A significant judgment was handed down today by the Caribbean Court of Justice today – and it's a very major win for the Barrow Administration in its ongoing battle with the Ashcroft Alliance. More than that, it could have far-reaching implications for a long string of tax write-offs, offsets, guarantees, and settlement deeds that the former Prime Minister and Minister of Finance Said Musa gave to the Ashcroft Alliance.
But, before we explain all that, first to today's judgment – which was delivered by
teleconference from the CCJ Headquarters in Port of Spain, Trinidad to the Supreme Court Building in Belize City.
The CCJ declined to enforce an arbitral Award made by The London Court of International Arbitration in favour of the British Caribbean Bank. The Bank had won an arbitral award of $44 Million US dollars plus interest on the strength of a March 2005 settlement deed signed by then Prime Minister Musa and then Attorney General Francis Fonseca. At the time Musa explained that under the Settlement Deed, government agreed to abandon any litigation against the Carlisle Group for the recovery of outstanding business taxes in exchange for the Carlisle Group abandoning its pending litigation related to the BTL buy back.
In March 2005, then PM Musa said that it was a $12 million dollar write off in business tax that the Belize Bank owed, but what Musa didn't say is that he also wrote off the Bank's taxes going forward!
When the Barrow Administration was elected it refused to honour the agreement on the basis that only Parliament could approve such a tax write-off.
Well, the CCJ upheld that position; it found that the arbitral Award based on that deed was quote, "illegal, void and contrary to public policy." Why? Well the court found that quote, "the Deed purported to alter and regulate taxation and under the Belize Constitution…this could only validly be done by parliament." A press release from the court adds that, quote,
"to allow the Minister of Finance to assume essential law-making functions beyond his constitutional or legislative authority would put democracy at peril. Caribbean courts therefore have an obligation to strike down executive action that undermines the authority of the legislature."
Today, outside the court, attorney for the Bank Eamon Courtenay explained how the court differed from the London Court of International Arbitration:…
Eamon Courtenay, S.C - Attorney, British Caribbean Bank
"They took a different view and that is that the Minister did not have the power to give that type of tax treatment to the company and because it did not it concluded that the agreement was unlawful and therefore they will not enforce the award that was based on an unlawful agreement, it would be contrary to public policy to do that."
Jules Vasquez
"What's next for your client in terms of the settlement in this particular tax treatment which it is now liable for?"
Eamon Courtenay, S.C
"Well we have to go in and consider the situation, as I said - we have not read the judgment and it will give us pointers as to exactly what they found in terms of the fact etc.; we have to analyze the judgment first."
Today Prime Minister Dean Barrow told us that it vindicates his government's position on this and many other agreements entered into under the Musa Administration, specifically with the Ashcroft Alliance. Barrow's government has maintained that the settlement deeds regarding Universal Health Services the Accommodation Agreement and other tax breaks such as the one for IMMARBE had to go to parliament – and they didn't.
In a formal statement from, PM Barrow has commented that this landmark decision (establishes) that the various ‘settlement deeds' and ‘accommodation agreements' signed by the previous Government were repugnant to the Constitution and laws of Belize and could not be enforced. He said that the CCJ decision is a great victory for Belize and the rule of law.
And while that is the considerable upside for government, there is a modest upside for the bank when the court ruled that the Arbitration Act is constitutional – and thus arbitral awards can be enforced in Belize. That factored into the issue of costs where the Court found that "given the Government's refusal to participate in the arbitration proceedings," as well as the Bank's success on the arguments raised on the constitutionality of the Arbitration Ordinance, each party should bear its own costs.
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