The famous American author and most controversial columnist George Will, referencing in 2009 the phrase sober as a judge, wrote (I suspect with acid tongue deep in cheek!): “Responding to early 19th-century rumors that they drank excessively, the Supreme Court justices decided to drink nothing on conference days—unless it was raining. At their next conference, Chief Justice John Marshall asked Joseph Story to scan the sky for signs of rain. When Story said he saw none, Marshall said: ‘Our jurisdiction extends over so large a territory that the doctrine of chances makes it certain that it must be raining somewhere. Let us refresh ourselves.’ ”
The American Heritage Dictionary of the English Language, while for its part associating sober with individuals “habitually abstemious in the use of alcoholic liquors or drugs,” notes also that it defines people “devoid of frivolity, excess exaggeration, or speculative imagination.” Also, people “marked by seriousness, gravity, or solemnity of conduct or character . . . circumspection and self restraint.”
Might the above suggest why not many of our own legal killibwees have graduated from Gros Islet’s famous barstools to the plush benches of our highest courts?
I am inclined to conjecture that in delivering his opinion on the 2004 matter of Saint Lucia’s attorney general and the much-maligned Martinus Francois, Homer—in the person of one of the judges—simply nodded. (My thanks to the Honorable Madame Janice M. Pereira for the Homer line: she delivered it at the conclusion of the recent Attorney General’s Reference concerning a particular “typographical error” in the Constitution of Saint Lucia.
The reworked “error” will now permit the Saint Lucia government to take away from the people our earlier right to a referendum should it ever contemplate dumping the Privy Council, for eons our court of last resort, in favor of the Caribbean Court of Justice. All the government now needs to have its own way are its predictable eleven ayes!)
While the chief justice had referenced a legal drafter, in my case Homer refers to Justice Redhead who started his written opinion on the Francois matter this way: “On 19th December 1992 Dr. the Honorable Kenny Anthony, Prime Minister of Saint Lucia and Minister of Finance, entered into an agreement on behalf of the government with Rochamel Development Company Ltd (the Developer).”
Oh yeah? Well, while I have absolutely no way of knowing where Kenny Anthony was bivouacking in 1992 the record proves he was at the time stated in no position to enter into agreements affecting the people of Saint Lucia. That job was already filled by John Compton.
The year Kenny Anthony became prime minister lives in infamy: On the occasion Saint Lucians were served a Throne Speech that has been described as insulting, demeaning and vindictive—to the governor general in particular and to the nation. As is the custom here, the prime minister wrote the speech. The man whose misfortune it was to be the day’s governor general was Sir George Mallet, a former deputy prime minister who with Compton had served the nation as an MP for some four decades. Today the especially egregious Throne Speech represents the writing on the wall that spoke to no avail of coming disasters. Alas, our partisan ears had heard only what we wanted to hear!
The year was 1997. Soon after taking office the new prime minister had closed the earlier mentioned Rochamel deal. Meanwhile secret negotiations were well underway that would result eleven years or so later in a pending breach of contract lawsuit against the government that could cost the people some US$500 million, not including lawyers’ fees. More about that later.
In the meantime, just when it seemed Rochamel and its several consequences had had their run, that everything that needed to be said about the debacle had been said, that the matter was dead, buried and forgotten, a reminder of the character of politicians, courtesy the Caribbean Court of Justice.
But let’s start at the beginning: Two commercial companies, BCB Holdings Limited and the Belize Bank Limited, in March 2005 entered into a special arrangement with the then government of Belize that promised the companies would enjoy from April that year, what in a written judgment Justice Saunders described as “a tax regime specially crafted for them—and at variance with the tax laws of Belize.”
Underscored is the fact that while “this unique regime was never legislated, it was honored by the state for two years until it was repudiated in 2008 after a change of administration following a general election.”
The companies took the matter before the London Court of International Arbitration, where it was determined that the State of Belize “was in breach and awarded against Belize damages totaling some $44 million.”
The back-story according to Justice Saunders: There had been a dispute over the stated intention of the finance minister and the companies to settle. The dispute centered on a share purchase deed and an option deed the parties had negotiated. This dispute had itself been submitted to the tribunal for resolution by arbitration because of certain claims made by the companies against the state. The deed recorded the companies’ agreement not to pursue further these existing claims.
