Imperial Pacific International (IPI), the troubled casino operator in Saipan, has filed a lawsuit against the Commonwealth Casino Commission (CCC), its regulator. The legal action alleges a breach of their Casino License Agreement (CLA) and seeks exemption from all regulatory fees. This development follows the CCC’s recent notice to IPI, demanding payment of US$62 million in unpaid license fees within 30 days or face revocation of its casino license. The intricate details of the lawsuit reveal IPI’s claims and demands in response to the ongoing financial and operational challenges.
Background of the Dispute:
IPI faces a financial crisis, compounded by the closure of its Saipan casino, Imperial Palace, in 2020 due to the COVID-19 pandemic.
The CCC served IPI with a notice to pay US$62 million in unpaid license fees or risk license revocation, prompting IPI’s legal action.
Legal Allegations by IPI:
IPI is suing the CCC, alleging unconstitutional impairment of contract, violation of constitutional clauses, takings clause violation, and violation of due process clauses.
The lawsuit demands a jury trial and seeks a declaration that IPI is exempt from regulatory fees based on the terms of the original casino license agreement.
IPI’s Legal Demands:
IPI requests an injunction against the enforcement of annual regulatory fees, deeming them unconstitutional.
The lawsuit seeks restitution for all past regulatory fees paid, claiming the regulatory fee statute constitutes an unconstitutional impairment of the CLA.
Force Majeure Argument and Financial Challenges:
IPI argues its inability to pay fees is linked to the force majeure events leading to the closure of its Saipan casino.
The annual US$15 million license fee was paid until 2019, but IPI contests the imposition of the US$3 million regulatory fee introduced in December 2015.
Impact on Contractual and Property Rights:
IPI contends that CCC’s imposition of excessive fees interferes with its contractual and property rights, constituting an unauthorized taking without just compensation.
The lawsuit challenges the CCC’s requirement for IPI to pay additional and unlawful fees, nullifying the explicit terms of the CLA.
Imperial Pacific International’s legal action against the CCC reflects the escalating tensions and financial difficulties faced by the Saipan-based casino operator. The lawsuit not only challenges the legality of regulatory fees but also highlights the broader implications on contractual and property rights. The outcome of this legal battle will have significant ramifications for IPI’s future operations and the regulatory landscape in Saipan’s gaming industry.