Debevoise Advises Investors as Long-Running Litigation Over Nationalized Belize Telecoms and Electricity Companies is Settled

3 December 2015

The Caribbean Court of Justice has formalized the final settlement of a long-running and hard fought dispute between the Government of Belize and British, Canadian and local Belizean investors in Belize’s major telecoms and electricity providers, which had been nationalized in mid-2009.

Debevoise & Plimpton LLP acted for the Belizean telecoms investors throughout, including in the Belize courts and before the Caribbean Court of Justice, as well as for the British Caribbean Bank (BCB) in local proceedings challenging an anti-arbitration injunction, originally imposed to prevent BCB from pursuing an investment treaty arbitration under the UK-Belize Bilateral Investment Treaty. The firm worked together with local Belize counsel, as well as with Allen & Overy LLP in London.

Despite years of litigation at every level of the Belize courts and reaching the Caribbean Court of Justice on a number of occasions, the parties and the Government were able to reach a settlement following several months of negotiations preceding the latest elections in Belize in November 2015.  In the public settlement, the Government has agreed to pay $32.5 million to foreign and local investors in Belize Telemedia Ltd (“Telemedia”), with further compensation to be determined by an UNCITRAL arbitration tribunal currently deliberating on the investors’ claims under the UK-Belize Bilateral Investment Treaty, and to pay $35 million to settle a claim by Canadian investors in Belize Electricity Ltd.

The final Orders in the proceedings were issued by the Caribbean Court of Justice following a last minute attempt by the Bar Association of Belize to push the Court to give its judgment in the case (the final appeals having been heard in December 2014 – January 2015). However the Court declined the Bar Association’s application and congratulated the parties on achieving such a comprehensive settlement to the wide-ranging litigation.

The settlement also includes the payment of $48.6 million owed under an UNCITRAL Award in favour of the Turks and Caicos-registered British Caribbean Bank (BCB). BCB won the award last December after succeeding before the Caribbean Court of Justice in its claim to lift an anti-arbitration injunction imposed to prevent the arbitration proceeding.  BCB then successfully argued before the arbitral tribunal that Belize had unlawfully expropriated a $22 million loan it had made to Telemedia before the company was first nationalised. The decision of the Caribbean Court of Justice lifting the anti-arbitration injunction, thought to be the first judgment of a senior common law court in relation to the legitimacy of such an anti-arbitration injunction (in which Debevoise was believed to be the first non-Caribbean firm to appear) was awarded the “Most Important Published Decision of 2013” by Global Arbitration ReviewAs a result of this decision, the arbitration brought by BCB was able to proceed, and, a few months later, Belize’s Court of Appeal discharged a similar injunction against a similar claim by foreign investors.  The Government subsequently participated in both arbitrations, which were held in Costa Rica under the administration of the Permanent Court of Arbitration in The Hague.

Telemedia was first nationalised in 2009, the year after Belizean Prime Minister Dean Barrow came to power, and re-nationalised in 2011 after the first nationalisation was declared null and void by the Belizean Court of Appeal.  At that point, the Government pushed through an amendment to the Belizean Constitution to ensure that Telemedia would always be at least 51% owned by the Government and to place its nationalisation beyond judicial scrutiny. For years, the Government would not participate in any of the ensuing investment treaty arbitrations against it and went so far as to introduce criminal sanctions for lawyers breaching the terms of anti-arbitration injunctions imposed by the Belize courts to halt proceedings.

The final result represents a significant settlement of one of the most long-running investor-state claims in Belize, sparking multiple investor-state arbitrations and national constitutional proceedings running for over six years since the first nationalization in 2009. 

The Debevoise team acting throughout was led by London co-managing partner Lord Goldsmith KC, who also acted as lead advocate in the courts of Belize at all levels. The Debevoise team also included associates Nicola Leslie and Conway Blake. Local Belize counsel included Eamon Courtenay SC, Godfrey Smith SC and Magali Marin Young SC.

Debevoise & Plimpton LLP is a premier law firm with market-leading practices, a global perspective and strong New York roots. We deliver effective solutions to our clients’ most important legal challenges, applying clear commercial judgment and a distinctively collaborative approach.