“…there is no legal obligation on the part of Belize to recognize and enforce domestically arbitral awards within the contemplation of the New York Convention…” said Court of Appeal
Belize never ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards under which arbitration in London was sought and so is not obliged to pay
BELIZE CITY, Thurs. Aug. 9, 2012
In a dispute dating back to October 2008 over a settlement deed to abandon litigation by the Michael Ashcroft group against the Government over shares in Belize Telemedia Limited (formerly Belize Telecommunications Limited), the Court of Appeal ruled on Wednesday that the Government of Belize cannot be required to pay the Ashcroft group more than $40 million in damages awarded against it by the London Court of International Arbitration.
It is a signal ruling which sets aside a ruling previously made in December 2010 by Supreme Court Justice John Muria in favor of BCB Holdings Limited and its subsidiary, the Belize Bank Limited.
The day after the Michael Ashcroft companies won arbitration back in August 2009, on the claim that the Government of Belize had been guilty of a “repudiatory breach” of the settlement deed, they commenced Supreme Court proceedings in Belize, seeking to collect the award.
The London Court of International Arbitration (LCIA) had awarded the companies BZ$40,843,272.34 in damages, £206,248.40 (about BZ$610,042.88) for reimbursement of arbitration costs, and BZ$2,960,735.69 for legal, professional and other fees (a total of about $44 million) at a 3.38% rate of interest compounded annually.
However, Government’s attorney, Michael Young, SC, argued that the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, under which the Ashcroft group sought foreign arbitration, really does not apply to Belize, and so the arbitration award is not capable of being enforced against Belize. Whereas the UK is a party to the New York Convention, Belize never ratified it, Young maintained.
The Government had also maintained that it would be contrary to public policy to enforce the arbitration award.
Muria rejected the Government’s defense. He, instead, ruled that the Ashcroft group—represented by British barrister, Nigel Pleming, QC, and Belizean attorneys Eamon Courtenay, SC, and Ashanti Arthurs-Martin—could collect the arbitration award from the Government of Belize, because the New York Convention was “existing law” at the time Belize got Independence. He asserted that “…there can be no doubt that it applies to Belize…”
However, after listening to the appeal lodged by the Government of Belize and reviewing the historical facts, the Court of Appeal issued a ruling yesterday declaring that the New York Convention does NOT apply to Belize, as Belize is not a contracting party to the convention.
The Court went further to say that “…its unilateral provisional application on the part of the Prime Minister of Belize [at the time Said Musa, who entered into the settlement deed as Minister of Finance] was juridically misconceived in terms of the objective sought to be secured.”
As for the status of the LCIA award, the Court of Appeal said categorically that “…there is no legal obligation on the part of Belize to recognize and enforce domestically the arbitral awards within the contemplation of the New York Convention…”
It goes on to say that “refusal of the courts of Belize to recognize and enforce domestically convention awards cannot operate to engage the international responsibility of Belize.”
It means that either locally or overseas, the award—until and unless the higher court, in this case the Caribbean Court of Justice, rules otherwise—is not enforceable against the Government of Belize.
Justice Manuel Sosa, Court of Appeal president, and Justice Duke Pollard concurred on the ruling, while Justice Douglas Mendez dissented.
The Government was provisionally awarded costs by the Court of Appeal in this matter.
In another ruling made by the Court of Appeal on Wednesday, the court has clarified an earlier ruling made by Supreme Court Justice Oswell Legall in granting an injunction against British Caribbean Bank Limited from seeking foreign arbitration under the UK-Belize Investment Treaty of 1982, in challenging the constitutionality of Government’s acquisition of Belize Telemedia Limited back in 2010.
Legall had granted what the Court of Appeal deems to be an indefinite injunction, and it has now expressed the view that the injunction should be confined to the conclusion of the trial or further order by the court. The Legall injunction, though, still stands.