Belize’s debt is at the highest it has ever been and with the final ruling imminent regarding the nationalization of Belize Telemedia Limited, it will go even higher. Today, however, there is more to add to the country’s debt as a US court has confirmed an arbitral award made against the Government of Belize. It is a case that surfaced in 2002 under the Musa Administration whereby an agreement was signed with NEWCO Company, an affiliate of the Lufthansa Airline. The then Government had entered into an agreement to give NEWCO a 30-year concession for the private management of the Philip Goldson International Airport and in 2005, the PUP administration cancelled that agreement and gave it to the Belize Airport Concessions Company.
As a result, NEWCO filed a lawsuit to the tune of thirty three million US dollars in January 2008 which they say is for the damages caused when they backed out of the deal. The international arbitrators, in June 2008, ruled against the Government of Belize and ordered them to pay two point six million US dollars in damages plus another one million US dollars in interest and another five hundred thousand US dollars in other costs; it rounded up to about nine million Belize dollars. The ruling came just when the Barrow administration had just taken over and so, they were left with the burden of having to pay the award.
Interestingly, what was noted back in 2008 was that the Musa administration had granted the Belize Airport Concession Company indemnity; meaning that if the arbitration was to result in any award against them that the Government of Belize would foot the bill. By January 2009, NEWCO got tired of waiting for its money and they initiated civil action in the US District Court for the District of Colombia to enforce the award and in addition, had filed legal actions in the countries where Belize has its major trading and finance relations. The delay in the payment to NEWCO was mainly due to the Government of Belize wanting to work out terms for payment while NEWCO was demanding full payment and as well there was an issue as to when the penalty interest began accruing.
Belize had managed to secure an injunction in the Belize Courts on the grounds that they needed a declaration regarding the start of the interest penalty phase and also there was a request to pay the award in Belize dollars since NEWCO is a locally registered company and as well there was the issue of outstanding taxes by NEWCO to the Government of Belize amounting to two point seven million dollars. The Belize Supreme Court ultimately agreed that the Government could subtract the unpaid taxes from the award and the balance could be paid in Belize dollars. NEWCO refused those conditions and as a result, they continued their efforts in seeking enforcement for the arbitral award in the District Court while Belize moved to dismiss the suit on a variety of grounds.
It is a drawn out case which is undoubtedly costing the Government. According to the judgement document from the United States Court of Appeals dated May 13, 2016, it reads, in part, quote, “We affirm. Under the Federal Arbitration Act, U.S. courts must enforce foreign arbitral awards unless they find “one of the grounds for refusal or deferral of recognition or enforcement of the award specified in” the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards also known as the New York Convention.” It goes on to say, quote, “We have carefully considered all of Belize’s arguments. We affirm the judgment of the District Court.” End of quote. As it relates to the New York Convention, Belize is a signatory and as such this award is enforceable not just in Belize but in the jurisdiction of any of the parties to that convention. We have been unable to get a comment from Financial Secretary, Joseph Waight.