In return the finance minister agreed to grant the companies the special tax regime, to which reference was earlier made. The deed expressed that the provisions were to be governed by English law and it contained an arbitration clause stipulating that either party could refer to the tribunal for resolution of disputes that were not amicably settled.
The prime minister and then minister of finance, and also the attorney general, executed the deed. Observed Justice Saunders: “For well over a year after its execution the Commissioner of Income Tax was unaware of the deed’s existence or its implications. On July 10, 2006 the commissioner wrote to the companies seeking their compliance with the published tax laws of the land. The companies responded by instructing the commissioner to liaise directly with the minister of finance. Three months later the commissioner wrote back to the companies accepting the companies’ position and retracting what initially was his. For two years the companies enjoyed the tax regime set out in the deed.”
With the arrival of the new administration in 2008, the tax commissioner assessed the companies on the basis of Belize law in respect of the period the companies had enjoyed benefits under the deed. “The commissioner rejected the tax returns filed by the companies for the two previous years, and required the companies to comply with the law,” according to Justice Saunders. “This turn-around by the government constituted a repudiation of the promises made in the deed and motivated the companies once again to resort to arbitration.”
Among other assertions, the tribunal also held that Belize’s Income and Business Tax Act “expressly authorized the government, through the Minister of Finance, to make and guarantee the promises contained in the deed.”
Section 95 of the Act: “The minister may remit the whole or any part of the income tax payable by any person if he is satisfied that it would be just and equitable to do so. Notices of such remission shall be published in the Gazette.” Added Justice Saunders, “In support of its findings the agreement was not illegal and the dispute was arbitrable, the tribunal cited several authorities.”
The tribunal’s award cannot legally be enforced in Belize without an application first being made to the court to enforce. The application to enforce was made to a trial judge in Belize. On this occasion the state appeared and made several submissions strenuously resisting application.
Noted Justice Saunders: “In essence the state submitted to the judge that (a) the relevant provisions of the act were in fact not part of the law of Belize; (b) the subject matter of the arbitration was non-arbitrable and (c) it would be contrary to public policy to enforce the award. The judge rejected these arguments, noting that section 28 of the act enshrines the principle that an arbitral award made pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is, for all purposes, binding on those who are parties to the Convention.
“The judge held that this award is a Convention Award. The judge therefore weighed this principle against the provisions of section 30 of the act which enjoins the court not to refuse enforcement of a Convention Award except upon very limited grounds specifically prescribed. The judge suggested the courts in Belize ought to lean toward enforcement of Convention Awards unless to allow enforcement 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.’
“The judge concluded that the deed was a lawful and binding commercial agreement and that to refuse enforcement would transgress established applicable legal principles and practices. He therefore ordered that the companies be at liberty to enforce the award in the same manner and to the same effect as a local judgment. The state appealed the judge’s decision to the court of appeal.”
Justice Saunders expressed great regret that the court of appeal determined the appeal on a consideration only of the state’s submissions regarding enforceability were not at all moot. “No other issues were discussed in the judgment of the court of appeal,” wrote the judge.
Especially arresting is that aspect of Justice Saunders’ position on the state’s submission that it was never bound by the agreement that gave rise to the deed because its implementation without parliamentary approval violated the country’s fundamental law.
“While the minister, in making agreements, could ordinarily be taken to have implicitly promised that he would secure any necessary legislative approval,” wrote Justice Saunders, “the award on its face disclosed that no such approval was ever sought or obtained and there never was any intention to seek or to obtain such approval. In these circumstances, counsel submits, the court should not enforce the award as it is repugnant to the Belize legal order.”
On the other hand, the companies argued that “the state benefited from the agreement because the deed amicably settled prior and pending claims of the companies against the government. The tribunal has definitively ruled that the agreement was not illegal and the court should not now reopen the merits of what has already been determined. The state could and should have raised, before the tribunal or before the English supervisory courts, any arguments it now wishes to raise on the legality of the deed. The award is final and, in keeping with pro-enforcement bias courts should have toward Convention Awards, this court should enforce it.”
