Musa’s deed “was illegal, void and contrary to public policy:” CCJ

Only parliament can regulate and alter taxation, the CCJ stated

The Caribbean Court of Justice (CCJ)—Belize’s final appellate court—has declined a request by BCB Holdings Limited and the Belize Bank to enforce against the Government of Belize, a $44 million arbitral award—plus 3.38% interest—which the parties had won from the London Court of International Arbitration back in 2009.

The legal battle has its genesis in a settlement deed that the Musa administration had signed with the Ashcroft group back in 2005, as a trade-off for the Ashcroft group to withdraw litigation against the Government of Belize in their dispute over Belize Telemedia Limited and the buy-back arrangements.

At 2:00 on Friday afternoon, a panel of five judges of the Trinidad-based court dropped the bombshell, announcing that “…the deed was illegal, void and contrary to public policy and Caribbean courts have an obligation to strike down executive action that undermines the authority of the legislature. For these reasons, the Court found that the enforcement of the Award should be refused…”

The Court stated that the settlement deed purported to alter and regulate taxation; but under the Belize Constitution and statutes this could only validly be done by Parliament.

The CCJ stated that to allow the then Minister of Finance—the honorable area representative for Fort George Said Musa—to assume essential law-making functions beyond his constitutional or legislative authority would put democracy at peril.

The CCJ, however, differed with the Government on a very essential point: The CCJ rejected the Attorney General’s submissions that the Arbitration Act was unconstitutional.

“In deciding the issue of costs, the Court found that given the Government’s refusal to participate in the arbitration proceedings, as well as the Companies’ success on the arguments raised on the constitutionality of the Arbitration Ordinance, each party should bear its own costs,’ the CCJ said.

Attorney for BCB Holdings and the Belize Bank, Senior Counsel Eamon Courtenay, was in court today to receive the judgment handed down via teleconference.

In explaining the ruling, Courtenay said, “They found that because the effect of the agreement was to provide a particular tax treatment for BCB Holdings, and they felt that that could not be done by a minister – it had to be done by Parliament, and therefore to enforce such an agreement on such an award would be contrary to public policy. The arbitration tribunal had found that, in fact, the minister did have the power to do it under section 95, so in effect the Caribbean Court of Justice is coming to a different conclusion than the arbitrators. As you know, we haven’t had a chance to read how they got there so that is in effect what they concluded.”

The dispute is over 8 years old, and it dates back to the time when the Musa administration nationalized BTL, assuming control of the company from the Ashcroft Alliance. Musa’s administration then sold the shares to American Jeffrey Prosser. However, BTL was eventually returned to the Ashcroft Alliance. Those transactions sparked a series of legal disputes – and the current slew of litigation is a spin-off from those disputes.

“This goes way back to the Prosser days, where BTL was under Prosser and the BCB group had an option to buy it back. Differences arose in that regard and an arbitration was on. That arbitration was stopped by entering into the settlement deed. Then the government didn’t implement the settlement deed; and therefore BCB Holdings commenced arbitration again, and it is that arbitration that led to [the] award and now the Caribbean Court of Justice is saying that the award cannot be enforced in Belize,” Courtenay explained.

We asked Courtenay whether this is the end of the legal disputes between the Ashcroft Alliance and the Government of Belize. Courtney notes that there is pending litigation – and the CCJ decision today means that any further arbitration awards against the Government of Belize may be enforceable in this jurisdiction.

“You will recall a few weeks ago the CCJ gave a decision in which they allowed another arbitral award to go forward, and the decision today is very important, because if my clients win that award, Part IV of the Arbitration Act has been restored, and, therefore, they can come to Belize and enforce it – if they get an award of damages,” he said.

Courtenay furthermore hinted today that this may not be the end of the attempts by the Ashcroft Alliance to collect the $44 million LCIA award.

He said that “…it is open to my clients, if government has assets elsewhere, to go to that jurisdiction and attempt to enforce [the award] there. Then the question would be: Would it be contrary to public policy in that jurisdiction?”

There is another live dispute between the Barrow administration and the Ashcroft Alliance – and that has to do with the question of how much compensation the former shareholders should receive for their shares, after the Government of Belize took control of the telecommunications company four years ago, in 2009.

Courtenay said that the Court of Appeal is due to issue its decision on that case.

CCJ President Sir Dennis Byron, along with Justices Saunders, Bernard, Wit and Anderson presided over the CCJ session.

Queen’s Counsel Edward Fitzgerald QC, Senior Counsel Eamon Courtenay and attorney Ashanti Arthurs-Martin appeared for the Ashcroft companies; while Senior Counsel Michael Young and Crown Counsels Magali Perdomo and Iliana Swift appeared for the Attorney General.

The full CCJ judgment is available on the court’s website: http://www.caribbeancourtofjustice.org.