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My take is that the decision has been made and they are deciding on award…
RKHs case has been marked as Pending on the arbitration site.. their definition of pending is “ The case remains pending, for instance, if a State is found to have breached one or more IIA obligations (liability) but no award on damages has been issued yet. ”
So case won what we get still remains the question as there is still an option of Case Won but no award given - think that’s unlikely though due to time implications.
Just my own feeling but if the case had no merit I wonder why it would take 4 years to come to that conclusion, the thing that takes the time it seems to me would be establishing quantum, since that is dependant on future price of oil, and look where poo has been over the last 16 months. Im not a lawyer, just my feeling.
No it's not a red herring, in as much as there could be a change of Government (which happens quite often in Italy), when the commitments made by a previous administration are thrown away by the next.
The Italians may have tried and make something of this, but if RKH did a professional job, then DD won't have been an issue.
Not long before we find out.
Whilst there may be an element of DD to this case, there is no evidence that MOG or ROCK failed to do DD.
There is no DD that can eliminate the hypothetical risk that a government will backtrack, change the rules or remove permits.
If Italy had said before hand 'we might revoke permits', then that is a risk to factor in,
however Italy did not, as far as I know, suggest any such thing to MOG or Rock. This is a red herring I feel.
I do wish people would stick to the issues and not make irrelevant things up.
I'm not saying that in this case there is necessarily any due diligence (DD) argument against RKH, I was merely trying to explain the process, which has nothing to do with criminals bashing people over the head with baseball bats as CTS was suggesting.
The Italians will probably have tried to make out that RKH didn't do a thorough DD job. Maybe they told the tribunal that they made everything known to RKH, who didn't pay attention, or take enough notice. They may have tried to convince the tribunal that, just like a child who must have a new toy, RKH went ahead with the contract despite all their (the Italians) warnings. Even if they have succeeded, the maximum reduction in award would be 50% and not the "completely release the Italian Government from its duty to abide by the treaty" as stated by Phil64.
At the other end of the spectrum, RHK may have done a brilliant DD job, asking all the right questions and the Italians (just like Arfur Daley) might have lied through their teeth, telling RKH what a brilliant deal it was, with no worries - we just don't know, but hopefully the tribunal will have got to the bottom of it all.
Just to repeat myself, there IS a DD component to the process, which can result in up to 50% reduction in award.
None of this has anything to do with the criminal law, baseball bats, bashing people over the head, or anything else like that.
As you know, I’m no longer in here, but I think Rockhopper have a strong case. The due diligence argument is, in my view, seriously weakened by the fact that Rockhopper actually made progress with Ombrina Mare’s permitting AFTER it bought MOG. In particular, and crucially, the field’s development plan was approved by the Italian ministry of environment (see below). At the time, approval by the environment ministry was viewed as the final major stumbling block to getting the field developed, as the subsequent ministry of heritage and development approvals were supposed to just be rubber stamps (informed by the environment ministry’s decision). However, the law was changed (again), and Ombrina mare became history.
Because of all of that, Rockhopper can argue that there was no environmental reason for stopping the development, and as such the decision to block it was 100% arbitrary/political. For me, it feels like a strong argument, with significant merit. How much money they can win is an open question, but I fancy their chances….
Yes SecretBluePrint - exactly what I’m trying to say. I just don’t see how they could make a due diligence argument against Rockhopper and I don’t see how any award could be reduced/mitigated on that basis. The award should be decided as if it was still MOG as owner - anything else makes no sense to me.
I dont see how any failure of due diligence could completely release the Italian Government from its duty to abide by the treaty, it may mitigate any award yes, but it does not mean it can do as it likes.
The lead claimant is surely Rockhopper Italia SpA, which used to be the legitimate local operating subsidiary company for MOG (which held the licence), now called Rockhopper Mediterranean Limited, also a claimant, with RKH as co -claimant. Hard to see how the due diligence argument would wash for the original local operating company, but might wash for the MOG acquisition and RKH.
It's probably a Gordian Knot, which is why it's taking forever to unravel.
I’m not sure I understand how Rockhopper can be held responsible for lack of due diligence (for the purpose of this case I mean).
Are you suggesting that if MOG still existed and Rockhopper hadn’t bought them, that they would have a stronger case for damages?
That doesn’t make much sense to me. Surely when Rockhopper acquired MOG, they acquired all of their assets and also exactly the same rights to compensation should any of those assets be compromised like Ombrina Mare.
Or am I missing something?
I think CTS's analogy is wrong and misleading.
