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GIAA Asks AG to Intervene in Arbitration Award Lawsuit

Thursday, June 30, 2016

May 9, 2016— Hagatna, Guam

The Antonio B. Won Pat International Airport Authority. Guam ("GIAA") filed a lawsuit in Guam Superior Court in May asking the Court to vacate the arbitration award to DFS Guam relating to unpaid rent owed by DFS to the Airport. Yesterday, GIAA filed its opposition to DFS's motion to dismiss the lawsuit and asked Guam Attorney General Elizabeth Barrett-Anderson to intervene in the matter.

AG Barrett-Anderson has publicly announced her desire to be apprised of litigation matters involving the Government, including autonomous agencies such as GIAA, and has already reached out to GIAA for information on this case. GIAA Executive Manager Chuck Ada indicated that GIAA would try to work with the AG on what GIAA feels is clearly an erroneous arbitral award.

The lease between GIAA and OFS at issue in this case clearly states that any disputes must be resolved by the courts of Guam. Instead, despite the clear provision of the lease in question, DFS improperly took the Airport to arbitration in a move that could potentially cost the Airport and people of Guam more than $2 million. In effect, the off-island arbitrators who decided the case usurped the power of our local court.

GIAA is confident that the lease in question provides a sound basis for throwing out the arbitration award and we are requesting that the Attorney General, who recently asked to be apprised of all pending litigation involving public agencies, join us in asking the Superior Court to rule in GIAA's favor.

DFS, the exclusive duty free concessionaire for over 40 years, lost the specialty retail concession contract at the Airport in 2013 in a fair, open and competitive solicitation process. Since then DFS has launched a series of expensive protests and lawsuits against GIAA. These legal actions, accompanied by an unrelenting DFS campaign of falsehoods and innuendo directed against the Airport, its board and employees, and counsel have been a drain on public resources and we would welcome the Attorney General's participation in the holdover rent dispute, as well as others where it is possible and appropriate for her to do so.

The current specialty retail concession contract with Lotte has been of huge benefit to the Airport and the people of Guam. Some of the highlights of the Lotte relationship include more than double the base rent provided for in the previous contract with DFS, over $20 million in improvements at the Airport, and a contract that allowed the Airport to secure approximately $250 million in long term financing to fund capital improvements like the new arrivals corridor.

Lotte even agreed to indemnify the Airport for legal fees incurred in connection with the specialty retail concession contract. This provision in the contract has been a very significant money-saver for the Airport given all the lawsuits initiated by DFS, represented by multiple law firms, which has apparently bottomless pockets when it comes to litigation. It's very fortunate that we have had the resources to fight DFS in court and defend a contract that has yielded tremendous benefits to the Airport and is clearly in the best interests of the people of Guam and the traveling public.