A six-year civil suit filed by Koror State Legislature in July of 2014 against Koror State Public Land Authority and Palau Sea Ventures is finally resolved in a judgment issued by the Appellate Court confirming Trial Court’s decision that the lease executed between KSPLA and Palau Sea Ventures for the lot formerly PMIC lease, is not in violation of Koror State’s law K10-269-2014, the Public Benefit Act.

The order further states that since the lease is not in violation of the Act, the Public Benefit Act is not in violation of the Constitution’s Contract Clause.

Koror State Legislature in 2014 had sued KSPLA and Palau Sea Ventures forviolation of Public Benefit Act which prohibited leasing of P/K lot (former Palau Marine Industries Corporation or PMIC) to anyone.

KSPLA through a bidding process had awarded the lease of former PMIC lot to Palau Sea Ventures in April of 2014.

Koror State Legislature on April 15, 2014 had passed a bill prohibiting leasing of the two properties in Malakal, one of which is the former PMIC lot. The bill was vetoed by then Koror State Governor Yoshitaka Adachi on April 25, 2014.  On May 2, 2014, Koror State Legislature overrode the governor’s veto and the bill became law KSPL K10-269-2014, the Public Benefit Act.

KSL had sued KSPLA claiming the lease violated the Public Benefit Act and KSPLA and lessee had countersued claiming violation of the Constitution’s Contract Clause.  The Trial Court ruled in favor of Defendant Koror State Public Land Authority and counter-claim plaintiff Palau Sea Ventures in 2019.

It ruled that “the Act cannot be retroactively applied to render the lease entered into between PSV and KSPLA invalid.” 

It further stated that KSL has not demonstrated a compelling government interest for impairing a contract between KSPLA and PSV.

Trial court finds Public Benefit Act to be in violation of the Contract Clause, a fundamental right under ROP Constitution Article IV.  Trial Court’s decision was appealed by KSL.

In the appellate decision issued this week, it affirmed the trial court’s decision that the language of the law did not apply retroactively and “must be applied prospectively” and “must not impair the rights of the leases or contracts entered into before its enactment.”

Since the lease was executed before the enactment of the law, it does not violate the language of the law which indicated that the P/K property was identified to be included in the Public Benefit Act because it was unleased.  Since it is already leased, it no longer fits the defining language in the State law.

Appellate Court refused to address the Trial Court’s decision that the Public Benefit Act violates the Contractual Clause of the Constitution.

Appellate Court said that the lease contract did notviolate the Public Benefit Act as it is interpreted and therefore, Constitution’s Contract Clause has no implication on the Public Benefit Act.

Leave a comment

Your email address will not be published.