Govt. would receive global support for pushing Exxon to renegotiate lopsided deal

Oct 09, 2022 News

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– it has the opportunity to be a champion of the people instead of a shield for oil giant – New York-based lawyer

By Kiana Wilburg

Kaieteur News – Multinational Corporations (MNCs) are well known for using all their legal and technical powers to extract unfair and unconscionable contract terms, especially from developing countries.

While this has been the case for decades, the rising number of legal challenges, as well as protests against oil companies’ behaviour worldwide, proves that the tolerance for such contractual atrocities has worn thin says New-York based lawyer, Dr. Vivian Williams.

In an interview with Kaieteur News, Dr. Williams said there has been increasing pressure from activists and shareholders in pushing MNCs to behave ethically and conscionably in ventures across the world.

Dr. Williams said this new movement has seen companies apologising for past unconscionable behaviour that harmed vulnerable communities and groups in the past. With such a trend, he posited that Guyana could have therefore embarked on a campaign of moral suasion to soften ExxonMobil’s usually tough stance on contracts.

Dr. Williams said, “This effort could have built on the consensus among international experts that the 2016 Stabroek Block Production Sharing Agreement (PSA) is lopsided. It is likely too, that Guyana, a country ravished by exploitation, would have gotten global support to force ExxonMobil to balance what is described as a lopsided and exploitative agreement.”

Even if the government is banking on future contracts with ExxonMobil to compensate for shortcomings of the current PSA, Dr. Williams said it still should have pursued renegotiation of the deal.

Even if the effort did not produce substantial consensual revisions, he said it could have served as a primer for future negotiations.

Now that the government has announced that it is kicking the proverbial can down the road by staying chained to the deal, the lawyer said ExxonMobil is no doubt preparing for the next encounter. He said authorities should be expected that the oil giant will find ways to stay ahead as it has done in the past.

In fact, Dr. Williams firmly asserts that Exxon would be emboldened by the government’s advocacy of the sanctity of contract doctrine. “This stokes fear that the cycle of error in the misapplication of the doctrine will continue,” the lawyer expressed.

Furthermore, Dr. Williams noted that the government’s attachment to the sanctity of contract doctrine is flawed on three main dimensions. On the economic front, he said it sends the wrong signal to investors, that the government is willing to roll over and accept unscrupulous behaviour from investors. From the legal perspective, he said the doctrine is being misapplied since it is often set aside when contracts are not negotiated fairly and competently by both sides.

From a political standpoint, he reasoned that the government erred in essentially being the “fall guy” for Exxon and shielding it from the anger of the people regarding the lopsided terms.

Dr. Williams said failure to be resolute and clear from the start has caused the administration to be sucked into the problem. He insists that the government could have aggressively and swiftly approached ExxonMobil to revisit the agreement after assuming office in 2020. “What this would have done is direct agitation towards the powerful multinational corporation. Through this process, the government would have cast itself as a champion for the people and stayed clear of any buildup of animosity. Its failure to do this has placed it as a shield for ExxonMobil, absorbing all the anger of the people.”

Importantly, Dr. Williams said observers must take note that ExxonMobil has cleverly evaded a confrontation with the people by remaining in the background while the government marches forward in the role of its defender.

In essence, he said the ruling PPP/C administration has made the strategic political blunder of allowing itself to own a problem it did not create. Therefore, any problem or discontent that develops will fall squarely on its shoulder.

At a time when the country is a magnet for foreign investment, Dr. Williams posited that the government must send the right message. “That message should not be that investors who obtain unconscionable and unfair contract terms, whether through corruption or power asymmetry will be get away with it…,” expressed the lawyer.

He said this is likely to invite enterprising foreign investors to extract unconscionable deals either through corrupt practices or power and information asymmetry. The NY lawyer said this is not the message the government should be sending.

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