BELIZE CITY, Wed. July 8, 2015–United States District Judge Colleen Kollar-Kotelly for the District of Columbia, South Carolina, USA, recently issued a ruling upholding the $44 million arbitration award rendered by the London Court of Arbitration (LCIA) against the Government of Belize back in 2009.
The LCIA had awarded BCB Holdings BZ$40.8 million in damages, reimbursement of the respondents’ costs of the arbitration in the amount of £206,248.40, and legal, professional and other arbitration costs in the amount of BZ$2,960,735.69, with interest at an annual rate of 3.38% compounded annually on all sums.
The litigation stems from a settlement deed between the Government of Belize and BCB Holdings, previously known as Carlisle Holdings Limited, dated March 22, 2005.
The Kollar-Kotelly ruling noted that in 2008, a dispute arose between the parties over clauses in the deed under which the Government agreed to provide favorable tax treatment to BCB Holdings.
It added that, “in August 2008, the Belize Commissioner of Income Tax rejected tax returns that were filed by BBL in accordance with the Settlement Deed.”
Subsequently, the petitioners considered this rejection a repudiation of the Settlement Deed and went to arbitration in October 2008.
The LCIA ruled against the Government, which did not participate in the arbitral proceedings, in 2009. However, subsequent attempts to have the arbitration award enforced in this jurisdiction have failed.
In 2013, though, the Caribbean Court of Justice (CCJ), based in Trinidad and Tobago, dropped the bombshell, announcing that “…the [2005 settlement] 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…”
At the time, Eamon Courtenay, SC, attorney for BCB, had hinted that the CCJ ruling might not have been the end of the attempts by the Ashcroft Alliance to collect the LCIA award. He stated 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?”
On July 1, 2014, BCB and the Belize Bank Limited filed a petition in the United States to confirm the foreign arbitration award, but on January 30, 2015, the Government filed a motion to dismiss the petition and complaint, claiming, among other things, that the US Court lacks subject matter jurisdiction because Belize is entitled to foreign sovereign immunity. The Government also argued that the foreign judgment is against public policy and conflicts with the final CCJ judgment.
The Government of Belize also argued that the final judgment rendered by the CCJ prevents petitioners from attempting to enforce the Award in the US jurisdiction.
However, the US Court ruled to the contrary, saying that the Government of Belize’s arguments are unavailing.
“As England is the country with primary jurisdiction, only an English court may set aside the arbitral award issued by the LCIA. Consequently, although the CCJ decided not to enforce the award, its decision to do so does not hold preclusive effect on this Court,” US Justice Kollar-Kotelly said.
The Government also argued that confirmation of the Award should be denied because the Award violates the public policy of the United States against government corruption, but the court ruled that the government had not met the substantial burden of proving its public-policy defense.
After deliberating on the matter, Kollar-Kotelly ruled to uphold the $44 million arbitral award—notwithstanding the prior ruling rendered by the Caribbean Court of Justice.
Amandala was unable to reach Prime Minister and Minister of Finance Dean Barrow for comment on the implications of the US court ruling.