Embattled Saipan casino operator Imperial Pacific International (IPI) is suing its regulator, the Commonwealth Casino Commission, alleging breach of their Casino License Agreement and seeking exemption from payment of all regulatory fees. It is also asking for a court order requiring the CCC to pay restitution for all regulatory fees paid in the past, according to a report by Marianas Variety.
The latest twist in the ongoing IPI saga comes after the CCC last week served IPI with a 30-day notice to pay US$62 million in unpaid license fees or have its casino license revoked. The casino in question, Imperial Palace • Saipan, was shuttered in early 2020 due to the COVID-19 pandemic before having its license suspended in April 2021 as a result of the unpaid fees.
As per the terms of this new civil complaint, IPI is suing the CCC for unconstitutional impairment of contract violation of the contracts clause of the US and CNMI constitutions, violation of the takings clause and violation of the due process clauses of the US Constitution.
Marianas Variety revealed that IPI is demanding a jury trial and want the District Court for the NMI to issue a declaration stating that IPl is exempt from or not subject to the terms of the regulatory fee based on the terms of the casino license agreement originally entered into.
It also want an injunction preventing enforcement of any annual regulatory fees, a declaration that payment of such fees are unconstitutional and for the CCC to pay restitution for all the regulatory fees it has paid in the past.
Finally, it wants the court to vacate and nullify any orders made in relation to such unpaid fees, including the suspension of its casino license.
“The Regulatory Fee Statute imposed additional fees for doing business in CNMI, which constitutes a substantial and unconstitutional impairment of the CLA (casino license agreement),” the lawsuit says.
“IPI was and is still required by CCC to pay the US$3 million annual regulatory fee as a prerequisite to exercising its existing contractual and property rights set forth explicitly in the CLA, rights for which it already has compensated the Commonwealth,” the lawsuit stated, claiming that the regulatory fee represents a double whammy on top of other license fees.
“The annual regulatory fees are substantial, and the impairment to the express and implied terms of the CLA is direct. The later imposed regulatory fees effectively nullify the explicit terms of the CLA and impose completely unexpected and new liabilities and limitations on the operation of IPI.
“CCC requires IPI to pay excessive and unlawful fees pursuant to the later enacted regulatory fee statute without formal condemnation, as a condition for IPI to operate its business under the CLA despite the CLA already expressly providing for an annual license fee and no such regulatory fee, and further, despite IPI being legally prohibited from operating the casino during the pandemic and when its license was suspended.”
The CNMI is “thereby permanently, directly and substantially interfering with IPI’s use and enjoyment of its contractual and property rights, amounting to an unauthorized taking without just compensation.”
IPI noted that it had paid its agreed annual US$15 million license fee each year between 2014 and 2019 but that the new US$3 million regulatory fee was implemented by way of a new law in December 2015, aimed at covering all costs of the CCC but “regardless of the actual costs incurred.”
IPI has previously argued its inability to pay its fees was related to the closure of its Saipan casino which it says was the result of force majeure events.
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