Barrick (Niugini) Ltd v Nekitel [2020] PGSC 94; SC2005 (25 September 2020)

SC2005

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 18 OF 2020

BETWEEN
BARRICK (NIUGINI) LIMITED
Appellant

AND
STANLEY NEKITEL in his capacity as the Registrar of Tenements
First Respondent

AND
JERRY GARRY as Chairman and representing all other members of the MINING ADVISORY COUNCIL
Second Respondent

AND
MINERAL RESOURCES AUTHORITY
Third Respondent

AND
HON. JOHNSON TUKE, MP as MINISTER FOR MINING
Fourth Respondent

AND
HON. JAMES MARAPE, MP as Chairman and representing all other members of the NATIONAL EXECUTIVE COUNCIL
Fifth Respondent

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Sixth Respondent

AND
MINNERAL RESOURCES ENGA
Seventh Respondent

AND
HON. DAVIES STEVEN, MP as Attorney-General and nominal defendant on behalf of the Head of State
Eighth Respondent

Waigani: Makail J
2020: 17^th & 25^th September

SUPREME COURT – Practice & Procedure – Application for stay – Order sought to stay decision of National Court – Proceeding dismissed – Interim stay order discharged – Supreme Court Act – Section 19

Cases Cited:

Gary McHardy v. Prosec Security & Communication Limited [2000] PNGLR 275
Barrick (Niugini) Limited v. Mineral Resources Enga Limited &Ors: OS No 422 of 2019 (Unnumbered & Unreported Judgment of 2^nd August 2019 by Thompson J)

Counsel:

Mr. M. Varitimos QC, and Mr. D. Wood with Mr. L. Evore, for Appellant
Mr. N. Saroa, for First, Third and Fourth Respondents
Mr. T. Tanuvasa, for Second, Sixth and Eighth Respondents
Mr. L. Kandi, for Fifth Respondent
Mr. G. Geroro, for Seventh Respondent

RULING

25^thSeptember, 2020

1. MAKAIL J: Much has been presented and contended for and against Barrick (Niugini) Limited’s (Barrick) application to stay the decision of the National Court pending determination of the appeal pursuant to Section 19 of the Supreme Court Act.

National Court Decision

2. The decision of the National Court by the Deputy Chief Justice of 1^st September 2020 was:

2.1. The proceeding OS (JR) No 5 of 2020 is dismissed as being an abuse of process and incompetent.

2.2. The stay order of 17^th July 2020 is discharged forthwith.

2.3. Barrick shall pay the costs of the Respondents, to be taxed, if not agreed.

Reasons for Dismissal of Proceeding

3. In summary, the dismissal of the proceeding was based on the following findings:

3.1. Duplicity of proceedings: Barrick had filed a Request for Conciliation dated 8^th July 2020 (RFC) pursuant to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, 1965. It will be heard by the International Centre for Settlement of Investment Disputes (ICSID).

3.2. Duplicity of proceedings: Barrick (PD) Australia Pty Ltd had initiated arbitration proceedings to have the dispute arbitrated before an International Arbitration Tribunal.

3.3. The initiation and maintenance of the proceeding was without prior consent and approval of its partner Mineral Resources Enga Limited (MRE) under the Joint Venture Agreement.

Arguable case

4. The decision meant that first Barrick’s application to seek review of the decision of the National Executive Council (NEC) of 11^th March 2020 to refuse its application for extension of Porgera Special Mining Lease 1(P) (SML) which was lodged on or about 29^th June 2017 under the Mining Act, 1992 was not deliberated on by the National Court. It would then be a case where any questions surrounding its application for extension of the SML remained unanswered.

5. Secondly, the National Court did not deliberate on the subsequent decision of the Head of State acting on advice made on 27^th April 2020, purportedly acting pursuant to Section 36 of the Mining Act 1992, to refuse its application lodged for extension of the SML which decision was published in National Gazette Notice No. 229 on 27^th April 2020.

6. The threshold question of an arguable case rather than an “exceptional” or “special” circumstances identified in the often cited case of Gary McHardy v. Prosec Security & Communication Limited [2000] PNGLR 275 has been a subject of lengthy debate among the parties.

7. One of the issues identified is the duplicity or rather multiplicity of proceedings at different forums both locally and internationally for Barrick to air its grievance in relation to its unsuccessful application for extension of the SML: one at the National Court of Justice of Papua New Guinea and the other at the ICSID and finally, the arbitration proceeding at the International Arbitration Tribunal.

8. To counter Barrick’s contention that the issue to be determined by the Court as opposed to the dispute resolution agencies are materially different and that it is arguable that Barrick was not guilty of multiplicity of proceedings, the Respondents contended that the issue is materially the same: it being whether the NEC decision to refuse Barrick’s application for extension of the SML was made in breach of the statutory procedure established under the Mining Act, 1992 and invalid. The primary relief sought would be an order to quash the decisions.

9. However, it is also an equally strong contention that the issue that will be considered by the ICSID and in the arbitration is purely commercial in nature, that it is about protecting Barrick’s investment in Papua New Guinea and one of damages rather than compliance. A related issue is whether the ICSID conciliation hearing and outcome has the potential of displacing a legal proceeding as the National Court judicial review proceeding.

10. A similar issue is whether an International Arbitration Tribunal has jurisdiction to review an exercise of power by the NEC and quash the decisions is one for further consideration. Ultimately, the contention by Barrick that as it is a separate legal entity from Barrick (PD) Australia under company law, it is not privy to the arbitration between Barrick Australia and the State is one open to debate and worthy of further consideration.

