US court ruling could allow SA oil firm to seize DRC assets
The ruling is the latest development in a 14-year dispute between the firm and the DRC over oil rights
A US court has confirmed a $619m international arbitration award against the Democratic Republic of Congo (DRC), potentially enabling an SA junior oil company to begin proceedings to seize DRC commercial assets in America.
A federal judge in Washington last week granted DIG Oil’s motion for recognition and confirmation of a decision made by the Paris-based International Court of Arbitration in November 2018. The ruling is the latest development in a 14-year dispute between the firm and the DRC over oil rights.
DIG Oil “is seriously considering commencing enforcement proceedings in various international jurisdictions, seeking the full amount due to us”, CEO Andrea Brown said by email.
The French tribunal determined that the DRC’s government failed to honour two production-sharing contracts signed when former president Joseph Kabila was in power and should pay DIG Oil $617.4m. With costs, the Johannesburg-based company says it’s owed $619m.
The oil ministry granted DIG Oil a contract for blocks in the centre of the country in December 2007, and another permit on Lake Albert to a group of investors including the company a month later.
The arbitration court agreed with DIG Oil that the DRC violated the second agreement by reallocating the Lake Albert licence in 2010 to a company controlled by Israeli billionaire Dan Gertler and failed to deliver presidential approval for the other blocks “within a reasonable time”.
The DRC, one of the world’s poorest countries, only had $671m in reserves at the end of February, according to the most recent central bank data.
The award is registered in DIG Oil’s favour “with the same force and effect” as if it “were a final judgment of this court”, district judge Richard Leon ordered. The company filed the lawsuit in the US in 2020 and the DRC government was subsequently declared in default for failing to respond to a summons.
Discussions on a potential out-of-court settlement have faltered, according to Brown.
The government of President Felix Tshisekedi decided in May 2020 “to negotiate formally” with DIG Oil and both sides “approved in principle” a draft deal in December, she said.
Nine months later, “we have been very disturbed that no settlement agreement has been signed”, Brown said.
A spokesperson for DRC’s government and another spokesperson for Tshisekedi didn’t immediately reply to messages seeking comment.
Bloomberg News. More stories like this are available on bloomberg.com
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