IPI appeal vs CCC decision dismissed

The Superior Court has affirmed the CNMI Commonwealth Casino Commission’s order suspending Imperial Pacific International (CNMI) LLC’s exclusive casino license and, by doing so, dismissed the casino investor’s appeal.

According to the order issued by Superior Court Associate Judge Wesley Bogdan yesterday, the court affirms the CCC’s order suspending IPI’s casino license and imposing penalties because the court finds no error in the commission’s order under the Administrative Procedures Act’s “arbitrary and capricious” standard of review.

The judge explained that the APA’s standard of review states that agency actions that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” should be set aside. But because the CCC’s order was based on relevant facts and evidence generated during the evidentiary hearings; and because IPI admitted to these facts and offered no defense other than force majeure, the court found there had been no error of judgment with regards to the suspension of IPI’s exclusive casino license, Bogdan said.

The judge also addressed IPI’s main argument, which is that the CCC’s suspension of its casino license failed to recognize and apply the doctrine of force majeure before issuing its order despite the presence of a force majeure provision in the casino license agreement.

Force majeure is defined as an unforeseeable circumstance that hinders a party from fulfilling its part in a contract. The force majeure event IPI is arguing in this case is the COVID-19 pandemic that it claims hindered it from complying with the casino license agreement.

Bogdan said IPI’s argument that the force majeure defense should be interpreted by the court to excuse all of its violations of the terms and conditions of its exclusive casino license and that the court should set aside the CCC’s order in its entirety is “not at all well-taken.”

“Ultimately, the Casino Commission’s decision with respect to these violations is not connected to the force majeure defense [IPI] raised before the Casino Commission. Therefore, in short, the Casino Commission’s decision was not arbitrary, capricious, an abuse of discretion or, not in accordance with law,” Bogdan said.

IPI had also argued that the Casino Commission had relied on materials within the “Annual Report” issued by IPI’s Hong Kong-based parent company, Imperial Pacific International Holdings Ltd., that were not admitted into the evidentiary record when the CCC made its decision, reportedly depriving the casino investor of the opportunity to challenge, examine, or rebut under due process considerations the casino commission’s conclusions drawn from that evidence.

Here, Bogdan said, the assertion that IPI did not have notice of the grounds for the suspension of its exclusive casino license or an opportunity to respond is “simply not true.”

“Upon review of the entire record, during the actual hearing on April 22, 2021, wherein the Annual Report was mentioned, two IPI representatives were present answering the legitimate questions raised by the Casino Commission prior to taking a vote on the matter. Moreover, IPI had been represented by legal counsel, by its own admission the court notes, through all stages of the enforcement actions,” Bogdan said.