Guam Supreme Court Reverses Trial Court’s Decision in Lease Dispute Between Port and YTK

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Guam -The Guam Supreme Court has reversed the trial court’s decision in Guam YTK Corp. v Port of Guam.

The trial Court denied Guam YTK’s motion to compel arbitration in the companies dispute with the Port over a lease agreement for the construction and operation of a fisheries facility on Port-owned property.

The trial court denied YTK’s motion concluding that the arbitration agreement was unenforceable, and  because they ruled that the lease agreement was invalid. 

READ the decision in Guam YTK Corp. v Port of Guam HERE 

Guam YTK argued that arbitration should have been compelled because the trial court should have examined the validity and enforceability of the arbitration provisions independently from the underlying lease agreement. The Supreme Court agreed with Guam YTK and held that the trial court erred. 

The opinion authored by Chief Justice Phil Carbullido[1] and joined by Associate Justice Katherine Maraman and Justice Pro Tempore Perry  Inos[2]

READ the release from the Judiciary below:

SUPREME COURT OPINION ISSUED: Guam YTK Corporation v. Port Authority of Guam, 2014 Guam 7
FOR IMMEDIATE RELEASE:

(March 18, 2014)(Guam Judicial Center – Hagatna) –

In an opinion authored by Chief Justice F. Philip Carbullido[1] and joined by Associate Justice Katherine A. Maraman and Justice Pro Tempore Perry B. Inos[2], the Supreme Court of Guam reversed the trial court’s denial of Guam YTK Corp.’s (“Guam YTK”) motion to compel arbitration in Guam YTK Corp. v. Port Auth. of Guam, 2014 Guam 7.

This case involves a dispute that had arisen between Guam YTK and the Port Authority of Guam (the “Port”) over a lease agreement that they had executed for the construction and operation of a fisheries facility on Port-owned property.  The trial court denied Guam YTK’s motion because it found that the arbitration agreement was unenforceable because the lease agreement as a whole was invalid, and that the Government Claims Act (“Act”) served as a jurisdictional bar to Guam YTK’s claims because the Act is Guam YTK’s exclusive remedy.

Guam YTK argued that arbitration should have been compelled because the trial court should have examined the validity and enforceability of the arbitration provisions independently from the underlying lease agreement.  The Port did not contest the validity and enforceability of the arbitration agreement itself, but argued that the unenforceability of the lease agreement as a whole rendered the arbitration agreement unenforceable.  The Supreme Court agreed with Guam YTK and found that the arbitration agreement itself is valid and enforceable.  The court therefore held that the trial court erred in finding that the arbitration agreement is unenforceable and in failing to compel arbitration pursuant to the terms of the agreement.

Guam YTK also argued that the Government Claims Act does not bar arbitration because arbitration agreements involve alternative means of resolving disputes, and that actions to enforce arbitration agreements are outside the scope of the Act.  In line with local and national policies favoring arbitration, the Supreme Court agreed with Guam YTK and held that the trial court erred in finding that the Act is a jurisdictional bar to Guam YTK’s claims.

Accordingly, the Supreme Court reversed the trial court’s denial of Guam YTK’s motion to compel arbitration on all issues, and remanded the case for the trial court to compel arbitration on all issues arising out of or in connection with the lease agreement.

[1] The titles of the Justices in this press release reflect their titles at the time this matter was considered and determined.

[2] Associate Justice Robert J. Torres recused himself from this matter.  On June 10, 2013, Chief Justice Carbullido appointed the Honorable Perry B. Inos as Justice Pro Tempore in this matter.