Published On: Wed, Oct 6th, 2021

A flawed verdict highlighted

In September, GEBE, first alone and then together with the members of its supervisory board, filed  lawsuits against the company’s shareholder Country St. Maarten based on tort. More specifically, because Country St. Maarten represented by its government was structurally and frequently violating norms that govern its conduct, when exercising power as per civil law on a government owned company of which it’s the sole shareholder.

In those cases the court declared GEBE inadmissible, ruling that actions taken by the shareholder that might result in decisions by the company are for the account of the company. The plaintiffs should have taken GEBE to court and not country St. Maarten.

Supervisory board members Roberta Diaz and Conrad Richardson immediately filed a lawsuit against GEBE demanding a stop to the appointment of Sharine Daniel as the company’s director and to review various decisions of Country St. Maarten that are against the law and more specifically against the reasonability and equitability that the organs of GEBE must maintain towards each other. In the new lawsuit the supervisory board members did however explain, showing ample case law, why the decisions of the court that GEBE was inadmissible is judicially flawed.

The legislator never created a demand or criterion of interested parties having to also sue a company when asking for wrongful actions of its shareholder to be corrected based on tort. The mere fact that one cannot always know which possible incorrect actions of a shareholder will ultimately result in a decision of GEBE or not, makes this extra judicial criterion of the court for claims based on tort incorrect and senseless.

GEBE and its supervisory board members deliberately opted to initially sue based on tort also because the shareholder was one day stating that it took decisions and the other day that it didn’t,  e.q.: the – alleged – appointment of Ms. Daniel as the CEO of GEBE.

The third lawsuit was thus filed basically under protest following the new ‘rule of law’ of the presiding judge. The members of the supervisory board thereby also explained what the far-reaching consequence of this extra judicial criterion of the court would be for GEBE, that would suddenly find itself possibly liable for all actions of its shareholder that could have resulted in a decision. This time the court ruled that most actions by the shareholder cannot qualify as decisions of the company.

But wasn’t that the reason why the first two cases were premised on tort in the first place? And therefore had to be adjudicated accordingly, what the court did not do. The court failed to do this because of incorrect arguments on admissibility. But now parties are in different waters set by the incorrect criterion of the presiding justice, who, instead of basically acknowledging that the claims of plaintiffs had to be adjudicated based on tort in a case filed actually against the shareholder, doubled down on his criterion that he also further tried to explain in the verdict in the third lawsuit; by itself a somewhat remarkable event.

Despite almost 1,000 pages, indexed, color coded/highlighted accompanied with ample references and explanation the presiding justice made short work in denying all the claims of the members of the supervisory board stating mostly that matters were not explained or that demands were too vague. Come to think to it, what else can be expected if one opts to stubbornly maintain an incorrect criterion and departure point.

The material considerations of the court can within reason not be taken seriously and should actually be qualified in our opinion as merely excuses not to really look at the actions or lack thereof by government.

Absolutely no consideration was given by the court to the fact that plaintiff’s demand was for the shareholder to discuss all the agenda subjects, including about Ms. Daniel, and allow for due deliberation as prescribed by the prevailing case law, before taking decisions. This is what the members of the supervisory board asked for. No one asked for unlimited speaking rights.

The law allows for changes in demands to be made till at hearing and the criterion for acceptance is if the opposing party is able to properly defend and as such not damaged in his/her procedural position. Tardiness is not a criterion and in all conducted cases the opposing party was well able to defend against diminished and increased demands.

Contrary to what the court by the way redundantly stated after turning down the increased demand, Country St. Maarten decides on the salary and perks of members of the boards of GEBE. Not on their expenses. The entire system of checks and balances and the corporate governance code would be in peril if the shareholder is also to decide which expenses board members can make in carrying out their duties.

Meanwhile, the members of the supervisory board who in seeking justice for GEBE and its stakeholders, primary the Sint Maarten community, used all legal recourses to stem abusive and illegal/incorrect actions by the shareholder, actually found more injustice.

Diaz and Richardson are now contemplating their next actions, but realize, as the court probably also does, that their recourses are limited. Appeals of injunction cases take on average a year. Only in extremely exceptional cases does the Court of Appeals allow for an expeditious handling of an appeal of an injunction case. The bar is quite high. Main case procedures also take a long time. Diaz and Richardson furthermore never intended to stay on that long or longer than necessary to address the incorrect actions of the shareholder; thereby hopefully paving a better way forward for GEBE.

Related article: GEBE court ruling is regretfully flawed, attorney says