In 2024, Guyana’s High Court registered/recognised two foreign awards in court actions brought by ConocoPhillips Gulf of Paria against Venezuela. The company seeks access to money that Guyana owes Venezuela to satisfy a foreign arbitral award.
The application was heard by Justice Gino Persaud, who said that “the general approach of the courts to such awards is pro-enforcement” and that the Applicant is entitled to have the arbitral award entered in its favour and enforced in Guyana.
Persaud also said that Guyana is now a “premier destination for investment as the world’s fastest-growing economy,” adding, “It would not augur well for our image and reputation in the eyes of international corporate titans who may be willing to do business here that international arbitral awards are problematic to recognise, register and enforce in Guyana or it is not worth the effort or that the burdens outweigh the benefits.”
However, the Government of Guyana (GoG) states that it does not oppose enforcement in principle, but rather for public policy reasons. Government officials have said that the award should not be recognised in the current climate, where Venezuela remains hostile toward Guyana due to its unlawful claim to Essequibo.
Specifically, the GoG has said that: i) Venezuela claims a large portion of Guyana’s territory; ii) Venezuela’s claim has been put before the International Court of Justice for final determination; iii) Venezuela has a habit of belligerence against Guyana, often perceiving even the most innocuous words or actions as threats; and iv) both parties have promised to conduct themselves in a manner that does not escalate tensions, so the court should refrain making the order recognising the arbitral awards, at least at this time.
The GoG’s initial appeal was dismissed on procedural grounds, but an attempt is being made to revive it.
Actions taken by Venezuela against Guyana to date include: a referendum to “take” Essequibo from Guyana; a proposal to issue Venezuelan ID cards to Guyanese residents in Essequibo; and interference with petroleum exploration and production activities in Guyana’s maritime zones.
Venezuela’s conduct has been so pervasive that the ICJ has issued provisional measures against it, ordering it not to interfere with Guyana’s control of Essequibo. Venezuela has ignored this order, renaming Essequibo “Guayana Esequiba,” and plans to hold elections to elect a governor in Essequibo. These actions have prompted Guyana to approach the ICJ again to prevent these elections.
Notwithstanding the GoG’s posture toward the action, this decision may help the GoG realise its expressed ambition of making Guyana an arbitration hub.
History of the Case
The decisions were handed down in the case of ConocoPhillips Gulf of Paria v. Corporacion Venezolana Del Petróleo S.A and Petróleos de Venezuela S.A 2023-HC-DEM-CIV-CD-FDA-814; Phillips Petroleum Company Venezuela Limited and ConocoPhillips Gulf of Paria B.V. B. Petróleos de Venezuela S.A, Corpoguanipa, S.A, and PDVSA Petroleo S.A. 2023-HC-DEM-CIV-CD-FDA-816 (unreported).
ConocoPhillips Gulf of Paria (the Applicant) is incorporated in the Netherlands.
Corporacion Venezolana Del Petróleo S.A (CVP) is a Venezuelan company, and a subsidiary of, and wholly owned by Petróleos de Venezuela S.A (PDVSA), Venezuela’s national oil company.
In 2003, the Applicant and other investors granted CVP a loan to purchase a 35% stake in a subsea oil field in the Gulf of Paria offshore Venezuela: The Corocoro Project. This project was underpinned by three contracts, including arbitration clauses providing for final and binding arbitration under the rules of the International Chamber of Commerce (the ICC), with New York as the seat.
Neither CVP nor PDVSA repaid the loan, and eventually, the Corocoro Project was nationalised by the Government of Venezuela and given to CVP and PDVSA to operate. No compensation was paid to the Applicant.
The Applicant submitted a request for arbitration in December 2016, and in August 2019, the tribunal awarded the Applicant US$33.7 million plus interest from 22nd October 2002 until the payment was made, in addition to 1%. The tribunal also ordered the Applicant to pay US$2,500,000 in legal fees to CVP and PDVSA, while CVP and PDVSA were to pay the Applicant approximately US$242,000 related to the costs of arbitration.
The total amount owed to the Applicant, published to the parties in July 2019, was US$54.5 million (interest included).
The seat of the arbitration was in New York, and since the United States is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention), the Award is capable of recognition and enforcement at common law in Guyana, and under section 28 of the now repealed Arbitration Act, Cap 7:03, Laws of Guyana (the Repealed AA).
Importantly, though the repealed AA has been replaced by the Arbitration Act 2024 (Act 6 of 2024) the provision under the Repealed AA was relevant to those proceedings since that was the law at the time the proceedings were filed.
Fearing that CVP and PDVSA did not intend to honour the award, the Applicant filed proceedings in the High Court of Guyana asking for Orders that CVP and PDVSA pay US$54.6 million (which includes the award of US$33.7 million plus US$19.1 million constituting post-award interest as of November 2022) from funds it is owed by Guyana.
The Applicant told the court that it believes the Guyana Energy Agency (GEA) owes PDVSA at least US$104 million, which it argued can be used to enforce the arbitral award granted in its favour. The Applicant said that in 2019, Guyana’s Minister of Finance confirmed that the GoG owed Venezuela at least US$114 million as of December 2018 under the PetroCaribe programme, although it lacked additional specifics.
The Applicant also said that it was aware that due to US sanctions, the GoG set up an escrow account at the Bank for International Settlements into which it makes monthly payments toward servicing its debts to PDVSA. This account allegedly held US$25.6 million as of December 2021.
Though the GoG was not initially part of these proceedings, Justice Gino Persaud ordered that the proceedings be served on the Attorney General, whose office asked the Court not to recognise and register the award on public policy grounds.
As stated before, though the State opposed recognising and registering the Applicant’s award on public policy grounds, this decision nonetheless contributes positively to the GoG’s ambitions to make Guyana an arbitration hub.
In a 2021 Arbitration Survey Report by the Queen Mary University of London, Respondents said that greater court support for arbitration (56%), increased impartiality in the local legal system (54%), better judicial enforcement of arbitration agreements and awards (47%), and the ability of courts to deal with arbitration-related matters remotely (28%) could convince them to view unpopular seats, such as Guyana, in a more favourable light.
With the ConocoPhillips matter managed and determined via Zoom, Guyana’s High Court satisfies all the above-mentioned conditions. However, this will not get the job done. Consistency is key, and Guyana’s judiciary will likely remain under scrutiny as investors seek to ascertain a trend regarding these matters.
