HIGH COURT DECISION GIVES ST. KITTS A NEW CHANCE

C O N F I D E N T I A L BRIDGETOWN 000725 SIPDIS E.O. 12958: DECL: 12/10/2018 TAGS: KIDE EINV PREL XL SUBJECT: HIGH COURT DECISION GIVES ST. KITTS A NEW CHANCE TO DO THE RIGHT THING ON EXPROPRIATIONS Classified By: Charge d'Affaires, a.i. D. Brent Hardt, Reasons 1.4 (b,d ) -------------- Summary -------------- ¶1. (U) In an effort to develop its tourism industry with large-scale projects that can create jobs, generate visitors, and lure high-end investors, the government of St. Kitts and Nevis (GOSKN) has taken to expropriating land from smaller, individual investors under its eminent domain laws and selling it to corporations for development. The Embassy is aware of five cases currently being challenged in the courts, with one case over 21 years old. The expropriations have caused consternation amongst the Court losers, many of whom continue to wait for compensation. A recent High Court decision supporting the position of the displaced landowners, however, may yield more favorable settlements, provided the government pays them out expeditiously. We continue to press the government to come to closure on these cases, many involving American Citizen claimants, both as a matter of respect for the rule of law and for the good of St. Kitts' ability to market itself as a safe place to invest. End summary. -------------- St. Kitts and Nevis Land Acquisition Act -------------- ¶2. (U) Historically, the GOSKN has expropriated private land and other real estate for public use without compensation to the owners. Lands have been acquired by the government under both the Constitution and the Land Acquisition Act. Both legal devices allow for the acquisition of private property by the government for public use, but both require that property owners be compensated. The law under which compensation is determined is the Land Acquisition Act, which states that the value of the land shall be taken to be the amount which the land might have been expected to realize if sold in the open market by a willing seller twelve months prior to the date of acquisition. Thus under this law, a property owner would be compensated the commercial value of a property one year prior to the GOSKN taking possession. Historically, though, this has not been the case. The GOSKN has used what is called the agricultural value of a property to determine the amount of compensation, which has traditionally amounted to approximately 10% of the commercial value. -------------- Specific Cases -------------- ¶3. (U) The Embassy is aware of five expropriation cases currently being contested in St. Kitts and Nevis: -- The most visible case is the Angelus resort. Several American Citizen investors purchased condominiums in the Angelus complex. In 2006, the GOSKN acquired the property and subsequently sold it to the Marriott Corporation, which owns a large resort and casino complex next door. To date, the GOSKN has failed to compensate the previous (American Citizen) owners, who have now contacted their congressional representatives and the Embassy to push for a resolution. -- The GOSKN acquired 441 acres of undeveloped land at West Farm and the Camp and Johnson Estates in 1987 from a Kittian-born American Citizen, Loris James. According to James, the current value of this land is approximately 37 million USD; however, the government offered James the agricultural price of 740,000 USD. Both parties are still litigating the case in the court system. Mr. James only recently contacted the Embassy concerning his case and has not requested any assistance. -- In 1997, the government made a declaration of intent to acquire the 500 acre Greenhill Estate and offered the owner 740,000 USD. Choosing not to take on the government, the owner agreed and received half of the proposed offer but has not been paid in full despite several requests over the past 11 years from the owner's lawyers (the Greenhill owners are not American Citizens). -- Golgar Lands, an 850 acre parcel on the Southeastern peninsula, was in the process of being sold by American Citizen Owner to a Kittian-born Canadian Citizen when the deal fell through in 1989. While court proceedings were ongoing between the two parties, a group called the Auberge/Kiawa consortium expressed to the GOSKN its interest in the land. The GOSKN acquired the land while litigation was ongoing and sold it to the Auberge/Kiawa consortium. This land is now being developed into hotels, marinas and a golf course. The Embassy has not been contacted by the American Citizen involved in the Golgar Lands dispute. -- The Grant Family Land is a 7,000 square foot lot which was rented to a tenant for several years. Grant, the landlord, having other plans for the property, asked the tenant to move. The tenant approached the GOSKN, which issued a certificate of title to the tenant, effectively giving the land to the tenant. Grant challenged the issuing of the certificate in court and won a decision in July, 2008. The court ordered the title to be rescinded within 14 days and reissued to the original owner, Grant. As of December, 2008, the registrar has not signed the court order (Grant is not an American Citizen). -------------- A Favorable Court Decision -------------- ¶4. (U) A decision by the High Court in October, 2008 has opened the door for higher compensation from the GOSKN in expropriation cases. As a result of the 21-year court battle over West Farm and the Camp and Johnson Estates, the High Court issued a decision siding with the owner, Loris James. The decision stated the GOSKN must base its compensation on what a normal man would pay for the property one year prior to the government's acquisition, and not the considerably lower agricultural price. James told Emboff he is pleased with the decision, but is not anticipating any movement on the government's part to compensate him and expects future legal battles. -------------- Comment -------------- ¶5. (U) While developing its tourism economy, the GOSKN prides itself on having created a real estate investment environment favorable for large corporations and tourism development projects. The unfortunate by-product of this push for flashy new large-scale investments, however, has been the government's poor record of expropriating land from its own citizens and individual foreign owners for commercial, rather than "public good" reasons that are usually the basis for eminent domain seizures. More distressingly, attempts to seek compensation by original owners have been met with fairly systematic foot-dragging by the government. Most of the complainants in these cases are not fighting to get back their lands, only to be fairly compensated for the value of the lands given over for national tourism development. ¶6. (U) The complainants in the Angelus dispute have been particularly dogged in seeking fair compensation, taking their case to the GOSKN, the Embassy, members of Congress, and the press. Their hope is to encourage the GOSKN to settle fairly and quickly so as not to damage the reputation St. Kitts is cultivating as a safe and rule-of-law respecting investment destination. In September 2008, the Ambassador directly inquired about the case with Prime Minister Douglas, and Poloff spoke at length with the Attorney General in November. All levels of the GOSKN have assured the Embassy the case is moving forward and have indicated they believe some compensation may be paid out in early 2009. We will continue to follow this and the other outstanding expropriation cases, and will press the government at the highest levels to come to fair and expeditious settlements with the complainants. HARDT