|Hyatt $.3B for Udecott |
By JULIEN NEAVES Wednesday, June 11 2014
ATTORNEY General Anand Ramlogan said yesterday that Government has emerged successful from a three-year arbitration between the Hyatt Regency Trinidad and State-owned Urban Development Company (Udecott) with the international hotel chain paying out $334 million owed to the company.
AG Ramlogan said the settling of the arbitration, “has saved us a protracted legal battle that would have cost this country over $10 million in a legal budget to get this resolved.” He reported that Udecott has confirmed receipt of the monies and it will be used to complete public infrastructure projects.
“Today, I am pleased to advise that after difficult and complex negotiations, we have achieved a settlement pursuant to which a multi-party agreement was signed on June, 2 2004. Hyatt has agreed to pay Udecott the sum of $334,185,703.19 (inclusive of accrued interest and legal costs) which has been outstanding since 2008,” he said.
Ramlogan spoke on the arbitration in a statement to the Senate yesterday at Tower D, International Waterfront Centre, Port-of-Spain. He noted this was another successfully resolved multi-million dollar international arbitration under his supervision and management, reminding the Senate of Government’s victories in the Offshore Patrol Vessel arbitration and the World GTL arbitration.
He reported that on February 4, 2011, Hyatt issued a request for arbitration against Udecott. The dispute arose out of a hotel management agreement dated July 27, 2005 between Udecott and Hyatt for construction and subsequent management and operation of the Hyatt Hotel in Port-of-Spain.
Ramlogan explained that under this agreement Udecott agreed to finance and construct a first class hotel “entirely at its own cost” and the hotel was then to be managed and operated by Hyatt in return for a fee. The remainder of the hotel’s income after allowing for expenditure, reasonable running costs and Hyatt’s fee, was to be remitted to Udecott as a monthly Owner’s distribution.
Ramlogan pointed out that a key point of dispute arose from the fact that Udecott assigned its leasehold interest in the land on which the hotel was located to Port-of-Spain Waterfront Development Limited (“the Waterfront Company”). The Waterfront company purchased the land through a mortgage with Wells Fargo Bank Northwest National Association and sub-leased the land to the Government.
“Unfortunately and inexplicably, Udecott’s (then) executive chairman Calder Hart negligently failed to procure at the time of transferring the leasehold to the Waterfront Company (and) Udecott did not procure the appropriate non-disturbance agreements from the Waterfront company and Wells Fargo as required under the hotel management agreement. This non-disturbance clause was an obvious requirement for an international hotel. Indeed, it was considered a mandatory requirement,” Ramlogan explained.
He said this “negligent omission” on the part of the Calder Hart-led board at Udecott resulted in Hyatt refusing to pay the State company any money in accordance with the terms and conditions of the hotel management agreement.
“This severely compromised Udecott’s cash flow and financial position for many years as hundreds of millions of dollars in anticipated income from the Hyatt never materialised,” Ramlogan reported.
Hyatt, which had not paid UDeCOTT any money since 2008, triggered the arbitration clause in the agreement by issuing a request for arbitration on February 4, 2011 and Toronto, Canada was the venue for the arbitration hearing.