An international arbitration tribunal has delivered a landmark ruling dismissing the Bahamian government’s multimillion-dollar lawsuit against the Grand Bahama Port Authority (GBPA) while simultaneously affirming the state’s regulatory jurisdiction over Freeport’s special economic zone.
The three-member tribunal, comprising distinguished British Commonwealth jurists Sir Anthony Smellie, Lord Neuberger of Abbotsbury, and Dame Elizabeth Gloster, issued their partial final award on February 27, 2026. The decision resolves the most contentious aspects of a prolonged legal confrontation between Prime Minister Philip Davis’s administration and the private port operator.
The government had sought BSD$357 million (approximately US$357 million) in compensation for alleged administrative expenses incurred between 2018 and 2022, covering services including customs processing, immigration control, environmental oversight, and regulatory administration within the Freeport area. This claim primarily relied on a PricewaterhouseCoopers report detailing these expenditures.
However, the arbitration panel determined the government could not enforce payment through this method. The tribunal established that the historical reimbursement mechanism referenced by the Davis administration had been superseded in the 1990s by a negotiated arrangement establishing fixed annual payments from GBPA, followed by a review process to determine future amounts. Since this review process was never implemented after the initial period, the government could not retroactively claim payments for multiple years.
The ruling clarified that while a payment structure exists under the Hawksbill Creek Agreement, amounts owed must first be determined through the agreed review mechanism, which remains active and enforceable through 2054 when the agreement expires. Questions regarding retroactive payments were left unresolved and may be addressed in subsequent arbitration phases.
The tribunal also addressed GBPA’s counter-claims seeking over BSD$1 billion in damages for alleged government interference and investment diversion. Nearly all claims were dismissed, with the panel confirming the government retains legislative and regulatory authority over immigration, customs, environmental regulation, development approvals, and utility oversight in Freeport. Evidence demonstrated this shared governance arrangement had been practiced by both parties for decades.
GBPA prevailed on a single issue: the tribunal found the government failed to take timely action on environmental by-laws proposed in 2006 for the port area. While recognizing this breach, the tribunal did not award damages and requested further submissions to determine potential compensation.
Both parties have claimed victory following the decision. Prime Minister Davis characterized the ruling as confirming GBPA’s payment obligations and solidifying government authority, while GBPA described the dismissal of the $357 million claim as a victory providing stability for Freeport’s future.
The Hawksbill Creek Agreement, originally signed in 1955, granted GBPA a 99-year exclusive right to develop approximately 50,000 acres on Grand Bahama Island in exchange for providing comprehensive infrastructure including a deep-water harbor, airport, hospital, schools, and other amenities.