Heritage Reviews Ugandan Tribunal Decision

LONDON – Heritage Oil PLC, an upstream exploration and production company, Thursday said it is reviewing a decision on jurisdictional challenges raised by the Ugandan Government that was issued last night by an arbitration tribunal, adding that recent press comments attributed to the Ugandan Government and the Uganda Revenue Authority represent the decision in a misleading way. 

MAIN FACTS: 

  • Arbitral tribunal concluded that it does not have jurisdiction to hear arguments relating to the underlying substantive Ugandan tax matters, but Heritage is delighted that the tribunal has rejected the Ugandan Government's challenge to jurisdiction to determine the central question as to the propriety of the alleged imposition of tax with reference to contractual stabilisation clause protection invoked by Heritage together with the breach of other contractual obligations.
  • Statement responds to press speculation and statements attributed to Ugandan officials in relation to confidential international arbitration proceedings between the Ugandan government and the company's Heritage Oil & Gas Ltd. unit after Heritage sold its interests in Blocks 1 and 3A in Uganda in July 2010.
  • The determination by the arbitral tribunal is supposed to be confidential and marks the end to the preliminary phase of the international arbitration proceedings; the international arbitration will now continue and move to deal with the merits phase of Heritage's contractual claims against the Ugandan Government and the underlying substantive Ugandan tax matters remain under appeal in the Ugandan courts. 
  • $283.4 million placed in escrow in July 2010 by Heritage in relation to any potential Ugandan tax liability remains in escrow in London held by Standard Chartered Bank; additionally, in July 2010, Heritage deposited $121.5 million with the Ugandan Government. Substantially all of the cash has been reserved and does not impact on the current cash position.

Copyright (c) 2012 Dow Jones & Company, Inc.

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