Nassau, Bahamas – The Government of the Bahamas confirms that the arbitral tribunal has issued a Partial Award in the ongoing arbitration between the Government and the Grand Bahama Port Authority (“GBPA”) concerning the Hawksbill Creek Agreement (“HCA”) and related arrangements.
The Partial Award confirms the GBPA ’s liability to make annual payments to the Government for the remainder of the HCA, with sums payable in respect of earlier years to be addressed in the next phase of the proceedings.
The Partial Award also rejects the GBPA’s claim to exclusive authority over the administration of Freeport and the Port Area. It confirms that the Government has continuing legislative and regulatory authority in relation to Freeport and the Port Area, and in particular, that it has had regulatory authority or right of approval for over half a century in relation to licensing, immigration, customs, land acquisition, environmental regulation, development approvals and the setting of charges and tariffs for utilities.
The Government’s Claim – right to recovery confirmed
Under the HCA, the Government historically had a right under clause 1(5)(d) to recover costs incurred by it in relation to the Port Area. In 1994, in connection with arrangements extending tax concessions under the HCA, the Government and the GBPA agreed to an annual payments by the GBPA to defray the Government’s expenses, subject to an ongoing review process.
The Tribunal found that this annual payment mechanism remains operative and enforceable and that the Government therefore has a continuing right to recover administrative expenses incurred in relation to the Port Area. It held that the Government is entitled to invoke the review process under that mechanism from 2023 onwards and to seek annual payments from the GBPA for the remainder of the term of the HCA (i.e. until 2054).
The GBPA’s argument that the Government has no right to payment was rejected. As to past years, which were the subject of the Government’s claim, the Tribunal did not determine the sums payable for this period in its Partial Award. It confirmed, however, that the issue remains live and can be determined promptly if requested by the parties.
GBPA’s counterclaim overwhelmingly rejected
The GBPA advanced a counterclaim alleging extensive losses arising from alleged Government interference in the administration and development of Freeport over several decades. The GBPA originally sought damages in the arbitration of more than $1 billion. The Tribunal dismissed all but one limited aspect of that counterclaim.
In particular, the Tribunal rejected the GBPA’s claim to exclusive rights to administer the Port Area in relation to licensing, immigration, customs matters, utilities, land acquisition, environmental regulation, and development approvals. It found that by a longstanding arrangement between the parties going back to the 1960s, it has been agreed that the Government would have an ongoing role in the Port Area in respect of such matters that this agreement had been applied by the GBPA and the Government without question for over half a century, and that the Government’s legislative and regulatory authority continues to apply.
Complaints by the GBPA relating to the alleged diversion or frustration of investment projects were also rejected. One limited complaint by the GBPA was upheld, relating to the failure by successive Governments to give timely consideration to three proposed environmental bye-laws. However, the Tribunal noted that it was uncertain whether any recoverable loss has been established by the GBPA.
The Partial Award makes clear that administration of the Port Area is not exclusively vested in the GBPA. The GBPA ’s role operates alongside, and is subject to, the Government’s continuing legislative and regulatory authority.
Next steps
The arbitration remains ongoing. In the next phase of the proceedings, the Government will seek a determination of the sums payable to the taxpayer by the GBPA under the annual payment mechanism agreed between the parties to defray the costs incurred by it in relation to the Port Area for historical periods. The Tribunal has confirmed that it is ready and willing to determine these matters as soon as possible.
Additional Media Inquires:
Latrae Rahming (Director of Communications)
Email: latraerahming@bahamas.gov.bs
Phone: 1-242-477-1587
Please see below the follow FULL JUDGEMENT and the Road Map to the JUDGEMENT of the Partial Final Award in The Matter of An Arbitration Under The Bahamas Arbitration ACT 2009 Subject to The Arbitration Rules of Uncitral 2021. Between The Government of The Commonwealth and Grand Bahama Port Authority Limited .