I INTRODUCTION

Arbitration in Belize is governed by the Arbitration Act2 (Act), which was last amended in 1980 (1980 Ordinance). It has been nearly 40 years since the Act has been amended, and therefore it has become somewhat outdated. However, the 1980 Ordinance has assisted in Belize's assimilation of a modern arbitration enforcement regime by incorporating the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (New York Convention) into domestic law.

With respect to local arbitration, the Act makes standard provision for parties to submit disputes to arbitration, and for applications to be made to stay court proceedings pending arbitration.3 Among other things, the Act provides guidelines for the appointment of arbitrators,4 elaborates the implied powers of arbitrators5 and provides for enforcement.6

Under the Act, foreign awards are governed by three international conventions, which have expressly been incorporated into domestic law by way of insertion as schedules to the Act: the Geneva Protocol, 1923: Protocol On Arbitration Clauses; the Convention on the Execution of Foreign Arbitral Awards; and the New York Convention. While Belize is not a party to the New York Convention, the Caribbean Court of Justice (CCJ), Belize's final appellate court, has held that the provisions of the Convention embodied in the Act by the 1980 Ordinance give effect to the New York Convention in domestic law.7

ii THE YEAR IN REVIEW

i Developments affecting international arbitration

In January 2017, legislation was enacted that directly impacts the enforcement of foreign arbitral awards in Belize and abroad. The provisions of these acts are addressed in detail below.

The Crown Proceedings (Amendment) Act (CPAA) 8

The CPAA has amended the Crown Proceedings Act to introduce significant new provisions. Specifically, the long title to the CPAA states that the CPAA is an act to ‘make provisions relating to enforcement of foreign judgments against the Crown'. In the CPAA, ‘judgments' expressly include arbitral awards. In essence, if a foreign judgment has been entered against the government of Belize (government), and a court in Belize later declares that foreign judgment to be unlawful, void or otherwise invalid, Section 29A of the CPAA prevents enforcement of that foreign judgment in or outside of Belize.

The CPAA additionally introduced a new offence at Section 29B(1), which criminalises any attempted enforcement of a foreign judgment that has been declared by a Belizean court to be unlawful, void or otherwise invalid. Where an individual attempts to enforce such a foreign judgment, that person becomes liable on summary conviction to a fine not exceeding BZ$150,000, or to imprisonment for a maximum of two years, or to both a fine and imprisonment. If an offence under Section 29B(1) is committed by a legal person (i.e., a body corporate, an unincorporated body or any other entity), the CPAA imposes a fine at a ceiling of BZ$250,000 on that legal person. The CPAA clearly delineates the ambit of the offence. In accordance with Section 29B(4), any person who has acted in an official capacity on behalf of the legal person becomes liable for committing the office. ‘Persons acting in an official capacity' extends to shareholders, partners, directors, managers, advisers and even secretaries. These persons may be charged individually in accordance with Section 29B(2)(a), unless that person adduces evidence to show that the offence was committed without his or her knowledge, consent or connivance. That individual must show that he or she exercised all due diligence in his or her official capacity to prevent the commission of the offence. Effectively, a reverse burden is created so that the person acting in an official capacity would have to adduce evidence to prove innocence.

By these provisions, parties to foreign arbitral awards against the government are barred from pursuing enforcement of awards or foreign judgments issued on such awards, if a Belizean court has ruled that the foreign judgment (or foreign award) is unlawful, void or otherwise invalid. Law firms and attorneys would be committing an offence by instituting proceedings on behalf of clients who may wish to enforce such awards in other countries or otherwise. The scope of the offence is so wide that every staff member of a law firm who would assist with such a matter would be implicated. The objective of the CPAA is to effectively use the threat of criminal prosecution against Belize-based entities that have foreign judgments against the government to intimidate them from proceeding with enforcement outside of Belize.

The second act that was passed was the Central Bank of Belize (International Immunities) Act, 2017 (CBBIIA), which is an act ‘to restate for greater certainty the immunity of the Central Bank of Belize from legal proceedings in other States; and for purposes connected therewith or incidental thereto'. Section 3 of the CBBIIA makes certain declarations as to the international legal immunity of the Central Bank of Belize and its property. First, the CBBIIA grants immunity to the Central Bank from the jurisdiction of the courts or other tribunals of any foreign state. Secondly, the CBBIIA provides that the property of the Central Bank, wherever situated, is not intended for commercial purposes or other purposes, and is declared to be immune from proceedings for attachment, arrest or execution being instituted, in any foreign state. The immunity granted by the CBBIIAA is only subject to express waiver by the Central Bank itself, which is reflective of the extent to which parliament intended to safeguard the said immunity. If this section is given effect in foreign jurisdictions, successful parties to arbitration in a foreign state would be prevented from enforcing any award against property of the Central Bank of Belize.

