Caroli’s Group project moves to a friendly solution through a fresh Government approach

The greatest urban extension at Port Hercules is about to start. A quite unexpected outcome since when Caroli Group has been considered the winning party in the trial against the Monegasque State last June. A piece of news that made much talk of itself. 

On the 7th September 2020, in fact, an official press release by the Sovereign Prince Media Department announced the firm intention to find an amical settlement with the well-known Monegasque public limited company. That resulted after an intense negotiation between the Sovereign Prince and Antonio Caroli, the founder and realtor. A target meeting among H.S.H. Prince Albert II of Monaco, H.E. Pierre Dartout, the new Minister of State and Stéphane Valeri, President of the National Council, encouraged a proactive collaboration for the benefit of both parties aiming at pursuing the utmost interest of the Principality and its economic system. 

According to the new arrangements to be fixed shortly by the Gouvernement Princier, Caroli Immo would withdraw the economic claims, amounting to EUR 141 million, in view of starting the four-year great urban project, as originally planned. This will be possible on the condition of reducing the surface of the new district in order to allow the continuity of the most popular Formula 1 Grand Prix de Monaco, in complete safety. A private building, a state housing, a series of accommodations for professionals working in Port Hercules and an iconic museum area devoted to Man and the Sea will be part of the new neighbourhood. 

This outcome provides a valuable signal which bodes well for the future. Now, the floor is open to the legislative body, the Conseil National, that welcomed the news. 

But what is the subject of this legal dispute? What are the reasons that led the Supreme Court to give such a judgement? HelloMonaco wants to rebuild the key points of this legal case that may mark the Princely jurisprudence in the nearest future.  

Story Background: The Fishermen’s Esplanade

On the 5th September 2014, the Monegasque State, the Société Monégasque d’Etudes et de Gestion Immobilières (SAMEGI), a project-management and renowned public limited company part of Caroli’s Group, and Franck Goddio, distinguished French archaeologist, established a memorandum of understanding for an ambitious major urbanization work. A spectacular luxury and cultural district projected towards the open sea was supposed to redefine Port Hercules’s skyline, at the end of the existing big dam. 

A sinuous-line shining building should have hosted little more than fifty ultra-luxury accommodations with all facilities for private, commercial and business use. Besides that, a huge white manta-shaped structure with a ‘fluctuant’ roofing and a liveable square, designed by the famous architect Rudy Ricciotti, would have definitely hit the mark. Two new museums should have been created: Prince’s Family Museum, on the last two floors of the property, and the Centre of Man and the Sea, focused on marine archaeology, under the fish wings. For a total of more than 8,000 m2 of exhibition space. Since its presentation by Caroli’s Group, the project seemed successful and revolutionary, one of those to be remembered among the greatest assets in Monaco. Indeed, it was an initial investment of around EUR 300 million, involving an area of several thousand square meters resting on monumental foundations by the sea. 

On this basis, Caroli’s Group applied for a building permit concerning the lower section of Fort Antoine, called Esplanade de Pêcheurs (Fishermen’s Esplanade), the designated area where to start the new district that would be ready after four and a half years. From the land cession, the Monegasque State would have received several benefits in return, notably a 15-year exclusive management of the museums, the esplanade and 6,000 m2 of business activities plus the apartment commercial exploitation as well as the sole use of 30 parking spots. But things did not go smoothly and soon after a lawsuit was initiated on a logistical matter that would question the project itself as a primary threat to the F1 Monaco Grand Prix performance, thus intending to stop the great work.

The legal issue at stake

On the 23rd February 2018, following the request from the State to withdraw the agreement, Caroli Immo applied to the Tribunal, to claim compensation for the damage suffered, quantified in more than EUR 4 hundred million. The following November, the Supreme Court accepted the requests of the Real Estate Company acknowledging the existence of property interest detriment resulting from the premature conclusion of the contract. 

In this respect, between 2015 and 2017, Caroli Immo had been offering to the Gouvernement Princier several alternative projects including a suitable location for the TV Compound district, a Media well-equipped area essential for live broadcasting during the F1 Grand Prix. All possible solutions had been rejected for lack of consent by the Automobile Club de Monaco, called in question by the Minister of State. Furthermore, Mr. Serge Telle, nor his predecessor, have allowed that “loi de déclassement” (decommissioning law) necessary to the use of public land, not having adequate assurances of compatibility with a crucial event like the F1 international sport challenge.  

Monaco’s Supreme Court has recognised the Real Estate Company the right of contractual expectations closely linked to the completion of the contract, irrespective of any public interest. The State denial had clearly unbalanced contractual mutual interests so that contract cancelation and an adequate refund were behind the door, except for any reconciliation or replacement of parties. The subsequent technical consultancy, ordered by the moving party (the Real Estate Company), claimed to indemnify Caroli Immo in the amount of more than EUR 800 million.  On January 2020, also Franck Goddio decided to take action asking for EUR  193,4 million in compensation for the breach of contract – by the State. 

On the 25th June 2020, in the lack of a mere agreement inter partes, the Supreme Court decided that a sole due compensation should be granted to Caroli’s Group, for the amount of almost EUR  137 million, equivalent to EUR 150 million in view of legal interests. That was the result from a specific judicial assessment taking into account all different operational contingencies that could intervene during the execution of the works, a possible risk accepted by all parties while concluding the contract. Goddio’s extra claim, on the contrary, was refused since the Court had no jurisdiction to rule.

“All evidence showed that the project was not feasible”, pointed out the former Minister of State, emphasizing he acted responsibly to avoid a significant economic loss and reaffirming that the Monegasque Government had repeatedly attempted a compromise with Caroli Immo without a satisfactory result. Anyway, Supreme Court’s final judgement obliged the State to pay, within ten years, a substantial indemnity. 

This breaking news created a mixed sense of astonishment and curiosity in public opinion. This company, in fact, has created iconic buildings like the Monte-Carlo and Athos Palace, Les Terrasses du Port residency in Fontvieille and the new Technical and Hotelier Lycée, just to name some.