Derek Achong

Se­nior re­porter

US en­er­gy com­pa­ny Cono­coPhillips and its sub­sidiaries have been grant­ed per­mis­sion to reg­is­ter lo­cal­ly an over US$10 bil­lion ar­bi­tra­tion award against Venezuela.

De­liv­er­ing a de­ci­sion af­ter sub­mis­sions from lawyers for the com­pa­nies at the Wa­ter­front Ju­di­cial Cen­tre, yes­ter­day morn­ing, Jus­tice Frank Seep­er­sad up­held their ap­pli­ca­tion to reg­is­ter the award grant­ed by the World Bank’s In­ter­na­tion­al Cen­tre for Set­tle­ment of In­vest­ment Dis­putes (IC­SID) in 2019.

The ap­pli­ca­tion came less than a year af­ter the com­pa­nies were al­lowed by Jus­tice Seep­er­sad to reg­is­ter a sep­a­rate US$1.3 bil­lion ar­bi­tra­tion award grant­ed by the In­ter­na­tion­al Cham­ber of Com­merce (ICC) against Venezue­lan State-owned en­er­gy com­pa­ny Petroleos de Venezuela SA (PDVSA) in April 2018.

In de­ter­min­ing the ap­pli­ca­tion, Jus­tice Seep­er­sad had to con­sid­er the pro­ce­dure for reg­is­ter­ing the debt as the Civ­il Pro­ceed­ings Rules (CPR) do not di­rect­ly ad­dress the unique char­ac­ter­is­tics of the award made by the IC­SID.

He ruled that it fell un­der the court’s in­her­ent ju­ris­dic­tion and he could in­ter­pret the CPR to give ef­fect to this coun­try’s oblig­a­tions un­der the IC­SID con­ven­tion.

Jus­tice Seep­er­sad not­ed that he could grant ap­proval with­out the in­put of the Venezue­lan Gov­ern­ment as the IC­SID was au­then­tic and Venezuela un­suc­cess­ful­ly ap­pealed it in Jan­u­ary.

He not­ed that the fact that Venezuela with­drew from the IC­SID Con­ven­tion in 2012 was ir­rel­e­vant as the ar­bi­tra­tion pro­ceed­ings were ini­ti­at­ed while it (Venezuela) was still a sig­na­to­ry.

Jus­tice Seep­er­sad not­ed that Venezuela would be en­ti­tled to claim sov­er­eign im­mu­ni­ty if and when the com­pa­ny seeks to en­force the reg­is­tered judg­ment.

Deal­ing with ser­vice of the reg­is­tra­tion, Jus­tice Seep­er­sad per­mit­ted the com­pa­nies to serve it on the Venezuela Em­bassy in T&T as was al­lowed in the PDVSA case due to pre­vi­ous dif­fi­cul­ties ex­pe­ri­enced in ef­fect­ing the process.

He not­ed that late last year, Venezuela’s Na­tion­al As­sem­bly passed the Si­mon Bo­li­var Act, which dealt with in­ter­na­tion­al sanc­tions ap­plied to that coun­try.

He point­ed out that the terms of the leg­is­la­tion would make ser­vice in Venezuela im­prac­ti­cal or vir­tu­al­ly im­pos­si­ble as a process serv­er would risk crim­i­nal pros­e­cu­tion by seek­ing to com­plete the process.

Cono­coPhillips and its sub­sidiaries brought both ar­bi­tra­tion pro­ceed­ings af­ter the Venezue­lan gov­ern­ment ex­pro­pri­at­ed its ex­tra-heavy crude oil ex­trac­tion fa­cil­i­ties in the Orinoco Oil Belt be­tween 2004 and 2007.

The com­pa­nies claimed that they were un­law­ful­ly dis­pos­sessed and that PDVSA was li­able to par­tial­ly in­dem­ni­fy them against the ac­tions tak­en by the then-gov­ern­ment.

In 2019, the IC­SID up­held its claim and or­dered US$8.5 bil­lion plus in­ter­est. Venezuela was al­so or­dered to re­im­burse the com­pa­ny’s $6.46 mil­lion in le­gal fees and $1.35 mil­lion in oth­er court costs.

In late Jan­u­ary, the IC­SID is­sued a rul­ing re­ject­ing Venezuela’s re­quest to an­nul the award on the ba­sis that the ar­bi­tra­tion pan­el was im­prop­er­ly con­sti­tut­ed, ex­ceed­ed its pow­ers, ex­clud­ed key ev­i­dence and mis­ap­plied the com­pen­sa­tion mech­a­nism.

In its court fil­ings, ob­tained by Guardian Me­dia, the com­pa­nies, which have reg­is­tered the debt in oth­er ju­ris­dic­tions, iden­ti­fied this coun­try’s Drag­on Gas Field project as a po­ten­tial source to ser­vice the debt.

Un­der the project, which has been un­der dis­cus­sion since 2016, T&T’s whol­ly state-owned Na­tion­al Gas Com­pa­ny (NGC) and Dutch en­er­gy gi­ant Shell were al­lowed to de­vel­op the gas field pre­vi­ous­ly held by PDVSA and sup­ply nat­ur­al gas to this coun­try via a pipeline con­nect­ed to the Hi­bis­cus plat­form off the North­west coast of Trinidad.

They not­ed that in Au­gust 2023, Shell and NGC com­mit­ted to re­im­burs­ing PDVSA for all its le­git­i­mate claims aris­ing out of its ear­li­er in­vest­ment in the field, which it (PDVSA) es­ti­mat­ed at ap­prox­i­mate­ly US$1 bil­lion.

They point­ed out that in Jan­u­ary last year, it was re­port­ed that PDVSA grant­ed a 30-year li­cence to NGC and Shell.

How­ev­er, the deal is cur­rent­ly on hold af­ter the US Gov­ern­ment re­voked the Of­fice of For­eign As­sets Con­trol (OFAC) li­cence, which was grant­ed to fa­cil­i­tate the project, in April.

New­ly elect­ed Prime Min­is­ter Kam­la Per­sad-Bisses­sar has stat­ed her gov­ern­ment’s plan to ex­plore oth­er op­por­tu­ni­ties in the en­er­gy sec­tor due to un­cer­tain­ty over the deal.

“The Drag­on gas is dead. We would be fool­ish not to look at oth­er places as well, and in fact, we should have start­ed that search long ago. We should not have put every­thing in­to the Drag­on Gas. That is dead!” Per­sad-Bisses­sar said.

In its ap­pli­ca­tion, the com­pa­nies claimed that the Drag­on Gas deal pre­vent­ed Venezuela from op­pos­ing any move against its T&T as­sets on the ba­sis of sov­er­eign im­mu­ni­ty as it act­ed in a com­mer­cial ca­pac­i­ty when it en­tered in­to it.

“Venezuela was not un­der­tak­ing an act in­volv­ing the ex­er­cise of sov­er­eign pow­er but was in­stead en­gaged in com­mer­cial and mer­can­tile ac­tiv­i­ties with the Claimants, Shell, the NGC and the Gov­ern­ment of T&T,” its lawyers said.

The com­pa­nies were rep­re­sent­ed by An­drew Stafford, KC, Garvin Si­mon­ette, Sophia Vail­loo, Mer­rick Wat­son, and Kamille Mor­gan.