The Grynberg/St. Lucia Matter – An Inside Look

THE signing of a Hydrocarbon Exploration Agreement between former Prime Minister Dr. Kenny Anthony and Jack Grynberg’s RSM Production Corporation 17 years ago is still an explosive political football as evidenced by a statement read in Parliament earlier this month by Prime Minister Allen Chastanet.

Also keeping the matter smoldering is the duration of time in arbitration it has so far spent in the International Center for Settlement of Investment Disputes (ICSID) in the United States, five years and eight months from the day it was registered in that court.

Chastanet, at the last sitting for the year of the Lower House of Parliament, called on Dr. Anthony and anyone else with knowledge about the deal to come forward and answer some questions he believes they alone can answer so as to put the matter to rest once and for all.

Chastanet said that his government is not in a position to answer pertinent questions about the deal, such as why did St. Lucia enter into agreement with Grynberg at a time when he (Jack Grynberg) was in litigation with Grenada over a similar agreement.

The prime minister said that after 17 years, St. Lucians needed to know exactly how the country found itself fighting Grynberg in an international court over an agreement dispute having to do with the country’s seabed.

He believes that the former prime minister owes the country an explanation, seeing that he went against the Minerals Investing Act by signing an agreement with Grynberg, something the Act specifically allocates to the Governor General.

According to Section 3 of the Act, persons shall not mine any minerals unless under a license granted by the Governor General according to the terms and conditions specified in the license. Further that a person shall not prospect for or mine any minerals except by the authority of a license granted by the Governor General in accordance with the terms and conditions specified in the license.

Providing support to that section of the Minerals Vesting Act is Section 65 of the Constitution which states that the prime minister shall keep the Governor General fully informed concerning the general conduct of the Government of St. Lucia and shall furnish the Governor General with such information as he/she may request with respect to any particular matter relating to the Government of St. Lucia.

Her Excellency Governor General Dame PearletteLouisy has since confirmed not having the slightest knowledge of the Kenny/Grynberg agreement in a letter dated June 3, 2013 to Chastanet who was then Leader of the Opposition.

Chastanet read that letter in parliament in an effort to maximize on what he believed was wrongdoing on the part of the former prime minister.

He claimed, via the letter that Dame Pearlette wrote, that she had no personal or firsthand knowledge of any contract agreement between the former prime minister and Grynberg and his Corporation. Nor did she know of an agreement made by anyone or entity in or outside government with Jack Grynberg and his Corporation. Also, that no such contract or agreement was ever brought to her attention in her capacity as Governor General. Further, that the subject was never discussed with her, her advice was never sought, neither did she play any part in anything that may have transpired then or at any time subsequent.

Read Chastanet, quoting Dame Pearlette: “Notwithstanding, no prime minister from March 2000 has taken up the subject with me, neither admittedly I requested any information related to it since it would seem that successive administrations are content to have this issue of national interest aired out, debated and somehow resolved in the media.”

According to the prime minister, his administration has yet to find an official record of the Grynberg transaction in the files of Cabinet or in Hansard and that all efforts to secure related information on the subject have been fruitless.

The former administration, Chastanet said, has paid the legal team at the ICSID representing St. Lucia approximately EC$1.4 million and that his administration, in its 18 months in office, has also paid an additional US$300,000.

He gave parliament a rundown of events leading up to Grynberg Corporation filing a motion with ICSID and a precis of events in that court up to a point.

The case was registered in April 2012 at the ICSID. St. Lucia, in 2014, requested of the Arbitral Tribunal security for costs from the Grynberg in order to protect its asserted right to claim reimbursement of the costs it incurs during the arbitration, in the event that it prevails on the merits and the Tribunal grants a claim for reimbursement of costs.

St. Lucia succeeded in its request in that the Arbitral Tribunal, by majority, ordered Grynberg to post security, in the form of an irrevocable bank guarantee, in the amount of US$ 750,000 within 30 days of the decision.

Grynberg, through his legal counsel, sent an e-mail dated December 15, 2014, informing the Tribunal that his funding arrangement had been terminated and that he would be unable to provide a US$ 750,000 bank guarantee or place that amount in escrow.

St. Lucia, on December 24, 2014, filed a request for the discontinuation of proceedings as a result of Grynberg’s inability to post the security ordered. Grynberg filed an opposition to the discontinuation of the proceedings on January 5, 2015.

St. Lucia’s position regarding its discontinuation request was, among other things, that the Tribunal has the power to order discontinuation and in that regard made reference to the Tribunal’s inherent power to protect the integrity of the proceedings, relying on ICSID Arbitration Rule 45 in support of its proposition.

St. Lucia further contended that the proceedings being discontinued was the logical implication of the Security for Costs Decision and that should the Tribunal decide against discontinuing the proceedings, it would be exposed to precisely the threat that the Security for Costs Decision was intended to avoid.

St. Lucia was also of the view that compliance with the Tribunal’s decisions was a basic requirement for procedural good faith that Grynberg owes not only to St. Lucia but also to the Tribunal and that his act against good faith destroys the integrity of the proceedings by treating the Tribunal’s decisions as mere advisory opinions and as such should discontinue the proceedings.

