Have Kenny, Grynberg settled dispute?

Just over a year ago, on May 2, 2012—following my televised related announcement the previous evening—the prime minister’s press secretary officially acknowledged in a press release inexplicably backdated April 20, 2012 (yes, you read that right!) the following: “The company owned by Jack Grynberg has instituted arbitration proceedings against the government of Saint Lucia in respect of the exploration license which his company was granted several years ago to undertake exploration for oil over a specified area of water offshore of the coast of Saint Lucia. RSM Production Corporation claims the company’s case against the government is a simple breach of contract case.”

It seemed the message was calculatedly vague: “several years . . . “—no word concerning the licensing authority . . . no specifics about the acreage to be explored.

Moreover: “The corporation bases its case on two grounds. Firstly, notwithstanding two previous extensions
by the former SLP administration to continue exploration, it could not complete its exploration because of the failure to resolve boundary disputes between Saint Lucia and neighboring states. This failure, says the corporation constitutes grounds of force majeure.”

It was the first time Saint Lucians heard from the prime minister’s office directly about “two previous extensions” of a secret agreement that came to light some nine years after it had been established—and then through no effort of the government that had entered into it. Indeed, when an opposition MP hinted at the agreement during his budget presentation there was no reaction from the attendant signatory.

The May 2 release promised “more will be said of this force majeure in due course. (The nation still awaits fulfillment.) Additionally that “the corporation claims that the former prime minister did sign an extension to the agreement which he subsequently retrieved.”

The released continued: “The second ground is implicitly premised on the fact that the agreement was revived by former prime minister King’s letter which was recalled but confirmed by Mr. d’Auvergne. These matters were publicly discussed prior to the 2011 general elections.” A former minister in King’s government, d’Auvergne was now associated with the campaigning opposition SLP.

The release carefully neglected to mention that attached to Grynberg’s “simple breach of contract case” was a damages claim for US$500 million.

The following is taken from Grynberg’s Statement of Claim: “Given the confluence of boundary disputes and/or uncertainties, RSM and Saint Lucia both jointly concluded that there was no practical way for RSM to commence exploration activities in a manner consistent with the agreement. Indeed Saint Lucia did not want RSM to perform, as such activities threatened international hostilities.

“Accordingly, on 8 September 2000 the parties amended the agreement to, inter alia, expressly acknowledge and agree that the agreement is in a force majeure situation as to the entire agreement area due to adverse claims and disputes relating to the government’s ownership or control over the petroleum in portions of the agreement area. The parties confirmed that the force majeure excused performance or fulfillment of all of such obligations by the period required to establish beyond doubt the government’s ownership of, and control over, all petroleum in the entire area described in Annex A to the agreement and depicted on Annex B.”

Additionally: “In December of 2006, Saint Lucia’s government changed and the Honorable Kenny D. Anthony, the prime minister in which RSM had negotiated the prior agreements, was replaced by prime minister John Compton. In February of 2007 RSM met with prime minister Compton and briefed him on the status of the project, including the force majeure status and the related boundary issues. However, prime minister Compton passed away later that year.

“By November of 2007 Stephenson King had ascended to become prime minister of Grenada [sic]. The same month prime minister King signed an extension of the agreement. On November 7, 2007 the prime minister’s secretary asked RSM’s representative Earl Huntley to collect the signed extension and handed Mr. Huntley an envelope with the document which extended the agreement. But prime minister King did sign the agreement which is reflected at Exhibit D.

“Mr. Huntley left the prime minister’s office with the version of Exhibit D signed by the prime minister King with the intention of using Federal Express to send the document to RSM. However, as Mr. Huntley was on his way to Federal Express, he received a call from prime minister King who wanted to further check the extension to the agreement. Mr. Huntley did not make a copy of the signed extension and Saint Lucia never returned the document.

