MONROVIA – The Civil Law Court at the Temple of Justice has dismissed a US$7.2 million shareholder derivative lawsuit filed against the Central Bank of Liberia (CBL), ruling that the Bank acted within the law when it seized several insurance companies for failing to meet revised capital requirements.
In his opinion, Judge Peter W. Gbeneweleh upheld the constitutionality of the 2013 Insurance Act and its 2016 Regulations, declaring them binding on all insurance companies operating in Liberia, including those originally licensed under the now-repealed 1972 Insurance Act.
The plaintiffs—shareholders of Global Trust Insurance (Liberia) Limited, Family Dollar Universal Insurance Services, Inc., African Insurance Corporation of Liberia (AICOL), and Capitol Express Insurance Liberia Limited—had challenged the Central Bank’s enforcement of the 2013 statute. They argued that applying the law to companies licensed under the previous framework amounted to an unconstitutional ex post facto action, in violation of Article 21 of the 1986 Constitution.
Additionally, the shareholders contended that the CBL failed to comply with procedural safeguards, including securing court approval before seizing the companies and initiating reorganization or liquidation proceedings within 90 days.
Judge Gbeneweleh rejected those arguments, finding that the 2013 Insurance Act is regulatory—not criminal—in nature and therefore does not violate the constitutional prohibition against retroactive criminal laws. The Court further noted that the Act expressly preserves lawful acts and contracts executed under the prior regime while transitioning all insurers to the updated regulatory framework.
On the procedural issue, the Court held that the Central Bank is not required to obtain prior court approval before taking possession of a licensed insurer under the Act. Evidence presented showed that the CBL conducted stakeholder consultations, provided recapitalization guidance, and facilitated merger discussions—measures the Court deemed sufficient to satisfy the statutory requirement to “commence process” toward reorganization.
The ruling also emphasized that shareholders are residual claimants in insolvency or regulatory enforcement actions, meaning policyholders, creditors, and employees hold priority in any recovery before shareholders can assert financial claims.
As a result, the Court denied the plaintiffs’ claim for US$7.2 million in damages, dismissed the case in its entirety, and disallowed costs.
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