AGO 03-48.

• Case Date: May 21, 2003
• Court: South Carolina

South Carolina Attorney General Opinions 2003. AGO 03-48. 229May 21, 2003 OPINION NO. 03-48The Honorable James H. MerrillMember, House of Representatives 308-A Blatt Building Columbia, South Carolina 29211 Dear Representative Merrill: Your letter references "a controversy [which] has erupted in the Charleton port community over whether the South Carolina State Ports Authority (SPA) has the unilateral legal authority to terminate a license agreement that was signed in August of 1999 with Charleston International Ports, LLC (CIP). You state that "[t]he license agreement allowed CIP to operate a break bulk cargo business on port facilites at the Charleston Naval Base for a period of thirty (30) years with profits to be shared between CIP and the SPA." By way of background, you further indicate the following:

The SPA alleges that CIP is in violation of the terms of the license agreement and has announced by a vote of the SPA Board that the license agreement has been terminated "for default." CIP denies the allegation of default and argues that the license agreement requires such disputes to be arbitrated according to the terms of the agreement pursuant to the S.C. Code of Laws governing the process of arbitration.

This week SPA made an attempt to seize operations control of the facility. The SPA has written letters to CIP's tenants and cargo customers directing them to begin sending their payments to the SPA. CIP responded by writing letters to the same tenants and customers disputing SPA's unilateral authority to terminate the agreement and asking the tenants and customers to honor their contractual obligations by continuing to send payments to CIP until the dispute is resolved.

These actions have caused the dispute to rise to the level of urgency. Tenants and customers are not caught in the middle of this controversy, and it now threatens to disrupt the orderly business of the port community.

You request an opinion regarding the following legal issues:

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1. Does the SPA Board have the legal authority to unilaterally terminate the license agreement for cause between the SPA and CIP without arbitration of differences?

2. If arbitration is required to resolve disputes arising under the agreement, which party has the legal authority to operate the facility until the dispute is resolved?

Limitations of an Opinion of this Office to Resolve Questions of FactWe begin our analysis by noting one caveat: your questions ultimately involve a contractual dispute between the State Ports Authority and CIP. Thus, final resolution of those questions may well turn upon issues of fact which cannot be determined by an opinion of this Office, but only adjudicated by a court. In a previous opinion of this Office, we expressed the following reservation concerning the difficulties in attempting to resolve contractual disputes through the issuance of an opinion of the Attorney General:

[a] legal opinion cannot resolve such obviously critical questions as precisely what expectations the parties may have had or what reliance was placed upon any representations made....

Because this Office does not have the authority of a court or other fact-finding body, we are not able, in a legal opinion, to adjudicate or investigate factual questions. Unlike a fact-finding body ... we do not possess the necessary fact-finding authority and resources to adequately determine the difficult factual questions present here.

Op. S.C. Atty. Gen., Op. No. 85-132 (November 15, 1985). Those same reservations and limitations are present here. Only a court can resolve the issues of fact which may be highly relevant to any final resolution of the question raised by your letter. However, with that caveat in mind and based solely upon the information provided, we will attempt to set forth the applicable law which a court would likely consider. Contract Between SPA and CIPYou have forwarded the relevant contract between SPA and CIP to this Office. A brief review of the pertinent contractual provisions is thus in order. Stamped at the top of the contract in bold capital letters and underlined is the following statement: 231

CONFIDENTIAL: This Agreement Is Subject To Arbitration Pursuant to S.C. Code Ann. §§ 15-48-10 et seq. As Modified In This License By The Agreement Of The Parties.

Paragraph 47 of the Agreement deals with arbitration specifically. Such Paragraph broadly provides in pertinent part that

[a]ny controversy or dispute arising out of or relating to this License shall be determined by arbitration in Charleston, South Carolina.

If either party elects to commerce arbitration, such party (herein called the "petitioner") shall give notice of the controversy to be submitted to arbitration (herein called the "arbitration notice") to the other party (herein called the "respondent") and simultaneously therewith shall select an arbitrator and notify the respondent of his/her identity.

The procedure for the selection of an arbitrator is also set forth in Paragraph 47. Paragraph 28 of the Agreement addresses...