The Tribune

EDITOR, The Tribune.

Kindly allow me to make a few comments in your valued paper on what I term the “Baha Mar Fiasco.”

Since the signing of the contract to construct the Baha Mar Resort, like many Bahamians, I have watched with great anticipation the mega resort as it were, “rise” on the Cable Beach strip. I believe all residents of this most beautiful archipelago, admire the confidence the resort developer placed in our country, as he elected to invest here to the exclusion of all other jurisdictions. Sadly, that confidence must now surely seem misplaced. If you ask a Bahamian to list the most pressing issues facing our country today, you can be confident that crime, jobs or the lack thereof, and the Baha Mar Fiasco, are probably at the top of the list.

Many persons have an opinion on Baha Mar and they have the right to express it. Excluding the proverbial “mudslinging spouting from the mouths of many of our politicians, most of us have, over the past 6 to 8 weeks, heard phrases banded about such as “Chapter 11”,, “liquidation”, “sovereignty”, “provisional liquidators”, and “conflict of interest”. As a result, I decided to check on a few of the issues in the context of this most unfortunate situation and having done so I ask: “Is it really a question of sovereignty?” I attribute this to comments made by the Attorney General and if I am incorrect I apologise, but if I am correct then such comments coming from a sitting member of Cabinet is attributed to the Cabinet collectively and to the country as a whole.

The principals of Baha Mar chose to seek protection in the United States under what is called the “Chapter 11” proceedings. As I appreciate this process, a company seeks protection under supervision of the Federal Court from its creditors. The process allows the company to continue as a going concern while it organizes, or reorganizes, its operations. In so doing, the company is allowed to function in what I describe as a probationary period. Ultimately, this process results in the company getting back on its feet or dissolving. But our government has basically challenged this process. They say that all legal proceedings should commence, and continue, here in The Bahamas, since the principals are all here, the corpus of the action, the resort, is here, and for all intents and purposes, Baha Mar, is domiciled here. This is a question of jurisdiction, but to say, as I understand the government to be saying, that the “Chapter 11” process is an attack on our sovereignty, is misleading and dishonest.

The issue of sovereignty, in the context of the Baha Mar fiasco must be examined against the background of private international law, and the respect that judicial bodies have for one another. Our domestic legislation, specifically the Companies (Winding-Up Amendment) Act, 2011, expressly recognises judicial pronouncements in other jurisdictions in this area or Company law, and such pronouncements are in no way curtailed because the laws of one jurisdiction may not be the same, or similar, to another jurisdiction.

The Act contains Part VII A, which addresses international cooperation in the area or insolvencies. The interpretation section of this Act, in my view, recognizes the “Chapter 11” process. The phrase “foreign proceeding” means proceedings in a foreign country, including interim proceedings which purpose is to achieve the reorganization, rehabilitation, liquidation, or bankruptcy or an insolvent debtor”. The presence of the word “or” means that the words are disjunctive, meaning that the word “reorganisation” has a meaning different from the word liquidation”.

I suggest that the words reorganisation and rehabilitation are akin to the letter sought by the developer of Baha Mar under the “Chapter 11” process. Our domestic legislation therefore recognizes the “Chapter 11” process by implication, and as a result such Orders emanating from the Federal Court in the United States are to be respected and enforced by our Supreme Court. In other words, the Supreme Court of The Bahamas has the power to make orders ancillary to the foreign proceedings and in support of it.

What is judicial “comity”? It is not defined in the Act, but is one of the criteria that the Supreme Court is bound to take into account in deciding whether to enforce the foreign order. The criteria are set out in Section 255. In summary the court is to be guided by matters which will “best assure an economic and expeditious administration of the debtor’s estate, wherever they may be domiciled”. Since this is the duty of the Court the criteria includes “comity” in Section 255 (1) (g). There is no definition of this word in the Act, so it must be interpreted in its ordinary sense. This word means:

“Courtesy, respect, a disposition to perform some official act out of goodwill and tradition rather than obligation or law. The reception or adoption of decisions or laws by a court of another jurisdiction, either foreign or domestic, based on public policy rather than legal mandate”.

In short, it is when one court defers to the jurisdiction of another in a case in which both would have the right to handle the case. There is no doubt that our domestic laws recognize the “Chapter 11” process. The developer has the right to seek protection and the allegation that these steps amount to a threat to our sovereignty is an insult to right thinking residents. What you now have are courts in two jurisdictions dealing with the same parties, and same corpus. This is counterproductive to the mischief which the Act addressed regarding international cooperation. This does not bode well for our country, which almost on a daily basis seeks to attract foreign investment, but again, the executive claims it is a question of “sovereignty”. If there is a sobering aspect to the Baha Mar fiasco, it is that having applied for the winding-up of Baha Mar, the executive has opened a can of worms, in that the process requires any party having a claim or interest now has to come forward.

It will be interesting to find out how many other “conflict of interest” cases will arise involving certain persons in the Cabinet. Now that is a question of sovereignty.

A. J. THOMPSON

Nassau,

August 18, 2015.