DRC hit by oil explorer’s bid to enforce $619 million award

0
299

A SOUTH AFRICAN oil-exploration company has turned to US courts in a bid to enforce a $619 million arbitration award against the Democratic Republic of Congo.

DIG Oil Ltd.’s petition to a federal court in Washington is the latest episode in a 13-year dispute over concessions in the central African nation, which may hold as much as 6 percent of the continent’s crude reserves. The firm is seeking to compel the state to obey a ruling made in late 2018 by an arbitration court in France that found Congo’s government failed to honour two production-sharing agreements.

The Johannesburg-based company filed its case with the District Court for the District of Columbia on April 30 and Congo’s government has 60 days to respond. Congo’s foreign reserves were only $607 million as of April 24 before the IMF loaned the country $363 million for its Covid-19 response, according to the central bank.

The Paris-based International Court of Arbitration decided in November 2018 that Congo ‘failed to execute its obligations’ and should pay DIG Oil more than $617.4 million to cover future economic losses and already incurred expenditure. An appeal court dismissed Congo’s bid to overturn the award in January, according to the company’s filings to the US court. With additional costs, the full amount now owed is $619.3 million plus interest, DIG Oil said.

Congolese Justice Minister Celestin Tunda didn’t respond to requests for comment. The government has previously argued that both the arbitration tribunal and the appeal court refused to take into account the discretionary powers of the nation’s president under Congolese law.

Debt Relief

The petition comes as African countries struggle to deal with the economic slowdown caused by the coronavirus pandemic and as calls for debt relief intensify. The IMF last month cancelled about $20 million in debt payments that Congo was due to make over six months and is considering extending the waiver for up to two years. The fund has provided more than $730 million to the nation since December through two emergency loans.

DIG Oil is entitled to an order from the US court confirming the 2018 decision under the so-called New York Convention, an international treaty that requires contracting states to recognise and enforce foreign arbitration awards, the company said in its filings.

Congo is one of more than 160 nations to have signed up to the convention. DIG Oil Executive Director Andrea Brown and the company’s law firm, Gibson, Dunn & Crutcher LLP, declined to comment.

DIG Oil signed a contract for three blocks in central Congo in December 2007 and was part of a consortium that secured another permit in the east of the country a month later. Former President Joseph Kabila withheld his approval from both agreements, while one of the licenses was re-allocated in 2010.

Former opposition leader Felix Tshisekedi succeeded Kabila in January 2019, inheriting the potentially costly quarrel with DIG Oil. A month before departing power, Kabila signed an ordinance approving DIG Oil’s remaining contract – even though the ICA had already reached its decision.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here