Introduction
On 22 February 2023, the Guyana High Court handed down its decision in the action brought by newspaper publisher and crusader Glenn Lall. The action was filed on 22 January 2022 naming the Attorney General as the respondent and essentially sought 17 declarations by the Court that the breadth of concessions granted by then APNU+AFC Petroleum Minister Raphael Trotman not only to the oil companies but to their affiliates, subcontractors and employees of the oil companies and their subcontractors were not permitted by law and were therefore illegal.
On 31 March 2022, Esso applied to be added as a respondent. The optics appear to have been lost on the Government that here it was on the same side of the oil companies fighting a public-spirited private individual citizen who was challenging the Agreement which the PPP/C Government had committed in its 2020 Manifesto to renegotiate. As the case moved to the next stage, the lawyers for both the government and the oil companies raised procedural issues seeking to prevent the case from being heard. The gist of the Attorney General’s response was that the Agreement was a contractual matter falling in the realm of private law. The attorneys for Esso challenged Mr. Lall’s standing to bring the case, his delay in bringing the action, the manner and procedure in which Lall brought his action, and the right of the Court to hear the matter.
The Judge did not rule on the procedural challenges but rather, called for submissions by all the parties on the procedural and substantive issues, indicating his intention to deal with both sets of matters at one time.
The Judge compressed the several issues raised by the parties – two procedural and two substantive.
1. Whether the Applicant has locus standi for the declaratory reliefs prayed for?
In an elegant criticism of the inelegantly worded method by which the action was initiated, the Court noted that the allegation that the Minister with responsibility for petroleum had acted ultra vires of the provision of statue by granting tax concessions, exemptions and waivers to parties other than the oil companies, justified the Court’s intervention. Stating as the correct legal position that Lall’s locus standi only applies if “he can establish that his rights were either being infringed or threaten with infringement by the defendant”, the Court however, exercised its discretion under the Civil Procedure Rules to grant relief which the Court considers just, and that since the application raised matters of a public interest, Lall had the locus standi to bring the matter.
2. Whether the delay in filling the applicant was fatal to the Applicant’s case?
While a delay by itself may not justify a refusal by a court to hear a matter, an applicant has to offer an acceptable explanation to justify an unusually long delay, even if that included 15 months during which the Agreement was kept from the public. Lall had proffered that he had relied on the commitment by the PPP/C in its 2020 Manifesto to renegotiate the contract once in Government.
The Court found that the case involved a matter of public interest, well beyond the interest of the litigants and that it had advanced significantly. In declining the Respondent’s application that the matter be thrown out, the Court recognised that the case was the first of a kind in a new industry registering a phenomenal growth. The Court emphasised that it was for those reasons only that it allowed the extensive delay.
It could have added that since Lall was not seeking a ruling that would apply retroactively, the oil companies actually benefitted from the delay.
3. Whether tax concessions granted under section 51 of the Petroleum Exploration and Production Act, (PEPA) extended to persons other than Licensees?
The Court recognised that the purpose of section 10 of PEPA is to authorise the Minister to enter into Petroleum Agreements, while section 51 is to give the Minister the power to direct that the several tax laws referred to in the section shall not apply to or in relation to the licensee.
It found that the Minister’s powers applied not only to licensees, such as Esso, Hess, CNOOC, but also to their sub-contractors, affiliated companies, and to their expatriate employees under defined circumstances. It further declared that the tax provisions of the Petroleum Agreement are consistent with the words, context and purpose of sections 10 and 51 of PEPA.
4. Whether section 49 and 51 of PEPA violate the Financial Administration [and Audit] Act.
Lall alleged that section 49 of PEPA violated section 6 of the FAA which requires fiscal concessions to be granted only under a Tax Act. The Court did not agree and ruled that the fiscal concessions set out in Article 15 of the Petroleum Agreement were authorised by section 51 of the PEPA and Order No. 10 of 2016 made under section 51. The Court concluded that the power of the Minister was neither abrogated nor diminished by the FAA.
Conclusion
I close with the caveat that the court has not yet issued its judgement in written form and my assessment is based on second-hand information. However, Mr Lall has publicly stated that he proposes to appeal the judgement. I encourage all Guyanese to support his call for changes in certain of the contractual terms to prevent this travesty and disaster being perpetuated until 2056 when the Agreement will finally come to an end.
The PPP/C Government probably considers the results of the case as a success, enabled by and for the benefit mainly of the oil companies. In the process, it has abdicated its responsibility to Guyanese and broke its Manifesto commitment. As if these are not bad enough, it fails to exercise any regulatory oversight over the oil companies with which it now engages in an incestuous and unholy relationship.
The battle might have been lost but the war has to go on.
Next week’s column will examine the deductibility of Esso’s Head Office Cost.
