Washington D.C.- According to the website www.law360.com, a D.C. federal judge, Coleen Kollar-Kotelly, chided the Belizean government last Friday in a decision that allowed a Turks and Caicos entity to pursue a confirmed $27.4 million arbitral award over a tax arrangement with banks, discounting Belize’s “meritless” arguments to keep the case with another plaintiff.
Judge Kollar-Kotelly ruled that Belize brought arguments that are “meritless and require little discussion” in trying to prevent Midway Investments Ltd. from taking over the litigation for a $27.4 million arbitration award. The judge wrote that Belize had regularly attempted to forestall the resolution of the litigation, particularly by frustrating previous petitioners BCB Holdings Ltd. and Belize Bank Ltd.’s attempts to realize the award.
Judge Kollar-Kotelly said that the transfer of the award to a new entity was not sudden or unexpected. Another judge had confirmed the award — which included some $4.8 million in interest — tied to a failed tax deal in 2015, and the litigation is meant to provide access to Belize’s U.S. assets as payment.
Friday’s ruling detailed that the Belizean government has taken various steps to frustrate the execution of the award since the litigation was brought in 2014 by BCB and Belize Bank, including following a February ruling that allowed for execution of the award.
The underlying award had been issued by a London tribunal in 2009 following a dispute over an allegedly secret 2005 deal between then-Belize Prime Minister Said Musa and BCB, a Belizean financial services company controlled by U.K. billionaire and Musa campaign contributor, Lord Michael Ashcroft. Under the deal, Belize agreed to provide favorable tax treatment to Belize Bank and to BCB.
But in 2008, Belizean tax authorities rejected Belize Bank’s tax returns that had been filed in accordance with the settlement deed, prompting the underlying arbitration.
Belize claimed in its opposition last month that if Midway is recognized as the owner of the judgment, it will not be subject to the jurisdiction of the Belizean courts, since Midway is registered in Turks and Caicos. But the company has ties to BCB — in fact, it was a subsidiary of BCB’s successor, Caribbean Investment Holdings Ltd.
The dispute over whether Midway should be substituted as petitioner in the dispute is only the latest in several challenges the Belizean government has asserted in the litigation. After a district court judge in 2015 confirmed the BCB award, Belize appealed unsuccessfully to the D.C. Circuit.
Thereafter, Belize filed a petition asking the U.S. Supreme Court to weigh in on the case, saying it needed to resolve a circuit split as to whether an enforcement action can be dismissed on forum non conveniens grounds — or that a more convenient forum exists elsewhere. But the justices turned down the case earlier this year, leaving BCB free to continue trying to collect the judgment.
According to law360.com, the respective counsel for Midway and the Belizean government could not be immediately reached for comment Friday.
Midway is represented by Louis B. Kimmelman, Kristin Graham Koehler and Dana C. MacGrath of Sidley Austin LLP.
The government of Belize is represented by Juan C. Basombrio and Creighton R. Magid of Dorsey & Whitney LLP.
The case is BCB Holdings Ltd. et al. v. Government of Belize, case number 1:14-cv-01123, in the U.S. District Court for the District of Columbia.