BELMOPAN, Cayo District, Fri. Jan. 27, 2017–At an emergency meeting held in Belmopan, parliamentarians from both sides of the floor—the ruling United Democratic Party and the Opposition People’s United Party—voted in favor of a bill to protect the foreign reserves of the Central Bank of Belize, an estimated US$377 million (mostly held in the US), from being seized to satisfy two arbitration awards totaling US$50 million awarded to companies controlled by British billionaire Lord Michael Ashcroft.
Ashcroft, a shrewd businessman with Belizean citizenship, has financed both of the political parties, which both signaled their support for the bill as a show of nationalism amid what Prime Minister Dean Barrow now deems an economic war.
And although another bill approved in Parliament on Friday criminalizes any such attempted seizure by introducing jail time and fines for anyone in Belizean territory trying to enforce such arbitration awards (contrary to a previous ruling by the Caribbean Court of Justice (CCJ), Belize’s highest court), Barrow suggests that Belize is not completely immune from attempts to have assets seized, not just in the US, where the companies have successfully litigated against the Government of Belize in US courts, but also elsewhere.
Barrow told journalists on Friday that, “…this tries to immunize the Central Bank’s assets wherever they are, and they are not all over the world; there are a couple of countries in which I believe the Central Bank has reserves. So to the extent that it would serve for the United States, it would also serve for the UK, Canada, if there are reserves in Canada.”
Rare unanimous support in the House for bill to protect foreign reserves from Ashcroft maneuver
However, he conceded that the legislative maneuver would NOT bar attempts by the litigants to get the arbitration award paid, and went further to tell the press that there would be no way to get at operators of vulture funds if a move is made to assign the arbitration awards to such a fund. (A vulture fund buys securities in distressed investments, such as high-yield bonds in or near default, or equities that are in or near bankruptcy, according to Investopedia.)
“The law is effective in the context of what we know is currently in play; but for example, suppose you were talking about vulture funds; there is no way we can get at the operators/owners of those vulture funds; if there were to be some assignment of this award to a vulture fund, it’s difficult to be able to actually deploy the deterrent effect, because we can’t find them within the jurisdiction to charge them,” Barrow said.
Barrow also said that the litigants may move for an ex parte freeze order, and although he thinks that the Government can have it unblocked, such a freeze could, nevertheless, cause enormous reputational, psychological and perhaps even practical damage.
“Because we know that this country’s reserves constitute a big fat inviting target to the predators who would seek to collapse our economy, we believe that once they obtain the order for enforcement of the judgment they will seek to attach the assets, the holdings of the Central Bank of Belize,” Barrow said, adding that the litigants would have to show that the Central Bank waived immunity for attachment of its reserves.
He went on to say that, “There is always a thing called litigation risk…” and that the litigating parties are able to make ex parte applications without notice to the other side, in this case the Government of Belize, and get preliminary interim orders which could then result in the freezing of the Central Bank’s assets. It would then be open for the Government to argue to get the interim order set aside, Barrow explained.
As we reported in the weekend issue of Amandala, Belize Social Development Limited and Caribbean Investment Holdings Limited (formerly BCB Holdings), along with the Belize Bank, have asked the US courts to issue an order to secure the payment of two arbitration awards totaling US$50 million, after Barrow said in the last sitting of the House that he won’t pay a penny. Barrow said that he could not pay the awards, which are contrary to a former ruling made by the CCJ.
Since the filing was made for the order on Monday, we have been advised that both the Government and the Central Bank have been taking measures to shelter Belize’s foreign reserves.
When the House met on Friday, it approved, in a rare unanimous vote, the Central Bank of Belize (International Immunities) Bill, 2017, one of the counter-measures being launched.
In introducing the bill, Barrow said that, “…in the United States of America, their federal statute, called the Foreign Sovereign Immunities Act, which is a 1976 law, confers both jurisdictional immunity and immunity from suit on central banks. In fact, that Foreign Sovereign Immunities Act, as the title suggests, also confers immunity from suit and attachment on foreign governments. The immunity, however, can be waived by the sovereign governments, so that when, as is the case now, there are arbitral awards pronounced against this Government—pronounced against this country, not this administration—and those awards are sought to be enforced in the United States, this Foreign Sovereign Immunities Act would normally prevent any enforcement of those awards…. But those awards came about as a consequence of arbitration agreements entered into by the last Government, in which agreements the last Government expressly waived its immunity,” Barrow detailed.
In their filing in the US court, the litigants expressly note that, “…Belize ‘irrevocably and unconditionally’ waived its sovereign immunity with regard to proceedings relating to the Settlement Deed…”, in reference to one of the agreements in dispute.
In tandem with the bill to protect the foreign reserves, local parliamentarians approved as well the Crown Proceedings (Amendment) Bill, 2017, which introduces jail time and/or fines for attempts—even overseas—to enforce awards frowned upon by courts within Belize’s jurisdictions.
“This particular Bill… will make clear that no one can properly enforce abroad an arbitral award once that award has been declared unconstitutional, illegal and void by our courts,” Barrow said.
The bill calls for a fine not exceeding $250,000 and a jail term of 2 years.
Opposition Leader Johnny Briceño took issue with the fact that the parliamentarians of the People’s United Party (PUP) were not informed about the two surprise bills in advance, as they would have liked to have had time to review and consult on them in advance of the meeting.
Briceño said, “…for the Prime Minister to pass [the international immunity bill] through 3 stages today, certainly it would not be fair to us to take a good and comprehensive look and probably help him in trying to strengthen it if he is missing anything in the bill.”
“We’re trying to pass legislation to prevent this man from coming after our assets, something that I fully support, that we have to protect our foreign reserves and we can’t allow this man who, from time to time, behaves like a predator coming after us…. But the point that I am making is that it is just not right. It is just not fair that the Prime Minister and his government throw this at us without us really sitting down and studying it properly,” Briceño commented.
Barrow apologized to Briceño, saying that, “…without wishing to cast any aspersions, we don’t think that in a matter like this, we can trust some members of the Opposition, and there is a factual basis for that.”
He added that one of the PUP’s key officials is the chief local counsel to the Ashcroft concerns.
“If it was just a matter of something between you and me, I would have had no doubt that since it concerns the welfare of Belize, you could absolutely have been trusted. It was not you, Sir,” Barrow told Briceño, who signaled that he was personally hurt by the non-disclosure by Barrow before Friday’s meeting.
At its meeting on Friday, the House also approved a motion for the re-appointment of Ombudsman Lionel Arzu, as well as the International Insurance (Amendment) Bill, 2017, and the Forest (Amendment) Bill, 2017.
Orange Walk North area representative for the ruling United Democratic Party, Gaspar Vega, and Opposition PUP member for Freetown, Francis Fonseca, were absent from Friday’s meeting.