More than four years after the RCMP rented three cruise ships as floating hotels for cops and soldiers at the Vancouver 2010 Winter Olympics, a judge in Washington, D.C. has awarded US$19 million plus interest to the charter company the Mounties originally hired.
United States District Judge Rosemary Collyer decided last September that the RCMP breached its contract with Cruise Connections Charter Management (CCCM) of Winston-Salem, N.C. over a dispute about taxation, currency fluctuations and costs. In her 53-page, July 21 ruling, Collyer wrote that the RCMP breached the contract September 26, 2008 and then formally terminated it on November 17, 2008 by declaring default.
RCMP hired CCCM on a CAD$55.35 million contract announced in June 2008 to source three cruise ships for the Vancouver 2010 Integrated Security Unit, because there were not enough land-based hotel rooms for the Games’ security force.
Amid the global economic crisis, the value of the U.S. dollar plummeted. On Sept. 26, 2008, the contract was worth US$53.48 million in U.S. funds, meaning CCCM saw its profit margin evaporate.
CCCM had agreed to pay Holland America US$12.5 million for the MS Statendam for hotel service charges and guaranteed net onboard revenue (including food and beverage). CCCM also agreed to pay Royal Caribbean Cruise Lines US$25.74 million for the Jewel of the Seas and the Radiance of the Seas. The total cost of US$38.237 million was not in dispute, but myriad administrative and operational costs to support the ships’ extended stay at Ballantyne Pier and disputes over taxation became major issues between CCCM and the RCMP as their relationship deteriorated.
Additionally, CCCM’s contract with Holland America anticipated a four-day repositioning cruise from San Diego to Vancouver before the Olympics and a four-day repositioning cruise from Vancouver to San Diego afterward, but Collyer ruled the RCMP breached the contract before CCCM could reach an agreement on the repositioning cruises.
In 2009, the RCMP eventually went direct to Holland America to contract the MS Statendam and MS Oosterdam and the Elation from Carnival, for CAD$76 million -- more than $20 million higher than the originally announced deal with CCCM.
CCCM sued for breach of contract on Nov. 26, 2008. Early in the proceedings, RCMP successfully claimed it had immunity under the Foreign Sovereign Immunities Act and argued the case should be heard in British Columbia, but that ruling was reversed on April 6, 2010, because, according to Collyer, the Canadian government “had engaged in commercial activities that had a direct effect in the United States.” The RCMP application to move proceedings to B.C. was also dismissed.
RCMP has until Aug. 20 to appeal Collyer’s finding.
