Julius Capital Bank Inc. v The Financial Services Regulatory Commission

• Jurisdiction: Antigua and Barbuda
• Judge: Robertson, J.
• Judgment Date: 01 March 2022
• Judgment citation (vLex): [2022] ECSC J0301-2
• Court: High Court (Antigua)
• Year: 2022
• Docket Number: CLAIM NO: ANUHCV2021/0199

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

CLAIM NO: ANUHCV2021/0199

In the Matter of Part 56 of The Civil Procedure Rules 2000 of The Eastern Caribbean Supreme Court;

and

In the Matter of the International Banking Act No 6 of 2016

and

In the Matter of an Application to Review the Decision of the Financial Services Regulatory Commission contained in a letter dated the 16th day of April, 2021 and written by the Intended Defendant to the Claimant whereby the Intended Defendant refused to grant the Claimant a Class 1 Banking Licence (hereinafter called the “Decision”).

Between:

Julius Capital Bank Inc

Claimant/Applicant

and

The Financial Services Regulatory Commission

Defendant/Respondent

Appearances:

Ms. Leandra Smith appearing for the Claimant

Ms. Lauralee Riley appearing for the Defendant

1 Robertson, J. Julius Capital Bank Inc., the claimant, initiated these judicial review proceedings seeking, among other things, a declaration that the decision of the commission, as contained in the letter dated 16 ^th April 2021 is null and void and of no effect, and an order of Certiorari to move this court to quash the decision of the commission. The correspondence in question advised that the claimant's application for a Class 1 International Banking License Banking license was declined.

2 The Parties. Julius Capital Bank Inc. is a company which was incorporated and registered under the International Business Corporation Act, CAP 224 of the Laws of Antigua and Barbuda [the Act] and later issued a certificate of revival under the provisions of section 315 of the Act. The commission is a statutory body which was continued under the authority of the provisions of Financial Services Regulatory Commission Act, 2013 (as amended) [herein after the FSRC Act]. The commission, among other things, regulates international banking business carried on from and within Antigua and Barbuda. Thus, the management of the international banks and non-banks fall within the ambit of the mandate of the commission. The FSRC Act indicates that the commission also has a collaborative function to provide assistance to overseas regulatory authorities.

The Claim and the Claimant's Reasons for Issuing these Proceedings.

3 Julius Capital Bank Inc., on the 18 ^th day March 2021, unsuccessfully applied for a Class 1 International Banking License. The commission in its response to the application indicated that “ the application was declined in accordance with Section 9(4)(b) of the International Banking Act 2016, as amended”. Despite a request, no other information was given by the commission for having declined the application. Julius Capital Bank Inc. initiated these proceedings seeking a determination that the decision of the defendant as contained in the correspondence dated 16 ^th April 2021 was null and void and of no effect, and that the decision be quashed and for cost of the proceedings to be paid by the commission.

4 Julius Capital Bank Inc has indicated the following as the reasons for having to refer the matter to the court to seek a review the decision of the commission:

• a. The commission failed to provide reasons or adequate reasons for its decision and as such the Julius Capital Bank Inc. contends that the decision of the commission was arbitrary or unreasonable, irrational, or unfair or was made in bad faith or was made for an improper purpose.

• b. Julius Capital Bank Inc. also notes that the decision of the commission fails to state whether the decision was based upon (a) public interest or (b) that the criteria for approving the license were not met or both (a) and (b).

• c. Julius Capital Bank Inc. had a legitimate expectation that once it supplied the commission with an adequate response to the concerns raised by the commission during the application process, the requested license would be granted. Julius Capital Bank Inc was previously in possession of a Class 1 Banking License.

The Relevant Background

5 Dario Item was the sole shareholder of Julius Capital Bank Inc. During the month August 2018 an application was made by the Julius Capital Bank Inc to the commission for a Class 1 Banking License to enable Julius Capital to conduct international banking business in the state of Antigua and Barbuda. The commission, in accordance with section 9(4) of the International Banking Act granted a license on 15 ^th May 2019.

