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29 March 2012
On August 25 2009 the Belize government nationalised Belize Telemedia Limited. By way of an order issued by the telecommunications minister, the government acquired approximately 96% of the shares in the company. The government claimed that these shares were 'Ashcroft related'. The government also compulsorily acquired the security interest held by British Caribbean Bank Limited under a debenture, as well as related security agreements issued by Telemedia. The bank had advanced substantial sums to Telemedia – in excess of $22.5 million – and held a mortgage over the company's assets.
When the shares were acquired, the government removed the existing board of directors and appointed an interim board to manage the company. The interim board consisted primarily of public officers along with a few selected members from the private sector.
Dean Boyce, the trustee of the Employees' Trust, and the bank both launched challenges to the legality of the nationalisation. The Supreme Court had previously found the nationalisation to be constitutional. However, on June 24 2011 the Court of Appeal handed down its decision and declared the nationalisation to be "unlawful, null and void".
Section 17 of the Constitution allows the government to compulsory acquire private property. Such nationalisation can be carried out only pursuant to a law that provides for the payment of reasonable compensation within a reasonable time to the property owner. The overriding criteria which must be present is that property can be taken only in order to further a compelling public purpose. If there is no legitimate public purpose, then the government cannot compulsorily acquire private property, even if it is prepared to pay compensation.
The government stated that the reason for the nationalisation was for "the stabilisation and improvement of the telecommunications industry and the provision of reliable telecommunications services to the public at affordable prices in a harmonious and non-contentious environment".
The appeal court rigorously reviewed the evidence lodged by the government in support of these objectives and found the evidence wanting. Indeed, it was shown that:
The appeal court found that this evidence had no rational connection to the stated public purpose. The shares and the security interests acquired in the nationalisation were not duly acquired for a public purpose. Therefore, the nationalisation was unlawful and unconstitutional.
The appeal court also found that the government had acted disproportionately, arbitrarily and in breach of the formal requirements set out in Section 17 of the Constitution. The only ground on which the court did not find in favour of the bank and Boyce was on discrimination.
Immediately after the appeal court's decision was handed down, the government and its appointed directors accepted the decision's effect. The board of directors left the Telemedia compound and the government stated that there was no point in physically resisting the previous directors' resumption of management. However, this position was short lived.
A few hours after relinquishing control of the company, the government displaced the previous directors and resumed management of the company. Surprisingly, the government took the position that unless a court order was issued ordering the directors to leave the premises, it would remain in control of Telemedia. Police guarded the company's compound preventing entry by the previous directors.
An application was filed in the appeal court asking it to resume its hearing in order to issue the appropriate orders so that the declaration it had issued would be effective in the face of the government's defiance. The court did not reconvene. Ostensibly, this state of illegality continued until July 4 2011, when the National Assembly passed new nationalisation legislation and the telecommunications minister issued again an order renationalising the same property which had been found to have been unlawfully taken.
The new law has provided a new public purpose to the nationalisation and has attempted to 'fix' some of Section 17's formal requirements that had not been complied within the previous version.
On July 22 2009 the government tabled the Constitution (Ninth) Amendment Bill in the House of Representatives. Among other things, this bill seeks to declare that the second Telemedia nationalisation (and the nationalisation of Belize Electricity Limited) had been "duly carried out for a public purpose in accordance with the laws authorising the acquisition of such property". Furthermore, the bill prevents any challenge to it and to the 2011 order by ousting the jurisdiction of the courts to "enquire into the constitutionality, legality or validity" of the nationalisation. This bill is currently the subject of heated public consultations. The government has announced some changes to the bill, but its final form is still unknown.
On August 16 2011 the bank and the trustee of the Employees' Trust applied to the Caribbean Court of Justice for special leave to appeal against the appeal court's decision not to reconvene and to issue consequential relief to address the government's defiance of its judgment. After hearing the parties, the appeal court concluded that the case was sufficiently urgent to warrant it being considered during the legal vacation, and it also gave special leave to the parties to bring the appeals. These appeals are now in process and are expected to be heard by the Caribbean Court of Justice in Trinidad and Tobago in the near future.
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