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Why the Portuguese government can’t just cancel the oil exploration contracts

6232Let's look at this oil exploration in Portugal issue in context because it appears there's lots of confusion, writes ASMAA

There's the belief that the Portuguese government can just with a simple gesture cancel all oil and gas exploration contracts in Portugal. Nothing could be further from the truth. The situation is a lot more complex.

Some facts: no government has the power to cancel contracts outright without consequences. Only a court of law can do this.

What a government can do is initiate an investigation into:

--- how were contracts awarded?
--- was process followed?
--- was due diligence applied?
--- was undue influence exerted?
--- was corruption involved?,

Once evidence has been gathered which indicates some non-conformance, non-performance, or misconduct can a government initiate legal procedures to have a contract cancelled. But these still have to be proved in a court of law.

What a government can do while legal process (or an investigation) is running is to suspend all activities allowed within a contract until a legal outcome has been reached and a court award issued. Often this is done by obtaining a court interdict (providenca cautelar), or through an embargoe of a project for possible cause (example of what happenned in Aljezur in which APA suspended the works and the government is busy with an investigation)

Currently the government is being cautious and is following the correct procedure.

What we need to ascertain is if all factors are being reported, what is being acted upon, and if good governance is being applied right through the entire investigation and reporting process.

 So, that being the case what good are petitions, demonstrations, etc?

For starters, they all help ensuring that the government initiates an investigation. It also ensures that a government knows that their actions are being watched. In return such events, and petitions can be used in support of any legal action that takes place...

Some risks to taxpayers and the country

Having said that ... should a government cancel a contract outright - then it may find itself in breach of contract, in which case the other party can and will in most probability take the government to court and demand compensation for damages.

This could see the government facing billions of euros claims by the industry and years of legal disputes. In addition the third party could for example demand reinstatement of contract etc, etc…

The environmental card

Although much focus is being placed on the environment by activists and the public, the fact that contracts are already signed, means that the environment argument is now relegated to a supportive role rather than being the main focus of the argument.

Above is just a short synopsis and its not exaustive.

If you interested in understanding more I suggest that you read this very good guide “A legal guide for communities seeking environmental justice” by Lucie Greyl and Angèle Minguet that you can download in the attachment section below.

A legal guide for communities seeking environmental justice


ASMAA, July 2016