The forfeiture of 100 acres of land at Chatham Bay, Union Island by the Government (2006-2013)

by

Dr. The Hon. Ralph E. Gonsalves

Prime Minister

Author’s Note: The story of the process leading to the forfeiture by the government of St. Vincent and the Grenadines of 100 acres of land at Chatham Bay is worth retelling for several reasons. My summation of this was published in my recent book A Time of Respair: Beyond Covid, Volcanic Eruptions, Hurricane Elsa and Global Turmoil:  Fresh Hope for Saint Vincent and the Grenadines.  This portion of my book is reproduced below.

THE ISSUE

Between 2006 and 2013, the U.S. Embassy in Barbados sought to pressure me to reverse a decision made by my government to institute legal proceedings under the Alien Land-Holding Act of 1922, to forfeit 100 acres of beachfront land at Chatham Bay in Union Island — part of St. Vincent and the Grenadines — owned by a group of American investors, including a prominent one who was already involved at Petit St. Vincent. The pressure and threats by the U.S. Embassy were crude, ill-advised, and completely wrong on the facts and the law. The investors known in the law suit as Chatham Bay Club Limited and Chatham Bay Development Corporation Limited had made it clear to the government, through their lawyers, that they were prepared to fight the matter all the way to the Privy Council in London, the final appellate body in our judiciary.

THE BACKGROUND

The background to this issue was straightforward. The American investors, defined as “aliens” under the Act that was put in place by the British colonial government in St. Vincent and the Grenadines since 1922, obtained an Alien Landholding Licence from the predecessor government to purchase the land in the late 1980s and did so purchase the land. One of the conditions, pursuant to the Act, was that the investors, by agreement, invest EC $15 million (just over US $5 million) to build a small hotel and restaurant at Chatham Bay. Under the Act, as was stated in the licence, a failure to so fulfil that condition may result in “forfeiture of the land” by the Crown, the government.

The investors never built anything at all on the land; it was left virgin. Up to the end of 2005, the investors did nothing to fulfil the condition in the Alien Landholding Licence. So, in early 2006, I instructed the Attorney-General, on behalf of the government, to institute proceedings in the High Court for forfeiture.

THE LAW COURTS

After a spirited trial, the High Court ordered forfeiture on June 27, 2007. In the judgment of Justice Albert Matthew, the mischief the Act sought to avoid was plainly in evidence: A foreign investor simply cannot buy scarce land on the cheap, do nothing to develop it, and later speculate on its sale for a huge profit due to no effort or investment on his part. Land values naturally rise with the State’s expenditure on roads, airports, seaports, schools, health facilities, water and sanitation, electricity and telephone services, police and coastguard services, and administrative services generally. And all this the State did in Union Island where Chatham Bay is located.

Additionally, in St. Vincent and the Grenadines there are no capital gains taxes, so the investors were not liable to pay any such taxes on the increased value of the land. Only land taxes of a puny kind were due and payable.

The American investors appealed the decision of the High Court to the Court of Appeal. The stakes were high. The investors brought in a distinguished Queen’s Counsel from London to argue the case before the Court of Appeal consisting of three Appeal Court Judges. The Court of Appeal, in a unanimous decision, dismissed the appeal on August 13, 2010, and upheld the forfeiture. An order for legal costs against the investors was made at the High Court, and the Court of Appeal. The investors appealed to the highest court of St. Vincent and the Grenadines, the Privy Council in London. A few days before the final appeal was to be heard before the Privy Council, the English lawyers for the investors intimated to my government’s lawyers that they would withdraw the appeal before the Privy Council, if my government would revert to its original 2006-2012 offer of settlement to repay the purchase price of the land from the date of purchase with the usual interest rate at five percent; the investors’ lawyers asked if we would also agree that each side bear its own legal costs.

After appropriate consultation and advice, I instructed our lawyers to agree to the proposed terms of the settlement except that interest would run on the principal sum up to the date in January 2006 when the government instituted its legal claim for forfeiture. Accordingly, the appellant investors withdrew the appeal. Clearly, the investors’ English lawyers had advised them that they would lose at the Privy Council, so they wanted to cut their losses. For the government’s part, I had no interest in leaving the investors empty-handed, even though that is where the law and the facts led. The government’s maintenance, unsullied, of its reputation as being investment-friendly was and is a public policy of my government.

