A judge in New York has delivered a judgement, which favours the ruling National Democratic Congress (NDC) government of Prime Minister Tillman Thomas in the battle against Taiwan.
Grenada was taken to court in the United States after the island failed to pay-off millions of dollars owed to the Republic of China (ROC) on Taiwan in loans contracted mainly by the former New National Party (NNP) government of ex-Prime Minister, Dr. Keith Mitchell.
One of the loans related to the first national sporting stadium that was built at Queen’s Park and was destroyed by Hurricane Ivan in 2004.
When the Mitchell government broke off ties with Taiwan in favour of Mainland China, the ROC took legal action to recover all outstanding loans from Grenada.
The Taiwanese also targeted the funds of several state-owned entities in the Spice Isle.
As a public service, the NEW TODAY reproduces an article from a leading U.S media provider on the Taiwan/Grenada court battle:
New York — The island country of Grenada last week Wednesday urged the Second Circuit to block China’s export-import bank from using Grenadian funds held in the U.S. to pay itself back for some of the $28 million in unpaid infrastructure loans it made to the Caribbean nation.
In Wednesday’s brief, Grenada encouraged the court to uphold the June 2012 judgment of U.S. District Judge Harold J. Baer, who found that the two targeted sets of funds, one of which Grenada won in an unrelated arbitration, are off limits to the Export-Import Bank of the Republic of China.
“In sum, the district court found that … (the funds) were sovereign property exempt from attachment or execution under the Foreign Sovereign Immunities Act and ordered the (China Ex-Im-imposed) restraints vacated and all funds released,” Grenada told the court in a brief in an appeal jointly filed by the island country and five government-created entities listed as interested parties.
Those parties – the Grenada Airports Authority, the Grenada Solid Waste Management Authority, the National Water and Sewage Authority of Grenada, the Grenada Ports Authority and Aviation Services of Grenada Ltd. – are concerned with the second set of Grenadian funds China Ex-Im is seeking.
The interested parties are supposed to be paid from taxes, fees and other charges that airlines, cruise lines and shipping companies are charged in connection with their Grenada-related business operations, but China Ex-Im has restrained certain of these payments until it gets access to the arbitration funds it wants to put toward Grenada’s unpaid infrastructure loans.
At issue is $300,487 worth of attorneys’ fees that Grenada won in 2011 following a U.S. arbitration with upstream company RSM Production Corp., which had accused the Caribbean nation of wrongfully denying RSM an exploration and production license.
In an unrelated case, China Ex-Im sued Grenada in 2006 for defaulting on four loans totaling $28 million.
Court documents show the export credit agency issued the loans, which ranged in value from $2 million to $10 million, to the island country between July 1990 and January 2000 for various projects, including the construction of a national
sports arena and ministerial complex.
In March 2007, Judge Baer ordered Grenada to cough up $21.6 million on the outstanding balance of the loans, but the Caribbean nation has so far failed to pay up, according to China Ex-Im, which has been trying ever since to have the judgment enforced.
The export credit agency says that, in addition to the restrained funds, it is entitled to Grenada’s $300,487 in arbitration proceeds, which are currently sitting in a U.S. bank account.
While such funds would normally be immune from attachment under the Foreign Sovereign Immunities Act, China Ex-Im claims an exemption under the FSIA’s commercial activity clause, which allows creditors to go after a foreign nation’s funds if those funds are being used for commercial purposes within the U.S.
China Ex-Im points out that Grenada is supposed to be using its $300,487 arbitration award to pay its attorneys in that matter, Freshfields Bruckhaus Deringer LLP, which it claims qualifies as a commercial use.
Judge Baer rejected that argument, saying the FSIA exemption pertains to how the disputed funds have been used upon judgment – not how they will be, could be, or are designated to be used in the future.
The judge denied China Ex-Im’s requests to turn over both the arbitration and the restrained funds that are due to the Grenadian third parties.
He also granted Grenada’s motions to have the arbitration monies declared immune and to vacate the restraints on the third-party funds.
“We were pleased with the district court’s holding that all of the funds at issue were exempt from execution under the Foreign Sovereign Immunities Act, and we are confident that the court of appeals will reach the same conclusion,” Steven D. Greenblatt, the attorney representing the Grenadian interested parties, said in an emailed statement.
A representative for China Ex-Im declined to comment.
Grenada is represented in the appeal by Brian E. Maas and Khianna N.
Bartholomew of Frankfurt Kurnit Klein & Selz PC.
The Grenadian interested parties are represented by Steven D.
Greenblatt of The Law Office of Steven D. Greenblatt.
China Ex-Im is represented by Andrew Todd Solomon and Paul Eliot
Summit of Sullivan & Worcester LLP.
The case is The Export-Import Bank of the Republic of China v.
Grenada, case number 12-2619-cv, in the U.S. Court of Appeals for the