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20 February 2020
Arbitration in Belize is governed by the Arbitration Act.(1) As the act was last amended in 1980 (1980 Ordinance), it has become somewhat outdated. However, the 1980 Ordinance assisted in Belize's assimilation of a modern arbitration enforcement regime by incorporating the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) into domestic law.
With respect to local arbitration, the act makes standard provision for parties to submit disputes to arbitration and for applications to be made to stay court proceedings pending arbitration.(2) Among other things, the act:
Under the act, foreign awards are governed by three international conventions, which have expressly been incorporated into domestic law by way of insertion as schedules to the act:
While Belize is not a party to the New York Convention, the Caribbean Court of Justice (CCJ), Belize's final appellate court, has held that the provisions of the convention embodied in the act by the 1980 Ordinance give effect to the convention in domestic law.(6)
In January 2017 legislation was enacted that has directly affected the enforcement of foreign arbitral awards in Belize and abroad.
Crown Proceedings (Amendment) Act
The Crown Proceedings (Amendment) Act (CPAA)(7) amended the Crown Proceedings Act to introduce significant new provisions. Specifically, the long title to the CPAA states that its aim is to "make provisions relating to enforcement of foreign judgments against the Crown". Under the CPAA, 'judgments' expressly include arbitral awards. In essence, if a foreign judgment has been entered against the government of Belize and a Belize court later declares that foreign judgment to be unlawful, void or otherwise invalid, Section 29A of the CPAA prevents enforcement of that foreign judgment in or outside Belize.
Section 29B(1) of the CPAA introduced a new offence, which criminalises any attempted enforcement of a foreign judgment that has been declared by a Belize court to be unlawful, void or otherwise invalid. Where an individual attempts to enforce such a foreign judgment, that person becomes liable on summary conviction to a fine of up to Bz$150,000, up to two years' imprisonment or both. If an offence under Section 29B(1) is committed by a 'legal person' (ie, a body corporate, an unincorporated body or any other entity), the CPAA will impose a fine of up to Bz$250,000 on that legal person. The CPAA clearly delineates the ambit of the offence. In accordance with Section 29B(4), any person who has acted in an official capacity on behalf of the legal person becomes liable for committing the office. 'Persons acting in an official capacity' extends to shareholders, partners, directors, managers, advisers and even secretaries. These persons may be charged individually in accordance with Section 29B(2)(a), unless they adduce evidence to show that the offence was committed without their knowledge, consent or connivance. That individual must show that they exercised all due diligence in their official capacity to prevent the commission of the offence. Effectively, a reverse burden is created so that the person acting in an official capacity would have to adduce evidence to prove innocence.
By these provisions, parties to foreign arbitral awards against the government are barred from pursuing enforcement of awards or foreign judgments issued on such awards if a Belize court has ruled that the foreign judgment (or foreign award) is unlawful, void or otherwise invalid. Law firms and attorneys would be committing an offence by instituting proceedings on behalf of clients who may wish to enforce such awards in other countries or otherwise. The scope of the offence is so wide that every staff member of a law firm who would assist with such a matter would be implicated. The objective of the CPAA is to effectively use the threat of criminal prosecution against Belize-based entities that have foreign judgments against the government to intimidate them from proceeding with enforcement outside Belize.
Central Bank of Belize (International Immunities) Act
The purpose of the Central Bank of Belize (International Immunities) Act (CBBIIA) 2017 is "to restate for greater certainty the immunity of the Central Bank of Belize from legal proceedings in other states; and for purposes connected therewith or incidental thereto". Section 3 of the CBBIIA makes certain declarations as to the international legal immunity of the Central Bank and its property. First, the CBBIIA grants immunity to the Central Bank from the jurisdiction of the courts or other tribunals of any foreign state. Second, the CBBIIA provides that the property of the Central Bank, wherever situated, is not intended for commercial or other purposes and is declared to be immune from proceedings for attachment, arrest or execution being instituted, in any foreign state. The immunity granted by the CBBIIA is subject to express waiver only by the Central Bank itself, which reflects the extent to which Parliament intended to safeguard the immunity. If this section is given effect in foreign jurisdictions, successful parties to arbitration in a foreign state would be prevented from enforcing any award against property of the Central Bank.
