Revere Jamaica Alumina Ltd v Attorney-General

• Jurisdiction: Jamaica
• Judgment Date: 30 May 1977
• Date: 30 May 1977
• Court: Supreme Court (Jamaica)

Jamaica, Supreme Court.

(Smith C.J.)

Revere Jamaica Alumina, Ltd.

and

Attorney General

The individual in international law — Aliens — Position of — Treatment by and responsibilities of the receiving State — Repudiation by Government of Agreement with foreign company — Whether arbitrary confiscation of property or compulsory acquisition without compensation — The law of Jamaica

State responsibility — Nature and kinds of — For taking of, or interference with, property — Expropriation — Contract of guarantee between Government and foreign company — Undertaking by Government not to increase taxes or royalties payable by company — Repudiation of contract by Government — Whether amounting to arbitrary confiscation of property or compulsory acquisition without compensation — The law of Jamaica

Summary: The facts:—In March 1967 the plaintiff and the Government of Jamaica entered into an agreement whereby the plaintiff agreed to engage in the mining of bauxite and the production of alumina in Jamaica. The Agreement prescribed the amount of taxes and royalties which were payable to the Government by the plaintiff and provided, inter alia, that no further taxes or financial burdens would be imposed on the plaintiff. In 1974 the Jamaican Bauxite (Production Levy) Act greatly increased the tax, through a production levy on bauxite, payable by all companies, including the plaintiff. The plaintiff filed an action against the Government claiming damages and a declaration that the Act was in breach of the Constitution which prohibited arbitrary confiscation of property or compulsory acquisition without compensation.

Held:—The production levy did not constitute either arbitrary confiscation of property or compulsory acquisition without compensation. The production levy was a tax and the power of parliament to impose taxes was unlimited in extent. The 1967 Agreement had not created any new rights in the plaintiff as against future taxes and therefore the enactment of the production levy was not a breach of the Agreement.

The following is the text of the judgment of the Court:

SMITH, C.J.: This action results from the enactment by Parliament in June, 1974, of the Bauxite (Production Levy) Act 1974 (No. 29) and the Mining (Amendment) (No. 2) Act 1974 (No. 30). These were companion measures. The former provided for the imposition of ‘a tax to be known as a production levy’ on all bauxite or laterite extracted or won in Jamaica on or after January 1, 1974, and the latter, which was supportive of the former, inter alia, empowered the Minister to prescribe minimum amounts of minerals to be extracted during prescribed periods by holders of mining or special mining leases. At the time the Acts were passed, the plaintiff company was one of several companies engaged in this country in the mining of bauxite. The plaintiff contends that the provisions of the Acts of 1974 violated its rights under an agreement dated March 10, 1967, made between the plaintiff and the Government in which the plaintiff agreed, upon terms and conditions stated therein, to engage in the mining of bauxite and the production of alumina therefrom and to construct a plant in Jamaica for this purpose.

In the action, filed on January 13, 1976, the plaintiff claims against the Government for a number of declarations and for damages, including declarations that the Acts of 1974 are ultra vires and in breach of the Constitution. The Minister of Mining and Natural Resources and the Collector General were joined as defendants with the Government, but in their personal capacities for the sole purpose of claiming injunctions against them. At the end of the plaintiff's case judgment was given in their favour against the plaintiff with costs on the ground that no evidence had been adduced against them.

The agreement of March 10, 1967 (hereafter ‘the 1967 agreement’) is an elaborate document of 33 pages and 38 clauses. It was signed for the Government by the Minister of Trade and Industry, who was the Minister then responsible for the subject of mining. The President of the plaintiff company signed for the company. The agreement was preceded by a ‘Heads of Agreement’ dated January 26, 1967, in which the parties were Revere Copper and Brass Inc., parent company of the plaintiff, and the Government. The clauses of the 1967 agreement are divided into seven parts, preceded by a preamble. Part I is headed ‘General’ and contains, inter alia, the interpretation clause and the clause providing for the duration of the agreement. Part II contains clauses dealing with the payment of taxes and royalties. Part III is headed ‘Operating and Administrative Requirements’ and deals, inter alia, with rights over Government lands, licences and permits, personnel and prospecting programme. Part IV contains clauses dealing, inter alia, with shipping, reserves, mining leases and exchange control. Part V deals with the construction of the alumina plant and Part VI with the establishment of an aluminum reduction plant in Jamaica in the future, if it is considered feasible. The final part, Part VII, deals with miscellaneous matters, including the company's right to assign, financing and the giving of notice of default.