Section 4(1) of the CBBIIA also brings into existence two new offences with respect to the immunity of the Central Bank. A person who institutes or becomes a part of any proceedings in a foreign state, which the Central Bank would be immune from by virtue of Section 3, commits an offence (the institution of proceedings offence). This offence includes the commencement of proceedings inside or outside of Belize, and also covers the institution of proceedings before or after the CBBIIA came into effect. Additionally, where a person makes a false report or public statement to the effect that the Central Bank or the property of the Central Bank has been subjected to proceedings from which the Central Bank or its property would be immune, that person commits an offence (the reporting offence). Section 4(2) attaches the same penalties to the institution of proceedings offence that appear in the CPAA, as described above. Where the reporting offence has been committed, the fine for an individual is BZ$100,000 and a term of imprisonment of up to one year. In the case of a legal person, the fine is BZ$150,000 (Section 4(3)).

Section 4(4) extends the offence to persons including legal advisers acting in an official capacity on behalf of a legal person in the same terms as Section 29(B)(4) of the CPAA. Again, this provision creates a presumption of personal guilt in respect of those acting in an official capacity, including legal advisers, and a reverse burden is imposed on such person to prove his or her innocence. Effectively, the legislation bars attorneys from advising potential clients as to matters that would be captured by the above-mentioned provisions.

Injunctions

In 2010, the Supreme Court of Judicature (Amendment) Act was passed, which created sections that address contempt of court, specifically in relation to non-compliance with injunctions and injunctions issued in arbitration proceedings. The constitutionality of this legislation was challenged in the Supreme Court, and was recently addressed by the CCJ in Attorney General of Belize v. Philip Zuniga et al.9 The main challenge was to the provisions that imposed minimum mandatory penalties for knowingly disobeying or failing to comply with an injunction or an order in the nature of an injunction issued by the courts of Belize.

Section 106(A), which contained 16 subsections, created an offence at Subsection (1)
for disobeying or failing to comply with an injunction, and enumerated the attendant penalties, the scope of the offence, and addressed other ancillary matters at Subsections (2)-(16). Subsection (8) is of particular interest, as it confers jurisdiction on the court to issue injunctions restraining a party or arbitrators, or both, from commencing or continuing arbitral proceedings, and restraining parties from commencing or continuing enforcement proceedings arising from an arbitral award, where it is shown that an abuse of the legal or arbitral process had occurred or would result. The amendment also confers jurisdiction on the court to void and vacate arbitral awards made in disregard of such injunctions.

It was argued by the respondents that Subsection 8 was unconstitutional because it interfered with the right to property guaranteed by the Constitution. Particularly, it was argued that the contractual right to arbitrate constituted property, which was capable of and required constitutional protection. Additionally, the respondents submitted that the jurisdiction conferred upon the Court to vacate arbitral awards was an unjustifiable interference with the right to property.

The Court agreed that the power introduced by the amendment was a novel one. The Court also decided that such a power was entirely within the Court's jurisdiction, but the exercise of that power would only occur in exceptional circumstances. The Court held that ‘there is nothing inherently unconstitutional in the court being given a power to restrain an abuse of the legal or arbitral process or to vacate awards'.10 The Court aligned itself with the judgment of Mendes JA at the Court of Appeal, where he held that arbitration proceeds that are or would be oppressive, vexatious or inequitable, or would constitute an abuse of the legal or arbitral process, as described in the latter part of Section 106A(8)(i), are not in the public interest. Consequently, it was determined that the amendment pursued the legitimate aim of promoting fairness between parties to an agreement to arbitrate. In the premises, it would be proper for the Court to grant injunctive relief if any arbitration proceedings were found to be of such a nature.

