GRYNBERG GETS GOING! Tribunal denies Kenny petition

For how much longer will the justice minister, Philip LaCorbiniere (l), keep St Lucians in the dark on the matter of Grynberg vs The Government of St Lucia? Also pictured, Jack Grynberg, center, and Prime Minister Kenny Anthony.

For how much longer will the justice minister, Philip LaCorbiniere (l), keep St Lucians in the dark on the matter of Grynberg vs The Government of St Lucia? Also pictured, Jack Grynberg, center, and Prime Minister Kenny Anthony.

Speaker Peter Foster may have managed to keep Grynberg hidden in plain sight behind the padlocked lips of the wimps in opposition but that never meant the issue was near dead, let alone buried.

It turns out that the Kenny Anthony government, whose altogether entrancing mantra while campaigning for office in 1997 had been “transparency and accountability,” continues to keep from the concerned public important developments relating to the secret deal it had first struck with Jack Grynberg’s RSM Production Corporation thirteen years ago.

As is by now common knowledge, almost three years after taking office the prime minister had handed the controversial Denver, Colorado oilman Jack Grynberg exclusive exploration rights to millions of acres of the Saint Lucia seabed—without a related word to parliament. The only other party privy to the surreptitious transaction was the finger-in-every-pie also known as Earl Huntley.

He it was who had privately headhunted and imported the American for the all-important purpose of confirming his voodoo conviction that the goo that had stuck to his foot while swimming in the sea at Dauphin was palpable evidence of rich oil deposits in the vicinity. His suspicions validated, Huntley then introduced his new friend to the nation’s prime minister.

Soon afterward their deal was struck. Not even the prime minister’s Cabinet, let alone parliament, had the smallest soupçon about the meeting, or that the prime minister and Jack Grynberg had sealed an agreement on 29 March 2000, with Huntley as the sole witness.

At the time Grynberg was already busily engaged in the first stages of highly costly litigation against the Grenada government for breach of contract centered on a similar deal. If the then public servant and part-time oil diviner Huntley knew the details of Grynberg’s suit against the Grenada government, there is no evidence he shared such information with Saint Lucia’s prime minister.  In any event, the prime minister had never been famous for carrying out due diligence—defined as “a measure of prudence, activity, or assiduity, as is properly to be expected from, and ordinarily exercised by a reasonable and prudent person under the particular circumstances.”

In regular parlance, due diligence means making sure you get what you think you are paying for, or getting into.

Some nine years after the Grynberg deal came to light, Huntley had published an article in a local newspaper, wherein he claimed the prime minister had made him the secret repository of all documents related to Project Sea at Dauphin.

It turns out that not even the governor general, who alone is authorized to issue (independent of the usual “on the advice of the prime minister” caveat) exploration licenses in Saint Lucia, had any idea of the arrangements between the oilman from Colorado and the island’s prime minister.

No matter, while there remains much to be explained, it is no longer a state secret that the deal had soured a mere six months after it was signed, with Grynberg invoking the agreement’s force majeure clause.

Finally, on April 2, 2012, his company had filed with the International Center for Settlement of Investment Disputes a request for arbitration against the Saint Lucia government.   On April 23, 2012 the ICSID’s secretary-general registered the request, notified the involved parties and invited them to proceed to constitute an arbitral tribunal as soon as possible.

On August 6, 2013, the secretary-general further notified the parties that all three arbitrators—Prof. Siegfried H. Elsing (president), a national of the Federal Republic of Germany; Judge Edward Nottingham, an American appointed by the claimant RSM; and Dr. Gavin Griffith QC, an Australian, appointed by the Saint Lucia government—had accepted their appointments.

Ms. Aurelia Antonietti, an ICSID team leader and legal counsel, was designated to serve as secretary of the Tribunal.

One month later a small army of foreign lawyers filed on behalf of the government of Saint Lucia a request for “provisional measures.” On September 20, 2013 RSM filed its opposition to that request. The parties having submitted their replies and rejoinders on provisional measures, the tribunal held its first session and hearing on provisional measures with the parties in New York City, on October 4.

All of the above had transpired without a word from the prime minister’s press secretary or from his far less attractive other mouthpiece on legal matters. Doubtless the latter was too busy formulating an apology for Timothy Poleon to deliver to his RCI listeners three times a day, having determined that by reading on-air an anonymous internet item relating to matters concerning Saint Lucia, the newscaster had demeaned the island’s Justice Minister in both his personal and professional capacities.

As for the attorney general, who knows?

Parliament was none the wiser when it came to Grynberg. Certainly MPs were as much in the dark as were the people whose taxes were paying for the services of some the world’s most expensive lawyers.

The back story from the perspective of the ICSID: RSM bases its claim on the 2000 agreement, pursuant to which the Saint Lucia government granted RSM an “exclusive oil exploration license in an area off the coast of Saint Lucia, initially for a period of four years. Subsequently boundary disputes developed, affecting the exploration area . . . which prevented RSM from initiating exploration.”

On September 8, 2000, the parties “amended their agreement to the effect that it was stipulated the agreement was in a force majeure situation due to the boundary issues and that this situation excused performance of RSM’s obligations under the agreement.

“Additionally, the parties extended the duration of the agreement and the period allowed for performance by the period necessary to solve the boundary issues. In March 2004, the parties acknowledged the continuance of the boundary issues and agreed on an extension of the agreement for another three years.”