Continued Justice Saunders: “In sum, in exchange for settling the prior arbitral proceedings the deed purported to create and guarantee to the companies a unique tax regime that was unalterable by parliament. So, for the sake of argument, if the BCB remained a Public Investment Company for the next 15 years, the State of Belize would be in breach of contract if its National Assembly at any time during that period, without the Companies’ concurrence, enacted any revenue measure applicable to the Companies that diverged from the deed. The promises by the minister were thus intended to supplant and supersede all current and future statutes enacted by the National Assembly.”
Observed the judge: “The tribunal noted that it is commonplace in international investment contracts for a host country to promise a foreign investor or contractor tax incentives as an inducement to make the investment or carry out an activity which is the subject of such agreements. The judge at first instance affirmed these conclusions of the tribunal.
“We agree that the minister does indeed possess wide prerogative powers to enter into agreements. The executive may do so even when those agreements require legislative approval before they can become binding on the State.”
It was at this point the supposedly long dead and forgotten Francois-Rochamel ghost appeared in the CCJ’s halls of justice: “This was also the opinion of the Eastern Caribbean Court of Appeal in the Saint Lucian case of the Attorney General v Francois, an authority cited by the Tribunal. The judge’s focus, however, ought logically to have extended beyond the issue of whether it was lawful to make the promises. The making of a government contract may be a matter quite distinct from its enforceability against the state, as the Francois case also demonstrates.”
By Justice Saunders’ account: “Francois concerned a guarantee entered into by the Saint Lucia Minister of Finance. No parliamentary approval had been given for the grant of the guarantee. The state was subsequently obliged to make good on the instrument. A citizen challenged its legality. The court held that nothing prevented the minister from giving the guarantee but the state only became bound by the same after parliament had approved the funds necessary to discharge it. As parliament had done so before the guarantee was honored there was no basis for the citizen’s complaint.”
Returning to the Belize matter: “It turns out that the minister had no power to make or implement the promises he made, his lack of authority would be a potent factor in any assessment of the legality of the agreement and the question whether enforcement of the award is contrary to public policy. The companies accept that the minister’s authority to make the agreement could only have been premised either on prerogative power or on section 95 of the Income Business Tax Act . . .
“The crucial question is whether any of the points made to justify the exercise of prerogative power . . . serve to render enforceable an agreement made by the executive branch of government without parliamentary approval, to except a taxpayer from obligations contained in current and future revenue statutes.”
Additionally: “Governments in the region are authorized to make promises to public or private bodies that the latter may enjoy derogations from the revenue laws of the state but whenever this occurs the promises must be sanctioned by the legislature or a body specifically authorized by the Constitution or the legislature before they can be implemented.”
Finally, the court decided, as another judge saw it, “for the reasons so eloquently articulated in the judgment of our brother Saunders JCCJ,” that “enforcement of the arbitral award should be declined.” The parties were directed to bear their own costs.
Still I am taken aback by Justice Saunders’ statement that while “no parliamentary approval had been given for the grant of the guarantee” in the Francois-Rochamel matter, “the state was subsequently obliged to make good on the instrument.”
How and when was the state “subsequently obliged to make good on the instrument.” Was Justice Saunders referring to the Civil Appeal No. 37 of 2003, which opens with Justice Redhead’s never corrected “December 1992” misstatement, and on which case Justice Saunders had also served as an adjudicator with the Honorable Hugh Rawlins? I quote again Justice Redhead on the historic occasion:
“Moreover, as I see it, the members of the parliament of Saint Lucia must have known what they were voting on. The resolution was before them. The resolution speaks quite clearly [my emphasis] of borrowing to finance capital and recurrent expenditure and also for financing government’s capital works program. The members of parliament must be taken to understand what are capital and recurrent expenditures and what is capital works program. If the members of parliament do understand and, in my view, they must have, then when they voted unanimously on the resolution they were passing a resolution for government to borrow to finance capital and current expenditure and for financing government’s capital works program.”
Why all the guesswork? The three opposition MPs involved were accessible to the court, if the judge really wanted to know how well they had understood the oh-so-clear resolution.
