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
)

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Summary
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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.

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St. Kitts and Nevis Land Acquisition Act
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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.

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Specific Cases
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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).

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A Favorable Court Decision
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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.

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Comment
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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