Posted: Wednesday, January 18, 2017. 3:22 pm CST.
GOB says a lower court failed to properly consider Belizean law and wrongly found that it waived sovereign immunity.
Belize seeks to escape contract clauses that waive its immunity and agree to litigate in U.S. courts, contending that its budget minister lacked authority to enter into the deal so the agreement is void and there was no waiver — even though its government paid GDG nearly $13.5 million under its terms.
Belize’s counsel, Juan C. Basombrio of Dorsey & Whitney LLP, opened the oral arguments in Miami on Friday by focusing on what laws the courts should rely upon to determine if Belize’s sovereign immunity remains intact. The district court erred by applying the Eleventh Circuit’s 1999 ruling in Aquamar SA v. Del Monte Fresh Produce NA Inc., which applied only to ambassadors’ authority to waive immunity during U.S. litigation, Basombrio said. Instead, it should have looked to Belize’s law and constitution, which he said did not give Minister of Budget Management, Investment and Home Affairs Ralph Fonseca authority to agree to the contract, which was part of a plan to set up a private communications network to lower the government’s phone bills.
U.S. Circuit Judge R. Lanier Anderson ruled, however, that the case seemed to him like an “easy affirm” of the district court’s decision. Even if Fonseca lacked authority to sign off on the deal, it was approved by Belize’s cabinet, including the ministers the country now says had the proper authority, and the parliament also approved the annual appropriations for the lease payments, the judge explained. “They did approve it. End of story, it seems to me,” Judge Anderson said.
GDG’s counsel Martin J. Siegel said: “This case is a poster child for that kind of abuse,” adding that Belize gave all kinds of assurances of the deal’s validity until its interests shifted. The three-judge panel also raised another path to finding the contract valid under the doctrine of ratification, which U.S. Circuit Judge Douglas H. Ginsburg, sitting in from the D.C. Circuit, said “assumes a lack of authority.” Judge Marcus said ratification seems to fit what happened with the GDG contract, with the cabinet and parliament expressly approving the contract through their actions, despite Fonseca’s possible lack of authority to enter into it.
“For ratification, all I need to look at is if they paid the bill, and they did,” Judge Marcus said. The court also expressed hesitancy to base its ruling on a decision Basombrio cited from the Caribbean Court of Justice, which serves as Belize’s supreme court, that reversed tax concessions in an unrelated contract that court found Belize’s prime minister had entered into without proper authority.
This marks the second time the case has appeared before the Eleventh Circuit. In 2014, a panel that also featured Judge Marcus reversed a dismissal order based on a finding of forum non conveniens, saying the district court failed to consider the forum selection clause in the contract. The disputed contract originated in 2002 when Belize’s government, in an effort to reduce its expenditures on office telephone services, reached a leasing deal with Intelco and its founder and director, Glenn D. Godfrey, for hardware equipment, including telephones, cables, routers and servers, to set up a private communications network.
The agreement, signed by Fonseca, while serving as Belize’s budget minister, and Godfrey, called for the government to make quarterly rent payments totaling over $6.7 million over five years, according to court documents. The agreement also obligated the government to return the equipment to Intelco at the end of 2007 or continue paying rent at the same rate, month-to-month, for up to a year. The parties entered a second lease of additional equipment to run from 2003 to 2008 at the same rate, but the government has continued to possess and use the equipment without payment since the initial contract periods expired, according to the suit.
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