CHIEF Judge Ramona V. Manglona of the District Court for the NMI has granted the request of Imperial Pacific International LLC to allow arbitration in IPI’s dispute with the Commonwealth Casino Commission or CCC regarding their casino license agreement and the casino developer’s force majeure defense.
Judge Manglona also granted IPI’s motion for a preliminary injunction against the casino commission.
On May 23, 2022, IPI requested a temporary restraining order against the commission from convening an enforcement hearing on May 24-25, 2022 that would revoke IPI’s exclusive casino license. The court granted IPI’s motion for a TRO.
IPI also sought an order compelling the commission to participate in a non-binding arbitration with the American Arbitration Association pursuant to Section 30 of the casino license agreement or CLA; and a preliminary injunction against the commission from proceeding with the revocation without first going to arbitration.
In her 21-page memorandum decision, the judge said the court has the authority to decide whether IPI has waived its right to arbitrate pursuant to the CLA, and that in this case, IPI has not waived its right to arbitrate as to the allegations in the 2021 complaints, which are the subject of the 2022 revocation hearing before the CCC.
“IPI must be allowed to arbitrate all disputes on the applicability of its force majeure defense to the allegations contained in the 2021 complaints, lest Section 25 of the CLA is deprived of any meaning,” the judge said.
She granted IPI’s motion for a preliminary injunction enjoining the CCC from proceeding with the 2022 revocation hearing based on the 2021 complaints.
She also granted IPI’s motion to compel the CCC to submit to arbitration pursuant to Section 30 of the CLA.
As the court stated at the Aug. 24, 2022 hearing, the judge added, “the CCC’s prior decision to suspend IPI’s license based on the 2020 complaints, which has been affirmed by the Commonwealth Superior Court and is now pending appeal, is not disturbed by this decision.”
Judge Manglona said, “There were two pivotal issues in the case at bar: 1) whether IPI has delayed and therefore waived the opportunity to seek arbitration under the CLA; and 2) whether a dispute on the applicability of a force majeure defense in the instant case is subject to Section 30’s dispute (i.e., arbitration) resolution process despite Section 30’s carve-out for revocation proceedings.”
The court finds that while IPI has waived its right to arbitrate the allegations in the 2020 complaints, it has not waived its right to arbitrate the allegations in the 2021 complaints.
The court also grants IPI’s motion for a preliminary injunction, determining that a force majeure defense may be subject to Section 30’s dispute resolution process.
“Although Section 30 specifically precludes arbitration for issues relating to revocation proceedings (such as the failure to pay annual dues), a force majeure defense that has not been waived must be allowed to go to arbitration. Otherwise, Section 25’s force majeure provision would be effectively nullified and deprived of any meaning,” Judge Manglona reiterated.
IPI is represented by attorneys Joey San Nicolas, Kevin Abikoff and Samuel Salyer while Assistant Attorneys General Keisha Blaise and Alison Nelson represented the CCC.
Previously, the casino commission and IPI, in a joint report to the federal court, stated that they were in material agreement regarding the terms of a settlement agreement and had been continuing to negotiate a few final terms.
IPI also told the court that at the end of May 2022, IPI “anticipates that it will begin receiving an infusion of $150 million of capital that will allow it to meet its obligations to its creditors, resume operations, and restart construction.”
IPI said it had signed a memorandum of understanding with IH Group to provide that capital. Kyunam Kim of IH Group appeared at a hearing and said the infusion of capital funding would happen.
As of press time Monday evening, there was still no update about the funds from IH Group.
Neither was there a settlement reached between IPI and the commission, which had asked the court to deny IPI’s motion for a preliminary injunction and order compelling arbitration.
