T&T firm sues GUYOIL for $60M over alleged contract breach

Trinidad and Tobago firm Commissiong and Company Limited is suing the Guyana Oil Company (GUYOIL) for US$291,055, which is equivalent to just over GY$60 million for what it says is breach of contract.

Late last year, local attorneys for Commissiong had threatened legal action against GUYOIL for payment of over GY$80 million for materials acquired and work done under the aborted agreement as well as for an estimated loss of profits.

Through their attorney, Anil Nandlall, Commissiong is claiming US$291,000, which it says is owed by GUYOIL for fabrication and erection of two 10,000 US gallon storage tanks at the GUYOIL terminal at Providence.

The claimant company is also seeking damages for breach of contract, general damages and damages in excess of GY$23,542,886. Additionally, it wants punitive damages for breach of contract, court costs and any other order or relief which the court may deem just to grant.

In court documents seen by this newspaper, the claimant said that sometime last year February GUYOIL advertised an invitation to bid to supply, fabricate and erect 10,000 barrel storage tanks and as a result an agent from its company came to Guyana and visited the site.

According to Commissiong, it made enquiries as to whether international and/or foreign bonds would be accepted and GUYOIL assured that it would be, even stating further that the standard bidding document for procurement of works data sheet did not exclude international bonds.

Thereafter the claimant said that it submitted a bid for the contract on February 22nd, 2019 and two months later—on April 25th—it was accepted for the contract price of GY$110,285,913 VAT inclusive.

Commissiong said that the letter also requested that it furnish GUYOIL with a performance security bond for an amount equivalent to GY$3,308,577, which was to be in the form of a bank draft or bank guarantee in favour of GUYOIL or an insurance bond which would be valid until the end of the defects liability period.

Further, the claimant said that the letter stipulated that that, along with furnishing of the performance security for the works would stand concluded.

Pursuant to those stipulations, Commissiong said that it provided to GUYOIL a performance bond to the tune of US$15,857, which the latter accepted on 24th May, 2019 and which saw a written agreement being entered into between the two companies at a cost of GY$110,285,913.

In accordance with the expressed terms of the said agreement, the claimant said it began purchasing materials to fabricate the tanks. After it had already done this, however, Commissiong said that the oil company breached the contract.

The claimant said that by then it had already sent to GUYOIL an invoice with the advanced payment of US$16,542,886 for the fabrication and erection as well as an advanced payment guarantee from its insurance company for a sum not exceeding US$79,268.

It said that a condition of the guarantee was that it would become effective upon receipt of the advance payment.

Commissiong said that in July one of its directors received a call from a GUYOIL official informing that in order for the advance payment to be made, the claimant would be required to pay 20% of the value of the contract.

Commissiong said that its director, however said that this would not be possible, since its profit margin was only 10%.

According to the court documents, the director said that the person who had called on behalf of GUYOIL said that the payment was not for a government official, who is identified in the suit.

The director, Commissiong said, refused to pay what was essentially a “kickback.”

Subsequently, on July 18th, 2019, Commissiong said that its director received another call on behalf of GUYOIL and was informed that the advance payment guarantee which it had previously submitted would be rejected, and that local bonds needed to be submitted.

It is against this backdrop that the claimant has mounted its suit against GUYOIL.

GUYOIL has repeatedly said that the contract 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 contract, rendered the circumstances inconvenient for GUYOIL to further engage in the contract, and entitled it to terminate the contract.