6 Sometime after having granted the Class 1 Banking License, the commission became aware of a notice of administrative actions published on the Labuan Financial Services Authority's official website and as a consequence of having noted the information contained therein, the commission re-visited the banking license application of the claimant. The commission considered the application submitted by Mr. Item and noted the following question on the form and response made on behalf of Julius Capital Bank Inc: “ Have any of the parties connected with this application ever applied either individually or in conjunction with others, for the authority to transact business in any other jurisdiction? If so, please give details”, Mr. Item's response was “ no”.

7 The commission by letter dated 11 ^th June 2019 wrote to Julius Capital Bank Inc and requested clarification on certain information which was published on the official website of the Labuan Financial Services Authority about Blue Investment Bank Inc. and Blue Wealth Management Ltd, companies in which Dario Item was a director. Specifically, the commission sought, among other things, information on the charges or allegations made by the authority in Malaysia, the defense to the charges and allegations made by the authority on the disqualification of Dario Item as one of the directors and the principal officer of Blue Investment Bank Inc and Blue Wealth Management Ltd. in Malaysia. The commission also directed that the claimant was not to commence any international banking until written authorization is received from the commission.

8 In correspondence dated 13 ^th June 2019 received from Europe Studio Legale Tributario, an attorney representing Blue Investment Bank Inc and Blue Wealth Management Ltd., the commission understood that the association between Dario Item, Blue Investment Bank Inc and Blue Wealth Management Ltd pre-dated the submission of the 2018 application for the banking license and that the association possibly continued to subsist. The commission also determined from the correspondence received that Mr. Item had “ at least constructive knowledge of administrative actions taken against his associated entities in Malaysia”.

9 The commissioner on 14 ^th October 2019 informed the representative of Julius Capital Bank Inc. that the commission intended to revoke the Class 1 Banking License which was granted to Julius Capital Bank Inc on 15 ^th May 2019. The commission outlined the reason for the intended action and noted that Julius Capital Bank Inc. had until 25 ^th November, 2019 to respond to the notice of intent to revoke the license. The commission later agreed to an extension of the time from 25 ^th November 2019 to 9 ^th December 2019 for the Julius Capital Bank Inc. to submit statement of objections in accordance with section 15(2) of the Act.

10 By correspondence dated 9 ^th December 2019 the then attorneys at law for the Julius Capital Bank Inc. wrote to the commission and provided Julius Capital Inc.'s statement of objections in response to the Notice of Intent to revoke the license. In that correspondence the counsel indicated to the commission, among other things, that the position of Mr. Item on the matter and the status of the matter against Blue Wealth Management Ltd. and Blue Investment Bank Inc. and its directors in Malaysia and suggested alternate remedial action which could be adopted. The matter not being resolved the Julius Capital proposed that the commission permit Julius Capital Inc to voluntarily surrender its license number 17185.

11 The evidence of the commission is that at a meeting subsequent to the issuance of the Notice of Intention to revoke the banking license the commission informed the representative for Julius Capital Inc. that the notice of intent to revoke the banking license was premised on the non-disclosure of material information which was known to the director of Julius Capital Inc. at the time of submission of the application for banking license and that the notice was not on the premise of fitness and propriety of the directors.

12 On 30 ^th December 2019 the attorney for Julius Capital Bank Inc. formally sought the commission's permission to permit Julius Capital Bank Inc. to immediately surrender the banking license and to commence voluntary liquidation. On 12 ^th March 2020 the commission authorized the Julius Capital Bank Inc.'s liquidation with the subsequent cancellation of the International Banking License on 22 ^nd April 2020. Julius Capital Bank Inc. the claimant, was therefore dissolved and ceased to exist on 8 ^th July 2020.

13 Julius Capital Bank Inc. was revived on 11 ^th January 2021. On 24 ^th November 2020 the representative for Julius Capital Bank Inc. submitted an application dated 1 ^st October 2020 to the commission for issuance of a Class 1 Banking License. The commission requested certain information which, according to the commission was required for “amongst other things compliance with section 8(a) of the Act”. Upon receipt of the information the commission indicated that it assessed the application along with other supporting documentation and informed the representative for Julius Capital Bank Inc. through correspondence dated 16 ^th April 2021 that the application was unsuccessful.

14 The correspondence of 16 ^th April 2021 from the Director of International Banks and Non-Banks indicated that:

“Re: Application for Class 1 International Banking License (Julius Capital Bank Inc.) The Financial Services...