March 18, 2009 — Jeffrey Prosser, former owner and CEO of Innovative Telephone, has lost another court battle in another nation — this time in London, England.
The venerable Law Lords (or more formally the Lords of the Judicial Committee of the Privy Council) ruled Wednesday that Prosser's claims through the Innovative Communication Company against the Central American nation of Belize were without foundation.
Prosser had, years earlier, obtained temporary control of the monopoly phone company in that former British colony, and then lost it when he failed to meet a payment deadline. His claim was that despite the payment problem, he still controlled the board of directors of the local phone company.
The government of Belize, which seized the phone company after Prosser failed to come up with enough cash, dismissed Prosser's board members, and both parties went to the local courts. A judge in Belize, Abdulai Conteh, ruled for the government. Prosser appealed to the Belize Court of Appeal, which ruled in his favor. Then the government appealed to the Law Lords, where Belize won.
Meanwhile, with Prosser in bankruptcy, his claims against Belize belong to his estate, i.e. his creditors, primarily the Rural Telephone Financial Cooperative, so they lost, too.
The Prosser-and-creditors battle with Belize now moves back to U.S. federal court in Miami. Prosser had sued Belize for $200 million in connection with his failed effort to hold onto the Belize phone company. The district court ruled against him. (See "Prosser Loses, Belize Wins in Miami Court.")
Prosser appealed, and the U.S. Circuit Court in Atlanta sent the case back to Miami. It did so with instructions to wait for the Law Lords decision, which the Circuit Court said would provide useful background information for the Miami judge.
The London decision essentially dealt with a gap in the complex governance arrangements for the Belize phone company. While the company's rules laid out how the directors were to be appointed under certain stock ownership arrangements, such as a party having more than 37.5 percent of the shares, there were no provisions for changing those arrangements when a single stockholder's (i.e. Prosser's) holdings fell below 37.5 percent.
Prosser argued that his directors were supposed to stay in office, despite the decline in the holdings (which related to his non-payment for the shares), but Conteh and the Law Lords said that when the ownership diminished, so did Prosser's power to appoint directors.
In a sense, the court battle was between two fallen titans. On one hand there was the once free-wheeling Prosser, now in bankruptcy, and on the other there was the former Belizean prime minister, Said Mussa. The latter is now not only out of office, but facing the possibility of being tried for alleged fiscal malpractices. Mussa, incidentally, once had the distinction of being the world's senior Palestinian prime minister. Belize is a polyglot nation.
The court system that operates in Belize is one that can be found in many parts of the former British Empire. Many of the judges are recruited from other once-British lands, and their salaries are heavily subsidized by Great Britain as a way of assuring what the UK regards as sound judicial systems. Conteh, for example, is the former attorney general of a small nation in Africa, Sierra Leone, and moonlights as a member of the Cayman Islands Court of Appeal. (Having an expatriate judge is useful because it removes a lot of potential conflicts of interest in jurisdictions with small populations.)
The highest court for Belize is not in Belize at all, but it is the Law Lords in London. This is also the case for the British Virgin Islands. The Law Lords, though a subset of the House of Lords, are not hereditary nobles; they are senior British judges who hold life peerages. The Law Lords, as an institution, have been losing large chunks of their jurisdiction over the years. For example, both Australia and Fiji have opted to create their own supreme courts and no longer send disputed cases on the long trip to London.
The Law Lords routinely sit in panels of five, as they did in this case. The judgment against Prosser (who was never identified by name) was unanimous and was written by Lord Hoffman, not otherwise identified.
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