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R.S.M. Must Put Up $ Security

Image of Jack Grynberg

US$750,000 To Be Paid In 90 Days.

Image of Jack Grynberg
Jack Grynberg

A decision on Saint Lucia’s request for security for costs in a case brought against it by RSM Production Corporation, represented by Jack Grynberg at the International Centre for Settlement of Investment Disputes (ICSID), has been arrived at with the verdict going in Saint Lucia’s favour.

The three-man tribunal that reviewed this particular aspect of the case decided in the majority and ordered RSM Production Corporation to post security for costs in the form of an irrevocable bank guarantee for US$750,000 within 30 days of the decision.

The tribunal further ordered that failing the provision of the guarantee, Saint Lucia is granted leave to request that the tribunal cancel the hearing date as set forth in the Procedural Timetable and that the decision regarding the costs of Saint Lucia’s application remain reserved until a later stage in the proceedings.

The decision, which was handed down on July 15, 2016, is a blow to the RSM Production Corporation which had argued that the tribunal did not have the power or authority to order security for costs, and that the requirement for such a measure was not fulfilled in the case at hand. The company also argued that Saint Lucia’s application for security for costs was unjustified since Saint Lucia did not elaborate on the merits of the case and its position towards the Corporation’s request for arbitration.

The Corporation had further argued that its financial resources were limited and that it hoped to be in a position to honour a possible costs award issued against it. The Corporation also argued that it is was right to pursue its claim unduly limited in case security for cost is ordered prior to a decision upon the claim and had called on the tribunal to reject Saint Lucia’s request in its entirety.

The tribunal, after reviewing the matter as presented by both Saint Lucia and the Corporation, noted that in general it had the authority to order provisional measures to preserve a party’s right, adding that provisional measures should only be granted in exceptional circumstances. The tribunal quoted Article 47 of the ICSID Convention and ICSID Arbitration Rule 39 in arriving at this decision.

According to the tribunal, a large number of ICSID tribunals have ruled that a measure requesting the lodging of security for costs, does generally, not fall outside an ICSID tribunal’s power provided exceptional circumstances exist.

The dispute has its origin in 2000 when the agreement between the parties for petroleum exploration of a certain part of Saint Lucia’s seabed was inked, initially for four years.

The Corporation claimed that during that time boundary disputes developed between Barbados, Martinique and St. Vincent and the Grenadines which prevented it from initiating exploration.

On September 8, 2000, the parties amended their agreement to the effect that it was acknowledged that a ‘force majeure’ situation existed due to the boundary issues which as a result excused the Corporation from performing its obligations under the Agreement. This resulted in an extended duration of the Agreement and the period allowed for the Corporation to solve the boundary issues.

In March 2004, the parties acknowledged the continuance of the boundary issues and agreed to an extension of the Agreement by another three years. The government changed in 2006 and RMC is contending that the new Government terminated the agreement..

The Corporation wants the tribunal to declare that Saint Lucia terminated the agreement in breach of Article 27. It also wants the tribunal to order Saint Lucia to pay damages in the amount of at least US$200 million; to pay interest on the damages awarded, from the date of the termination of the agreement up to and until the full payment of the final award; to pay all the costs and expenses of the arbitration, including the fees and expenses of the tribunal, the ICSID administrative expenses and the legal fees and other expenses incurred by the Corporation in the arbitration.

It also wants the tribunal to declare that the Agreement is still in force and that Saint Lucia be prohibited from granting third parties any exploration or development rights in the Agreement area during the pendency of the Agreement.

Micah George is an established name in the journalism landscape in St. Lucia. He started his journalism tutelage under the critical eye of the Star Newspaper Publisher and well known journalist, Rick Wayne, as a freelancer. A few months later he moved to the Voice Newspaper under the guidance of the paper’s recognized editor, Guy Ellis in 1988.

Since then he has remained with the Voice Newspaper, progressing from a cub reporter covering court cases and the police to a senior journalist with a focus on parliamentary issues, government and politics. Read full bio...

4 Comments

  1. Was this agreement ever discussed by the Cabinet of Ministers or brought to the relevant authorities like the ministry of Sustainable Development, Ministry of Agriculture, Commerce, Invest St. Lucia, and the third Estate….the media? Just asking!

  2. Who ever screwed up on this matter in the first place should face the full
    brunt of the Law – Jail. St. Lucia as I see it cannot win. If we are able to get
    out of it, the winner is ultimately is a group of Lawyers. Some body messed up.

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