Representatives of the defunct carrier BVI Airways (BVI, Beef Island) have launched arbitration proceedings against the British Virgin Islands government in New York, the BVI Beacon newspaper has confirmed citing the summary of a Cabinet meeting.

According to the information from the November 22 meeting, the airline filed its claim on June 14 and the Cabinet hired Tortola-based solicitors Martin Kenney & Co. to defend the case.

The same law firm had been hired by the territory's previous administration in October 2018 to trace a missing USD7.2 million loaned by the state. BVI Airways allegedly took the loan from that administration - which lost power in an election in February 2019 - in return for pledging to launch a direct route to Miami Int'l. The Miami initiative fell apart in 2017 and the flights never materialised.

The current case, which is before the International Centre for Dispute Resolution of the American Arbitration Association, was filed at the same time the law firm was reaching out to the airline's representatives with questions about the missing sum.

BVI Airways’ grievances are unclear, as the arbitration proceedings are private and the government and BVI Airways have refused to provide the newspaper with more information.

The government is reportedly gathering evidence as it contemplates civil proceedings against Lester Hyman, the government’s attorney in the United States between 1987 and 2017, for allegedly accepting undisclosed payments from BVI Airways, the newspaper reported. Hyman denies any wrongdoing.

A US judge will likely make a ruling within three months, a source familiar with the matter said.