BVI Offshore Business: Grey Area

The Prospect Reef Vacation Club (PRVC) is going to file a lawsuit against the British Virgin Islands government in the U.S. Federal Court, for an estimated sum of US$4-8 mln. The international group is alleging that the BVI government illegally deprived owners of their property rights when it decided not to follow prior contracts after buying the resort in 2005. After this decision, there were years of negotiations which finally broke down this year.

According to PRVC timeshare members, the vacation club was established in 1999. For an initial down payment and annual maintenance fees, club members could buy the timeshare for one week per year, for 70 years use. In 2005 PRVC was bought by the BVI government, and vacation club members lost access to the property and did not receive remuneration from either the government or former property holders – the Romney Group. Answering the complaints of the club members, the BVI government stated that, as purchasers, they were not responsible for agreements entered into by previous landowners or operators.

Dr. Orlando Smith, which was the BVI Chief Minister at that time, told the press that these issues “are not a problem between the government and timeshare holders”, but rather - “a matter between timeshare holders and the person or persons with whom they entered into timeshare agreements.”

The solution was not reached, but in March 2007 BVI government officials promised club members they will help the situation. After the Virgin Islands Party won general elections in August 2007, Timeshare owners applied to the new government headed by Ralph O’Neal, but, in their words, they received no response.

Susan Eisenhut, the communication co-ordinator of Prospect Reef Vacation Club, wrote that club’s members are protected by the Hague Treaty, which “says that U.S. citizens have the right to sue another government in U.S. Federal Court when that government takes our property, as did the BVI government when they acquired Prospect Reef.”