Actually the resolution couldn’t have been more vague. The opposition members themselves admitted they were misled by what it said: “And whereas the Minister for Finance considers it necessary to enter into a fully underwritten fix rate bond facility of US$41 million or its equivalent in Eastern Caribbean dollars at an issue price of 100 percent per value with the RBTT Merchant Bank Ltd for the purpose of financing government’s capital works program and for refinancing government’s obligations in respect of the former Hyatt . . .”
There is no mention of recurrent expenditure in the resolution. What the MPs had read and understood clearly was that the resolution sought two matters only: 1) permission to borrow to finance government’s capital works program and 2) to refinance obligations to the bankrupt former Hyatt which some six months earlier and been sold by the bank to Sandals owner Butch Stewart. The three opposition MPs, as they claimed, had been misled into believing, as MP Marius Wilson told it, the government was seeking to refinance an old bank loan to the previous government. After all, there’s a world of difference between financing government capital works and refinancing “obligations” to a hotel by whatever name.
The ordinary meaning of the word refinancing: “To provide new financing or new financing for, as by discharging a mortgage with the proceeds from a new mortgage obtained at a lower interest rate.” How did any of that apply to the government and that “hotel formerly known as Hyatt?” And if the Kenny Anthony government was indeed seeking to honor a guarantee that had never sought or received House approval, and therefore was not binding on the state, why then did the resolution speak so vaguely of “refinancing obligations” to a hotel . . .”
What precisely were those obligations? What did they amount to? How much of the borrowed money was supposed to pay for the government’s capital works program, how much for those unspecified obligations? If the government MPs understood the word “obligations” as a government guarantee, their opposition did not. Pity the court never was interested in hearing directly from Marius Wilson, Marcus Nicholas and Arsene James.
Section 41 of the Finance act says nothing about obligations; it specifically addresses government guarantees; when they are binding upon the state and when they are not. The answers to some of my questions are to be found in the Sir Ramsahoye Report, including that part of the money sought was to be used to pay the debts of a company called Frenwell, an entity unheard of before the Ramsahoye inquiry.
In 2011, the House amended Section 41, ostensibly in the best interests of the people. But when politicians sit down to work in the people’s best interests, watch out. Initially this was how Section 41 of the Finance (administration) Act read: “No guarantee involving any financial liability shall be binding upon the government unless that guarantee is given in accordance with an enactment or unless approved by resolution of parliament.” As written, and earlier noted, nothing in the law prevented the minister from guaranteeing loans without the knowledge or approval of parliament.
The law was amended in February 2011 to take care of that: “A guarantee involving any financial liability is not binding on the government unless the minister grants the guarantee in accordance with an enactment or with the prior approval of parliament by a resolution of parliament. (My italics) Moreover, the amended law also required that parliament be given “full details of the amount guaranteed, the terms and conditions of the guarantee, the person or legal entity in whose name the guarantee is intended, and the object and reasons for the giving of the guarantee.”
So far, so good. But then, inexplicably, there is also this: “The minister may grant a guarantee on such terms and conditions as he or she may think fit.” In other words, back to square one. Chalk up another one for the politicians while the people bite the dust one more time!
It remains to be asked: What impact, if any, could the CCJ decision on July 26, 2013 have on the outcome of the pending Grynberg matter? Could there be a connection between the apparent haste to take away from the people their constitutional right to decide via a referendum between the CCJ and the Privy Council as our court of last resort?
Although based in Trinidad & Tobago, that country is not a member of the CCJ. Addressing the matter recently was Senate President Timothy Hamel-Smith. In part, this is what he said: “We currently have legislation that gives jurisdiction to the International Criminal Court, to the ad hoc International Criminal Tribunal for the former Yugoslavia and the International Criminal Tribunal for Rwanda. Yet we have none that recognizes the CCJ. Why can’t we start believing
in ourselves and our competences? Let there be a vote of conscience, by secret ballot, on whether it becomes the final Court of Appeal or, if as parliamentarians you lack the confidence to make that change, place it before the electorate by way of public referendum on the ballot paper?”
Perhaps the Senate president should comb Trinidad & Tobago’s constitution. Who’s to say he might not find a typo that would be the answer to his CCJ dream?