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Lack of legal expertise could impede energy projects

The Cyprus Hydrocarbons Company (CHC) risks remaining without expert legal advice for the foreseeable future, impeding its ability to negotiate major energy-related projects that are on the horizon.

The complication arose after a challenge mounted to the CHC’s decision to award a contract for procuring legal services.

The tender was awarded to Cameron McKenna LLP, for a three-year contract worth some €9.5 million.

But DLA Piper UK LLP, the bidder ranked second in the competition, has appealed the decision with the Tenders Review Authority (TRA).

DLA Piper is arguing that the successful bidder had a conflict of interest.

The same law firm has in the meantime secured an injunction from the TRA, which prohibits the CHC from signing a contract with the successful bidder until its own appeal is ruled on.

That would effectively leave the CHC without expert legal advice until the matter is resolved.

Under the current contract, set to expire, the CHC’s current legal advisors are DLA Piper. But on this contract the CHC has a balance of only €114,000 left – nowhere near enough funds to carry it through over the next months.

Complicating matters further, the CHC’s own lawyers – including former attorney-general Alecos Markides – contend that the appeal before the TRA is invalid.

That is because, they say, the CHC is not a public-law organization and thus does not fall under the TRA’s jurisdiction.

The CHC’s charter states that it is an entity governed by private law, despite the fact that all its stock is held by the energy ministry (the government).

Assuming Markides’ argument holds, it was not exactly clear how or why the CHC initiated a call for a public tender in the first place.

Sources apprised of the matter told the Cyprus Mail they had “no clue” when the TRA would be ruling on the appeal.

However, other legal avenues are open to DLA Piper should it turn out that the TRA cannot hear its appeal. DLA Piper could presumably file legal proceedings against the CHC’s decision in a district court.

At any rate, the timing of the entanglement could not be worse, as over the coming period the CHC will be needing expert legal advice for a number of major projects.

The CHC is currently in the midst of advanced negotiations, it is understood, with potential buyers in Egypt of natural gas from the Aphrodite reservoir.

Also on the cards are new negotiations between the energy ministry and the Aphrodite stakeholders on the revised production and development plan for the reservoir. The ministry has its own consultants, but also receives legal advice via the CHC.

And in January or February, the CHC will be required to provide legal assistance to the ministry as the latter negotiates with the companies pre-selected for exploration concessions in offshore blocks 6, 8 and 10, as part of the third hydrocarbons licensing round.



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