27.8 C
Belize City
Monday, March 18, 2024

Belize places Top 40 at Miss World 2023

Photo: Elise-Gayonne Vernon, Belizean contestant by Kristen Ku BELIZE...

PM presents 2024/2025 Budget

Photo: Prime Minister, Hon. John Briceño  The national...

Women in Art

by Charles Gladden BELIZE CITY, Thurs. Mar. 14,...

BCB wins US$48 mil arbitration award against GOB

HeadlineBCB wins US$48 mil arbitration award against GOB

BELIZE CITY–The Barrow administration appropriated a US$22.5 million loan to Belize Telemedia Limited (BTL) held by an Ashcroft bank in the Turks & Caicos when it nationalized the phone company—a move which sparked both litigation in Belize’s domestic courts and a legal challenge under the UK-Belize Bilateral Investment Treaty.

Today, the Government announced that it had lost at arbitration and it is now on the hook for up to US$48 million—an award that the Government says it intends to challenge.

An official Government statement said that on Friday, December 19, 2014, a 3-member panel of international arbitrators issued its decision in a dispute between the British Caribbean Bank Ltd. (BCB) and the Government of Belize (GOB) over the Government’s decision back in 2009 to appropriate the bank’s loan to Belize Telemedia Limited as part of the nationalization of the phone company.

British Caribbean Bank, based in the Turks & Caicos Islands, also issued a statement, announcing the favorable conclusion of the international tribunal administered by the Permanent Court of Arbitration at the Hague, Netherlands.

Despite assertions by the Government of Belize that the loan transaction, dating back to 2007, was unlawful, the arbitration ruling declares that the Government must pay the bank an award of US$41,773,096.04. In the BCB statement, however, the total amount of the arbitration award is said to be US$48 million with interest.

“The tribunal, in a unanimous decision, held that Belize unlawfully expropriated various loan interests held by the Bank. The tribunal also held that Belize breached its international obligations to treat the Bank’s investment in a fair and equitable manner,” the BCB report detailed.

Back in November 2009, the bank had said that the liability was BZ$50 million or US$25 million. In 2009, Michael Ashcroft’s London attorneys, Allen & Overy, wrote the Barrow administration for a second time, threatening for a second time to invoke international arbitration against the Government of Belize.

The attorneys claimed that the Government’s acquisition of shares held by the Ashcroft group in Belize Telemedia Limited and Sunshine Holdings (which held shares in BTL before the nationalization) plus their related assets; as well as the rights of Ashcroft’s British Caribbean Bank in relation to two loans, was “in flagrant breach” of the UK-Belize investment treaty for qualified investors.

“When the present Government acquired the shares in Telemedia owned by various Lord Ashcroft- related companies in 2009, BCB demanded payment of the loan and threatened to wind up Telemedia. In reaction, GOB compulsorily acquired the loan from BCB. This meant that GOB now owned the loan, preventing BCB from undermining the acquisition and winding up Telemedia.

“In turn, it meant that GOB now became liable to pay BCB, and that Telemedia now became liable to pay GOB,” today’s statement from the Government said.

In July 2007, BTL had secured a mortgage for US$22.5 million (repayable in four years) from the Turks and Caicos branch of the Belize Bank, a sister company.

Back in 2008, BTL’s government-appointed board had said that it was illegal for the then shareholders to take out the loan—a loan which they say BTL cannot afford to pay, setting up a situation where the company was bound to enter into receivership and lose all its core assets, which were pledged to the bank in a subsequent mortgage debenture. The BTL board threatened suit against the former directors for BZ$21 million.

For its part, the Government now asserts that at all times it has acknowledged its obligation to pay compensation to BCB.

“The reason why it has not done so to date is that Telemedia, to whom GOB looks to provide that money, has objected that the loan was contracted for an illegal purpose and should not be repaid by Telemedia, but should be paid by those persons who actually got the benefit of the loan,” its statement said.

“Telemedia’s objection was that the money was borrowed so that Telemedia could use that money to enable a subsidiary to purchase Telemedia’s own shares, which it maintained is illegal. The shares were later distributed to the Ashcroft-related companies,” the Government explained.

It conceded, though, that the foreign arbitrators have overruled that objection, which GOB put forward in the arbitration.

“However, that objection is the substance of a case still pending before the Supreme Court of Belize, brought jointly by Telemedia and GOB against BCB, seeking a declaration that the loan was illegal and may not be enforced. That case remains to be heard in the Supreme Court of Belize,” the Government said.

The Caribbean Court of Justice earlier this month heard 6 consolidated cases, including a suit against the Government by British Caribbean Bank, challenging the Government’s nationalization of BTL and Belize Electricity Limited, for which a ruling is pending in January.

The Government clarifies that the case before the arbitrators is different from the constitutional challenge case before the CCJ.

“The arbitration arose out of a Treaty signed by the United Kingdom and Belize. BCB was able to rely on the Treaty because the Turks and Caicos Islands (TCI), where BCB is located is a dependency of the United Kingdom. TCI companies may, therefore, bring arbitration proceedings under the Treaty,” the Government explained.
The Government says that it will challenge the decision of the foreign arbitrators.

Check out our other content

Belize places Top 40 at Miss World 2023

PM presents 2024/2025 Budget

Women in Art

Check out other tags:

International