A Supreme Court judge in New York has decreed that a Chinese contractor must compensate a developer $1.6 billion due to a contentious dispute linked to a resort project in the Bahamas.
The involved parties—China Construction America (CCA), China State Construction Engineering Corporation (Bahamas) (CSCECB), and CCA Bahamas (CCAB)—served in the capacities of general contractor and overseer of construction for the venture.
Sarkis Izmirlian held the titles of chairman and CEO at BML Properties, the developer entity at the heart of this legal battle.
Back in 2011, an investment accord was formalized between BML, BMLP, and CSCECB. Under this arrangement, BMLP was to commit an equity investment totaling $830 million, while CSCECB’s stake amounted to £10 million. When the resort’s anticipated inauguration in March 2015 was missed, BMLP infused an additional $15 million, elevating its total investment to a substantial $845 million.
Following a collapse of the developer in 2015 due to prolonged delays, litigation was initiated in 2017.
After an intensive 11-day judicial review, Justice Andrew Borrok concluded that CCAB had purposefully decelerated progress on the project, contravening the collective interests of BML Properties.
During the turmoil of delays, Izmirlian was coaxed into disbursing $54 million in contested change orders, with the defendants contending that these funds were for subcontractor payments. Contrarily, the funds were diverted toward a competing Hilton project situated in proximity to the resort.
This episode, among others, ushered BML Properties into a severe liquidity crisis from which it failed to recover.
Justice Borrok’s judgment indicated that the defendants had violated their duty of fidelity toward BML Properties no fewer than six times, with findings of fraudulent conduct surfacing at least four times. The cumulative impact of these actions led BML Properties to lose its entire $845 million investment in the Baha Mar project.
Rejecting the counterclaims raised by the defendants, the judge affirmed their accountability for BMLP’s $845 million investment, with interest accruing from May 1, 2014, thereby bringing the total liability to approximately $1.6 billion.
In a public statement issued via BML Properties, Sarkis Izmirlian, founder and visionary behind Baha Mar, lamented, “I conceived Baha Mar over two decades ago, only to witness it wrested from my control on the verge of its grand opening by CCA.”
It’s anticipated that CCA will file an appeal in response to this ruling.
