The court case between the Government of Saint Lucia and the Colorado oil man Jack Grynberg and his RSM Production Corporation at the International Centre for Settlements of Industrial Disputes (ICSID), is again back in the news, seven years after it first surfaced.
The case to date has generated two major decisions, both with information that debunked previously held views by detractors of the Agreement between the two parties that was initially signed in 2000, renewed in 2004 for three years and supposedly renewed in 2007.
The last renewal remains as controversial today as it was in 2007, since it was believed, at least by the Saint Lucia Labour Party, that former Prime Minister Stephenson King signed the Agreement in that year. King, in 2007 – 2008 had denied renewing the Agreement challenging anyone with information in the affirmative to prove he signed such a document.
RSM instituted arbitrary proceedings against the Government of Saint Lucia at the ICSID in April 2012. The first decision that came out of the proceedings was in August 2014 when the ICSID’s Tribunal ruled on a request made by Saint Lucia which sought a provisional measure requiring 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, should the case go against RSM Production Corporation.
The Tribunal ruled in favour of Saint Lucia. Judge Edward W. Nottingham who wrote the decision gave a background of the case in which he debunked the much-held belief that RSM instituted arbitration at the ICSID as a direct result of actions of the former Prime Minister Dr. Kenny Anthony.
Judge Nottingham in his judgement wrote thus: “In March 2004, the parties acknowledged the continuance of the boundary issues and agreed to an extension of the Agreement by another three years.”
Saint Lucia in December 2006 went through general elections. The United Workers Party, headed then by Sir John Compton, won and formed the new government. Sir John died the following year to be replaced as Prime Minister by Stephenson King.
Judge Nottingham in his description of the case’s background wrote that “after a change of the Government of Saint Lucia in 2006 and after a further replacement of Saint Lucia’s Prime Minister in 2007, an envelope was given to Earl Huntley on November 7, 2007 in the Prime Minister’s office. According to the Claimant (RSM Production Corporation) the envelope contained an agreement signed by the Prime Minister to the effect that the Agreement was extended by another three years.”
The judge continued, “Mr Huntley was, after collecting the envelope, called and asked to come back and give back the envelope which was not returned, neither to Mr Huntley nor to Claimant (RSM Production Corporation).”
Huntley had served as a liaison officer for the RSM Corporation at the time.
The document signed by Judge Nottingham noted that RSM Production Corporation argued there was continuance of the Agreement since it was signed in 2007 and that Saint Lucia should not negotiate with, nor grant to third parties any exploration rights in the same area of the seabed that they initially had a signed Agreement for.
RSM noted in the document signed by Judge Nottingham that Saint Lucia’s termination of the Agreement meant that Saint Lucia was obliged to reimburse RSM for all damages incurred in reliance upon the Agreement.
The second decision coming out of the ICSID since the case was filed in 2012 was released on April 29 of this year. On December 15, 2014, RSM informed the Tribunal that it would be unable to provide a US$ 750,000 bank guarantee or place that amount in escrow. On December 24, 2014, St Lucia filed a request for the discontinuation of the proceedings, to which RSM Production Corporation objected on January 5, 2015.
On April 8, 2015, the Tribunal issued a Decision on St Lucia’s request for suspension or discontinuation of proceedings (the “Vacatur Decision”) with assenting reasons from Judge Nottingham. The Tribunal directed as follows: The deadline for Respondent’s (Saint Lucia) Rejoinder and the hearing dates are vacated and, subject to below, the procedural directions of hearings are stayed until further order. The vacatur will be lifted if Claimant [RSM] within six months as of the date of this decision [that is by October 8, 2015] provides security for costs in the amount of US$750,000, as directed by the Security for Costs Decision as modified on August 20, 2014.
The Tribunal noted that should RSM default Saint Lucia would then be granted leave to apply to the Tribunal for a final award for dismissal, with costs or such other orders as it may be advised. By letter of October 13, 2015, on behalf of the Tribunal, the Secretariat informed the Parties that the vacatur period, as ordered in the Vacatur Decision, expired on October 8, 2015, and that the Tribunal had noted that RSM did not provide the security for cost that was asked of it. On November 24, 2015, St Lucia filed a request for a final award. On February 9, 2016, RSM filed its reply to St Lucia’s request for a final award.
The Parties thereafter presented their submissions on costs and the Tribunal closed the proceedings on June 13, 2016. On July 15, 2016, the Tribunal rendered its Award. The Tribunal directed and ordered all RSM’s prayers for relief to be dismissed, fixing costs of the proceedings at US$ 615,670.25 with RSM ordered to bear all the costs of proceedings.
RSM was also ordered to reimburse Saint Lucia’s legal and other costs in the amount of US$291,153.76 plus interest at the rate of three months (London Interbank Offered Rate) plus 4% per annum from the notification of the Award until full and final payment. The court dismissed all further prayers for relief submitted by the Parties.
On November 12, 2016, ICSID received an Application for Annulment from RSM. The Application for Annulment was made within the time-period provided in Article 52(2) of the ICSID Convention. RSM sought annulment of the Award based on the following three grounds:
The Tribunal was not properly constituted because Dr. Griffith, who gave an assenting opinion when the Tribunal gave its security for costs decision, allegedly did not possess the required impartiality; The Tribunal manifestly exceeded its powers because it improperly ordered RSM to post a security for costs before any hearing on the merits while the ICSID Convention does not provide for such; vacated the proceedings when there are no provisions to this effect in the ICSID Convention; and dismissed the case due to RSM’s failure to post the security while it had no such authority under the ICSID Convention; and The Tribunal departed from the fundamental rules of procedure because Dr. Griffith did not possess the required impartiality and participated in all the stages of the decision-making.
On November 15, 2018, a hearing on the Annulment was held in Washington, D.C. An ad hoc committee which was formed to hear the annulment said it found no basis on which it can be concluded that Dr. Griffith’s alleged lack of impartiality was a ground for deciding that the Tribunal was not properly constituted within the meaning of Article 52(1)(a). Equally, for the same reasons, the Committee stated it did not find any basis on which it can be concluded that Dr. Griffith’s alleged lack of impartiality would be a ground for deciding that there had been a substantial departure from a fundamental rule of procedure within the meaning of Article 52(1)(d).
The Committee said it was not convinced that ordering a provisional measure that required RSM to post security for costs constituted a manifest excess of power. It further rejected the claim for annulment under Article 52(1)(b) of the Convention.
The ad hoc Committee’s final decisions were that the Tribunal’s Award be partially annulled to the extent that RSM’s prayers for relief are dismissed with prejudice; the costs covering the ad hoc Committee Members’ fees and expenses, the ICSID administrative fees and other direct expenses, as determined by the ICSID Secretariat, be borne on the basis of one third to be paid by St Lucia and two thirds by RSM with RSM bearing its own legal costs and expenses and one third of the legal costs and expenses of Saint Lucia.
The case as filed in 2012 is not over. Government, two weeks ago noted it had spent so far approximately EC$5.4 million in legal fees on its defense.