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Enron Mail |
Louise,
I thought you would want to see this since you were there during all of those times. m ---------------------- Forwarded by Mike McConnell/HOU/ECT on 04/09/2001 10:26 AM --------------------------- Mary Nell Browning 04/04/2001 01:59 PM To: James Derrick/Enron@EnronXGate, Michael R Brown/LON/ECT@ECT, John Sherriff/LON/ECT@ECT, Mark Evans/Legal/LON/ECT@ECT, Fernley Dyson/LON/ECT@ECT, Paul Chivers/LON/ECT@ECT, Mark Frevert/Enron@EnronXGate, Greg Whalley/HOU/ECT@ECT, Mike McConnell/HOU/ECT@ECT, Jackie Gentle/LON/ECT@ECT, Richard B Sanders/HOU/ECT@ECT, Claire Wright/LON/ECT@ECT, Raj N Patel - Tax/LON/ECT@ECT, Rex Rogers/Enron@EnronXGate cc: Richard Harper/LON/ECT@ECT, Paul Turner/LON/ECT@ECT, Peter Crilly/LON/ECT@ECT Subject: CATS litigation Disappointingly, the House of Lords ruled 5 - 0 against Enron in the CATS litigation today. This will mean that we will repay to the CATS parties approximately $150 million plus interest and court costs, putting the final figure at an estimated $155-160 million. We expect to be invoiced for the principal amount in the next week or so; sorting costs and interest may take as long as 60 days. The written opinion reflects a determination on the part of the Lords to rule against us regardless of what the contract says. The opinion seeks to conclude "what rational businessmen could have intended" rather than applying the provisions of the contract. For example, Lord Hoffman (author of the primary opinion) makes it clear that the "retrospective consequences" of discovering a latent defect after payments have been made (and would therefore need to be refunded) are unacceptable. His view seems to be that because we were not ready to flow J-Block gas during the period of the T-6 leak, we are not damaged and therefore not entitled to relief under the contract. Furthermore, he says that the Commencement Date notice sent by the CATS parties was in the nature of a declaration and as long as it is sent in good faith it is effective. As far as the price reduction formula in Clause 7.5, Lord Hoffman opines that the clause is not operative until TGTL had tied in the J-Block field. The contract makes no reference to this requirement. Hoffman's view is that it is only upon tie-in that the CATS parties' obligation to provide the Transportation Service is triggered and therefore there can be no price reduction for not providing the service unless tie-in is complete. This statement is in stark contrast with Hoffman's earlier statement in the opinion that upon the giving of the Commencement Date notice the CATS parties have an absolute obligation to provide the Transportation Service. Equally disappointing and surprising is the fact that the Lords rejected our submission for reimbursement of our costs incurred in connection with the restitution issue. As you may recall, restitution was the primary issue upon which the CATS parties obtained leave to appeal, and they conceded the point at the commencement of the hearing. Reimbursement of these costs should have been a given. Although I have not yet been able to speak to our most senior barrister, our other counsel have assessed the opinion as "appalling" and "pathetic," and describe the situation as one where Enron has been "stitched up". Unfortunately, given that this is the court of last resort in this country (except of course the Court of Human Rights), there is not an avenue for recourse. In conclusion may I say that although we did not get the result we wanted or expected from the House of Lords, I very much appreciate all the support from each of you for these past six years. The case has been a roller coaster ride; I hope our earlier victory in the Court of Appeal will evidence in fact that some tribunals in this country recognize that we did get it right. Please call me if you wish to discuss the case in any further detail, or if you wish to have a copy of the opinion. My telephone number is 011 44 207 783 6582. Many thanks.
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