Hyatt Corporation, the international hotel chain and manager of the Government-owned hotel on the Port of Spain waterfront, has initiated arbitration proceedings against the Urban Development Corporation of Trinidad and Tobago (UDeCOTT) at the International Court of Arbitration in Paris, France, for "multiple breaches" in its Hotel Management Agreement.
The International Court of Arbitration handles international commercial disputes and is part of the International Chamber of Commerce.
But in a counter-claim, UDeCOTT is also claiming breaches in the Agreement and is seeking over $150 million.
Hyatt signalled its intent to pursue the matter legally in December 2010 in a letter to UDeCOTT chairman Jearlean John and late last year filed papers seeking declaratory relief for harm caused by UDeCOTT's multiple breaches of the Management Agreement, which it signed in July 27, 2005.
One of those breaches, the Hyatt claims, is the transfer of UDeCOTT's ownership interest and site (the property is leased from the Port Authority) to a subsidiary, the Port of Spain Waterfront Development Company.
Hyatt claims this breach has left it in doubt as to who is the rightful owner of some US$20 million in profits.
The company said it has been forced to place the funds in a separate account, pending resolution of this uncertainty.
The hotel is claiming its ability to provide management services is "severely compromised", as it has found itself with a "counterparty that has essentially absented itself from the project".
In its arbitration claim, a copy of which was obtained by the Express, Hyatt states that UDeCOTT has refused to approve plans for the completion of the hotel and related services such as the construction of an additional food and beverage outlet and retail space which were to be constructed one year after the hotel's opening, but this never occurred.
Hyatt claims UDeCOTT's failure to discuss or approve the plan has negatively affected Hyatt's provision of management services to the hotel.
"Among other things, the absence of the additional amenities means that the hotel cannot generate as much revenue as it otherwise would have been able to do. This, in turn, reduces the fees that Hyatt earns, since they are calculated as a percentage of revenues," it stated.
Hyatt also claimed UDeCOTT's failure to discuss the annual plan, operating budget and capital budget has left it without the ability to make proper low-cost maintenance and repairs.
Among such repairs are:
1. Upgrade to the hotel's fire-life safety system, which does not report reliably, could not be executed.
2. Plumbing problems associated with the pool.
Hyatt claims: "It is only because of a work-around devised by the hotel staff that the pool is operable at all; significant repairs are still required."
3. Leaks from the faulty plumbing to the pool make it necessary to replace ceiling tiles in meeting places on the hotel frequently, on average twice a month.
4. Repairs to the hotel's "building envelope", which leaks in some areas when it rains, causing water to penetrate guest bedrooms.
Hyatt also claimed UDeCOTT has breached its obligation with regard to the management of the parking garage next to the hotel.
"The garage is currently not under management. Instead, cars come and go freely and the structure is deteriorating. Due to UDeCOTT's failure to provide management for the garage, Hyatt Regency Trinidad does provide some custodial maintenance and security patrols for the parking structure," it stated.
Hyatt is seeking a declaration that UDeCOTT is in breach of the Hotel Management Agreement, a determination as to which entity is entitled to the distribution of funds and damages quantified over the course of arbitration.
However, in a counter-claim filed by UDeCOTT's attorneys in December 2011, UDeCOTT is seeking $146,577,358.33 in outstanding sums that Hyatt failed to pay in distributions owed between 2008 and 2011.
The company has denied charges levelled at it by Hyatt Corporation in its answer and counterclaim.
UDeCOTT has dismissed the Hyatt's claim that it's unsure to whom the funds are entitled as "misconceived".
"There are no proper grounds for contesting that UDeCOTT is and has been at all material times the entity entitled to these funds. An assignment of the leasehold interest in the land is not an assignment of UDeCOTT's rights and obligations under a contract known as the Hotel Management Agreement," UDeCOTT claimed.
UDeCOTT denied that Hyatt was unable to fulfill its management responsibilities as Hyatt has full authority to take decisions regarding the everyday management and operation of the hotel, and has done so for the last four years without impediment.
The company dismissed Hyatt's claim that it has complained about repair work to the hotel as "alleged" requests; it labelled as "allegation" the Hyatt's claim that it incurred expenses in managing the car park, noting that no such particular concern has been raised in communication.
UDeCOTT noted that while Hyatt was responsible for the water rates, it failed to pay the Water and Sewerage Authority between July 2, 2008, and December 8, 2010. Subsequently, this $1,762,370.99 debt was cleared by UDeCOTT and the company now wants back that sum.
In addition, UDeCOTT claims Hyatt owes $2,530,000 in tenancy charges, due as of June 14, 2011 (and continuing).
The Express understands that a legal team from UDeCOTT is expected to meet with their counterparts at the Hyatt Corporation next week to resolve the dispute.
Both the Hyatt and UDeCOTT have refused to comment on the matter.