You secured a contract with the Government of the Virgin Islands to undertake substantial municipal scale construction and the Government doesn’t pay, now what? Under the Revised Organic Act, Title 48, United States Code, Section 1541, the Government of the Virgin Islands can be sued in cases arising out of contract. While the Government of the Virgin Islands has waived its sovereign immunity for breach of contract claims, government property, however, is exempt from execution.
Under Title 5, Virgin Islands Code, Section 479(a), V.I. Government property is exempt from execution, including “[a]ll property of any public corporation or the government of the Virgin Islands“.[1](emphasis added). The statute does not create separate provisions based on how the Government came to own the property and therefore, any and all property of the Government is expressly exempt from execution. In addition, the Code does not contain any provisions allowing the Government to waive this protection. Hence, the Government cannot contract away its statutory exemption from execution and “[w]hen a contract does not meet statutory requirements, the Court can declare it null and void ab initio or sever the portions that are in violation.[2]
The statute does not, however, affect the Court’s authority to enter a judgment against the Government of the Virgin Islands for breach of contract and does not prevent your company from bringing such lawsuit. The strategy is to draft and structure the contract so that your company doesn’t end up funding the work for the government and DNF can help your company address these issues before it’s too late.
[1] See also Brown v. Farrelly, 28 V.I 345, n.l0 (3d Cir. V.I. l993) (citing 5 V.I.C, 549(a)(4)) (“all property of the Virgin Islands government is exempt from execution”); Lindway v. Government of V.I., 19 V.I. 193, 194 (D.V.I.1982) (money judgment against Virgin Islands government cannot be enforced by writ of execution or writ of mandamus).
[2] Heyl & Patterson Int’l, Inc. v. F. D. Rich Hous. of Virgin Islands, Inc., 663 F.2d 419, 432 (3d Cir. l981) (citing Sargeant v. Gov’t of the V. I., CIV 275 -1970, 10 V.I. 245, 252-253 (D.V.I. 1973)); SIU de Puerto Rico, Caribe Y Latinoamerica v. Virgin Islands Port Auth.,42 F.3d 801, 803 (3d Cir. 1994) (“It follows that VIPA acted beyond the scope of its authority in agreeing to pay accumulated sick leave to retirees, and the sick leave provision of the Agreement is void ab initio and cannot be enforced”).
Please feel free to contact us to discuss construction contracts with the government of the Virgin Islands, or any other business needs.
Alex Moskowitz is a Partner in Dudley Newman Feuerzeig LLP’s litigation department. He has been practicing law in the Virgin Islands for the fourteen years. His main areas of practice include complex commercial litigation, creditors’ rights, and personal injury defense and his full biography can be found here.