Appeal Court Judge stays execution of High Court order against oil company in unlimited parent company guarantee case

Appeal Court Judge stays execution of High Court order against oil company in unlimited parent company guarantee case

Justice of Appeal Rishi Persaud, today ordered a stay of the orders of the High Court, which mandated the Esso Exploration company to put in place an unlimited liability parent company guarantee within 30 days.

However, in granting the stay of the High Court order, the appellate Judge also ordered the oil company to lodge US$2B in guarantee within 10 days.

“In an effort to allay any anxiety as to impending doom, as conceived by some, and more over in the interest of justice, I will order the provision of the US$2B in guarantees to be lodged by the applicant Esso within…10 days therefrom, failing which, the stay order stands dismissed,” Justice Persaud said as he handed down his decision in the preliminary matter.

The stay has been granted pending the hearing and determination of the substantive appeal.

The Environmental Protection Agency and the oil company appealed the High Court’s ruling last month, which was handed down by Justice Sandel Kissoon.

 In ruling on a number of preliminary issues, including the Court’s jurisdiction to hear the application for a stay of execution, the Appeal Court Judge concluded that the appeal had prospects of success.

The High Court Judge, in part, had based his ruling on Condition 14 of the Environmental Permit, however, Justice Persaud said that conditions outlined under Condition 14 must be considered as a whole. 

“Section 31:2 requires the specification of an amount of financial assurance. Condition 14 (3) of the permit provides a formula that guides the form, quality and quantity of the financial insurance. It must be guided by an estimate of reasonably credible cost, and is not expected to address the inestimable cost, which can be recovered by civil action. A defined quantum that is estimable is required. The conflation, condition 14 (1), which provides for all cost, with the necessity of an insurance under Condition 14 (3) and held to be unlimited, is on the face of it problematic,” the appellate judge reasoned.

He said the use of Condition 14 to interpret and extend the clear word of the Environmental Protection Act, and Condition 14 (3) of the Permit, seems to be impermissible.

“The general obligation is for liability for all cost, which the credit holder has acknowledged in no uncertain terms, must be read separately from the precise requirements for assurances,” Justice Persaud reasoned further.

He said to do otherwise would amount to a complete disregard of the purpose and intent of the governing legislation.

 It was pointed out that Condition 14 (4) authorizes the EPA to request additional assurances if necessary while Condition 14 (5) mandates that the environmental liability insurance be guided by international standards in the Petroleum Industry.

Justice Persaud said it seems that the trial judge misconstrued the processes in relation to the acquisition of the insurance, and ignored the agency’s discretion.

He said it was in the interest of justice that the stay of execution be granted pending the hearing and determination of the case.

Attorney-at-Law Sanjeev Datadin is representing the EPA in the case, while EEGPL is being represented by Senior Counsel Edward Luckhoo.

Senior Counsel Seenath Jairam is representing the respondents, Frederick Collins and Godfrey Whyte.

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