T&T company to challenge GUYOIL’s termination of contracts
Commissiong and Company Limited of Trinidad plans to take legal action against the Guyana Oil Company (GUYOIL) for alleged wrongful termination of three contracts.
On Wednesday, Stabroek News reported that GUYOIL terminated three contracts to which the company was the other party, citing alleged breaches by the company of contractual obligations to provide a guarantee or bond from a local bank.
Commissiong and Company Limited had participated in a tender process which saw it securing contracts for the: (1) ‘Supply and Delivery of one (1) Light Truck at Providence Terminal’; (2) ‘Supply and Delivery of one (1) Rigid Tank Wagon (RTW) at Providence:’ and the (3) ‘Supply, Fabrication, and Erection of two (2) 10,000 US Gallons Storage Tanks’. The three contracts are, together, said to be valued at approximately $169 million.
Nirmala Rambharat, a Director for Commissiong and Company Limited, told Stabroek News yesterday from Trinidad that GUYOIL never, orally or in any of the contracts, indicated that the guarantee or bond needed to be sourced from a bank in Guyana. Rambharat argued that the allegation of breach of contract is therefore false, and is tarnishing the name of her company.
Stabroek News noted that terms of the contract between GUYOIL and the company require the guarantee or bond to be sourced from a bank which is acceptable to GUYOIL, ultimately giving GUYOIL the final say in the matter, and latitude to make demands as to where the guarantee or bond is to be sourced from.
Rambharat explained that her company had successfully bid for the contract, and that in addition to providing the bid-securing bond, and advanced performance bond required, she travelled to Guyana to sign the requisite contracts. She said that the documentation submitted by the company left no doubt that it was registered in Trinidad and Tobago alone, having no registered operations in Guyana. GUYOIL, she said, was fully aware of this, and proceeded with the signing of the contracts.
However, she said that she subsequently received a call from a GUYOIL official, who asked that Commissiong and Company Limited provide a guarantee or bond from a local bank.
By a letter dated September 10, 2019, Ilissa McTaire-Jones, GUYOIL’s Corporate Secretary and Legal Advisor, wrote Rennie Gosine, attorney-at-law for the company, informing him that the company was required to submit local bonds with respect to the contracts.
Gosine, in a letter dated September 11, 2019, responded to say that the company was incorporated in Trinidad and Tobago, and that, consequently, all of its assets are based in that country. Gosine further noted that “Bid Security bonds which were issued previously did not require any security,” and said that that advanced payment bonds require collateral and would not be issued to Commissiong and Company Limited in Guyana given that the company does not hold assets or a bank account in Guyana.”
Gosine said that in light of those realities, and the fact that GUYOIL was fully aware of the asset base of the company at the time the contract was signed, the company should not now be made to provide advanced payment bonds in Guyana.
Rambharat said that after signing the contract, and in light of the fact that no opposition was raised, her company incurred expenses in preparation to carry out its obligations under the contracts and that GUYOIL’s actions risk costing her the investment made toward performance of the contracts, and the revenue she would have obtained had the contract not been terminated.
On October 7th, 2019, GUYOIL terminated the contract with Commissioning and Company Limited for its alleged failure to provide the bonds.
In a letter addressed to Rambharat, GUYOIL asserted that the company had “failed to perform its obligation as per clause SCC 61”, which requires the company to submit a “…simple receipt and bank guarantee for the equivalent amount in the form provided in the bid documents or another form acceptable to the Purchaser.”
These failures, GUYOIL contended, constituted contraventions of clause 10.1 of the first two contracts.
GUYOIL also said that clause 55.1 required the company to provide “an Unconditional Bank Guarantee in a form and by a bank acceptable to the Employer in amounts equal to the advance payment”, and the failure, in keeping with clause 59.4 of the third contract, rendered the circumstances inconvenient for GUYOIL to further engage in the contract, and entitled it to terminate the contract.