Government faces lawsuit from Clico, Britsh American regional policyholders

THE Government of Trinidad and Tobago is facing a lawsuit from a group of British American and Clico (BACOL) policyholders from the Eastern Caribbean over its bailout of CL Financial in 2009.

In an original-jurisdiction application filed in the Caribbean Court of Justice (CCJ), the group intends to argue that the Government’s rescue plan to protect the funds of policyholders of the TT conglomerate discriminated against British American policyholders on the basis of nationality.

They contend the Government contravened certain articles of the Revised Treaty of Chaguaramas, which governs the Caribbean Community (Caricom). Under the treaty, Caricom states agree to not allow for discrimination on the grounds of nationality, among others.

The group’s application for leave to pursue its lawsuit against the Government was filed in the CCJ in its original jurisdiction, which applies the rules of law in the interpretation and application of the treaty.

If leave is granted, the shareholders will argue that the Government acted in breach of its treaty obligations and discriminated against British American and Clico policyholders in other countries on the grounds of nationality.

The Government is resisting the application for leave, and at a case-management hearing on Wednesday, Senior Counsel Deborah Peake asked for additional time to file factual evidence, respond and then put in submissions on the objection.

She said the Government did not see the April 2019 pre-action protocol letter sent by the Eastern Caribbean policyholders and needed “a fair opportunity to respond,” as “we are dealing with hundreds of millions of dollars.”

CCJ President, Justice Adrian Saunders and CCJ judges, Justices Jacob Wit and Winston Anderson gave directions for the Government to file its objections to the grant of leave by November. The shareholders will get an opportunity to respond the following month and an oral hearing on the application for special leave and the objection will be held on January 18.

The regional shareholders are represented by a team of British and Caribbean-based attorneys who include Simon Davenport, QC, Dr Kenny Anthony – a former prime minister of St Lucia, Robert Strang, QC, Gregory Pantin, Raphael Adjodia, and Miguel Vasquez.

The TT Government is represented by Peake, Tamara Toolsie, Brent James and Karissa Singh.

Peake said leave ought to be refused since the group’s allegations were incomplete and erroneous.

Davenport said there had been a number of communications over two years: “They (Government) had two and a half years to consider its position.”

The challenge before the CCJ is aimed at recovering the investments made by thousands of OECS citizens before Clico and British American’s collapse.

The group has said the effects of the collapse of the Trinidad-based conglomerate had a catastrophic and widespread effect on the Eastern Caribbean.

At a media conference to discuss the intended legal action, Davenport said when CLF collapsed, it did not have the funds in liquid assets to recover its liabilities to its investors.

He said in TT, the Government stepped in and took emergency control of Clico and the TT arm of British American. However, he pointed out the insurance company also had a regional arm.

He accused the Government of forcing CLF to agree to make all its assets available to fund the deficit in Clico and British American, while also pumping money into the cash-strapped entity.

Davenport claimed the results of those actions mean Clico and British American customers were protected, with TT policyholders recovering the full value of their investments.

However, he said in July, British American policyholders in other countries were not protected, and, to date, have only recovered 14 per cent of the liquidation.

Davenport said the TT Government declined to intervene to protect the regional policyholders despite other Caricom member states pressing it to do more.

He further maintained the Government has not budged on moral suasion nor recognised the rights of policyholders outside of TT and it was for this reason, the legal action was necessary to restore these rights.

The three complaints the Government is facing in the proposed lawsuit are that it rescued the TT policyholders of British American, but not the insurance company’s other customers; it harmed the company by asserting that CLF’s assets could only be used to help Clico and British American TT policyholders; and it attempted to justify its actions by insisting they were in accordance with a regulatory regime which only protected TT policyholders.

At July’s briefing, Davenport explained that the group will be asking the CCJ to enforce the obligations binding TT under the Caricom treaty.