The Court eventually held Section 106A to be constitutionally valid save for the mandatory minimum penalty regime contained in Subsection 3, the proviso to Section 3 and also Subsection 3(a), and Subsection 5 in its entirety. The Court then exercised its power to sever the unconstitutional aspects of these provisions from Section 106(A).

ii Arbitration developments in local courts
Qualifications of or challenges to arbitrators

In the Belize Bank Ltd v. the Attorney General of Belize,11 the government resisted an action for enforcement of an arbitral award on two grounds. First, the government argued that the arbitration was conducted by a panel not properly constituted according to the agreement of the parties; and secondly that, in accordance with Section 30(3) of the Arbitration Act, to enforce the award would be contrary to public policy.

The background is that the Belize Bank Ltd sought an order for the enforcement of an arbitral award obtained against the government in July 2013 in the London Court of International Arbitration (LCIA). The arbitral award amounted to BZ$36,895,509.46 plus interest and the costs of the arbitration amounted to £78,943.30 and £457,874.41, arising out of a loan note issued by the government to the Belize Bank Ltd in March 2007.

The government defaulted on the loan note in April 2007, and in accordance with the arbitration agreement in the loan note, the Belize Bank Ltd initiated proceedings for arbitration. The Belize Bank Ltd successfully obtained the award upon conclusion of the arbitration, and then applied in Belize for the enforcement of the award.

The government argued that the panel was not properly constituted because procedurally, the tribunal's appointment was not in accordance with the parties' agreement since the government was not afforded the opportunity of nominating an arbitrator. Further, the government argued that the appointment of Professor Zachary Douglas, a member of the panel, was tainted by an appearance of bias, and this resulted in a breach of a term existing by necessary implication in the agreement: that the appointment of an arbitrator would be free from bias or any appearance thereof. The main thrust of the objection, however, was that Professor Douglas' appointment was tainted by an appearance of bias.12

The Court did not favour these arguments. It held that the government irrevocably waived its right to nominate an arbitrator in accordance with the parties' agreement by virtue of its non-participation in the arbitration proceedings. The Court then considered the government's arguments that there was an appearance of bias with respect to Professor Douglas's presence on the panel. The government alleged apparent bias, because Professor Douglas was a member of Matrix Chambers, and other members of those Chambers may have advised or been sought out by Lord Ashcroft, who had interests in BCB Holdings Limited, the parent company of the appellant, in connection with two other matters in the UK that bore connections to Belize. The trial judge eventually held that there was no appearance of bias, because Lord Ashcroft's interaction with other members of the Matrix Chambers occurred in 1994, which was 16 years prior to the arbitration proceedings in question. The assertion that barristers from Matrix Chambers may have been consulted or may have advised Lord Ashcroft in proceedings in the UK also did not sit well with the Court. This was because the barristers who were allegedly consulted were never identified, and it was also never alleged that those particular barristers participated in the arbitration proceedings. The Court also criticised the government's delay in grounding this challenge.

Although the argument that the panel was not properly constituted was rejected by the trial judge, enforcement was refused on the basis that it would offend public policy in Belize. This is discussed below.

iii Investor-state disputes

The government has been involved in arbitration proceedings with local and international investors. Although these legal entities have successfully obtained foreign arbitral awards, enforcement of these awards has been refused on the basis that such enforcement would offend public policy. Section 30(3) of the Arbitration Act empowers the court to do this. This occurred in BCB Holdings & the Belize Bank Ltd v. the Attorney General of Belize,13 which has been litigated at Belize's final appellate court, and this decision represents a final judgment on the matter. The Court of Appeal also refused enforcement of an arbitral award in The Belize Bank Limited v. the Attorney General of Belize.14 However, the Belize Bank Limited has sought an order for special leave of the CCJ to appeal the Court of Appeal's decision. Both cases are addressed below.

BCB Holdings & the Belize Bank Ltd v. the Attorney General of Belize

In this case, the Court held that it would be contrary to public policy to recognise an award issued to the Belize Bank Limited, and declined to enforce it because the deed upon which the award was based (settlement deed) was implemented without parliamentary approval, in violation of Belize's fundamental law, particularly the doctrine of separation of powers.

BCB Holdings Limited, the parent company of the Belize Bank Ltd (the appellants), the Minister of Finance of Belize (who signed for himself as well as on behalf of the government) and the Attorney-General of Belize (acting on behalf of the state) entered into the settlement deed on 22 March 2005. This settlement deed created a unique tax regime that altered and regulated the manner in which the appellants should discharge their statutory tax obligations. This tax regime was not legislated, but was honoured by the government for two years. A dispute arose thereafter between the parties to the settlement deed, and the appellants claimed that the government had breached and repudiated the settlement deed (as amended). The appellants then commenced arbitration, seeking declarations and awards on the basis of the breach.

