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US$2B parent guarantee still leaves Exxon in breach of Liza 1 Permit
– the Permit Holder is exclusively and solely responsible for all such liabilities arising from its operations without limitation or exception.
“It is simply not open to Exxon to say it is engaged in a frolic of its own, aided and abetted by the EPA, to unilaterally, arbitrarily and unlawfully cap its unlimited liability and financial assurance”- Justice Kissoon
Kaieteur News – Upon examining the provisions of the Liza Phase One Permit, High Court Judge, Justice Sandil Kissoon has ruled that there is an unambiguous requirement for Exxon’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) to furnish authorities with an unlimited liability Parent Company Guarantee Agreement and/or an unlimited liability Affiliate Company Guarantee. He has also ordered that this order be complied with by June 10 or the permit would be suspended.
Justice Sandil Kissoon
Justice Kissoon’s ruling was handed down on May 3, 2022 after hearing submissions in a case filed by two Guyanese September last. The Environmental Protection Agency (EPA) which was the respondent to the case had introduced draft documents regarding a US$2B parent guarantee from ExxonMobil to prove compliance. Justice Kissoon said such documents are irrelevant since the amount of US$2B does not bring EEPGL into compliance with the requirements of the permit.
Justice Kissoon categorically stated that the Liza Phase One Permit carries a confluence of measures at Condition 14 which stipulate and impose full, complete and unlimited liability upon the Permit Holder for any discharge of any contaminant into the environment and for all costs of clean up, restoration and any damages all of which constitute legitimate liabilities under the Permit. The Judge said the norm or standard in relation to activities of this nature has been and continues to be that the Permit Holder is exclusively and solely responsible for all such liabilities arising from its operations without limitation or exception.
Expounding further, Justice Kissoon noted that Condition 14 of the permit titled Financial Assurance and Liability for Pollution Damage provides at: 14:1 that: The Permit Holder is liable for all costs associated with clean up, restoration and compensation for any damages caused by an discharge or any contaminant including the cost of all investigations into pollution incidents or discharge of contaminants conducted at the instance of the Agency.
Justice Kissoon noted that this sub-Condition is all-encompassing in several aspects. The Judge outlined that it imposes that EEPGL: assumes liability for all costs, assumes liability for any damages, and acceptance that liability accrues to the Permit Holder from any discharge howsoever it occurs.
Justice Kissoon also ruled that, “Condition 14:01 does not contain any word or term of limitation upon liability, quantum of costs, quantum of damages nor restrictions on the circumstances of release or discharge nor on containment nor restriction on the sphere of adverse effects caused directly or indirectly.”
His Court also finds and holds that in the circumstances of the clear, express, unambiguous language of the stipulation at Condition 14:01 of the Environmental Permit (Renewed), EEPGL assumed unlimited liability for all costs of clean up, restoration and compensation for any damage from any discharge of any contaminant.
Justice Kissoon said the unlimited liability which is exclusively that of EEPGL, is by no means unusual in any sense. Considering all the submissions, Justice Kissoon ruled that, “It is simply not open to the Permit Holder to say it is engaged in a frolic of its own, aided and abetted by the EPA, to unilaterally, arbitrarily and unlawfully cap its unlimited liability and financial assurance.”
He further noted that a Parent Company or Affiliate Company indemnity or guarantee to the extent of US$2B does not fulfill the obligations of the Permit Holder at Condition 14:10 and, in such circumstances, Esso will remain in breach.
Justice Kissoon said, “There is no hurdle to the provision of the unlimited parent company guarantee and the unlimited affiliate company guarantee agreements stipulated at Condition 14:10 of the Permit.”
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