Vilvoorden Investment Inc, which is engaged in the business of rice cultivation and milling has been awarded judgement by the High Court of US$77,000.20 which represents monies owed to the company by the Guyana Rice Development Board (GRDB) for the supply of rice to Panama.
In 2018, the Essequibo company had entered into several oral and written agreements with the GRDB to supply six containers of long-grain white rice for that State agency to sell same to the Agriculture Marketing Institute, a State Agency of Panama.
The company, however, moved to the High Court after the GRDB failed to carry out its contractual obligations, that is, failing to pay it for the rice it supplied for exportation to Panama.
However, while the GRDB had acknowledged that it was indebted to Vilvoorden Investment, it had argued that its obligation to effect payment was conditional and contingent on it receiving payment from Panama. Therefore, since it had not received any commission from Panama, the GRDB had contended that its obligation to pay the company had not arisen.
Moreover, the GRDB had asserted that it has made and continues to make diligent efforts and has taken reasonable steps to demand payment from the Agricultural Marketing Institute of Panama but the latter has not fulfilled its contractual obligation to pay it.
Deliberating on Vilvoorden Investment’s application was Justice Gino Persaud who observed that the contract’s payment clause contains the following clause: “The buyer will pay the seller the value for the white rice … after deductions as stated are made by the buyer on receipt of payment from Panama”. The Judge held that the language of the clause does not suggest that payment is contingent on the GRDB being paid by Panama but rather suggests a pay-when-paid clause.
Ambiguous
However, the language used in the clause is ambiguous and does not specifically refer to the entity in Panama which payment would be made from, Justice Persaud said.
According to him, further confusion is added by the latter part of the clause which states: “Invoices for each weekly shipment are to be submitted to the [GRDB]. Payment will not be made if the seller does not submit the invoices to the Guyana Rice Development Board.”
The High Court Judge reasoned that the aforementioned clause suggests that payment would be made after invoices are supplied by the subcontractor [Vilvoorden Investment] on a weekly basis and that if these invoices were not supplied, the subcontractor could not be paid.
Having regard to this, he held the GRDB cannot rely on the pay-when-paid clause since that clause is unspecific and ambiguous. Importantly, he went on to note that Vilvoorden Investment had
completed its obligation under the contract four years ago, and thus, was entitled to be paid within a reasonable time for the rice supplied.
“The pay-when-paid clause did not absolve the Respondent’s [GRDB] liability to pay the Applicant [Vilvoorden Investment] even if it had not been paid,” Justice Persaud pointed out.
By relying on that clause, he said the GRDB had to advance all means possible to obtain payment from Panama but from the evidence provided, it had not done so.
In this regard, the Judge held that “merely, sending letters to demand payment is not sufficient, given that four years have passed.”
Based on his findings, Justice Persaud granted judgement in favour of Vilvoorden Investment in the sum of USD 77,000.20, or its equivalent in Guyana dollars, with interest on that sum as prayed together with costs in the sum of $1 million to be paid in six weeks hereof.
The Judge, in his decision, noted that the circumstances surrounding this case have thrown up a “Heller’s Catch-22 situation.”
Rice deal payment
The Guyana Government is still actively trying to recover the over one billion dollars owed by the Government of Panama over a flawed rice deal that was struck under the A Partnership for National Unity/Alliance For Change (APNU/AFC) Government in 2018.
In March, Attorney General and Legal Affairs Minister Anil Nandlall, SC revealed that legal proceedings have been filed at the International Chamber of Arbitration in France in an attempt to recover the monies owed to local rice farmers and millers.
On April 13, 2018, a contract was signed between the Government of Panama and the then APNU/AFC Administration for the supply of some 9000 tonnes of rice, with the GRDB being the facilitator.
Reports indicate that after the rice was shipped, a partial payment was made, but the balance, which has now accumulated significant interest, remains outstanding to date.
There was another contract signed in 2019, for which no payment was made to Guyana, Agriculture Minister Zulfikar Mustapha had told the State-owned Guyana Chronicle.
