Supreme Court declines to enforce Belize Bank arbitral award

A $39 million BZ arbitration award granted to the Belize Bank Limited by the London Court of International Arbitration (LCIA) in January of 2013 cannot be enforced because, according to Supreme Court Justice Shona Griffith, it would be contrary to public policy, specifically the need for parliamentary approval to enter into a loan guarantee with the Belize Bank Limited on behalf of Belize Healthcare Partners Limited.

Belize Healthcare Partners Limited bought the assets of the former Universal Health Services in 2008 under a settlement agreement. The Bank was gifted $40 million from the Government, consisting of separate US$10 million amounts from Venezuela and Taiwan, but the Venezuelan money was ordered to be returned by the Central Bank as it was intended for a different purpose. Additionally, Belizeans greatly disliked the notion of public funds being used for private ventures such as BHPL/UHS.

While the Executive could enter the contract, the Court said that without approval of the legislature, which was not granted as the motion was withdrawn from the House of Representatives due to public upheaval at a meeting in May of 2007, it found difficulty seeing a way to enforce payment of the monies granted under the arbitral award. This is because the Finance and Audit Reform Act brought into force in 2005 legislates that such approval is needed for any amount over BZ$10 million.

Speaking after the judgment, attorney for the government, senior counsel Denys Barrow, commented on its substance.

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denys5.2.15Denys Barrow – Attorney for Government

“The court said that the executive is basically always entitled to enter into agreements, including loan agreements. The problem is that entering into an agreement, making an agreement, and enforcing that agreement are two separate stages. It is therefore why the Finance and Audit Reform Act 2005 makes provision that there should be a resolution of the National Assembly, approving loans of a certain amount, because implicit in that, is that if the National Assembly, which votes the payment of all monies, approves the making of the agreement, then it follows as a matter of course that the National Assembly must intend to approved the payment of the obligation which is incurred.  But if there has been no parliamentary approval, but simply the making of the agreement by the executive, by the government, then the question of getting paid is a separate question, and you cannot get paid unless the National Assembly approves the paying of the money.”

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Were the actions of then-Prime Minister Said Musa’s administration in 2007 illegal? Barrow was not willing to go that far but said the Government was not properly advised and moved without looking at the consequences.

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Denys Barrow

“It was an ill-advised or a deficient approach that they took, and the consequence is what we have now seen.  If you do not get approval, then unless you go back after and get approval for the payment, you cannot pay out the money.

We have every confidence that this will go to the CCJ, because I am sure that the Belize Bank will appeal.  The Judge gave, I think with respect, a brilliant judgment.  She analyzed and outlined to us all the issues.  It’s a finely balanced question.

She held against the Government on two aspects,  and held in our favor on one aspect which was the decisive aspect.

But, I think, whoever won at the Supreme Court will appeal to the Court Of Appeal, and I think whatever the outcome at the Court Of Appeal, there will be a further appeal to the CCJ.”

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The court disagreed that there was double compensation in play or that the arbitration panel was improperly constituted, meaning the case turned on the issue of public policy.

The defendants were awarded half their costs to be assessed if not agreed.

The Caribbean Court of Justice decided a similar case in 2013 from BCB Holdings in favor of the Government on tax regimes which formed a major basis for this decision.

The Government has also planned to challenge the $41 million awarded to British Caribbean Bank for a loan to Belize Telemedia Limited in 2007, which was acquired by the Government in 2009.

Lord Michael Ashcroft and other representatives of the Belize Bank were at court Thursday morning for the judgment, but conspicuously avoided the press by leaving through the back of the court.

On Thursday afternoon we heard from attorney representing the Belize Bank, Senior Counsel Eamon Courtenay. Justice Shona Griffith’s decision not to enforce the arbitral award was, in her words, “finely balanced”, and what tipped that balance was the issue of whether the award could be enforced contrary to public policy – the Government paying for monies it did not approve to be used from the Consolidated Revenue Fund, as the grants from Venezuela and Taiwan were to be used for other purposes.

According to Eamon Courtenay, with due respect to the judge and her careful and fine analysis, the award still exists and it needs to be paid. That, he said, is what compels his clients to pursue appeal to the Court of Appeal and ultimately the Caribbean Court of Justice, in what the attorney admits has been a six-year “war” between Lord Michael Ashcroft’s various business interests and the current administration.

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vlcsnap-2015-02-06-06h32m22s115Eamon Courtenay – Attorney for Belize Bank Limited

“That is Belize Bank loaned money, because it’s out of pocket.  So it is not that the Court has found that the Government doesn’t owe. An arbitral tribunal established that that money is owed by the Government of Belize. The sole question was a technical one as to whether there was compliance with the Constitution.

At the end of the day I can tell you this:  There is no Court that has said that the loan note is unconstitutional or invalid. In fact, you will recall that the Privy Council held that the loan note was not a violation of Section Seven of the Finance and Audit Reform Act, and so I can expect that very shortly the Belize Bank is going to institute another claim, and we are going to sue on the loan note to recover the debt that is owed to the bank.

The long and short of it is, that the money is owed, interest is accruing.  The longer the Government takes in resisting and fighting at every page and place that it can, the more he interest accumulates, and ultimate the people of Belize well have to pay.”

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Eamon Courtenay noted that also at stake is perception of investor confidence – that investors generally cannot trust an administration that goes back on its word, even if that administration is populated by different personnel from the original makers of the agreement.

He told PLUS News that there is enough merit in this case to distinguish it from the BCB Holdings case extensively cited by both parties, and Justice Griffith in Thursday’s ruling which will ultimately make it successful.

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Eamon Courtenay

“The decision on BCB Holdings, in my view, is a very narrow issue.  That is a case in which a tax regime was agreed between the parties, and what the CCJ said is that you cannot agree a private tax regime for a particular group of companies. 

You would have heard Justice Griffith today say that, that level of illegality was not present in this case.  It is our argument that it is not present in the other cases. 

So the BCB Judgment was used by the Judge as a basis on which she would analyze on the line document. We respect and understand that, but we think that when you look at the factual situations, they are so starkly different that ultimately we are going to prevail.”

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As for Lord Ashcroft’s presence in court on Thursday, Eamon Courtenay noted that he was also at the CCJ hearing in person, and opined that perhaps he wanted to see for himself how the cases were being decided as they come to a close, but he added that he does not know that for sure and has not asked Lord Ashcroft his purposes for being in Belize.
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