Words are getting in the way

Feb 24, 2024 Features / Columnists, Peeping Tom

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Kaieteur News – The Opposition Leader seems averse to the use of the word “renegotiation”. He is not alone in this regard: the use of this word also gives nightmares to many government officials.

The Opposition Leader’s explanation is to the effect that the word ‘renegotiation’ has wider connotations than its appearance. He did not explain what that meant.

But he is correct in one sense. The small concessions which Jagdeo has clawed back for the country from the oil companies involved a process that cannot be classified as a re-renegotiation.’

Re-negotiation involves actual changes to the wording of the contract. This has not happened under the PPPC government which had promised to renegotiate the Production Sharing Agreement between the oil companies and the Government of Guyana.

In the case of the Opposition Leader, it is one thing to be disinclined to use the word ‘renegotiation’, and it is another thing to say that the contract provides for the government to ‘engage’ with the oil companies.

The Production Sharing Agreement does not use the word ‘engage. The term “engage” is often considered too ambiguous for use in contracts because it lacks precision and clarity regarding the specific obligations or actions required of the parties involved. Contracts require clear and unambiguous language to outline the rights, duties, and responsibilities of each party to the agreement.

Legal professionals typically advise against using vague terms like “engage” in contracts. They instead recommend employing language that clearly articulates the parties’ intentions and obligations to avoid ambiguity and ensure enforceability.

The Production Sharing Agreement, signed by the APNU+AFC has stability clauses. The relevant stability clause relating to renegotiation states that: “Except as may be expressly provided herein, the Government shall not amend, terminate, declare invalid or unenforceable, require renegotiation of, compel replacement of substitutions or otherwise seek to avoid, alter or limit this Agreement without the prior consent of the Contractor.

While the Opposition Leader may not be comfortable with the word ‘renegotiation’, it is used and provided for in the contract. What is not mentioned in the stability clauses is the word ‘engage’.

But one has to appreciate the dilemma in which the Opposition Leader finds himself. He is the Leader of the APNU which was part of a Coalition government that signed the controversial Production Sharing Agreement. If he calls for renegotiation, it is tantamount to being critical of the very agreement which the APNU+AFC signed.

Ironically, the AFC, the other main Coalition partner has supported calls for renegotiation. It has not developed ‘goose bumps’ over the use of the word ‘renegotiation’.

The Leader of the Opposition also spoke about the sanctity of contracts. He says that this is a feature of international law.

What the Leader of the Opposition needs to appreciate is that the principle of sanctity of contracts does not preclude renegotiation of contracts. An international lawyer, Melinda Janki, has pointed out the principle of ‘sanctity of contracts’ does not collide with renegotiation. What the ‘sanctity of contracts’ prevents is one party opting to change the terms of a contract without the consent of the other. It does not mean that both parties cannot renegotiate and agree to changes.

This is what Janki wrote in an article in the Stabroek News, “Sanctity of contract’ stops ONE party from changing the terms of a contract by itself. If you agree to do something you must do it. You cannot change your mind and tell the other person that you will not do what you promised. ‘Sanctity of contract’ means that the Government cannot change the Petroleum Agreement by itself to give Guyana a better deal, and then tell Esso, Hess and CNOOC that they have to accept the new terms. That kind of bad behaviour is a classic ‘breach of contract.’ It is not a renegotiation.”

“People can make agreements and change agreements provided everybody who signed the agreement says okay. This is freedom of contract. It is a fundamental legal principle…The Petroleum Agreement can be changed right now if the Government, Esso, Hess and CNOOC all agree to change it. ‘Sanctity of contract’ does not stop them from changing (‘renegotiating’) the Petroleum Agreement.”

Sanctity of contracts is a principle in contract law that emphasizes the importance of upholding agreements made between parties. It suggests that contracts are binding and must be honored by all parties involved. This principle stems from the idea that individuals and businesses should have confidence in the enforceability of their agreements. This confidence fosters stability and predictability in commercial relationships.

The Production Sharing Agreement between the oil companies and the Government provides for and uses the word ‘renegotiation’. It does not provide for the parties to engage – whatever that means.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• appearance, companies, Government, Opposition Leader, renegotiation

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