Grynberg’s position was that, among others things, the Tribunal had no jurisdiction to order the discontinuation or suspension of the proceedings. He also objected to any award on costs, asserting that the proceedings must continue because none of the situations apply in which the proceedings may be discontinued pursuant to the Rules and the ICSID Administrative and Financial Regulations.

The Tribunal, it seems, agreed to vacating the proceedings for a six-month period, noting that the period of time was reasonable for the parties to get a number of things in order

The Tribunal handed over its decision to the parties on the suspension in April 2015. Here is that decision in part:

Leave to apply for dismissal
“The Tribunal rejects as inapplicable the application to make orders of discontinuance arising under specific Rules as invited by the Parties in their submissions. The situation with which this Tribunal is confronted does not implicate any of the provisions invoked. It is the absence of other specific provisions which, pursuant to Article 44 sentence 2 of the ICSID Convention, enlivens the Tribunal’s authority for an autonomous resolution of the impasse in this case of continuing default, which is Claimant’s (Grynberg) continuing non-compliance with the Security for Costs Decision.

“The Members of the Arbitral Tribunal concur that such resolution must be final. A mere interruption or a break would mean that the matter might be resumed or continued in the future. An interlocutory state of affairs is not in the interest of either party. In particular, an indefinite stay or an indefinite discontinuance would mean denying Claimant (Grynberg) procedural fairness, which at the least, must include the capacity to vindicate its contentions that the Tribunal had no jurisdiction to make the Security for Costs Decision.

“As a matter of procedural fairness to Claimant (Grynberg), the Tribunal’s determination here must be framed so as to afford beyond doubt or contrary argument Claimant’s (Grynberg) right to challenge on an Annulment Application under Article 52 (1) (b) of the ICSID Convention the Tribunal’s majority finding and exercise of jurisdiction in the Security for Costs Decision.

“Hence, decision on Saint Lucia’s Request for Suspension or Discontinuation of Proceedings and in the event of Respondent (St. Lucia) making a further application for finality upon continuing noncompliance after six months, the Tribunal is presently inclined to regard a formal award of termination or dismissal as the proper form of final order. Furthermore, an indefinite stay or discontinuance is not in Respondent’s (St. Lucia’s) interest, which would become subject to indefinite uncertainty as to the outcome of monetary and other claims concerning the disposition of its offshore resources. This conclusion is in line with Respondent’s (St. Lucia’s) submissions and claims for relief whereby Respondent (St. Lucia) applies for (1) “suspension” and (2) upon Claimant’s (Grynberg’s) failure to post the security for costs for the “discontinuance” of the proceedings. Irrespective of the terminology applied, Respondent (St. Lucia) clearly seeks the final end of the proceedings at hand and thereby legal certainty. In this context, Respondent (St. Lucia) contends that […] suspension alone cannot cure the harm RSM’s conduct has inflicted, nor can it re-establish the proper administration of justice. If the proceedings were suspended indefinitely, but not discontinued after a reasonable period, St. Lucia would be severely prejudiced, particularly by a second postponement of the hearing and the in terrorem effect the pendency of the proceedings might have should St. Lucia choose in the future to seek reliable concessionaires to explore its maritime zones. Thus, the Tribunal is of the opinion that should Claimant (Grynberg) fail to comply with the Security for Costs Decision upon the expiry of a time period of six months, Respondent (St. Lucia) must be permitted to apply for a final award dismissing the case.

“Hence, as a matter of compelling and necessary principle in the exercise of the open textured jurisdiction under the second sentence of Article 44, the impasse arising here upon the open non-compliance, firstly has to be resolved by an immediate vacatur, and upon noncompliance after a reasonable period followed by a final award for determination if applied for by Respondent (St. Lucia).

Decision on Saint Lucia’s request for Suspension or Discontinuation of Proceedings, and information on the parties’ sources of funding.

The Tribunal does not accept the invitation that it should interrogate either Party as to its sources of funding. The issues of determination are confined to the sanctions that may arise from the continuing default in compliance with the Tribunal’s Security for Costs Decision. This determination does not depend on the question of the Parties’ sources of funding.

“Based on the above analysis, the Tribunal directs and orders as follows: (i) The deadline for Respondent’s (St. Lucia’) Rejoinder and the hearing dates are vacated and, subject to (ii) below, the procedural directions of hearings are stayed until further order. (ii) The vacatur will be lifted if Claimant (Grynberg) within six months as of the date of this decision provides security for costs in the amount of USD 750,000, as directed by the Security for Costs Decision as modified on August 20, 2014. (iii) In default of (ii) Respondent (St. Lucia) is granted leave to apply to the Tribunal for a Final Award for dismissal, with costs or such other orders as it may be advised. (iv) All other procedural requests are dismissed. (v) The decision regarding the costs of Respondent’s (St. Lucia’s) application. The decision regarding the costs of Respondent’s (St. Lucia’s) application remains reserved until a later stage in these proceedings.”

The latest developments in the Grynberg/St. Lucia saga are as follows: Annulment proceedings have begun in that the case was registered on November 21, 2016. The date of constitution of an ad hoc committee was January 4, 2017.

Composition of ad hoc committee: President Donald M. Mcrae (Canadian, New Zealand), Andreas Bucher (Swiss) and Alexis Mourre (French). The status of the proceedings has been labeled ‘Pending’. The very latest development is that on September 8, 2017 RSM Production Corporation files a memorial on the annulment.

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...

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