana, the miners refused to comply.
They argued that the option agreement and arbitral award were void on public policy grounds.
Rather, they argued that Section 57 of the Mining Act only allowed transfers of permits to persons who were Guyanese citizens.
They also argued that since WBDG was owned by foreigners, the option agreement and arbitral award were void.
However, WBDG not only argued that the option agreement was valid pursuant to Guyana law, but that Baboolall and Ramnarine who received millions of dollars over a decade couldn’t simply not assert that the agreements were void, they being estopped from doing so.
Justice Corbin, ruling in favour of WBDG, stated, “I do not find that enforcement of the award … contrary to the act and thus public policy.”
Most importantly, Justice Corbin found, “I do not accept that any nominee of West Bank would be holding on behalf of West Bank in an effort to circumvent the provisions of the Act which prohibits West Bank from holding medium scale mining and prospecting permits.”
The ruling would have implications on the mining industry, where a number of foreign mining companies place mining properties on trust with local persons, under sanction of the GGMC, so that they can invest with the view of developing large-scale mining.
The ruling in essence would offer them some sort of protection.

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