“Former prime minister King’s planning minister Ausbert d’Auverge has publicly confirmed that prime minister
King did, in fact, sign a renewal of the agreement in 2007. Nevertheless, by letter dated April 10, 2008, Anthony Severin, who was the permanent secretary of the Ministry of External Affairs, took the position that the agreement had expired. A copy of his letter is attached hereto as Exhibit E. Saint Lucia has subsequently, reportedly taken steps to put the agreement area which RSM has the right to explore out to competitive bid. Subsequent efforts by RSM to negotiate a resolution of this dispute have not been successful.”

Grynberg lists as Causes for Action: “RSM and Saint Lucia are parties to an on-going, enforceable contract. The unamended March 2000 agreement called for a four-year exploration period but has been in an agreed-upon force majeure status since September 2000. The agreement has also been expressly extended twice, once in 2004 and again in 2007. But even without those extensions, the force majeure status continues, and under the express terms of the agreement, RSM has the opportunity to explore Saint Lucia’s waters after the conditions of
force majeure have been removed . . . “by claiming the agreement has expired, and threatening to place exploration rights in the subject area out to competitive bid, Saint Lucia has breached the agreement.”

RSM further claims it “has undertaken very significant efforts to resolve this dispute amicably” ever since Saint Lucia took the position that the agreement had expired. Moreover, that these efforts were initially directed at prime minister Stephenson King and his government, to no avail. Also with Kenny Anthony who had negotiated the original agreement, when he resumed as prime minister.

According to Grynberg’s claim: RSM sought, through communications with identified individuals in the Kenny Anthony government “to obtain either a prompt substantive meeting to discuss any differences between RSM and Saint Lucia or, if such a meeting could not be arranged promptly, RSM proposed a tolling agreement which would have allowed the parties to negotiate for several months without having to worry about any statutes of
limitations expiring. None of these efforts solicited any substantive response from Saint Lucia.”

In its press release issued May 2 but dated April 20, 2012 the government assured Saint Lucians it would “vigorously dispute and contest the proceedings,” and that the attorney general was in the process of assessing the claim and securing attorneys to represent the interests of Saint Lucia. There has been no further official word on the matter.

However, as we reported last year, the government has retained the services of the famous British law firm Freshfields Bruckhaus Deringer. Meanwhile, RSM’s lawyers have offered the Kenny Anthony government yet another escape route out possible financial disaster. A Fed-Exed letter dated May 17, 2013 addresses the prime minister thus:

“Dear Dr. Anthony: In an effort to resolve the pending ICSID dispute, we are offering the following: Upon your acceptance of our payments sent to the government of Saint Lucia for years 2007 through 2012 totaling $156,534, which we will wire to the government of Saint Lucia upon notification of wire instructions, plus our payment of $26,089 sent March 25, 2013, for a total of $182,623, and resolution of the boundary between Martinique and Saint Lucia, which I am more than happy to mediate, we will initiate the exploration, and we will dismiss the ICSID proceedings.

“In exchange Saint Lucia agrees to affirm that the parties’ March 2000 agreement continues to be in full force and effect, and has been so since March 2000. You also agree that the agreement has been, and continues to be, in a force majeure due to the aforementioned boundary dispute.”

The agreement covers 8.73 million acres!

Nearly four months later, the prime minister has repeatedly refused to divulge details of the March 2000 agreement with RSM and where the matter now stands. There has been no announcement of the most recent communication from Grynberg. In any event, this last missive offers further proof that the Stephenson King administration neither honored the arrangements nor accepted lease payments from RSM. It remains conjectural what happened to the March 25 payment referred to in Grynberg’s latest missive to Kenny Anthony!

According to Earl Huntley (referred to in Jack Grynberg’s Statement of Claim as “my representative”) having sealed the Grynberg deal in 2000, prime minister Kenny Anthony had instructed him to keep all related documents secret—even from members of his own Cabinet.

The question, whether the prime minister illegally issued Grynberg a license to explore the Saint Lucia seabed—which under the Saint Lucia Minerals Act only the governor general is authorized to do remains unanswered—for now!