AMERICAN PRESSURE

The American government could not resist direct pressure and threats against my government and me as Prime Minister. The pressure and threats came to a head on Independence Day, October 27, 2010, two weeks after the Court of Appeal’s judgement. The American Ambassador had requested an appointment to see me on that day. I acceded to the request, but I did not know the subject matter she intended to raise.

So, on our nation’s 31st anniversary of Independence, after our morning celebrations, I met with the American Ambassador and her two diplomatic colleagues (a senior and a junior diplomat) at the official residence of the Prime Minister.

Immediately, she raised the issue of the American investors’ interest, and predicament, in the matter of Chatham Bay. Please note that by then the government had already secured judgments in its favour at both High Court and the Court of Appeal and the matter had started its slow process, as intimated by the investors’ lawyers, towards its denouement at the Privy Council. She recounted to me what I had already known: That U.S. Congressmen, Senators, and the State Department were weighing in on the matter and were requesting that my government discontinue the proceedings and leave the American investors with 100 acres of prime beach front land in Union Island. I politely and calmly told her that the facts and the law are on the government’s side, and I await confidently any hearing and judgement of the Privy Council.

At this point the accompanying senior diplomat, whom I understood was of Jamaican birth but an American citizen and whom I had never met or heard of, entered the conversation aggressively, threateningly, disrespectfully, and wildly. He was clearly the designated metaphoric “pit bull” for the day. I sensed that immediately and never allowed him to rile me up. He accused my government and me of “expropriating” American investors’ property and asserted that America will never allow it to go unpunished. I calmly explained to him that my government stands for, among other things, the right to private property, the rule of law, and the Constitution of St. Vincent and the Grenadines. I advised him that in our country there is no legal category known as “expropriation” of property; thus, we cannot expropriate. I pointed out that a government in St. Vincent and the Grenadines may purchase land, or acquire land under and by virtue of the Constitution and the Land Acquisition Act (which existed from colonial times and which also exists in the USA), and that consequent to acquisition of property, the government is required to pay fair compensation within a reasonable time; or apply to the High Court for forfeiture in circumstances detailed in the Alien Landholding Act. We did the latter and had succeeded in the Courts thus far.

RESOLUTE AND STANDING FIRM

I indicated the terms of a settlement I had proposed to the investors’ lawyers from the very beginning, that is to say, payment of the purchase price mentioned in the Deed plus interest at the rate of 5 percent per year from the date of the purchase. I informed the American diplomats that their government was unwisely advising the American investors to be unyielding when they were plainly in the wrong. I told them that the investors’ “take it or leave it” offer of sale of the land to the government of US $20 million when they had purchased it for under US $200,000 was absolutely out of the question. I asked them the simple question: Why would my government with High Court and Court of Appeal judgments under its belt for “forfeiture”, allow the investors to keep the land, or pay them US $20 million for it?

The senior diplomat kept interrupting me angrily. When I was finished, he was in a veritable uncontrollable rage. He said that all my “nice legal talk” meant nothing to him; he insisted that it was “expropriation” and that it is “the way communist governments behave”. He summoned the names of this and that senior Congressman and Senator who may retaliate against St. Vincent and the Grenadines and me; that I did not know what I was getting into by “expropriating” Americans’ property; that American visas for Vincentians and my family were in jeopardy; and so he ranted on and on about this or that potential adverse action by the American government against St. Vincent and the Grenadines. I did not take his bait.

I calmly replied that I have no control over what the American government or its representatives may or may not do. I reiterated that our position is entirely reasonable and I await any outcome at the Privy Council. I told them that I am satisfied that reasonable people in the American government would find my government’s position compelling. At this juncture, the junior diplomat, who had evidently studied the case well, indicated to the Ambassador that I had presented accurately the facts and the law, as they stood, but he thought that the Privy Council may rule otherwise. I simply said: “Let’s see; we believe in the rule of law.”

During the discussion, the staff at the Prime Minister’s Residence brought us drinks; the Ambassador, the junior diplomat and I indulged; the senior diplomat did not; clearly, he was not thirsty. Two months later, in December 2010, the ULP was re-elected in general elections for its third consecutive term despite hostile external forces being arraigned against it.