A court in New York has ruled against the government of Grenada in a court case over US$21.6 million in loans and interest owed to a Taiwanese bank, a report on the Web site of the Grenada Today weekly newspaper said on Saturday.
Grenada was one of Taiwan's diplomatic allies before it established ties with China in 2005.
The Grenada Today article said that the Export-Import Bank of Taiwan had lent a total of US$28 million to Grenada between 1990 and 2000 in four loan agreements to facilitate development projects in the Caribbean country.
The money helped fund the construction of Grenada's first sports stadium at Queen's Park in the capital St. George's, a ministerial complex, agricultural projects and road construction projects, the report said.
Since April 2004, however, Grenada has failed to repay certain principal installments and interest, bringing the amount owed to the bank to US$21.6 million, the report said.
In order to recover the money, the bank filed a lawsuit against Grenada in a US District Court in the Southern District of New York on Dec. 21 last year, the report said.
The report quoted an unnamed official from Grenada's Ministry of Finance as saying that the Grenadian government said the country was unable to repay the debt because of economic difficulties caused by hurricanes Ivan and Emily in 2004 and 2005 respectively.
Judge Harold Baer rejected that defense, the report said.
"This matter has severe legal, political, and embarrassing consequences for all of us in Grenada," the article quoted an official from the Ministry of Finance as saying.
Baer urged the two parties to negotiate an out-of-court settlement, the report said.
The bank has been represented by the Boston-based law firm of Sullivan & Worchester, while the Grenada government has been represented by Donzell Tucker, wife of Grenadian Foreign Minister Elvin Nimrod, the report said.
When contacted for confirmation of the newspaper report, an official at the Export-Import Bank of Taiwan said yesterday that it had sued Grenada in a New York court for violating its loan agreement because they were commercial loans dating back to the 1980s and not government-to-government deals.
The official, who wished to remain unidentified, said the loans were designed just like a domestic loan, with the original agreement stating that the repayment period could extend from 20 to 30 years.
However, failing to make payment as stipulated in the contract constitutes a violation of the agreement on the borrower's part and is seen as the early termination of the agreement, the official said. This means that Grenada must pay the loans back in advance, the official said.
The commercial loan had been transferred into one of Grenada's accounts in New York so that lawsuits would be handled under the jurisdiction of the New York courts to provide international impartiality, the official said.
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