Belize International Services Limited V the Attorney General Of
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IN THE SUPREME COURT OF BELIZE, A. D. 2013 CLAIM NO. 698 OF 2013 BETWEEN: (BELIZE INTERNATIONAL SERVICES LIMITED CLAIMANT ( (AND ( (THE ATTORNEY GENERAL OF BELIZE DEFENDANT ----- BEFORE THE HONOURABLE MADAM JUSTICE MICHELLE ARANA Mr. Eamon Courtenay, SC, along with Pricilla Banner and Ms. Angeline Welsh of Courtenay Coye LLP for the Claimant Mr. Denys Barrow, SC, along with Jaraad Ysaguirre of Barrow and Co for the Defendant Hearing Dates: 9th December, 2015 10th December, 2015 16th February, 2016 28th October, 2016 ----- The Facts 1. This is a claim for $45 million US in damages brought by Belize International Services Ltd. (hereinafter “BISL”) against the Government of Belize for breach of contract. The Claimant as stated in the Statement of Claim dated March 26th, 2015 was and is at all material times a company duly registered and existing under the Laws of the British Virgin Islands with its registered office situate at Craigmuir Chambers P.O. Box 71, Road Town, Tortola, British Virgin Islands. The Defendant is the legal representative of the Government of Belize (“the Government”). By virtue of a written Management Services Agreement (“the Agreement”) - 1 - dated 11th June, 1993, the Claimant agreed with the Government to develop and manage the International Business Companies Registry (“the IBCR”) and the International Merchant Marine Registry of Belize (“the IMMARBE”) (together “the Registries”) for a period of ten years with an option to renew the term. 2. On the 9th May, 2003 the Agreement was renewed for a further term of ten years when the Claimant exercised the option contained in Clause 15 of the said Agreement. The Claimants say that on 24th March, 2005 the Claimant and the Government acting pursuant to clause 20(1) of the Agreement and in consideration of the payment of the sum of $1.5 million dollars by the Claimant to the Defendant, amended the Agreement and extended the duration of the Agreement to the 11th June, 2020. The Defendant says that the contract came to an end by effluxion of time on June 10th, 2013 and therefore the Government proceeded on June 11th, 2013 to take possession of the Registries. The Defendant also contends that the terms of the Agreement which required the deposit of public moneys into the Claimant’s private bank account and the withdrawal of moneys so deposited amounted to gross violations of constitutional and public finance law thereby rendering the contract illegal and unconstitutional. The Defendant argues that the contract was also unlawful in that it was awarded without following the mandatory tender procedure; the Claimant is therefore not entitled to the relief which it seeks. The Issues 3. a) Did the Government breach the Agreement with BISL? Was the Agreement validly extended by the letter dated 24th March, 2005 signed by the Prime Minister and Attorney General addressed to BISL? - 2 - b) If there was a breach, has the Government’s breach of the Agreement resulted in loss and damage to BISL? c) If the answer to b is yes, then what is the amount of loss and damage suffered by BISL as a result of the said breach by the Government together with interest and costs? The Claimant’s Case 4. Mr. Courtenay, SC, on behalf of the Claimants submits that on March 24th, 2005 the Claimant and the Government, acting pursuant to clause 20(1) of the Agreement and in consideration of the payment of the sum of US $1.5 million by the Claimant to the Government, amended the Agreement, and extended its duration to 11th June 2020 (Exhibited as Annex 3 in the Claimant’s Trial Bundle). On May 16th, 2005, the Claimant paid US$1.5 million to the Government as agreed (Annex 4). By the terms of the Agreement, the Government agreed, inter alia, to share with the Claimant: a. The revenue derived from the management and operation of the Registries as follows: i) 40% of the income in any given year is to be used to cover the operational expenses of IMMARBE and IBCR for that year; ii) Thereafter, the balance of income is to be shared 1. 60% for the Government; and 2. 40% for BISL. b. Any income earned by the Claimant or its affiliated companies from activities related to the Agreement which are outside the scope of the fees, penalties and taxes collected under the Merchant Shipping Act or the International Business Companies Act or any subsidiary legislation and other fees collected pursuant to clauses 8(2), (3) and 8(4) of - 3 - the Agreement. In written submissions filed on December 1st, 2015, BISL argues that the evidence is pellucid that (i) the Parties entered into the Agreement (ii) BISL performed its obligations under the Agreement for twenty years; (iii) the Agreement was amended and its terms extended until 2020 (an additional seven years) in consideration of US $1.5 million paid by BISL to the Government and BISL’s promise to continue to perform its obligations under the Agreement for the renewed term. The decision of the Parties to amend, and therefore extend, the term of the Agreement by reliance on clause 20(1) of the Agreement was nothing more than the parties exercising their freedom to contract. 