The document has all the essentials of a contract with legally binding rights and obligations but the Government challenges its validity on several grounds, one factual and the rest legal. The issue of fact is raised by para. 27 of the defence, in which it is contended that ‘the purported agreement was not intended to create and could not and did not create any enforceable legal relation as to future taxation.’ The provisions regarding future taxation are contained in Part II, cl. 12, of the 1967 agreement and, so far as is relevant, are as follows:

‘No further taxes (including any income tax …), burdens, levies, excises, customs or imposts will be imposed on bauxite, bauxite reserves, or bauxite operations or on alumina or the production of alumina or any operations carried on in relation to or incidental thereto or on any raw materials, supplies, property or other assets used in connection therewith in Jamaica …; including but not limited to any additional royalty under the Mining Law, any other royalty whatsoever, any tax, burden or impost on severance, manufacture, processing, … or prepayment of taxes or any other impost EXCEPT as specifically provided elsewhere in this agreement and except normal licence duties of general application, … but not any duty which would be a tax, burden or impost of the nature of any of those enumerated above.’

Clause 13 provides that for the purpose of taxation and royalties the provisions of the agreement shall remain in force ‘until the expiry of twenty-five years’ from the earlier of two dates stated in the clause.

On behalf of the Government, it was sought to prove that during the negotiation of the detailed terms of the 1967 agreement the stand was taken by those representing the Government was that cl. 12 could not create enforceable legal relations and that this was brought to the attention of the plaintiff company through its negotiating team. The contention for the Government is that with this knowledge the parties could not have intended the clause to have any legally binding effect. The plaintiff's witnesses denied any knowledge of the stand taken by the Government negotiators and maintained that they intended the 1967 agreement to be a legally binding and enforceable contract in every respect. The main witness for the Government on this issue was Mr. Herbert S. Walker, who, in 1967, was Permanent Secretary in the Ministry of Trade and Industry and participated, as a representative of the Government, in the negotiation of the 1967 agreement. Mr. Walker said that it was explained to the ‘Revere negotiators’, in particular the Jamaican representatives on the team, that cl. 12 could not create a legally binding obligation insofar as it purported to fetter the legislative powers of Parliament to impose future taxation. The Jamaican representatives on the plaintiff's negotiating team were the plaintiff's Jamaican lawyers. Mr. Walker said that they were the principal representatives of the plaintiff at the negotiations. Mr. William F. Collins, then a Vice-President, Secretary and General Counsel of the parent company, was head of the plaintiff's negotiating team. In cross-examination, he could not recall that the constitutional position regarding the power to fetter Parliament's power of taxation was raised in the course of the negotiations. Mr. Collins, however, became ill during the negotiations and it is clear that much of the negotiations took place in his absence. Mr. Albert Molowa, who replaced Mr. Collins, said that he never met directly with the Government's representatives.

I have not the slightest doubt that, as Mr. Walker said, the view of the Government's representatives regarding cl. 12 was made clear to, at least, the plaintiff company's Jamaican lawyers. It is extremely unlikely that the lawyers did not communicate this view to their clients. But this, in my view, is not conclusive of the issue being considered. Mr. Walker said in cross-examination that the Government agreed to include cl. 12 in bauxite agreements because of the insistence of bauxite companies. He supposed the companies felt that ‘it would give some aid and comfort’; that even though the clause would not fetter Parliament ‘it had some value to them’. He had said earlier, however, that he regarded the whole of the 1967 agreement as legally binding ‘except insofar as there is in it any clause which seeks or purports in any manner to restrict or fetter or limit the legislative power of Parliament to impose future taxation’. This answer, it seems to me, indicates that the true issue here is one of law, not of fact. The question is not whether the parties intended the agreement to create legally enforceable relations as to future taxation but whether, as a...