Supreme Court rules in favor of port, throws out $14 million YTK award

(Port Authority of Guam file photo)

The Supreme Court has ruled in favor of the Port Authority of Guam in its appeal against the trial court’s decision to let an arbitration panel award $14 million to YTK Corporation.

YTK is the company involved in a dispute with the port on a lease for the government-owned Hotel Wharf. In 2016, an arbitration panel ruled in favor of YTK and awarded it $14 million in damages.

But in its decision, the court found that the arbitration panel exceeded its authority and that the Guam Legislature has plenary authority over the transfer of land owned by the government of Guam.

“Accordingly, where government-owned land is purportedly transferred to, or possessed by, a third-party without the Legislature’s consent, that purported transfer or possession is unlawful,” the court stated.

Guam law authorizes the Legislature to grant authority to the Port Authority of Guam to enter into contracts transferring port-owned land “for a term not to exceed five years.”

Guam YTK had argued that this provision made its development agreement and lease a lawful transfer of government-owned land.

The Supreme Court, however, rejected this argument, finding that the development agreement and lease attempted to transfer land for a period of 45 years.

Because the Legislature never approved such a transfer, enforcing the terms of the lease would have caused the parties to engage in the illegal transfer or possession of government-owned land without the Legislature’s consent, the court ruled.

The arbitration panel’s decision to enforce the development agreement and lease were thus vacated and the trial court’s order confirming the amended arbitration award to Y2K was reversed.

Reacting to the court decision, Port Authority of Guam general manager Rory Respicio said the port is very pleased with the ruling by the Supreme Court of Guam as it removes the cloud of uncertainty placed over the Port for the past two decades.

“While we could not have predicted this outcome it is most certainly a great day for the port and the people of Guam and we continue to focus on our plans to modernize and transform our facility into a safe, efficient and sustainable seaport for Guam and the Western Pacific Region,” Respicio said.