Just after the global lockdown that involved inevitably even the Monegasque tiny land, troubles seem not to be over for the Principality of Monaco that is facing an unprecedented economic crisis, albeit bravely and determinedly. According to a recent decision by the Tribunal Suprème (Supreme Court), the Monegasque State is forced to pay a multimillion-euro compensation, having lost the case against Caroli Immo, paramount Monaco’s real estate company, founded in 1970’s by Antonio Caroli, Italian businessman and realtor. His company 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.
What is the subject of this legal dispute? What are the reasons that led the Supreme Court to give such a judgement? What consequences will follow? 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 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 judgement is final and the State is now obliged to pay, within ten years, an indemnity that was defined a ‘staggering’ amount by Mr. Serge Telle, even if much lower than the original request by the counterparty.
Actually, Covid-19 health emergency pushed the Principality to pay an equivalent sum, so far. This matter could not have happened at a worse time.
So, what? The Minister of State takes time in view of a direct debate with the Conseil National (National Council) where to define also the payment methods and source. Drawing from the Fonds de Réserve Constitutionnel (Constitutional Reserve Fund) seems difficult to achieve since this financial instrument is intended to cover primarily any possible State budgetary deficit.
Antonio Caroli, on his part, has always been convinced that the project was compatible with F1 Grand Prix from the very beginning and he has recently declared that he would be willing to refuse the indemnity provided that his project will be carried out. Regardless of how it turns out, this issue seems to last long.