~Says TelEm 'effectively financially crippled'~PHILIPSBURG--The Court of First Instance has ordered the immediate lifting of prejudgment bank attachments obtained by Flow against the bank accounts of the TelEm group in connection with a disputed Cg. 1,238,806.96 debt.
The court has ruled that the harm caused to TelEm outweighs Flow's interest in maintaining the attachments while the underlying dispute is being resolved.
In a judgment issued on June 24. The Court ordered that all conservatory third-party attachments imposed on June 12 against the accounts of Sint Maarten Telephone Company NV (SMTC), Smitcoms NV and TelCell NV at The Windward Islands Bank, RBC Royal Bank and Republic Bank (St. Maarten) be lifted. The Court stressed, however, that Flow remains free to pursue its claim through ordinary civil proceedings, where the parties' competing claims will be fully examined.
The dispute centres on negotiations held between the parties during 2023 and 2024 concerning amounts allegedly owed between their various companies for telecommunications services provided in Sint Maarten and Curaçao.
According to the judgment, Flow and TelEm have for many years relied on each other's telecommunications infrastructure to provide services in both countries, including interconnection and cross-over services. Those services are invoiced between the companies and periodically settled.
Flow contends that following negotiations, the parties reached a settlement agreement under which TelEm remained liable for Cg. 1,238,806.96 relating to services provided through December 31, 2022.
The judgment notes that both parties agree TelEm owed Flow Cg. 115,874.49 as of December 31, 2020, which Telem paid on December 22, 2023.
The parties also agree that TelEm owed Cg. 2,137,935.08 as of December 31, 2022. Under the negotiated arrangement, that amount was to be paid in four equal instalments of Cg. 534,483.77. Telem paid the first instalment on February 27, 2024, followed by another payment of Cg. 364,644.35 in April 2024. According to the Court, this left an outstanding balance of Cg. 1,238,806.96 for the period through the end of 2022.
Based on that claim, Flow successfully obtained court permission on June 4 to place prejudgment third-party attachments on Telem's bank accounts. The attachments were executed on June 12 after Flow had first applied for the order on May 21 and later supplemented its request following questions from the judge about the necessity of attaching accounts at all three banks where Telem conducts business.
TelEm subsequently asked the Court to lift the attachments, arguing that it had valid counterclaims against Flow that should be set off against the amount claimed.
A main issue in the case involves several credit notes issued by Flow on November 20, 2023. According to the judgment, Telem advised Flow in March 2024 that while preparing its 2023 financial statements it discovered that Flow allegedly owed Telem a substantial amount. Telem argued that after taking those credits into account, together with other amounts owed between the parties, Flow actually owed Telem Cg. 1,238,806.96.
TelEm maintained that because it still owed Cg. 1,603,451.20 under the settlement covering the period through 2022, it paid Cg. 364,644.35, believing that after applying the credit notes neither party owed the other anything through the end of 2023.
Flow disputed that position, arguing that the November 2023 credits were not genuine credits but accounting adjustments related to implementation of the settlement agreement.
The Court found that Flow's explanation was "to some extent" plausible, but also concluded that Telem's position could not simply be dismissed.
The judge noted that invoices submitted to the Court showed a recurring monthly charge of Cg. 528.94, while the November 2023 invoice included an additional "Lease Lines rental adjustment" credit of Cg. 58,181.47—an amount the Court described as significantly different from the normal monthly charge. The Court also observed that the invoice did not indicate the adjustment related to the settlement agreement.
In addition, the Court said Flow was unable during the hearing to adequately explain why the credits had already been processed in November 2023 when the settlement agreement itself was not finalized until January 26, 2024.
The judge concluded that while Flow's explanation appeared plausible, TelEm's defence could not be rejected at this preliminary stage and would have to be examined during the full civil proceedings.
TelEm also argued that the settlement agreement was not legally binding because it had never signed it.
The Court rejected that argument on a preliminary basis, noting that TelEm had never previously challenged the agreement's validity and had repeatedly referred to it in correspondence throughout 2024. The Court also pointed to TelEm's payments in February and April 2024, which corresponded with obligations under the agreement, concluding that the debt relating to the period through December 2022 was sufficiently established for purposes of the proceedings.
The Court likewise rejected TelEm's argument that Flow had breached its legal duty of candour. Although TelEm argued that Flow incorrectly claimed it had never asserted a right of set-off, the judge found that Flow had submitted TelEm's email correspondence in full, allowing the Court to reach its own conclusions. The Court ruled that disagreements between the parties over the interpretation of evidence did not amount to a breach of the duty to present the facts truthfully.
The decisive issue, however, was whether the attachments should remain in place while the dispute continues. The Court noted that Flow had obtained nine separate attachments—covering three TelEm companies at three different banks—and found that all existing balances in those accounts had been frozen. As a result, the companies could operate only with funds deposited after the attachments were imposed.
The judgment states: "Even without further investigation, the Court assumes that the TelEm companies have effectively been financially crippled by Flow."
The Court further found that employees and suppliers could not or could hardly be paid and noted that Flow itself had presented evidence indicating that TelEm's financial position was weak.
After balancing the interests of both parties, the judge concluded that the severe impact on TelEm outweighed Flow's interest in maintaining the attachments, particularly since the parties have been disputing TelEm's claimed right of set-off since 2024.
Accordingly, the Court ordered that all prejudgment attachments be lifted immediately.
Flow was also ordered to pay Cg. 2,748.50 in legal costs.
The Court noted Telem's statement that it expects its financial statements for 2023, 2024 and 2025 to be completed within one or two weeks. The judge said those financial statements could provide a basis for renewed discussions between the parties, whose negotiations have stalled since March.
The Court stressed that that lifting the attachments does not resolve the underlying dispute. Flow remains free to file its substantive civil claim, where the issues surrounding the settlement agreement, the disputed November 2023 credit notes and TelEm's claimed right of set-off will be fully determined.