5. Mr. Courtenay, SC, contends on behalf of BISL that the Government evinced a clear and unambiguous intention to no longer be bound by the Agreement after 11th June, 2013. The Government appointed a Deputy Registrar who took over the management of both Registries on 11th June, 2013 on behalf of the Government. Learned Senior Counsel further submits that by its letters, issuance of Statutory Instruments No. 58 and 59 of 2013 and by its conduct the Government repudiated the Agreement. He therefore argues that the measure of damages resulting from Government’s breach is the amount of profits that BISL would have earned over the remaining term of the Agreement i.e. the seven years from June 2013 to June 2020. In submissions filed on behalf of BISL on December 24th, 2015 Mr. Courtenay, SC, advanced the argument that both Government’s arguments are untenable as a matter of law and fact. He sets out his counter arguments as follows: Part B – addresses the submissions made by the Government in Part 1 of its Pre-trial Submissions Part C- addresses the submissions made by the Government in Part 2 of its Pre-trial Submissions - 4 - Part D - BISL’s Submissions on the quantum of damages The Defendant’s Case Part 1 of GOB Pretrial Submissions - Private Control of Public Moneys 6. Mr. Barrow, SC, in his submissions dated December 4th, 2015 argues on behalf of the Government that the Agreement dated June 11, 1993 was for BISL to operate and run two newly created registries; one for registrations in Belize of sea going vessels (IMMARBE) and the other for the registration in Belize of international business companies (IBCR). He says that while the Agreement was renewed on 9th, May 2003 pursuant to clause 15, the Agreement did not provide for any further renewal. He argues that the alleged extension for the period 2013 to 2020 was effected by a letter dated March 24th, 2005. It is this purported renewed term of the Agreement that is the subject of this claim. Learned Counsel then adverts to the legislative framework of the Merchant Marine Act and International Business Companies Act as the context for his arguments on why the Government says the contract was not renewed. He cites Section 23 of the Merchant Marine Ships Act: “23 (1) For the more efficient operation of IMMARBE, the Attorney General may, if he thinks fit, engage the services of a person or a body corporate possessing the qualifications and expertise necessary to manage IMMARBE’s business abroad. (2) Any such contract as is referred to above may authorize the person or body corporate with whom it is made to do all things necessary for IMMARBEs operations, including the designation of world-wide representatives of IMMARBE, approval of classification societies and radio accounting authorities, appointment and approval of world-wide inspectors, and establishment of IMMARBE’s offices abroad. (3) Every such contract as is referred to in this section shall contain a provision that the Auditor General shall be entitled to audit the accounts of the person or body corporate who is contracted to manage IMMARBE’s operations.” - 5 - Mr. Barrow, SC, then refers to section 122 of the International Business Companies Act as follows: “122- (1) The Minister shall appoint a person to be Registrar of International Business Companies. (2) The Registrar may with the approval of the Minister appoint one or more persons to be Deputy Registrar of International Business Companies. (3) The Minister may make regulations with respect to the duties to be performed by the Registrar under this Act and in so doing may prescribe the place or places where the office for the registration of International Business Companies is located.” “Section 132.-The Minister may make regulations for the better carrying out of the provisions of this Act and for prescribing anything that needs to be prescribed.” The Agreement 7. Mr. Barrow, SC, then turns to the Agreement between Belize International Services Ltd. (BISL) and the Government of Belize, whereby the Government agreed that BISL would assist with the development of the Merchant Marine Registry and the International Business Companies Registry. In operating and managing these registries, BISL would also be responsible for “collection of taxes, fees, and other charges payable by vessels” in the case of IMMARBE, and “collection of taxes, fees, penalties and other charges payable by such companies…” in the case of the IBC Registry.