Rio de Janeiro, July 3, 2018 – Petróleo Brasileiro S.A. – Petrobras informs that it intends to adopt all available legal remedies to challenge an arbitral award rendered yesterday in an arbitration administered by the International Centre for Dispute Resolution regarding a drilling contract entered into between Vantage Deepwater Company and Vantage Deepwater Drilling, Inc. (collectively, “Vantage”) and companies of the Petrobras Group.
The three-member Tribunal concluded by majority, with a dissenting opinion, that Vantage is entitled to US$ $615.62 million for the alleged early termination of the drilling services contract, as well as $6.4 million associated with invoices issued by Vantage in connection with the drilling of a well in the Gulf of Mexico.
The dissenting arbitrator refused to sign the final award and issued a written dissent and objection to the decision stating that “the prehearing, hearing, and posthearing processes that led to the issuance of the final award have denied Respondents [Petrobras Group companies] in this proceeding the fundamental fairness and due process protections meant to be provided to arbitrating parties” under the United States Federal Arbitration Act (“FAA”).
In the objection and dissent mentioned above, the arbitrator specifically noted that the majority’s decision is subject to vacatur under the FAA based on the following legal grounds: the award was procured by corruption, fraud, or undue means; there was evident partiality and/or corruption in the arbitrators; the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; and, the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
Petrobras America Inc. terminated the contract due to material operational failures by Vantage. As revealed by “Operation Car Wash”, the drilling contract was procured by corruption. Petrobras has been recognized as a victim of the corruption discovered through said investigation by the authorities in Brazil, including the Brazilian Supreme Court.
The information regarding this procedure is disclosed in the financial statements (ITR) for the first quarter of 2018, in explanatory note 28.3. Contingent liabilities – Description of civil matters.