Karl Pörnbacher:” Frontera was trying to politicize the case from the outset”

18 May, 2020
“The decision of the International Arbitration Tribunal is quite clear and cannot be interpreted”,- This is the response to the ongoing processes around the Frontera issue and the attempt to spread misinformation by the lawyer of the international law firm Hogan & Lovells Karl Pörnbacher, who defended the interests of the Georgian State Oil and Gas Corporation as well as the State Oil and Gas Agency during the international arbitration dispute against Frontera Resources Georgia Corporation.

Hogan & Lovells responded to Frontera's claims as if the Arbitration Tribunal had rejected the Corporation's and the Agency's request to terminate the contract. According to the company, there has not been posed such a request and could not have been made, as the Georgian side would have this right only in case the Arbitration Tribunal would rule a material breach of the contract committed by Frontera.

According to Hogan & Lovells, after the Arbitration Tribunal satisfied a claim of the Corporation and the Agency and ruled the material breach of the contract committed by Frontera, the Georgian side had full right to terminate the contract and to send termination notice to Frontera. The company explains that this decision is irreversible and cannot be denied even in case of return of the territory by the Frontera.

All aforementioned is confirmed by the motivational part of the award of the Arbitration Tribunal, which also demonstrates the fact that the Arbitration Tribunal was aware of the targets of the Corporation and the Agency and the consequences in case of satisfying this claim.

Karl Pörnbacher cannot hide his surprise at the attempt to politicize the issue, saying there has been no such case in his 20 years of practice.

The decision is quite clear and is not a subject to interpretation. Georgian side made a proposal regarding disclosure of the decision in order to make it available to the public and the discussions to have come to the end, nevertheless Frontera rejected the proposal and preferred to spread misinformation over the content of the decision.

The whole discussion concerning who is the winner is completely useless and irrelevant.

The demand of the Georgian side covered 3-4 main issues:1. First was the issuance of an order on the concession of almost 99% of the territories, which had to be done by Frontera back in November 2017, and since then was refused to be done; 2. The second was to prove that Frontera had committed material breach of the contract; 3. The third was the issuance of an order on Frontera regarding the reimbursement of legal costs related to the arbitration proceedings. In addition, Frontera demanded $ 3.5 billion against Georgia, and therefore our Fourth task was to protect Georgia from this lawsuit. If we consider now these issues, we will see that all four were satisfied: Frontera is obliged to relinquish the territories, the Arbitration Tribunal ruled, that Frontera committed material breach of the contract; Frontera is obliged to reimburse legal costs incurred regarding arbitration proceedings and the Arbitration Tribunal stopped considering the counterclaim demanding 3.5 billion USD after its withdrawal”- states Karl Pörnbacher.

In addition the lawyer states that Frontera never intended to perform the contract, neither during the period he started working on the case, nor before. According to the lawyer, the Georgian side has been negotiating the extension of the contract in the further period of 2017 from 2015-2016, but Frontera has never accepted responsibility to implement any of the obligations regarding investments.
Pörnbacher adds that in 2017, the parties resumed negotiations.Georgian side offered to resolve the dispute through negotiations amicably and even offered mediation, but Frontera refused.According to him, during the whole arbitration dispute,Frontera denied its obligation - to relinquish the territories.

“I am unaware till nowadays, whether they intended to return the exploration area after 2022. Now that the Arbitration Tribunal has already ruled that they are obliged to relinquish territories (which they had to concess back in 2017), they pretend as if they are intending so”-the lawyer explained.

He also emphasized that the dispute was discussed at the International Arbitration Tribunal by three high-ranking international arbitrators. Stockholm was designated as the venue for the process. None of the arbitrators, or judges, were Georgian - one of them was Swiss, another - a German living in London, and the third was a US citizen. The Georgian side now wants to enforce their decision.

Karl Pörnbacher states that Frontera was trying to politicize the issue from the very beginning, however he adds that it is not a political issue and a dispute, this is a purely commercial dispute and it was resolved on the basis of legitimacy.

He talks about the origin of Frontera Resources Georgia Corporation:
“Frontera Resources Georgia Corporation is registered in Cayman Islands. Frontera operates several companies, some of which are offshore companies and some of them operates in Texas”,-explains the lawyer.

The decision in the dispute between the parties on the one hand Frontera Resources Georgia Corporation and on the other hand Georgian Oil and Gas Corporation along with State Agency of Oil and Gas, was issued in favor of Georgian side on 17 April 2020, which was followed by number of attempts of Frontera to politicize the issue and spread misinformation over the content of the results of the arbitration dispute.