Section 4(1) of the CBBIIA created two new offences with respect to the immunity of the Central Bank. A person who institutes or becomes a part of any proceedings in a foreign state, which the Central Bank would be immune from by virtue of Section 3, commits an offence (the institution of proceedings offence). This offence includes the commencement of proceedings inside or outside Belize and also covers the institution of proceedings before or after the CBBIIA came into effect. In addition, where a person makes a false report or public statement to the effect that the Central Bank or the property of the Central Bank has been subjected to proceedings from which the Central Bank or its property would be immune, that person commits an offence (the reporting offence). Section 4(2) attaches the same penalties to the institution of proceedings offence that appear in the CPAA, as described above. Where the reporting offence has been committed, the fine for an individual is Bz$100,000 and up to one year's imprisonment. In the case of a legal person, the fine is Bz$150,000 (Section 4(3)).
Section 4(4) extends the offence to persons including legal advisers acting in an official capacity on behalf of a legal person in the same terms as Section 29(B)(4) of the CPAA. Again, this provision creates a presumption of personal guilt in respect of those acting in an official capacity, including legal advisers, and a reverse burden is imposed on such person to prove their innocence. Effectively, the legislation bars attorneys from advising potential clients as to matters that would be captured by the abovementioned provisions.
Supreme Court of Judicature (Amendment) Act
The Supreme Court of Judicature (Amendment) Act 2010 addresses contempt of court, specifically in relation to non-compliance with injunctions and injunctions issued in arbitration proceedings. The constitutionality of this legislation was challenged in the Supreme Court and was recently addressed by the CCJ in Attorney General of Belize v Philip Zuniga.(8)
Section 106(A), which contains 16 subsections, created an offence at Section 106(A)(1) for disobeying or failing to comply with an injunction, and enumerated the attendant penalties and the scope of the offence and addressed other ancillary matters at Sections 106(A)(2) to (16). Section 106(A)(8) is of particular interest, as it confers jurisdiction on the court to issue injunctions restraining a party or arbitrators, or both, from commencing or continuing arbitral proceedings, and restraining parties from commencing or continuing enforcement proceedings arising from an arbitral award, where it is shown that an abuse of the legal or arbitral process has occurred or would result. The amendment also confers jurisdiction on the court to void and vacate arbitral awards made in disregard of such injunctions.
The respondents in Philip Zuniga argued that Section 106(A)(8) was unconstitutional because it interfered with the right to property guaranteed by the Constitution. Particularly, it was argued that the contractual right to arbitrate constituted property, which was capable of and required constitutional protection. In addition, the respondents submitted that the jurisdiction conferred on the court to vacate arbitral awards was an unjustifiable interference with the right to property.
The court agreed that the power introduced by the amendment was a novel one. The court also decided that such a power was entirely within its jurisdiction, but that the exercise of that power would occur only in exceptional circumstances. The court held that "there is nothing inherently unconstitutional in the court being given a power to restrain an abuse of the legal or arbitral process or to vacate awards".(9) The court aligned itself with the judgment of Mendes JA of the Court of Appeal, who had held that arbitration proceeds that are or would be oppressive, vexatious or inequitable, or would constitute an abuse of the legal or arbitral process, as described in the latter part of Section 106A(8)(i), are not in the public interest. Consequently, it was determined that the amendment pursued the legitimate aim of promoting fairness between parties to an agreement to arbitrate. In the premises, it would be proper for the court to grant injunctive relief if any arbitration proceedings were found to be of such a nature.
The court eventually held Section 106A to be constitutionally valid save for the mandatory minimum penalty regime contained in Section 106A(3), the proviso to Section 3 and Sections 106A(3)(a) and 5 in its entirety. The court then exercised its power to sever the unconstitutional aspects of these provisions from Section 106(A).
For further information on this topic please contact Eamon Courtenay or Stacey Nichole Castillo at Courtenay Coye & Co by telephone (+1 501 223 1476) or email (firstname.lastname@example.org or email@example.com). The Courtenay Coye & Co website can be accessed at www.courtenaycoye.com.
An earlier version of this article was published in The Law Reviews.
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