Canacol Energy Ltd. has publicly responded to a significant decision stemming from arbitration proceedings with VP Ingenergía S.A.S. E.S.P. The arbitration, overseen by the Arbitration and Conciliation Center of the Bogotá Chamber of Commerce, centered on the termination of three natural gas supply contracts. Canacol terminated these contracts due to various breaches committed by VP Ingenergía, including issues related to contractual guarantees and payment for gas deliveries.
During the arbitration process, the tribunal examined not only the contractual failures but also the implications of a force majeure event that Canacol experienced. This aspect was crucial as it intertwined with the contractual obligations and potential exemptions for both parties involved.
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Details of the arbitration ruling
The tribunal ultimately sided with Canacol on several key arguments, particularly regarding the invalidity of guarantees provided by VP Ingenergía. The tribunal also highlighted irregularities in VP Ingenergía’s management of proceeds from gas sales. However, it acknowledged certain claims made by VP Ingenergía concerning force majeure events, resulting in a mixed outcome for both parties.
As a result of the tribunal’s decision, Canacol was ordered to pay approximately USD $22 million. It is important to note that this ruling is not yet finalized; it remains open for clarification and supplementation and will become binding only on November 20.
Ongoing financial considerations
In light of this ruling, Canacol is reviewing the implications of outstanding invoices from VP Ingenergía, which are believed to total around USD $25 million. Additionally, Canacol is pursuing further legal avenues through an international arbitration process involving claims exceeding USD $76 million against VP Ingenergía, who currently has no financial claims against Canacol.
The groundwork laid by the domestic tribunal’s recognition of Canacol’s justified contract termination strengthens the company’s position in the international tribunal. Canacol remains optimistic about the outcome of this process, which is projected
Legal actions and implications
Canacol intends to present the findings from the domestic arbitration to the Office of the Attorney General of the Nation. This decision is based on evidence indicating that the guarantees provided by VP Ingenergía were inadequate and did not meet the required standards to secure the contracts. Additionally, it was found that VP Ingenergía acted in bad faith by making unauthorized withdrawals from trust funds intended for fulfilling its financial obligations to Canacol.
The outcome of these findings will directly influence ongoing criminal investigations against key figures associated with VP Ingenergía, including Mr. Álvaro Augusto Vargas Bravo, his spouse Patricia Peña, and legal representative Darlyn Yesenia Neira. The Office of the Attorney General has filed charges against them, encompassing serious allegations such as aggravated fraud and corruption, all linked to the disputes adjudicated in the domestic arbitration.
Next steps for Canacol
Canacol is currently reviewing the arbitration decision to evaluate potential legal avenues, including the possibility of appeals. The company remains committed to utilizing the Colombian legal system to seek justice and resolution in this matter.
As Canacol moves forward, it continues to stand firm in its strategies and operations within the Colombian natural gas sector. The company is well-positioned to navigate these legal challenges while maintaining its focus on growth and sustainability.
About Canacol Energy
During the arbitration process, the tribunal examined not only the contractual failures but also the implications of a force majeure event that Canacol experienced. This aspect was crucial as it intertwined with the contractual obligations and potential exemptions for both parties involved.0
During the arbitration process, the tribunal examined not only the contractual failures but also the implications of a force majeure event that Canacol experienced. This aspect was crucial as it intertwined with the contractual obligations and potential exemptions for both parties involved.1
