The Tribune

• Offer to pay BPC’s attorneys $100,000

• And narrow Judicial Review for go-ahead

• QC: ‘No brainer’ for all and public interest

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Oil exploration opponents have offered to pay $100,000 to the former Bahamas Petroleum Company’s (BPC) attorneys, and narrow the scope of their Judicial Review, in a bid to remove all legal roadblocks.

Fred Smith QC, the Callender’s & Co partner, in an e-mailed June 21, 2021, proposal seen by Tribune Business, wrote to both the government and now-Challenger Energy Group Plc holding out concessions in a bid to overcome a two-and-a-half month delay blamed on The Bahamas’ Know Your Customer (KYC) regulatory regime.

Mr Smith’s law firm and Graham, Thompson & Company, Challenger Energy’s attorneys, have to-date been unsuccessful in efforts to establish a joint account that will hold the $200,000 “bond” ordered by the Supreme Court.

Justice Petra Hanna-Adderley had previously required Save the Bays and Waterkeepers Bahamas to raise thus sum, as a “security” to cover Challenger’s legal costs, before their Judicial Review challenge could be heard on the substantive merits.

While the activists raised the necessary $200,000 by the Supreme Court’s end-March deadline, the failure to meet the requirement to establish a joint bank account to hold it - even though Callenders and Graham, Thompson have held accounts with the same financial institution for years - has left the legal challenge “stayed” and unable to move forward for two-and-a-half months.

Now, in a bid to “speed up and dramatically streamline” a case whose determination will benefit the Bahamian people, the government and Challenger, Mr Smith and his clients are offering to pay a reduced $100,000 “security” directly to Graham, Thompson & Company rather than continue to fight the bureaucracy and ‘red tape’ associated with establishing a joint account.

He justified the 50 percent reduction on the basis that his environmental activist clients will withdraw their challenge to the licences and permits granted for Challenger’s Perseverance One well, acknowledging that “this ship has already sailed” given that the exploratory drilling ceased in February this year.

Removing this aspect of the case would result in a significant reduction in legal costs for all parties, Mr Smith added, while promising that his clients will focus solely on asking the Supreme Court to determine what permits and approvals are required for future exploratory wells drilled within Bahamian territorial waters.

He told Tribune Business yesterday that a hearing narrowly focused on such issues would benefit Challenger and its shareholders, as well as aid its search for a joint venture partner to share the financial and technical risk associated with a second Bahamian well, by generating absolute certainty on what permits and approvals are required for drilling to begin.

“What’s the regulatory construct and framework here? It’s in everybody’s interest to know,” Mr Smith said last night. It’s in the Bahamian public’s interest to know what the regulatory framework is rather than have Judicial Review after Judicial Review after Judicial Review, wasting everybody’s time, money and court resources. This is a no brainer.”

In his letter to Challenger’s lead attorney, Clare Montgomery QC, as well as Graham, Thompson & Company and the Government, Mr Smith wrote: “In view..... of the KYC struggle both Graham, Thompson and Company and Callenders have faced in trying to set up the security for costs, we write on behalf our clients to make the following proposal with a view to speeding up and dramatically streamlining the hearing and resolution of the Judicial Review proceedings for the benefit of the Bahamian public.”

Challenger’s now-completed Perseverance One well failed to discover commercial oil quantities some 90 miles west of Andros, and Mr Smith said this backdrop - as well as “the ongoing challenges” in establishing the joint bank account - meant a new initiative was required to break the three month-plus “stay” that has halted his clients’ Judicial Review since March 1.

To do this, Save the Bays and Waterkeepers Bahamas will pay $100,000 directly to Graham, Thompson & Co as “security” for Challenger’s legal costs. In return, the oil explorer will “consent” to the activists’ bid to lift the stay so the matter can be heard “in the interests of the Bahamian public”.

“The rationale for varying the ‘security for costs’ is that the proposed drastic reduction in the scope of the Judicial Review ought to have a significant impact on costs and therefore on the level of security required,” Mr Smith said.

And he added that his clients were also prepared to abandon their challenge to the licences and environmental approvals granted in 2020 to then-BPC for the Perseverance One well given that it had long been completed.

They would instead narrow their action to focus on the permits and approvals that Challenger will require should it be successful in obtaining a three-year extension to its licences from the Government, which would come with an obligation to drill another exploratory well in Bahamian waters during that period. The licence applications have already been submitted to the Minnis administration, which is determining if to approve them.

Mr Smith said his clients will focus on whether future wells require site plan approval under the Planning and Subdivisions Act; an excavation permit under the Conservation and Protection of the Physical Landscape of The Bahamas Act; Environmental Planning and Protection Act approvals; and compliance with treaties controlling and prohibiting pollution at sea (MARPOL).

“Save the Bays and Waterkeepers Bahamas believe that, under the circumstances, with the ongoing struggle to set up the security for costs account, and with the Perseverance One ship having already sailed, so to speak, all parties, and the Bahamian public, would benefit from such a streamlined approach,” the well-known QC wrote. 

He argued that this will “dramatically reduce the costs of the Judicial Review proceedings, and save a great deal of current and future judicial time by settling, via the most direct route possible, the regulatory landscape on an issue of crucial national public importance to The Bahamas”.

Mr Smith also asserted that it will “clarify for statutory regulators, the Bahamian public and BPC (Challenger) or any other oil exploration company the correct processes under law for any future applications or renewals of this nature, and militate against future Judicial Reviews and the prospect of having to litigate the same issues yet again”.

Suggesting that the Judicial Review’s outcome is “in the national public interest”, he said: “Likewise, BPC’s shareholders would no doubt gain comfort from having the process settled in law should BPC  intend to seek to renew any licences; drill under such licences; or apply for additional future licenses or Environmental Authorisation, Environmental Clearance or dredging permits.

“The primary objective of Save the Bays and Waterkeepers Bahamas has been from the outset to establish the correct regulatory process for the granting of oil exploration licenses and approvals under Bahamian law. We believe this proposal achieves this aim by the most expeditious, fair and reasonable route available under the circumstances, to the mutual benefit of all parties involved and the Bahamian public.”