The US Court of Appeals has granted an appeal by Saipan’s Commonwealth Casino Commission (CCC) against a prior ruling by the US District Court preventing it from revoking the casino license of Imperial Pacific International (CNMI) LLC (IPI).
According to details provided by Saipan Tribune, the matter has now been referred back to the District Court for further proceedings, with the Court of Appeals deeming the District Court had erred by ruling in favor of the casino operator.
IPI had argued that revocation of its casino license would prevent its obligated right to pursue arbitration proceedings with the CCC via a force majeure defense, insisting that the COVID-19 pandemic – which saw the company’s Imperial Palace • Saipan casino forced to close in March 2020 – constituted a natural disaster.
IPI’s casino license is currently suspended for failure to pay more than US$100 million in annual licensing fees and other obligations.
“The District Court agreed with IPI, concluding that the plain language of the CLA provides IPI with a contractual right to assert a force majeure defense and therefore denying arbitration would deprive IPI of this defense. The District Court erred,” states the Court of Appeals order.
“We disagree with the District Court’s conclusion. The CLA provides several venues in which IPI can raise a force majeure defense. IPI may raise a force majeure defense in a revocation proceeding before the commission, in an arbitration proceeding if the matter involves a covered ‘dispute’ under the CLA, or in a civil proceeding before the Commonwealth Superior Court.
“The District Court’s order enjoining the commission from proceeding with license revocation proceedings against IPI and mandating arbitration is reversed, and the matter is remanded to the District Court for proceedings consistent with this disposition.”
CCC Executive Director Andrew Yeom first began pushing for full revocation of IPI’s license following its April 2021 suspension order, filing five complaints against IPI for failure to comply with certain requirements under its license agreement.
Those five complaints specifically related to IPI’s failure to pay its annual US$15.5 million license fee in August 2020, failure to pay its annual US$3.1 million regulatory fee in October 2020, failure to contribute US$20 million to the community benefit fund in both 2018 and 2019, failure to comply with its minimum US$2 billion capital requirement and failure to comply with a CCC order to pay all money owing to its vendors.
While IPI has fought hard against such action and even touted its desire to reopen the casino should it find outside investment, it hasn’t been able to prevent the sale of its gaming equipment which has seen more than US$1 million raised to pay back contractors via a series of online auctions.
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