In a surprising move, the Supreme Court of El Salvador has ruled in favor of an injunction blocking the enforcement of an order emanating from a New York-based arbitration panel related to a shareholder dispute over the control of Continental Towers.
According to the court’s decision, the arbitration tribunal in question relates to Telecom Business Solution LLC v Terra Towers Corp – AAA ICDR Case No 01-21-0000-4309, which is chaired by Marc J. Goldstein with co-arbitrators Melida N. Hodgson and Richard F. Ziegler had sought to enforce four partial awards, which, among other findings, ordered the sale of the company, Continental Towers El Salvador, Ltda. C.V., as well as the reinstatement of the company’s former chief executive officer, Jorge Gaitan Castro, and former general manager Carol Echeverria.
However, the Supreme Court ruled in favor of an injunction (amparo) requested by the Continental Towers lawyer Zuleyma Beatrix Yanez Hernandez to halt the enforcement of the arbitration awards pending the outcome of pending criminal charges against Mr. Gaitan Castro and Ms. Echeverria.
On February 23, 2024, the Salvadoran newspaper Diario El Mundo reported that the two Guatemalan telecom executives in question are currently sought with arrest warrants relating to fraud accusations amounting to $1,284,274.39 which had allegedly been embezzled from the companies where they had worked, among other alleged crimes.
According to the text of the ruling by the Supreme Court, the defendants (minority investors in Continental Towers, Peppertree Capital Management and AMLQ) are ordered to “refrain from : i) demanding from Continental Towers El Salvador, Limitada de Capital Variable the compliance of the arbitration award number 01-21-0000-4309 contained in the four partial final awards already mentioned; ii) demand the withdrawal of complaints filed before the Attorney General’s Office regarding the alleged commission of criminal acts by Mr. Jorge Gaitan Castro; (iii) request the plaintiff company to carry out or continue to maintain commercial, business or management relations with certain person or to alter the contracts with suppliers and clients, preventing the development of its corporate purpose; (iv) alter the shareholding structure of either the plaintiff company or Continental Towers Latam Holdings Ltd, as well as to take steps to remove the current management of the plaintiff company; and v) to request the termination of the arbitration initiated before the mediation, Conciliation and Arbiration Center of the Chamber of Commerce and Industry of El Salvador, registered under the reference Al.1.2023 against Continental Towers Holding Corp. – among others.”
In an earlier press release, the management of Continental Towers disavowed the employment of the accused criminals which the New York arbitration tribunal is attempting to reinstate.
Continental Towers El Salvador reiterates previously published public notices that the individual in question, Jorge Alberto Gaitán Castro, was removed from his role overseeing the group’s regional tower companies in October 2021 and was completely separated from the company,” stated Antonieta Granillo, Chief Executive Officer (CEO) of Continental Towers El Salvador in the press release. “Continental Towers El Salvador has had no involvement and no knowledge of the alleged private business activities of Gaitán Castro, Jorge Leonel Gaitán Paredes, or the other individuals involved in alleged conduct in question.”