References to the change of government in 2011 make interesting reading: “After a change of government in 2006, and after a further replacement of Saint Lucia’s prime minister in 2007, a representative of RSM was asked to collect an agreement signed by the then prime minister of Saint Lucia, which extended the agreement by an additional three years . . . but after he had collected the envelope with the agreement signed by the prime minister he was called and asked to come back in order to allow the prime minister to further check the extension. RSM asserts that the signed copy was not returned.”

It can hardly be news at this time that an important part of the current government’s 2011 reelection campaign centered on a version of the last cited tale, as told by Earl Huntley and Ausbert d’Auvergne.

The day’s prime minister Stephenson King vehemently denied he had ever entered into an agreement with RSM, let alone extended it, but truth be told, few were ready to believe “de lyin’ king.”

Actually, the opposite was true: soon after replacing John Compton as prime minister in 2007, King had notified Jack Grynberg of his government’s intention to open the seabed to bidders, on the basis they did not recognize the 2000 agreement between Kenny Anthony’s government and RSM.

King proffered as proof of his truth correspondence between himself and the colorful Colorado oilman, to no avail. With elections in the air, all ears and eyes had been retooled to hear only and see what was convenient. And of the course the SLP had always been better at tuning the public sensibilities!
Neither Huntley nor d’Auvergne has ever backed up their contrary claims with evidence. Indeed, in 2011 Huntley acknowledged he had not seen the content of the sealed envelope he claimed to have collected from a government department. Still he and d’Auvergne had proved, with more baggage than a cargo train, more credible at election time than “de lyin’ King.”

According to ICSID, in its request for provisional measures, the Saint Lucia government sought two orders. First, “a provisional measure requiring RSM to post security for costs in the form of an irrevocable bank guarantee for US$750,000.”

Secondly: “An order requiring RSM to pay all costs advances during the pendency of this proceedings,” pursuant to ICSID Administrative and Financial Regulations.

Following arguments, for and against from the representatives of both parties, the Tribunal noted: “Two conclusions emerge from the provisions of Article 14 and Rule 28. First the Tribunal has the explicit and undoubted authority to order that advance payments be allocated in a ratio which varies from the one-half ratio stated in Article 14. Second, because the Convention, Regulations and Arbitration Rules are silent concerning what matters the Tribunal must consider in exercising that authority, the Tribunal must necessarily use its discretion and judgment in determining the allocation.”

Moreover: “The parties have not cited any authorities articulating the standards which should inform a Tribunal’s exercise of its discretion to order that advance payments be allocated in a ratio which varies from the one-half ratio stated in Article 14. The Tribunal is satisfied that Article 14 embodies a presumption that such payments should be allocated equally.

“The corollary is that any variance from this presumption must be supported by a record showing good cause for the variance . . .  Allocation of advances is largely an administrative mechanism designed to secure and pay ongoing expenses of the proceedings themselves. Both Regulation 14 and Rule 28 are clear that, whatever interim allocation might be ordered, that allocation remains subject to final adjustment under Article 6 (2) of the Convention, as part of the Tribunal’s final award.”

The ghost of RSM’s notorious relationship with Grenada haunted the proceedings: “Although the respondent [Saint Lucia] spends much time discussing prior litigation involving the Claimant and its chief executive officer, the proceedings which cause concern to the Tribunal all arose from the Claimant’s investment disputes with Respondent’s neighbor Grenada . . .

“On September 17, 2009, ICSID invited RSM to make an advance payment of US$150,000 to enable it to meet the direct costs of the proceedings in the next three to six months. RSM made an initial payment of US$118,105. The remaining was not paid until January 29, 2010, over four months after ICSID made the request.”

RSM had also been tardy in coughing up “significant administrative expenses and committee member fees in 2009.” Some payments were not made, with RSM objecting on the ground that they were “unreasonable.”

“On January 29, 2010, the outstanding amount of US$31, 895 was finally wired to ICSID. No part of the additional US$300,000 was paid by RSM as requested.”

The Tribunal drew “several inferences from this chronological recitation of RSM’s conduct in the Annulment Proceeding” (involving Grenada), according to the ICSID document.

“First, RSM was dilatory in meeting the initial request for advance payment which it was obliged to make under Regulation 14. Of the US$150,000 requested, US$31,895 was not paid until four months after request was made.

“Second, RSM never complied with the additional call that it pays US$300,000. It did not even pay the US$100,000 that it said it was prepared to pay.  Third, because of RSM’s failure to pay advances as requested, the committee discontinued the Annulment Proceeding. Fourth, because of RSM’s refusal to meet its regulatory obligations by paying requested advances, ICSID found it could not even meet actual costs incurred in the Annulment Proceeding. It asked RSM to advance $35,000 to allow recovery of costs actually incurred before the discontinuance. RSM did not do so. Instead Grenada stepped into pay ICSID $31,424.74 to cover these outstanding fees and expenses. No part of this had been recovered.”

Citing several other reasons, the Tribunal ruled as follows: “Respondent’s request for an order requiring Claimant RSM to pay all costs advances during the pendency of this proceeding, pursuant to ICSID Administrative and Financial Regulation 14(3)(d) and Rule 28(1) (a), is granted. Unless, and until otherwise ordered by the Tribunal, Claimant RSM will pay all costs advances heretofore or hereafter requested by the ICSID. It shall also refund Saint Lucia the US$100,000 heretofore advance by Respondent.

Saint Lucia’s request for an order requiring RSM to post security for costs in the form of an irrevocable bank guarantee for US$750,000 was adjourned sine die “for further consideration by the Tribunal upon notice to the parties before end of May 2014, or upon earlier application by either party. The decision regarding costs of Respondent’s application remains reserved until a later stage of these proceedings.”

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