(Kaieteur News) – The Appeal Court on Tuesday heard arguments over Guyana’s right to claim an unlimited guarantee via oil operator, ExxonMobil Guyana Limited (EMGL) from its parent company-US oil giant ExxonMobil Corporation in the case of an oil spill.Daily News Digest

The appeal case centers on Environmental Protection Agency’s (EPA) application to set aside a ruling by The High Court Justice Sandil Kissoon to have EMGL provide an unlimited parent company guarantee within 30 days of his May 3, 2023 decision.

Citizens, Frederick Collins and Godfrey Whyte had taken the EPA to court to enforce a critical clause in the Liza Phase One renewed environmental permit issued to Exxon subsidiary, EMGL.

Lawyers representing the two men are contending that EMGL as the permit holder must be able to meet its liabilities. In the likelihood of an oil spill, the responsibilities of Exxon are uncapped.

Notwithstanding the Act requires financial assurance in the Exxon permit, the attorneys believe that the core of the issue is for the corporation to provide unlimited guarantee for all costs related to cleanup, restoration, and compensation for damages caused by any discharge of contaminants, including investigations into pollution incidents.

On Tuesday, Appeal Court Justices Dawn Barnes, Nareshwar Harnanan and Priya Sewnarine-Beharry heard oral submissions from attorney for the EPA, Sanjeev Datadin, Senior Counsel and Edward Luckhoo, who represents EMGL.

Attorney General and Minister of Legal Affairs, Anil Nandlall SC, represented the Government of Guyana while the respondents (Collins and Whyte) were represented by a team of lawyers including Trinidadian born Senior Counsel, Seenath Jairam and attorneys Melinda Janki and Abiola Wong-Inniss as well as British-born King’s Counsel, Tim Prudhoe who joined the appeal.

In his oral presentation before the court, attorney for the EPA, Sanjeev Datadin raised contention over the legitimacy of the claims of an unlimited parent company guarantee. Datadin advanced that the term was introduced at the level of The High Court when the trial judge sought to give legal effect to the term “unlimited guarantee”.

“The submission of the appellants your honour is that there is no underpinning to the claim of unlimited parent company guarantee and there is no reference in fact to it in the legislation or the permit,” he said.

He submitted that Section 31 of the EPA Act requires financial assurance to be provided in a specified sum. Condition 14.3 sets the formula to calculate the amount.

“The forms of financial assurance shall be guided by an estimate of the sum of reasonably credible cost expenses and liabilities that may…from any breaches of this permit…” he explained.

While there is general reliance on Polluter Pays Principle (PPP) which essentially means entities causing environmental harm, particularly in the oil and gas sector, bear the costs of pollution prevention, cleanup, and remediation, rather than the public, the lawyer held that the financial assurance and insurance in a specified sum should suffice in the case of a spill.

Datadin contended that “Clause 14.1 provides clearly that the “… permit holder is liable for all costs associated with cleanup, restoration and compensation for any damages caused by any discharge … This is consistent with the ‘polluter pays’ principle set out in the Act…”

He emphasised that the financial assurance to be provided is pursuant to Clause 14.3 shall be guided by an estimate of the sum of the reasonably credible costs, and expenses.

According to Datadin, the court fell into error when it conflated the two concepts and concluded that “unlimited” financial assurances were needed.

“This was not so. The liability for all damage caused is clear but the guarantee is an estimate of the possible damage; two very different concepts and their confusion lead the Court into error.”

The lawyer is of the view that trial court erroneously issued a mandamus to compel the appellant to issue an enforcement notice within days of its decision directed to Exxon to provide the said unlimited assurances, which, if not produced within thirty days would result in the suspension of the environmental permit.

He noted that this is contravention of 14.2 where the permit holder shall provide and /or declare within a reasonable time following the signing of this permit a combination of the following forms of financial assurance to cover all its legitimate liabilities under this permit.

Exxon’s lawyer Senior Counsel Luckhoo submitted to the court that the error was made when the trial judge and the respondent conflated the issue of liability. He noted too that in keeping with the permit, there must be an estimate sum for the professed liabilities. He contended that it is international practice is that the sum is not unlimited.

Attorney General (AG) Nandall later expounded that estimate must be specified whether it takes the form letter of credit, performance bonds or cash. He submitted that the primary issue to be determined by the court is whether the environmental protection act and the environmental permit require unlimited guarantee as was ordered by the trial judge but first the court will have to decide whether such an animal exists in law.

“It is respectfully submitted that such a guarantee cannot be provided, it means the Government of Guyana’s rights under the contract may be [permanently affected bringing the contract practically to an end, resulting in immeasurable financial loss and damage to the state revenue stream …”

In this regard, the AG posited that the government’s interest in the matter is “purely financial.”

“Whatever the sum is estimated in which form it takes, cost will be borne by the state since because all comes out of cost oil.”

Further, the AG noted that perhaps the most egregious error committed by the court was to order the agency to compel Exxon to provide something that was not within the remit of its permit to provide.

The permit holder and the agency were in the process of having the regulations complied with when the court exercised judicial overreach and ordered it to have the oil company provide this unlimited guarantee.

“It was public knowledge and judicial notice ought to be have been taken that the suspension of the Environmental Permit would lead to the situation of the operations of Exxon being suspended which would lead to a reduction in revenues to the Government of Guyana and the additional costs would be incurred by the Government of Guyana to pay everything that followed as cost oil’.”

In his response, Senior Counsel Jairam told the court that his opponents are conflating two separate issues.

The attorney stressed that that the requirement for an unlimited guarantee from Exxon corporation for its Guyana operation is separate and apart from the need for insurance and financial assurance as is reference in clauses of the environmental permit granted by the EPA.

He explained that insurance is limited. It may cover some of the liability, but it will not cover all. The rest needs to be covered.

“There is no guarantee that this amount of insurance will cover Exxon’s liability. On the contrary, unlimited insurance is not a feature of the insurance market. An insurer will put a cap or limit on the amount of loss covered. It is pellucid that even if Exxon had put in place insurance which complied with the Exxon Permit (and it did not), that insurance would not cover all of Exxon’s liability.

Hence the attorney emphasised the need for the unlimited guarantee which sets out in clear and unambiguous language in condition 14.1 of the permit.

The permit holder is liable for all cost of cleanup, restoration and compensation for any damages caused by any discharge of any containment including the cost of all investigations into pollution incident or discharge of containments’

To support the argument for unlimited guarantee, attorney Janki provided the court with authorities and examples in which unlimited guarantee were given in case of an oil spill. The lawyer made specific mention of the scenario which Exxon purportedly gave this type of guarantee to Guinea.

Janki was however only able to submit two cases as authorities to court since Senior Counsel Luckhoo on the opposing took issue with how the information will be viewed by the court.

He objected to the information being introduced noting that at the preliminary stage of the appeal, Prudhoe successfully objected to the introduction of fresh evidence by the EPA. The court subsequently ruled out an application by the EPA for fresh evidence to be introduced in the matter on the basis that the information previous permit and the financial records failed to meet the necessary logical test for sufficient likely impact on the outcome of the appeal. The court is scheduled to render its decision on May 7.

Original link posted by Kaieteur News on March 26, 2026