Arbitrators Says G.O.B. Owes BCB US $45 Million

Eamon Courtenay

The Government of Belize will have to cough up the huge sum of nearly one hundred million dollars following the long awaited decision of an international Treaty Tribunal. Today, the Treaty Tribunal handed down its decision in the case of the British Caribbean Bank and the Government of Belize. The arbitration held in Costa Rica earlier this year arose from the 2009 nationalization of Belize Telemedia and Sunshine Holdings’ loans with the British Caribbean Bank, which the Government had also nationalized when it took over Telemedia.  The Tribunal determined that the Government had unlawfully expropriated the loans held by the Bank in violation of the UK Belize Bilateral Treaty.  The Tribunal also held that the Government had breached its international obligations to treat the Bank in a fair and equitable manner. The BCB says that the Tribunal awarded the bank a whopping forty-eight million US dollars, which includes interest and legal costs. The Government had initially failed to respond to the arbitration when the matter was originally pursued by the Bank in 2009 but belatedly decided to take part, and to be legally bound by the arbitration process; displaying at the time a much publicly stated confidence of success. The Government was represented by a high priced legal team from the United States, alongside with the Government’s own local legal counsel, Denys Barrow. BCB’s attorney Eamon Courtenay explains the case and decision.

Eamon Courtenay, Attorney for BCB

“Well the main loan was given in 2007, as you say.  It was from British Caribbean Bank to Belize Telemedia Ltd. for about twenty-two point five million U.S. dollars and the purpose of that loan was for equipment and other infrastructure for Telemedia, as well as to purchase some shares.  That transaction went through, that is to say, you will recall that it goes all the way back to Mr. Prosser and some shares that had been pledged to RBTT [Royal Bank of Trinidad & Tobago].  Mr. Prosser defaulted and RBTT wanted to sell and then a subsidiary of Telemedia, Telemedia Investments Ltd. bought the shares with the proceeds of this loan, part of the proceeds of this loan.  And they, as you can imagine, were obliged to repay.  There were two other entities, well one other entity, Sunshine Holdings Ltd., which had borrowed just over a million dollars and they had an overdraft of about a million dollars.  So, all in all it was about twenty-three to twenty-four million dollars in total that was outstanding at the time of the nationalization.  So when the nationalization occurred the bank got in contact with the government and said, well you have acquired this loan that we had with Telemedia and Sunshine.  There is no point in doing that, we are prepared to negotiate terms for you to repay the loan or if you don’t want we can assign it to another financial institution and that financial institution can then make a loan to you and you pay us out.  None of that was done.  Government, as you know, took the loan, took all the security rights and the bank went to court in an attempt to collect its money.  When it did that the government issued another statutory instrument and actually took away the debt and any and every debt and any and every right that the bank had to recover its money.  Therefore, the bank commenced proceedings in 2009 in the Supreme Court in Belize challenging the taking of its property.  The bank sued and Justice Legall said that the bank was right; no public purpose, unrelated to the nationalization.  But, by that time the government had passed the Eighth Amendment and Justice Legall interpreted the Eight Amendment to say that even though the bank had won, he was barred from giving the property back to the bank.  So the bank appealed that and the Court of Appeal earlier this year handed down its decision by a majority, two to one, saying that the taking of the bank’s property was constitutional and there was a very strong dissenting judgment that said it was unconstitutional.  That case is now before the Caribbean Court of Justice and we are halfway through the arguments.  We return in January to complete the arguments.  Parallel to that, at the same time, the bank was entitled because it’s in the Turks & Caicos Islands, it is entitled under the Bilateral Investment Treaty between England and Belize to commence what is called treaty arbitration.  Under that bilateral investment treaty if there is a dispute, if there is an expropriation of property by the government and any entity that is a British entity in England or any of its colonies can commence arbitration proceedings.”