Grenada Electricity Services Ltd v The Attorney General of Grenada
| Jurisdiction | Grenada |
| Judge | ‘Glasgow, J.’ |
| Judgment Date | 03 May 2019 |
| Judgment citation (vLex) | [2019] ECSC J0503-1 |
| Court | High Court (Grenada) |
| Docket Number | CLAIM NO. GDAHCV 2018/0063 |
| Date | 03 May 2019 |
IN THE SUPREME COURT OF GRENADA
AND THE WEST INDIES ASSOCIATED STATES
HIGH COURT OF JUSTICE
(CIVIL)
CLAIM NO. GDAHCV 2018/0063
In the Matter of Section 20 of the Electricity Supply (Amendment) Act: No. 33 of 2017
In the Matter of Sections 1, 6 and 16 of the Constitution of Grenada
and
In the Matter of the Supreme Court (Constitutional Redress Grenada) Rules 1968
Mr. Conway Blake with him Mrs. Linda Dolland and Mr. Darshan Ramdhani for the Applicant/Defendant
Mr. Sydney A. Bennett, QC instructed by Mr. Dickon Mitchell of Mitchell & Co. for the Respondent/Claimant
The applicant in these proceedings is the Government of Grenada (the Government”). It has applied to the court to stay a constitutional claim filed against it by the Grenada Electricity Services Limited (“GRENLEC”).
In its constitutional claim, GRENLEC seeks, inter alia, the following relief from the court –
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i. A declaration against the Government that section 20 of the Electricity Supply (Amendment) Act No. 33 of 2017(“ESA 2017”) violates or will violate GRENLEC's right to have its property compulsory acquired pursuant to section 6(1) of the Constitution of Grenada, and is therefore null and void;
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ii. A declaration against the Government that the requirement set out in the ESA 2017 that every network licensee (GRENLEC being the only such licensee in the State) shall pay five percent (5%) of its pre-tax profit every financial year to the Social Fund is or will be an unlawful compulsory appropriation of GRENLEC's property without constitutional authority therefor.
On 2 nd May 2018, the Government filed an affidavit in response to GRENLEC's claim in which it, inter alia, denied much of the factual allegations made by GRENLEC and stated further that the 5% imposition is a levy imposed consistent with section 6 (6) (a) (1) of the Constitution.
On 3 rd May 2018, the first hearing of GRENLEC's claim took place before Dyer J, where both parties were represented and a case management hearing was conducted. After hearing the parties, the learned judge gave directions for trial.
On 26 th June 2018, the Government filed the present stay application asking the court for a stay of GRENLEC's claim pursuant to section 7 of the Arbitration Act 1989 (“the Act”), section 7(1) of the West Indies Associated States Supreme Court Act and/or Rule 26.1 (2) (q) of the Civil Procedure Rules, and/or the inherent jurisdiction of the Court until determination of Grenada Private Power Limited and WRB Enterprises, Inc. v. Grenada ICSID Case No. ARB/17/13.
The Government says that GRENLEC's claim should be stayed for the following reasons –
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(1) the claim is in substance a dispute between Government and GRENLEC's majority shareholders, Grenada Private Power Limited (“GPP”) and WRB Enterprises Inc. (“WRB”). The matters contended are governed by a Share Purchase Agreement (“SPA”) concluded between Government and the said shareholders on 14 th September 1994 and thereafter amended;
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(2) the parties have agreed pursuant to article 11.2 of the SPA to refer to arbitration any disputes and/or differences “arising out of or in connection with” the SPA;
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(3) the SPA is legally binding and extends to all matters relating to, inter alia, —
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(a) alleged confiscation, expropriation or nationalization of any of GRENLEC's assets;
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(b) any alleged taking or exercising of acquisition powers by any State entity with respect to all or any part of GRENLEC's assets;
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(c) all claims in connection with the SPA which touch and concern the Constitution of Grenada
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(4) The dispute set out in GRENLEC's claim is directly connected to the SPA and the rights and obligations arising thereunder, fall within the matters to be sent to arbitration and engages matters to be determined by arbitration under the auspices of the International Centre for the Settlement of International Investment Disputes (“ICSID”).
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(5) Alternatively, the court can stay GRENLEC's claim further to its inherent jurisdiction, in the interest of justice and/or as an exercise of its general case management powers set out in the Civil Procedure Rules 2000 (“CPR”) 26.1(2)(q). The stay should be granted in the interests of justice due to the fact that the claim has been brought for collateral purposes.
