(Trinidad Guardian) A large group of British American Insurance Company (BAICO) policyholders from several Eastern Caribbean countries will have to wait to learn the fate of their lawsuit over a move by the T&T government to bail out only local financial subsidiaries of CL Financial (CLF).
Caribbean Court of Justice (CCJ) president Adrian Saunders and judges Winston Anderson, Maureen Rajnauth-Lee, Andrew Burgess, and Peter Jamadar reserved their judgment in the case after hearing submissions at the court’s headquarters in Port-of-Spain between Monday and Tuesday.
“The court will take time for its decision in this matter. We will let you know in due course when we are ready to render a decision,” said Saunders, at the end of Tuesday’s sitting.
In the lawsuit, the group is contending that the Government breached the Revised Treaty of Chaguaramas (RTC), which established the Caribbean Single Market and Economy (CSME), by bailing out certain local CLF subsidiaries such as Clico and British American (Trinidad) and not regional subsidiaries such as BAICO.
The group is claiming that while local policyholders were protected and essentially guaranteed their full investments, the Eastern Caribbean policyholders were only able to recoup approximately 14 per cent of their investments through the liquidation of the regional subsidiary.
Presenting submissions on behalf of the group, King’s Counsel Simon Davenport claimed that the Government’s actions breached Article 7 of the RTC, which prohibits discrimination based on nationality.
“Every Caribbean person is equal before the law,” Davenport said.
He claimed that assets of British American International Company (BAICO), the holding company for British American Trinidad, were used in the bailout, but the T&T Government did not accept its liabilities, including to policyholders.
“CL Financial did not distinguish among group companies unless absolutely necessary,” he said.
“This case is not going to bankrupt T&T. The amounts are significant but are only a fraction of the monies injected and now recovered by T&T,” he added.
Davenport referred to a US$100 million fund that was promised by the Government under the tenure of former prime minister Kamla Persad-Bissessar during a Caricom Heads of Government meeting, held in July 2012 in St Lucia.
He noted that T&T only made an initial US$36 million contribution and promised to finance part of the remainder through a loan.
Davenport claimed that the T&T government also breached Article 184 of the RTC, which requires member states to promote the interests of consumers by providing adequate and effective redress.
He admitted that if the Government did not take any action to protect its local policyholders, then his clients would not have a valid claim against it.
Responding to the submissions, Senior Counsel Deborah Peake noted that there was no evidence that BAICO’s assets were used in the bailout.
She said when the Government signed a Memorandum of Understanding (MoU) with CL Financial for the bailout in 2009, only three local subsidiaries Clico, BAT and Clico Investment Bank (CIB) were under consideration and not CLF’s 39 other local, regional and international subsidiaries such as BAICO.
“This case assumes that they (BAICO) were under consideration.” she said, as she noted that the claimants had to prove that the Government knowingly excluded regional policyholders.
She suggested that the group’s case was based on a misunderstanding of the RTC.
“The RTC was for free trade within a customs union not to frustrate a government which is protecting its country’s economy,” she said.
Dealing with Davenport’s claims over consumer protection requirements, Peake suggested that such provisions were meant to deal with anti-competitive behaviour.
“It is not reasonable to use it when the market has collapsed,” she said.
