Heritage Oil Plc ("Heritage" or the "Company") Judgment in Commercial Court Case
Heritage Oil Plc (TSX:HOC)(LSE:HOIL), an independent upstream exploration and production company, announces that judgment in the English Commercial Court case brought against Heritage and its wholly owned subsidiary Heritage Oil & Gas Limited by Tullow Uganda Limited (“Tullow”) has been received today.
The Honourable Mr Justice Burton of the High Court in London has today, in relation to the $313 million contractual dispute between Tullow and Heritage, awarded judgment in favour of Tullow. Heritage’s counterclaim was dismissed.
The Company strongly disagrees with the decision. It maintains the view that Tullow’s original payments to the Uganda Revenue Authority were commercially motivated rather than as the result of a valid legal obligation.
Heritage will perform a robust and exhaustive evaluation of its legal options with a view to appealing the judgment. Any appeal process will be commenced within the prescribed time period of 21 days from the date of judgment.
It is apparent from the judgment that Burton J. was not ruling on the fundamental legality of the imposition of the tax by the Uganda Revenue Authority, and it has no bearing on the outcome of the international arbitration proceedings against the Ugandan Government in London, which are ongoing. Appeals to the Ugandan High Court in respect of the tax assessments are pending. Heritage’s position remains, based on comprehensive advice from leading counsel, legal and tax experts, that this retrospectively placed tax, with no precedent, is not valid.
The $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 and so substantially all of the cash has been reserved and does not impact on the Company’s current cash position.
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