In one of his last judgments before his departure from Belize, Supreme Court Justice John Muria ruled that Government should pay BCB Holdings and its subsidiary, the Belize Bank, a $43 million arbitration award granted to the parties by the London Court of International Arbitration (LCIA) back in 2009.
The dispute is over a settlement deed with the bank dated March 22, 2005, and later amended, purportedly to settle a dispute over a share purchase deed and option deed for the repurchase of shares in Belize Telemedia Limited (formerly Belize Telecommunications Limited). The agreement centered on tax concessions to the bank.
Amandala has seen the written 52-page judgment, which sets out Muria’s line of reasoning in arriving at the decision.
Muria ruled that pursuant to the Arbitration Act, BCB Holdings and Belize Bank are at liberty to enforce the LCIA Final Award in the same manner as a judgment or order to the same effect as the Final Award.
The Government was also ordered to pay costs of the court claim to BCB Holdings and the Belize Bank.
The claimants in the case are BCB Holdings Limited (formerly Carlisle Holdings), the parent company of the Belize Bank Limited.
The substantive LCIA hearing took place in Paris on June 18, 2009, and the Final award was issued in London, UK, on August 18, 2009.
The Government of Belize did not participate in the foreign arbitration proceedings. Its attorney, Michael Young, argued before Muria that the arbitration award should not be enforced because (1) there are objectionable items in the settlement deed, (2) the underlying agreements were contrary to law and public policy, and (3) enforcement of the final award would be contrary to law and public policy.
The claimants filed a request for arbitration on October 16, 2008, Muria noted.
“At least 17 letters in relation to the Arbitration were sent to the Defendant, including some directly from the Arbitral Tribunal and the LCIA. Additional correspondence was also sent by the Claimants to the Defendant,” Muria documented.
“The government did not take part in the arbitration proceedings. Nevertheless, the Claimants proceeded with the hearing and to prove their case. At the hearing, the Claimants emphasized that they were not seeking from the Arbitral Tribunal to declare what level of tax was owed by the claimants to the Defendant; rather, they were requesting that the Arbitral Tribunal [grant] the Claimants damages for breach by the Defendant of the warranties it gave regarding taxation in the Settlement Deed as amended,” the judge continued.
He noted that the government did not file a statement of defense, nor did it otherwise participate in the arbitration, despite the numerous opportunities it was given to do so.
“There was no dispute that the defendant was given proper notice of the arbitration proceedings,” he added.
The LCIA ruled that BCB Holdings and the Belize Bank are entitled to BZ$40.8 million in damages, as well as reimbursement of costs, including $3 million in legal, professional and other arbitration costs. The annual rate of interest is 3.38% compounded.
Muria stated “…that the objection to the enforcement of the Final Award in this case on the basis that the award is contrary to public policy because of illegality cannot stand, and I reject it.”
He added that, “In my firm view, Belize, as a party to the New York Convention, must accept the generally accepted approach toward enforcement of an arbitral award. Hence the courts, I believe, ought to lean toward enforcement, unless the grounds set out in section 30 of the Arbitration Act are satisfied.”
According to Muria, Government would have had to establish an argument that, to allow enforcement of the award would “shock the conscience” or is “clearly injurious to the public good or wholly offensive to the ordinary reasonable and fully informed member of the public.”
“In my judgment, a reasonable and fully informed member of the public, conscious of the applicable legal principles and legal obligations of the parties under the Settlement Deed as amended in this case, is unlikely to be shocked, injured or offended by the enforcement of the Final Award in this case,” the judge declared.
Contrary to claims by Prime Minister Barrow that the agreements are unlawful, Muria found that the Settlement Deed as amended and the Arbitral Tribunal are lawful and legally binding, “…and it behooves on this court to enable it to be enforced.”
Muria wrote in his judgment that, “To refuse enforcement of the Final Award in this case would be taking the path beyond well established applicable legal principles and practices; that, this court is not prepared to do in the circumstances of this case.”
He concluded: “Thus for the reasons stated in this judgment, I find and hold that the claimants are entitled to enforce the LCIA Final Award made on 29 August 2009 by the Arbitral Tribunal in the Supreme Court of Belize.”
Government has decided to appeal Muria’s decision.