News Release

GIAA to Appeal Superior Court Order Re: Arbitration Award in Airport Rent Dispute

Wednesday, January 23, 2019

The Antonio B. Won Pat International Airport Authority, Guam (“GIAA") has filed a notice of appeal with the Guam Supreme Court of a recent decision by the Guam Superior Court that upheld a 2016 arbitration award to DFS Guam L.P. (“DFS”) in a dispute relating to the drawdown of a letter of credit and unpaid holdover rent owed by DFS to GIAA.

The dispute between GIAA and DFS is about an approximately $2.1 million in back rent and damages owed by DFS for a portion of the retail space at the Airport that DFS occupied at the end of its lease term prior to turning over the space to Lotte Duty Free Guam, LLP (“Lotte”) as the new concessionaire in July 2013. When DFS refused to pay the holdover rent expressly provided for under the lease, GIAA drew down approximately $2.1 million on a letter of credit DFS provided as security for all its leases under its Airport concession.

“It’s GIAA's position that this dispute, which is part of the ongoing litigation with DFS, never should have gone to arbitration in the first place and we are looking forward to the Supreme Court’s review," said Genevieve Rapadas, counsel for GIAA. “The lease at issue clearly states that any disputes must be resolved by the Courts of Guam, not by an off-island arbitration panel."

Attorney Rapadas went on to say, "The issue DFS is trying to avoid is the clear language of the lease which provides that DFS owes the holdover rent claimed by GIAA. DFS and GIAA explicitly agreed in the relevant lease that all disputes, including the holdover rent dispute, were to be decided by the Guam Superior Court. DFS, through the arbitration over GIAA's draw down on a letter of credit provided by DFS as security, is trying to side step a determination on the merits of the holdover rent issue by the Guam Superior Court."

DFS, the 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 to Lotte. Since then DFS has launched a series of expensive protests and lawsuits. These legal actions, accompanied by a DFS campaign of falsehoods and innuendo directed against GIAA, its board and employees, and counsel have been a drain on public resources and aimed at restoring DFS's monopoly position at GIAA.

GIAA stands behind the 2012-2013 procurement, the first competitive one in the history of GIAA, that resulted in the best contract that GIAA has ever had. The Lotte contract, which has been in place for the last five years, has paid more than $70 million in revenue to GIAA in contrast to the $32 million paid by DFS during the last five years of its contract. The current contract has enabled GIAA to undertake millions of dollars of capital improvement projects that will strengthen GIAA’s ability to efficiently facilitate the entry and exit of hundreds of thousands of travelers.

For any questions, please contact Genevieve Rapadas at 646-9355 or [email protected]