Agency sends termination notice to Frontera
29 April, 2020
On April 17, 2020 final decision was issued by the International Arbitration Tribunal regarding disputed issues between the parties, on the one hand, JSC “Georgian Oil and Gas Corporation” and LEPL “State Agency of Oil and Gas”, on the other hand, “Frontera Resources Georgia Corporation ” and “Frontera US LLC” upon non-fulfillment of contractual obligations of production sharing agreement and refinery study dated 25 June 1997.
The decision of arising dispute was made only after the numerous attempts from LEPL “State Agency of Oil and Gas” along with JSC “Georgian Oil and Gas Corporation” to resolve it, failed. “Frontera Resources Georgia Corporation” has repeatedly refused a proposal to settle the dispute via mediation.
The Arbitration Tribunal supported interpretation of the norms of the contract by JSC “Georgian Oil and Gas Corporation” and LEPL “State Agency of Oil and Gas” and satisfied a vast majority of their claims. Along with other issues, The Arbitration Tribunal ruled that “Frontera Resources Georgia Corporation” committed material breach of the contract by refusing to return the exploration area (99% of the entire licensed area) to the State, which gives the State right to terminate the contract.
According to the decision,”Frontera Resources Georgia Corporation” and “Frontera Resources US LLC” are obligated to reimburse the amount of the mineral usage tax paid by JSC “Georgian Oil and Gas Corporation” as well as the costs incurred by the claimants with regard to the arbitration proceedings.The Arbitration Tribunal also upheld an appeal against the claims of “Frontera Resources Georgia Corporation ” and “Frontera US LLC” and terminated the arbitration proceedings upon the issue. The decision of The Arbitration Tribunal is final.
Taking into consideration the content of The Arbitration Tribunal award and other circumstances, 27 April 2020, LEPL “State Agency of Oil and Gas” has issued contract termination notice to “Frontera Resources Georgia Corporation”. The contract will be automatically terminated upon expiration of the term specified in it (27 July 2020).
LEPL “State Agency of Oil and Gas” and JSC “Georgian Oil and Gas Corporation” completely deny false and incorrect assessments released in a statement by some of mass media outlets issued on behalf of “Frontera Resources Georgia Corporation” and “Frontera US LLC” on 29 April 2020. Georgian side urges the company to willingly carry out the decision of the Arbitration Tribunal the earliest possible time, including reimbursing fundings belonging to Georgian side (approximately $6M).
Additionally, worth noting that according to the rules of Arbitration, the final award can be given publicity with the mutual consent of the parties. LEPL “State Agency of Oil and Gas” as well as JSC “Georgian Oil and Gas Corporation” agree to give publicity to the final award and have applied to “Frontera Resources Georgia Corporation” upon consent, but have not received response so far.
The decision of arising dispute was made only after the numerous attempts from LEPL “State Agency of Oil and Gas” along with JSC “Georgian Oil and Gas Corporation” to resolve it, failed. “Frontera Resources Georgia Corporation” has repeatedly refused a proposal to settle the dispute via mediation.
The Arbitration Tribunal supported interpretation of the norms of the contract by JSC “Georgian Oil and Gas Corporation” and LEPL “State Agency of Oil and Gas” and satisfied a vast majority of their claims. Along with other issues, The Arbitration Tribunal ruled that “Frontera Resources Georgia Corporation” committed material breach of the contract by refusing to return the exploration area (99% of the entire licensed area) to the State, which gives the State right to terminate the contract.
According to the decision,”Frontera Resources Georgia Corporation” and “Frontera Resources US LLC” are obligated to reimburse the amount of the mineral usage tax paid by JSC “Georgian Oil and Gas Corporation” as well as the costs incurred by the claimants with regard to the arbitration proceedings.The Arbitration Tribunal also upheld an appeal against the claims of “Frontera Resources Georgia Corporation ” and “Frontera US LLC” and terminated the arbitration proceedings upon the issue. The decision of The Arbitration Tribunal is final.
Taking into consideration the content of The Arbitration Tribunal award and other circumstances, 27 April 2020, LEPL “State Agency of Oil and Gas” has issued contract termination notice to “Frontera Resources Georgia Corporation”. The contract will be automatically terminated upon expiration of the term specified in it (27 July 2020).
LEPL “State Agency of Oil and Gas” and JSC “Georgian Oil and Gas Corporation” completely deny false and incorrect assessments released in a statement by some of mass media outlets issued on behalf of “Frontera Resources Georgia Corporation” and “Frontera US LLC” on 29 April 2020. Georgian side urges the company to willingly carry out the decision of the Arbitration Tribunal the earliest possible time, including reimbursing fundings belonging to Georgian side (approximately $6M).
Additionally, worth noting that according to the rules of Arbitration, the final award can be given publicity with the mutual consent of the parties. LEPL “State Agency of Oil and Gas” as well as JSC “Georgian Oil and Gas Corporation” agree to give publicity to the final award and have applied to “Frontera Resources Georgia Corporation” upon consent, but have not received response so far.