Published On: Thu, Dec 1st, 2022

Alegria loses battle for long lease rights

PHILIPSBURG — More than six years ago, Alegria Real Estate, owner of what is now the Morgan Resort in Burgeaux Bay, asked for long lease rights to a water parcel adjacent to its property. VROMI-Minister Miklos Giterson had no objections, but his successor Egbert Jurendy Doran had different ideas. The appeals court has now vindicated the minister.

In September 2020, the Court in First Instance ruled that the country’s attorney, at the time Aernout Kraaijeveld, was authorized to approve an agreement with Alegria about the issuance of the long lease rights.

The country, now represented by Zylena Bary, appealed this decision. The appeals court ruled it in summary proceedings “plausible” that Kraaijeveld had insufficient authority to accept a proposal from Alegria for the long lease rights and that the country is not bound by the contents of an email exchange between the party’s attorneys.

The fight for the long lease rights began in February 2016, when Alegria asked for the issuance of long lease rights to a waterparcel on 13,525 square meters adjacent to its property. A modified request, submitted two years later, mentioned plans for the construction of a breakwater and a pier.

On May 31, 2018, Miklos Giterson, at that time Minister of VROMI, wrote to Alegria that “in principle” he had no objections and that the only construction permitted on the water parcel were “a breakwater and a sea aquarium.” Giterson also informed Alegria that Domain Affairs was in the process of drafting an advice.

It took however until December 2019 before VROMI’s Secretary-General and acting head of Domain Affairs Louis Brown asked  for this advice from his department. In February and March of the following year, a policy advisor issued a negative advice with a reference to a letter from the Nature Foundation containing objections against giving the long lease rights to Alegria.

Brown apparently decided to ignore this advice, because on March 4, 2020, he wrote to Alegria that VROMI had decided “in principle” to issue the requested rights of long lease. Brown mentioned that further study by Alegria was required before any construction would be permitted and that minor technical details still needed to be resolved.

On March 6, 2020, Minister Giterson wrote to Alegria that he had no issue with the construction of a breakwater and a pier as long as these activities did not damage corals. But nothing happened and so, ten days later, Alegria initiated an injunction in an effort to force the issuance of the rights of long lease. A week after that, Secretary-General Brown asked the Cadastre to create a certificate of admeasurement.

On May 4, 2020, Alegria’s attorney wrote to his confrère Kraaijeveld that “matters had been settled as follows.” He claimed that St. Maarten had agreed to sign the required decree and that it would issue the rights of long lease within four weeks after the issuance of the certificate of admeasurement. Alegria agreed to pay fees at the Cadastre and to withdraw its injunction. It asked Kraaijeveld to confirm approval of what it called a settlement agreement.

On May5, 2020, Kraaijeveld wrote to Brown saying that Alegria refused to go along with the country’s proposal and that it had presented an alternative. “Does the country approve it?” he asked. Brown replied the same day and declared that St. Maarten agreed, whereupon Kraaijeveld communicated this decision to Alegria.

On June 11, Alegria’s attorney sent the certificate of admeasurement to Kraaijeveld, who forwarded it five days later to Secretary-General Brown. While matters seemed to be moving in the right direction for Alegria, something had changed on the other side: Doran had replaced Giterson as Minister of VROMI at the end of March. On July 20, he asked Brown for clarification and on August 5 he gave the secretary-general a warning for “taking unilateral actions.”

On October 6, 2020, Minister Doran rejected Alegria’s request for the rights of long lease. A bold and remarkable decision, because a month earlier the Court in First Instance had actually ordered the country to grants those rights to Algeria.

The country managed to get a ruling to suspend this decision and later it appealed it. The country contested in particular the lower court’s ruling that the email exchange of May 2020 between the attorneys was binding.

The appeals court states in its ruling, dated Novmber 25, 2022, that it is “plausible” that the country’s attorney had insufficient authority to accept Alegria’s proposal. Alegria could not reasonably assume that the country’s attorney had been granted sufficient authority.

“From the single fact that a party lets itself be represented by an attorney, it cannot be concluded that the other party may assume that this attorney is authorized to enter into an agreement on behalf of his client,” the court ruled.

The ruling furthermore refers to the national ordinance that regulated the issuance of long lease rights. This ordinance states that the minister is authorized to issue rights of long lease. Furthermore, the Kingdom law financial supervision makes clear that decisions are void when someone exceeds his or her authority.

“Alegria knew, or should have known, that the minister had to give his approval and that its request for rights of long lease had met with resistance,” the ruling states. The appeals court also dismissed the lower court’s ruling that the authority of St. Maarten’s attorney is for the country’s account. “The country is not bound by an email exchange between the attorneys.”

The court rejected Alegria’s demand to abide by the agreement reached by the attorneys and ordered it to pay for the costs of the procedure.

VROMI-Minister Doran was happy as nails with the court ruling, labeling it as “a monumental victory” for the people of St. Maarten. ”The civil servants of this ministry have done their due diligence to protect our land and sea, and to defend the environment for this generation and others to come,” he stated in a press release.

After the court ruled in Alegria’s favor in September 2020, its attorneys stated that the ruling enabled its client to invest $100 million in the development of the Morgan Resort and that this would create 500 job opportunities for St. Maarteners. How Alegria will react now that it will not obtain the desired right of long lease, is at this moment unclear.


Related link: Minister Doran: Country Sint Maarten wins case against Alegria for long lease water rights