11. Finally, the doctrine of separate legal entity of Barrick from MRE as opposed to the joint venture partnership under the Joint Venture Agreement is an area which requires some careful examination. It may be that Barrick as a separate legal entity is entitled to commence proceeding to protect its 95% interest in the SML and not as a representative capacity and does not require prior approval of its joint venture partner, MRE. Its position has the backing of a judicial decision in a prior case in Barrick (Niugini) Limited v. Mineral Resources Enga Limited &Ors: OS No 422 of 2019 (Unnumbered & Unreported Judgment of 2^nd August 2019 by Thompson J) that Barrick does not need authority of MRE to commence proceeding.

12. These issues demonstrate that Barrick has an arguable case which supports its application for an interim relief. Where leave has been granted to apply for judicial review, the dismissal of the proceeding opens-up a further issue in relation to whether, procedurally, it was open to the Court to summarily dismiss it. This question is significant where this area of procedural law has not been clearly defined.

Balance of convenience

13. However, the question of arguable case having being established does not immediately entitle Barrick to an order for stay. The next threshold consideration is the balance of convenience where who is the party to suffer most while the dispute is pending resolution. The assertions by Anthony Esplin and Timothy Cribb of Barrick about the prejudicial and damaging consequences of the refusal to extend the SML are no doubt matters of significant concern for the care and maintenance of the mine. Such matters as structural stability of the open pit, waste dumps, west wall, underground workings, underground drainage systems and fixed plant infrastructure must be continuously monitored and maintained in order to ensuring that safety of personnel including illegal miners and trespassers are not compromised. But their assertions have been countered by the Chief Inspector of Mines Lave Michael. The Chief Inspector asserted that Barrick had addressed the safety hazards and risks or defects at the mine after he had issued a directive on 6^th May 2020.

14. It would seem then that both sides are concern about the maintenance and safety of the mine and personnel and rightfully so because there has been no extra ordinary event or damage to the mine and its infrastructure being reported so far and both sides must be commended and continue to maintain that while the appeal is being pursued by Barrick.

15. Even the assertion by Mr Gribb who is the PJV General Manager for Operations in relation to his concern about loss of mine-site to intruders who gain access to explosives has been countered by the absence of such incidents being reported or evidence of immediate threats being disclosed. It would appear that loss and safety of explosives are being adequately managed at this point in time while the appeal is being pursued by Barrick.

16. The grave concern by Mr Gribb about law and order and public safety is also countered by the Chief Inspector of Mines and the Project Coordinator of the Mine Joe Kak Ryangao that a large contingent of PNG Defence Force and Police personnel have been stationed at Porgera Valley to attend to any law and order related violence and issues at the mine site and that, there have been no serious law and order issues but all is calm. There is not much to be concern and none of the parties have been adversely prejudiced while the appeal is pending determination.

Interest of Justice

17. The decision to refuse Barrick’s application for extension of the SML was made by the NEC on the premise that the statutory procedure under the Mining Act, 1992 has been observed. It is arguably the first time a decision has been made by the executive government to part ways with a developer in a mining project in the country after 30 years of operation.

18. The reasons for the decision and parting of ways with Barrick have not been articulated by the Respondents. However, it would appear that the executive government has made a decision to move on. This is reinforced by the position taken by the Respondents at the hearing. The Respondents led by the Solicitor General strongly contended that events have over-taken the appeal and a grant of stay would serve no useful purpose because the NEC had made a subsequent decision to grant a SML over the land on which the mine is located to Kumul Minerals Holdings Limited (KMHL) on 25^th August 2020.

19. This is the latest turn of events and can be viewed as the State’s further act of parting ways with Barrick. This latest decision has now put Barrick in a position where it must now not only challenge the decision to refuse to extend the SML but also the grant of a SML to KMHL. This decision has been apparently gazetted to take effect.

20. The latest NEC decision did not come without any criticism and objection. Barrick has criticised the manner in which it has been treated in respect of its application for a SML after its application to extend the SML was unsuccessful. It pointed out that there could not possibly be two SMLs over the same piece of land and the failure by State officials at the office of the Registrar of Tenements and Government Printing Office to notify and provide to it a copy of the decision despite repeated requests.

21. It objected to the State and its agencies from relying on the latest NEC decision to circumvent the Court process and frustrate its appeal and application for stay. These are valid points by Barrick and the Respondents can be accused of frustrating the due process of the Court and Barrick’s effort to seek redress of its grievance. However, they may be raised on another occasion. At the end of the day, these turn of events reinforces the view that the Respondents are unwilling to reverse the first decision taken by the NEC and the relationship between the parties at worst has become obnoxious and broken down to the point of no return and it would not be in the interests of justice that the unwilling party be ordered to maintain the relationship.

Conclusion

22. There were further submissions made by parties which are not covered in this ruling because the focus was on the threshold considerations which have been covered. As there is not much to be concerned about in relation to the safety of the mine, its operations and personnel and that the relationship between the parties has become obnoxious and broken down, it is in the interests of justice that the present status quo be maintained.

Order

23. The orders of the Court are:

1. The application for stay is dismissed.

2. The costs of the application shall be in the appeal.

________________________________________________________________
Ashurst Lawyers: Lawyers for Appellant
Nelsons Lawyers: Lawyers for First, Third & Fourth Respondents
Solicitor-General: Lawyers for Second, Sixth & Eight Respondents
Wagambie Lawyers: Lawyers for Fifth Respondent
Geroro Lawyers: Lawyers for Seventh Respondent