The LCIA issued an award that determined that the government should pay damages for dishonouring the terms of the settlement deed. The tribunal found the government in breach, and awarded damages against Belize in addition to arbitration costs and legal, professional and other fees (award). The award totalled approximately BZ$44 million, and it carried interest at the rate of 3.38 per cent compounded annually.

The thrust of the government's argument for non-enforcement was that it was never bound by the agreement that gave rise to the settlement deed because implementation of the same without parliamentary approval violated the country's fundamental law, and enforcement of such an award would be contrary to public policy. In deciding this issue, the Honourable Justice Saunders cautioned that parties often invoke an argument of public policy to prevent the enforcement of a foreign award.15 However, he carefully considered the parameters of the public policy exception. Essentially, where a party is seeking to enforce a foreign or convention award, courts should apply the public policy exception in a more restrictive manner than in instances where public policy is being considered in a purely domestic scenario. This should be done in light of international comity considerations, to demonstrate faith in and respecting judgments of foreign tribunals. According to the Honourable Justice Saunders, ‘only where enforcement would violate the forum state's most basic notions of morality and justice would a court be justified in declining to enforce a foreign award based on public policy grounds'.16 He stressed that the public policy exception should only be made when the relevant matter lies at the heart of fundamental principles of justice or the rule of law, and must represent an unacceptable violation of those principles. The threshold to be met, therefore, is a very high one.17

Although the LCIA had already ruled on the legality of the settlement deed, the Court determined that it was within its jurisdiction to consider the provisions of the settlement deed in order to weigh the provisions against fundamental principles and rules of law. Upon undertaking this examination, the Court found that the provisions of the settlement deed were designed to alter the appellants' current and future tax obligations under the revenue laws of Belize for a period of 15 years, without being sanctioned by legislation. The Court found that such provisions offended the sacrosanct doctrine of separation of powers, since the executive exercised a power to grant exceptions to statutory obligations without obtaining parliamentary approval thereof. Additionally, the Court highlighted that where the exercise of a governmental function is regulated by statute, any prerogative power that could have been previously exercised is superseded by that statute. In this case, the relevant statute was Section 95 of the Income and Business Tax Act, which the Court noted that the Minister of Finance did not comply with. According to the Court, to allow the Minister to act as he did would be to disregard the Constitution completely.18 The Court held that it would have been necessary for the National Assembly to intervene so that legislation consistent with the Constitution could be enacted to give force to the newly created tax regime for the appellants.

The Court stated that even if a lower court determines that there are features of an award that may seem inconsistent with public policy, it does not follow that the court must decline to enforce the award.19 A balancing exercise would have to be conducted. The Honourable Justice Saunders then assessed the nature, quality and seriousness of the matters alleged to give rise to the public policy concerns, weighed those concerns and placed them alongside the court's desire to promote finality and certainty with respect to arbitral awards. Given the importance of tax laws ascribed by the Constitution, the Court determined that the facts of this case warranted the exercise of the Court's jurisdiction to refuse enforcement of the award, stating that the sovereignty of Parliament, subject only to the supremacy of the Constitution, along with the principle of separation of powers, are core constitutional values, and the facts of this case justified the Court's exercise of its power to refuse the enforcement of the award.20

The Belize Bank Limited v. the Attorney General of Belize

At the Supreme Court level, in The Belize Bank Limited v. the Attorney General of Belize,21 Griffith J also grappled with the invocation of the public policy exception to refuse the enforcement of an arbitral award. As stated above, this case involved a loan note that was not honoured by the government. The legal issues differed from the BCB Holdings case in that the legal instrument in this case, the loan note, was perfectly lawful. However, the National Assembly of Belize neither authorised nor approved the payment of the loan note, and the effect of such absence of authorisation rendered any payment on the loan note unconstitutional and illegal. As Griffith J explained, any monies from the Consolidated Fund required for expenditure must be approved for withdrawal from the Consolidated Fund by the Constitution or other act of parliament. No such approval was obtained with respect to the loan note. Consequently, any enforcement of an award obtained by virtue of the loan note would be contrary to public policy.

