A US federal court has ruled against Petrobras in its attempt to overturn a $622m arbitration award in favour of Vantage Drilling in a fight that centred on alleged bribery by Taiwanese shipowner Nobu Su.
District judge Alfred Bennett rejected the Brazilian state oil company’s motion to vacate the award, ruling Petrobras got a fair arbitration process.
“Although Petrobras’ briefing discusses at great length the iniquity of the alleged bribery scheme [that led to the Vantage contract], Petrobras’ arguments concerning the merits of the dispute are irrelevant to the court’s determination,” Bennett wrote.
In 2015, in the midst of the Brazilian corruption probe known as Operation Car Wash, Petrobras moved to void its contract with Houston-based Vantage to use the 67,800-gt Titanium Explorer (built 2012) to drill for oil.
Petrobras argued that Vantage won the deal thanks to a $31m bribe agreed by Su. The shipowner, who was a major shareholder in the drillship owner, has previously denied the bribery claims.
The cancelled contract, worth $1.82bn, landed Vantage in bankruptcy.
Claims of bias
The two companies went into arbitration in 2017 in Houston in front of the International Centre for Dispute Resolution. That July, a three-member panel sided with Vantage, which moved in federal court to confirm the award.
Petrobras argued in part that the award was improper as Vantage’s pick for the panel, Iran-US Claims Tribunal Judge Charles Brower, was biased because a friend of his was a partner at the law firm representing Vantage and even advocated for Vantage during hearings.
Bennett disagreed and noted that Petrobras had completed a bribery audit in 2013 and kept the contract in place for a further two years.
Petrobras was not available for comment this week, but when the initial arbitration award was made in 2017, it said it intended “to adopt all available legal remedies”.
“As revealed by Operation Car Wash, the drilling contract was procured by corruption,” the company said at the time. “Petrobras has been recognised as a victim of the corruption discovered through said investigation by the authorities in Brazil, including the Brazilian Supreme Court.”
In 2016, a judge in Brazil sentenced former Petrobras director Jorge Zelada to jail for 12 years in connection with the deal, ruling that he took the bribes and hid the funds in undeclared bank accounts abroad.
