Have you ever wondered why there are always performance clauses implemented against Antigua and Barbuda in matters related to development but rarely any implemented that benefit us?
This oddity in our negotiating skills has always struck us as strange.
The one-way penalty clauses most recently came to mind after hearing Prime Minister Gaston Browne speak about the court action relating to the airport in Barbuda. He said, “Every day of the delay, I believe there is a penalty clause in the agreement. So, it has cost implications for the country.” This, by the way, is normal and we alluded to this possibility when news of the injunction was delivered. Bahamas Hot Mix (BHM), the company contracted to build the airport, among other things in Antigua and Barbuda, does not want to be on-site forever. Unless they are benefitting from a sweet penalty payout agreement, they want to get on with what they are doing and move to the next job.
Contracts typically call for penalties when one side does not fulfill its obligations to the other side. And to be fair, there may be similar clauses in the agreement with BHM, that when triggered may be to our benefit, but we wouldn’t know since the documents have not been shared. Yes! We have asked.
We can already hear the response from both sides. The blue kool-aid drinkers will wag their fingers and simply point to one side of the argument and claim that it is further proof that the ABLP is incompetent, and those that prefer their beverage tinted red will defend the penalties as being “normal.” However, using this one incident to make a point on penalty clauses is a disservice to this discussion. Plus, all administrations are guilty of signing these one-sided agreements.
We can cast our minds back to the original Asian Village agreement and remember how lopsided that contract was. There was not one penalty clause in the agreement that could have forced development to the eventual benefit of our people. Every penalty that could have been invoked was to Dato Tan’s benefit. Don’t remember? Well if you want to take a stroll down memory lane, download a copy of the original agreement from our website, antiguaobserver.com. You will be amazed. It should be a textbook case of how not to negotiate a multi-billion dollar development deal.
Fast-forward to today and little has changed. There are few penalties that can be invoked to encourage or force Yida to deliver our multi-million dollar Caribbean Shangri La on Guiana Island and the nearby lands. Why is that? Are we so desperate that investors can ask and receive anything they desire? Or are we just poor negotiators?
Need another example? We present the Royal Antiguan. Sold by the United Progressive Party (UPP) administration for a sweetheart deal to Trinidadian, Issa Nicholas, the agreement was supposed to deliver fantastic benefits to our bit of paradise.
Situated on a fantastic beach, in a great location, it was to become a jewel in our tourism portfolio after tens of millions of dollars of expected investment was made. What happened? In relative terms, zilch! The 1,000-seat conference facility never materialised and the hotel fell into a state of disrepair over the years. The once Grand Royal Antiguan Beach Resort was not so grand anymore and its Tripadvisor review rating fell to just 2.5 with almost 50 percent of reviews rating it as “poor” or “terrible.”
That property was in Mr. Nicholas’ hands for a decade and it went from bad to worse.
Like most of the other deals, there seems to have been little if anything that the government could have done to force the investor’s hands because there were no penalty clauses. In the end, Mr. Nicholas made a profit from a deal which was brokered by the Antigua Barbuda Labour Party administration with a new investor. A deal which, from the scant details we have, seem to be good for Antigua and Barbuda.
We have now moved on to a new chapter in the Royal Antiguan affair and we hope that the new investors restore the resort to “royal” status.
Hopefully there are some clauses in that agreement that provide some type of insurance that should things not happen as they should, Antigua and Barbuda will be able to invoke penalties which will have teeth.
These examples are but a few of the many that have been negotiated to the greater benefit of “investors” and “developers” with one-sided concessions and lopsided penalty clauses. It is time we negotiate from a position of strength rather than with a “beggy-beggy” attitude that does nothing but demonstrate weakness to the negotiators across the table. We must be mindful that paradise is ours. God is not making any more pristine beachfront land in the Caribbean and what we have is precious. If someone wants to partner with us for development, then let’s truly partner, and then we can walk both ways on the street to prosperity together.
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