On 6 th September 2018, GRENLEC filed an affidavit in opposition to the Government's stay application. In its answer GRENLEC specifically denies that the Government is entitled to a stay of the claim. In particular it denies the assertions that –
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(1) It is bound by any contractual obligation whether under the SPA or otherwise to contribute at least 5% of its net income before taxes to charities within Grenada;
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(2) Its claim relates to or is a continuation of the differences or disputes between GPP, WRB and the Government regarding issues arising out of the SPA;
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(3) Its claim ought to be regarded as having been brought by GPP (GRENLEC's majority shareholder);
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(4) Section 7.9 of the SPA provides recourse to GRENLEC in the instance that it alleges that the Government has confiscated, expropriated or nationalized its assets; and
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(5) Its claim concerning Government's expropriation of its assets without compensation could be resolved by arbitration among GPP, WRB and the Government when it (GRENLEC) is not a party to the SPA. GRENLEC asks for the stay application to be dismissed.
Before proceeding to the legal arguments, this discourse may be assisted with an outline of the background to the present application. I will adopt parts of the helpful factual matrix presented by the Government. GRENLEC was formerly a Government owned public utilities company which served as the sole supplier of electricity in Grenada. The Government divested itself of control of the company by entering into a privatization scheme in 1994. The scheme was formalized through the SPA signed by the Government, WRB and WRB's local subsidiary, GPP.
WRB is a foreign registered and owned company registered and resident in Florida, United States of America. GPP is a locally registered company which has its headquarters in Florida, United States of America. As noted above, GPP is a subsidiary of WRB.
The SPA delineates the shareholding of the parties thereto in GRENLEC; WRB owns 50% of the shares through its local subsidiary, GPP, and the remainder of the shares is held by the National Insurance Scheme (NIS), Eastern Caribbean Holdings Limited (ECH), citizens of Grenada and employees of GRENLEC. It is said that WRB controls the 11.3% of shares held by ECH in GRENLEC and while nothing turns on this assertion, it has not been substantiated or disputed on this application. The Government explains that while GRENLEC has a total of over 2,000 shareholders, WRB holds about 61.3% of those shares giving it, along with GPP, effective control over GRENLEC. This control, the Government continues, is further evidenced by the fact that WRB, through GPP is entitled to appoint 6 of GRENLEC's directors including the chairman of its board of directors. The chairman is allowed 2 votes at meetings of the directors in the event of a tied vote. GPP and WRB are also allowed to appoint GRENLEC's managing director.
Previous to the year 2016, the electricity sector in Grenada was governed by statute styled the Electricity Supply Act No. 18 of 1994 (“ESA 1994”) which was passed by the Parliament of Grenada after discourse among WRB, GPP and the then Government of Grenada. After some period of consultation and preparation, the ESA Act 1994 was repealed and replaced. The Electricity Supply Act 2016 (“ESA 2016”) and the Public Utilities Regulatory Commission Act 2016 were enacted (“PURCA 2016”). GRENLEC in its affidavit in support of the claim complains about section 70 of the ESA 2016 which, inter alia, mandates that ‘ every licensee shall ensure that it spends, in every financial year, at least five percent of its gross profits, in pursuance of its Corporate Social Responsibility’.
GPP and WRB engaged the dispute resolution process under the SPA by instituting international arbitration proceedings against the Government on 5 th May 2017. The Government explains that the arbitration proceedings includes claims for specific performances, damages including claims that Government ought to be compelled to buy back WRB and GPP's shares in GRENLEC.
The ESA 2016 was amended in 2017 by the Electricity Supply (Amendment) Act No. 33 of 2017 (“ESA 2017”). By that amendment, the corporate social responsibility aspect of section 70 of the ESA 2016 was repealed. It was replaced by the requirement that ‘every network licensee shall contribute five percent of its pre-tax profit every financial year to the Social Fund’. GRENLEC's claim is that section 20 of the ESA 2017 violates section 6 of the Constitution of Grenada in that it infringes GRENLEC's right not to have its property compulsorily taken or acquired.
The Government's various grounds for this application may be subsumed under the broad themes of –
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(1) the Arbitration Act; and
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(2) the inherent jurisdiction/case management.
Under this head the Government argues that section 7 (1) of the Arbitration Act, Cap. 19 of 2010 Continuous Revised Edition of the Laws of Grenada (“the Act”) endows the court with broad powers ‘ to stay parallel and related proceedings which concern matters that are to be resolved pursuant to a valid and binding arbitration agreement’. 1 Section 7 (1) of the Act states:
Where a party to an agreement or any person claiming through or under him or her, commences legal proceedings in...
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