Exxon wants Court to strike down Glenn Lall’s application challenging tax waivers

Dec 13, 2022 Court Stories, Features / Columnists, News

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– Lawyer argues case should have been filed under public law proceedings

Kaieteur News – Attorney for ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), Edward Luckhoo, SC on Monday petitioned the court to strike out the case filed by Kaieteur News Publisher, Glenn Lall to challenging the Government’s decision to grant massive tax waivers to oil companies.

Lall had filed a case against the Government of Guyana (GOG) back in January to challenge the decision to grant massive tax waivers to the oil company and its affiliates. However, EEPGL was subsequently added as a respondent in the matter.

On Monday, EEPGL’s Lawyer argued, among other things, that Lall’s Application should not be allowed to proceed since it was filed erroneously under the private law proceedings.

Luckhoo asserted that “Based on his own submissions of the applicant [Lall] the proceedings cannot move forward by way of private law proceeding because at paragraph 3.5 of the applicant’s submission, the applicant admits that he has no personal interest in the reliefs sought and he is not directly affected by in an individual capacity.”

According to the Lawyer, by his own admission, Lall whose legal team is led by Attorney, Mohamed R. Ali, has been disentitled from any of the reliefs sought under private law.  He continued “… The only issue that rises for your Honour’s consideration is whether, in the circumstances of what is before the court and under the Judicial Review Act, if it is permissible and whether the Court ought to exercise its jurisdiction to convert the proceeding to Judicial Review proceedings…”

Further, Luckhoo submitted that the Court should not exercise its jurisdiction if it finds the applicant would be disentitled to the relief sought.

“It would be unnecessary to entertain this application,” he said alluding to the overarching principle, which is set out in Section 21 of the Judicial Review Act where it states “if the court considers that there has been undue delay in making the applications for judicial review and grant of relief would cause substantial hardship, prejudice the rights of any party…It may be consider it not appropriate to convert the matter.”

Added to this, the Senior Counsel advanced that Lall has not shown any reasons in his application as to why the matter should be converted under the Judicial Review Act.

He stressed that the Application did indeed suffer undue delay being filed five years after the Petroleum Agreement was signed between the Government of Guyana and the oil operator.

He said: “They say they were financially constrained which I find very difficult to understand since the applicant puts himself forward as the owner of a media house. They say they were unable to obtain legal representation which in the context of Guyana, thought of an unavailability of lawyers is impossible to entertain.”

Luckhoo added that the issue of tax exemptions, which is the center of Lall’s Application, is one that is to be easily disputed.

During his presentation, Senior Counsel Luckhoo cited Section 51 of the Petroleum Exploration and Production Act (PEPA) which deals with the modification of the tax laws with respect to the licensee.

That section states that: “The Minister assigned responsibility for finance may, by order, which will be subject to affirmative action of the national assembly, direct that any or all of the written laws mentioned in subsection (2) shall not apply to, or in relation to, a licensee where a licensee has entered into a production sharing agreement with the Government of Guyana.”

He noted that while Lall’s argument is that the PEPA should be limited to Exxon and its subsidiary, the law does not expressly state to whom the benefactors are when it mentions the words, “in relation to.”

Among the grounds, Lall lists his main contention as the provisions of the agreement violate the Petroleum Act, by purporting to extend production sharing concessions to persons other than those licenced.

Against this background, he argues that any exemptions referred to in Article 15 Petroleum Exploration and Production Act, purporting to extend concessions to persons other than the licensees are not consistent with the provisions of Act.

He contends that “licensee” as defined by the Petroleum Act refers only to Esso Exploration and Production Guyana Limited (EEPGL), CNOOC NEXEN Petroleum Guyana Limited and Hess Guyana Exploration Limited and not to any other person.

Lall through his Attorney has asked the Court to make a declaration that bringing the agreement into force that the tax waiver must apply only to licensees.

On the issue of discrimination, Lall argues that the Agreement “is discriminatory to Guyanese employees by exempting from personal income tax income earned only by expatriate employees of the contractor, affiliated companies or non-resident sub-contractors who are physically present in Guyana for 183 days or less on a cumulative basis in the tax year of assessment.”

However, Luckhoo contends that the law should be interpreted to mean that the concessions and waivers may be given to persons with sufficient connection to the licensee.

He submitted that Lall’s legal team failed to address questions surrounding the points raised by EEPGL (the contractor).

The Senior Counsel said that while Lall is challenging the use of PEPA by claiming that it is ultra vires of the Financial Administration (and Audit)Act  (FAA), “There is no definition of a tax act within the context of [our] legislation…” then the sections of PEPA that address tax modification ought to be deemed as tax law.

Luckhoo, who represents EEPGL along with Senior Counsel Andrew Pollard, was only Lawyer to make oral presentations in the case before Justice Nareshwar Harnanan on Monday.

Lall’s lawyer, Mohamed R Ali as well as Lawyers representing the Government led by Attorney General and Minister of Legal Affairs, Anil Nandlall, SC declined to make oral submissions but relied on the information previously submitted to the court.

The case which seeks to overturn the expansive tax provisions granted to the oil companies is now set for ruling in February 2023.

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