The debt created by the loan note, which was effectively a promissory note,22 was not charged upon the public revenue by the Constitution or any other law. Moreover, parliamentary approval is required for financial transactions exceeding certain amounts, and no such parliamentary approval was obtained for the loan note, which exceeded BZ$36 million. Griffith J held that the executive branch did not possess the authority to bind the government to the resulting expenditure caused by the loan note without parliamentary approval.

The Court then sought to weigh enforcement against the public interest of the executive's adherence to the regulations governing the expenditure of public funds, which impose checks and balances to certain financial transactions entered into by the government so as to ‘secure transparency, accountability and to uphold the rule of law by maintaining the separation of powers between the Executive and the Legislature as it pertains to authorizing expenditure from the Consolidated Fund'. The Court eventually held that the incurrence of debt above certain prescribed amounts is restricted by the Constitution and other legislation without the intervention of legislation by the National Assembly.23 After pitting this conclusion against arguments supporting the pro-enforcement bias, the Court made a determination that it should decline to enforce the award. At the Court of Appeal,24 the majority agreed with the reasoning of the trial judge, with Blackman JA dissenting.

iii OUTLOOK AND CONCLUSIONS

Although it has been emphasised that courts should lean towards the enforcement of arbitral awards, courts in Belize have twice refused to enforce arbitral awards on the basis that the awards offend public policy. Although foreign arbitration is seen as an alternative method of dispute resolution that may be appealing to parties, arguably, this option has been undermined by the passing of the CPAA and the CBBIIA (New Amendments). By reason of the New Amendments, the legislature has sought to prevent parties from even attempting to challenge or enforce awards that have been deemed by Belizean courts to be unlawful, void or otherwise invalid by making such acts an offence in law. As a result of this, enforcement of a foreign award by a successful party becomes almost impossible, if not impossible, to achieve.

Two claims have been instituted which challenge the New Amendment: Caribbean Investment Holdings Limited v. the Attorney General of Belize25 and Courtenay Coye LLP v. the Attorney General of Belize.26 These claims challenge the New Amendments on the ground that the New Amendments infringe the fundamental rights and freedoms guaranteed by the Constitution, including the right to life, liberty, security of the person and protection of the law, the right to work and protection from arbitrary deprivation of property. Additionally, the claimants argued that the offences created by the New Amendments are unclear and imprecise, and create a presumption of guilt and a reverse burden to prove innocence, which is contrary to Section 6 of the Constitution, which states that ‘All persons are equal before the law and are entitled without any discrimination to the equal protection of the law'.

The court's determination of the constitutionality of the New Amendments will significantly impact the enforcement of foreign awards in Belize and abroad, and the decisions and any subsequent appeals will provide interesting jurisprudence with regard to enforcement of foreign awards abroad.

1 Eamon H Courtenay SC is a partner and Stacey N Castillo is an associate at Courtenay Coye LLP.

2 Chapter 125 of the Substantive Laws of Belize, Revised Edition 2011.

3 Section 5.

4 Sections 6 and 7.

5 Section 8.

6 Section 13.

7 BCB Holdings and the Belize Bank Limited v. the Attorney General of Belize [2013] CCJ 5 (AJ) CCJ Appeal No. CV7 of 2012 Bz Appeal No 4 of 2011.

8 Act No. 2 of 2017.

9 [2014] CCJ 2 (AJ) CCJ Appeal No. CV8 of 2012 BZ Appeal Nos. 7, 9 and 10 of 2011.

10 At Paragraph 84.

11 Claim No. 418 of 2013.

12 At Paragraph 35.

13 [2013] CCJ 5 (AJ) CCJ Appeal No. CV7 of 2012 Bz Appeal No 4 of 2011.

14 Civil Appeal No. 4 of 2015.

15 At Paragraph 25.

16 At Paragraph 26.

17 At Paragraph 26.

18 At Paragraph 44.

19 At Paragraph 54.

20 At Paragraph 59.

21 Claim No. 418 of 2013.

22 See The Belize Bank Limited v. The Association of Concerned Belizeans and others [2011] UKPC 35.

23 At Paragraph 105.

24 The Belize Bank Limited v. the Attorney General of Belize, Civil Appeal No. 4 of 2015.

25 Claim No. 66 of 2017.

26 Claim No. 77 of 2017.