Government could face a major legal battle and risk to the country’s credit ratings if it fails to sell its 56 per cent stake in Methanol Holdings Trinidad Limited to Proman Holdings, through its consortium Consolidated Energy Ltd (CEL). This is the view of the lawyers for the German company in an opinion prepared for the company, a copy of which was obtained by the T&T Guardian.
In the opinion the lawyers quoted from a story carried in the T&T Guardian in which Finance Minister Larry Howai was reported to have said the government had “options” following the ruling of the International Court of Arbitration that CL Financial’s 56.53 per cent shareholding in (MHTL) has been valued at US$1.175 billion and CL Financial now has to offer the shares for sale for this sum in two tranches to its minority shareholder, Consolidated Energy Ltd (CEL.
The lawyers said for Howai and the Central Bank to have any notions that they have options in the matter is to gravely misread their obligations under various treaties and if they refuse to abide by the arbitration Proman will trigger a number of actions. The legal opinion read: “Given the nature of a partial award and order under ICC rules, a failure of T&T, and specifically the CBTT, to consent to the sale would constitute a violation of the New York convention, and would most likely be interpreted as such by all ratings agencies and governments. “It would, if properly played by us, have enormous and immediate impact on foreign investment, debt ratings and country risk for T&T as it is their most important international trade obligation regarding dispute resolution.”
The legal opinion given to Proman also outlines the ways in which they can hurt this country’s ability to borrow on the international market and increase the cost of borrowing and then use that as leverage in future negotiations. The document read: “The real cost of this action in violating the NY Convention for T&T would be the impact on foreign investment, new treaties and T&T's financing costs. In my view, these immediate impacts on T&T will dwarf what T&T would eventually owe to us as compensation. “So when evaluating the parts of the remedy that may take some time, we should recognize that what should concern our opponents (if a negotiation ensued) are the immediate impacts on T&T's ability to raise capital at the government and business level. What should concern us is knowing the details of T&T's obligations and the consequences of breach, and using that to leverage an immediate solution.”
They also raised the spectre of taking the government to the local courts and said this may not be the best option since they would be better served by pursuing the action in the UK or in Germany.
“Moreover, there are riskier options that we could pursue in T&T, if there is an appetite for that, to include action against the CBTT to force consent to the sale. These are only risky in that I fear once T&T gets a toehold here of jurisdiction, we may get conflicting court paths. But, setting that aside, a refusal by the CBTT to consent would be contrary to T&T law as well because the Central Bank Act mandates a sale pursuant to the Tribunal's order in these circumstances and/or mandates the CBTT's relinquishment of control over Clico/CLF at this time. “ In the end thePromans lawyers advised that their next move should be to go to the tribunal and seek immediate interim measures to include voting right modification to put CEL in control and also a suspension of dividends to Clico/CLF, and/or placing the 56 per cent dividends into escrow.
