On 14 June 2013 Burton J. held that Tullow Uganda Ltd, a subsidiary of Tullow Oil Plc, succeeded in its claim against Heritage Oil and Gas Ltd and Heritage Oil Plc for c.US$313 million plus contractual interest.
The claim arose out of Tullow’s widely-reported pre-emption of Heritage’s sale of the entirety of its petroleum rights and interests in Uganda, and Tullow’s subsequent acquisition of those rights and interests for US$1.45 billion pursuant to a Sale and Purchase Agreement concluded in January 2010. The Government of The Republic of Uganda assessed Heritage as liable to pay tax in Uganda, but Heritage denied that it had any such liability. Shortly after the completion of the transaction in July 2010, the Government served agency notices on Tullow appointing it as Heritage’s agent in respect of its tax liability. Tullow ultimately made payment to the Government in April 2011 of c.US$313 million pursuant to those notices. It then commenced proceedings against Heritage in order to obtain a contractual indemnity.
Heritage defended the claim on the basis that the notices were ineffective as a matter of Ugandan law, that Tullow had actual knowledge of this, and that Tullow had knowingly submitted to an unlawful and ineffective demand by the Government. Heritage also advanced a number of arguments as to the interpretation of the SPA.
Following a three-week Commercial Court trial Burton J. held that the notices were valid as a matter of Ugandan law, and that Tullow had held a genuine belief that the notices were valid at the time it made payment. He held that Tullow’s witnesses were “impressive and honourable”, and rejected each and every criticism of their evidence. He also dismissed Heritage’s legal arguments in their entirety.
Tullow was represented by David Wolfson QC and Richard Mott of One Essex Court.
The full text of the judgment is now available for download.