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Arguments heard over arbitration appeal

Posted: Jun 15, 2018 4:03 PM Updated:

The Guam supreme court heard oral arguments today in the appeal of the now more than $15 million arbitration award owed by the Port to YTK Corporation.  The case involves a lease for hotel wharf signed by the parties almost two decades ago.

The case dates back to 2006 when the Port and YTK signed a series of 5-year leases totaling 45 years for a fisheries operation that never really got started. The ensuing dispute wound up before an arbitration panel, which decided YTK's multi-million dollar award. It was upheld by the superior court, but appealed by the port to the supreme court. 

Attorney Kathleen Fisher represents YTK and said, "So I think the court had a lot of questions about really the port's argument that the lease was illegal and why the arbitrator's decided that differently. And they also had some questions about the damages that were awarded that both of us were answering for the court. So I think it was a court that had a lot of interesting questions that pose challenges to both sides."

Attorney Michael Phillips is counsel for the port, and noted, "The real contest seems to be over arbitration, and the question is even if they're completely wrong and I think most people looking at it, in fairness will concede that they were wrong. Does the supreme court in this case have the authority to step in and say we're going to overturn your decision, and I think that's where a lot of the heartache is."

And then there is the over-arching question of sovereign immunity and the legislature's requirement to approve any lease of more than five years. "The legislature has to consent when somebody sues them for land or in this case in a contract. And the legislature has not allowed the port to lease property for any more than five years. and in government if you don't have the authority to act, you can't act. In this case it's not just the lack of authority but specific mandates from the Guam Legislature that say any leases, any conveyances of land need to go before the legislature," said Phillips.

Fisher added, "Sovereign immunity is a very complicated issue and the port raised that, and the court raised it as a question about whether instrumentality of the Government of Guam is immune from this particular type of award. And there are a lot of questions that the court is asking that I was answering and Mr. Phillips was answering about whether that's different in the context of arbitration and the arbitrators get to decide that first and the court gets to decide it, and that's what the court process is about, the court will ultimately determine that."

Phillips added, "The question of whether or not the supreme court can review that or should review that as you mentioned is key. I said it in one statement and I think it summarizes it, they can look the other way, they have the authority to look the other way, I think the law demands that they don't."

"The panel of arbitrators spent a lot of time figuring out how to award actually the least amount that they could under the lease, and that once this is over and the amount of damages that the port's walking away from its obligations is finished, then the port can move on and develop hotel wharf which is a fabulous, valuable property here on Guam. I just wish Guam YTK had an opportunity to participate in that," continued Fisher.

The high court has taken the matter under advisement. 

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