Belize High Court Delivers Verdict on LPG Act Challenge

Belize High Court Delivers Verdict on LPG Act Challenge

The Belize High Court has delivered a ruling on the National Liquefied Petroleum Gas Project Act that was challenged by the former importers of Liquefied Petroleum Gas (LPG). In 2021, Gas Tomza Ltd., Western Gas Co. Ltd, Southern Choice Butane Ltd., and Belize Western Energy Ltd, took the government to court to squash the law, which they claimed violated their constitutional rights and negatively impacted their business. The law was passed in 2019 by the former Barrow Administration and sought to nationalize the lucrative industry by making the National Gas Company the sole importer of LPG. However, at the close of the trial in 2021, the Briceno Administration amended the act to allow other companies to import LPG under the condition that they construct an import facility with a storage capacity of 1.5 million US gallons or pass their imported LPG through the NGC’s terminal. The case ended in 2022, and the presiding Justice, then Chief Justice Michelle Arana, had struck down four of the five grounds of argument brought by the former importers but awarded them damages to the tune of 10.9 million dollars. Nevertheless, the companies felt that the ruling did not properly address their claims and challenged the ruling in the Court of Appeal. That decision was handed down yesterday.  Today, one of the Central American Companies’ attorneys, Senior Counsel Godfrey Smith, explained the basis of the decision. 

Godfrey Smith, Attorney at Law: “The Government’s attempt to say “Well we’re not breaching anybody’s right because you’re free to bring in LPG provided you can build a storage facility of 1.5 million.” the argument was clearly that’s impossible, it’s impractical, it can’t be reached and it effectively stimes your right to work, your right to freely choose to be an importer of LPG and the court upheld that. So as it stands therefore based on our interpretation of the judgment Gas Tomza and the other litigants, Western Energy Gas and so on would not be free to build a storage capacity within their economic costs, within their reach that they seem practical that they are able to build and then apply for permission to bring in LPG. There is also the matter of compensation for the breach of their rights which the court of appeal ordered, sent back to the High Court to be reassessed. I should point out for completeness that the gas companies Gas Tomza and Western Energy and the others also argued that other fundamental rights were breached like the right to the freedom of association and equality of law. The Court of Appeal said no those were not breached and the $10 million dollars awarded by the High Court the Court of Appeal found that there was not sufficient evidence of that, it wasn’t properly pleaded so damages have to be reassessed meaning done over. But you asked me for the main takeaway and I think if I as to attempt to distill it into one significant thing its that that requirement, that onerous impossible to reach requirement of having to have a storage facility of 1.5 US gallons to be able to import LPG has been deleted from the law.”

The case involved several high-level attorneys, including two members of the King’s Counsel, and is expected to be challenged by the government. Smith says that the ruling has major implications for both GOB and the companies that can now import LPG after obtaining a license. 

Godfrey Smith, Attorney at Law: “They will have to apply. Whoever wishes to continue to, I think one of them went out of business I think it’s Southern Choice Butane. There were four claimants at the very beginning of the case one went out of business because of the introduction of that requirement. If the three wish to continue in the business of importing LPG yes they’re going to have to apply or a permit and yes it’s possible that a government can deny you a permit but it can’t be for any arbitrary oppressive reason. It has to be for a good reason especially because these companies were in the business before for many many years. They have a history, they have experience, they have clients, they had good will for their businesses and so there’d have to be a very legitimate and good reason why you are denying them the right if they meet the requirements set out in the law. The level of counsel retained is indicative of the stakes involved and if I recall correctly the agreement between the National Gas Company and the Government of Belize there was a definitive agreement, not the one is controversial of recent vintage this one goes back to 2019. I think it may have had something in there to the effect that because of the size of the investment the National Gas Company was making in this project they had to be assured and maybe even guaranteed certain returns so it has I think fairly substantial implications to put it mildly.”

The government was represented by Edward Fitzgerald KC, Andrew Marshalleck, and Angeline Welsh, while the companies were represented by Douglas Mendes SC, Godfrey Smith KC, Hector Guerra, and Luke Hamel-Smith.

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