This isn't a criminal case, where RKH has been hit by an Italian with a baseball bat. This is an arbitration tribunal, where RKH may have entered into a contract without investigating the circumstances enough.
A closer analogy is CTS buying a house and not checking the deeds, or that all the houses in the area are built over ancient mine workings, so are subject to subsidence. The house is next to a river, which floods every month and has done so for as long as anyone can remember.
After a year or two of enduring this, CTS goes back to the seller and asks for a refund.
That's what not carrying out adequate due diligence is about, NOT about being hit over the head by an Italian with with a baseball bat, which would be heard in the criminal Court.
If anyone cares to read all about it. They don't call it contributory negligence, they call it fair and equitable treatment (FET)
No, let's not leave this one there.
The ECT rules apply here and failure to carry out adequate due diligence IS an issue, but RKH may have done a good job.
@Ovets, contributory negligence
The Italian state is liable for whatever the contracts it signed commits it to. That's the basis on which we're bringing the case. It's not less liable because a counterparty should have distrusted it. It's just not a contributory negligence thing. We're not saying a price was wrong.
Someone who hits you over the head with a baseball bat isn't less liable because he's an habitual criminal and you should have known he was in the vicinity! The Italian state is liable for exactly what it chose to sign up to do.
Let's leave this one there.
But so much stuff comes into any award it's bound to be a bit random whatever. There's no point in dwelling on it.
My recollection is that initially no one had any idea of the size of the claim and some speculated it might be as much as £1Billion (or maybe $1Billion), which of course was unlikely.
More recently someone let the cat out of the bag and we learnt it was $275 Million (or thereabouts), which is about £200 Million at today's exchange rate, so still quite a lot.
Of course, that's only the claim. Claimants have to have a very good case indeed (and very good lawyers to tell the story convincingly) if they're to be awarded the full amount.
Regarding the "contributory negligence" some have mentioned here, the issue is whether the claimant carried out adequate due diligence, before entering into the contract with the Italian State, to convince the tribunal not to reduce any award.
If RKH didn't carry out adequate due diligence, then any award can be reduced by up to 50% (worst case).
We have no idea about this, but we'll soon find out. If RKH management carried out their due diligence on OM, in the way Sam & Co. have done everything else, then expect there to be a reduction. let's hope I'm wrong.
It is equally possible in this irrational market, that even an unexpectedly high Ombrina Mare award does nothing to the share price, and you find the Executives trying to sell a claim on Italy to anyone that will pay the Company cash.
The situation is dire. Affirmative action by shareholders is required. We need 35million beneficial ownership shares to pledge join us please!
Mail me firstname.lastname@example.org
Cubane1 I was at the AGM and asked the question, your recollection spot on, and it’s in USD for clarity
Guessing Rocks SP by money in the bank is not accurate otherwise we would be way less that 9p.
Getting say $100m make a bigger impact that the cash alone.
It make SL more likely to happen and shareholders to keep %.
I Don't expect $100m, but even $30m would be very welcome!
Complete rubbish re the contributory negligence crap. The Italian subsidiary's owners have the same rights whoever they are. Those rights are nothing to do with who bought what and when. The confusion, if it's even that, is with when a party is suing the person they bought an asset off - not what's happening here.
All sorts of other things might of course influence the outcome.
Yes, it can be halved through contributory negligence: that RKH entered carelessly into the Italian venture without due diligence.
Whatever the award, it is possibly to be halved. A legal thing, apparently. Case law exists. DYOR. Maybe best not book that holiday just yet.
Just to add, Baldmark, this is precisely the reason why RKH followed the route they have, rather than pursue their claim in the Italian Courts.
As well as being notoriously partisan and slow, one thing they could be relied to do is not pay up, take endless evasive action and then, after a change of Government, say it's nothing to do with them and simply ignore the judgement.
Baldmark, the Italian state doesn't have the option to ignore an ECT award.
If they don't pay, assets can be seized and in this case, enforcement jurisdiction is in the USA, so plenty of Italian state assets there.
If you are going to post, please don't distract with incorrect, imaginary invention. Thanks
Ballpark, you said "Isn't this all hypothetical. Surely if a substantial amount was awarded the Italian government would just ignore the law in a specific and limited way. The Guardian may have a touching belief in international law, but they don't have to win elections". The answer is that Italy are a conrracting party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards . As such, if they ignore, Italian assets held in New York Convention contracting states can be seized to satisfy any award made in favour of RKH.
Isn't this all hypothetical. Surely if a substantial amount was awarded the Italian government would just ignore the law in a specific and limited way. The Guardian may have a touching belief in international law, but they don't have to win elections.