Jeff, we are in the same position.
Have you officially cancelled and asked for your deposit to be refunded ?
If you havn't you need to do this immediately through your solictor - do it through registered post and get confirmation from Arenal that they have received it.
Then, even if the Licence comes through in the meantime, you are on safe ground, you have effectively cancelled.
As regards the refund, that is in the lap of the gods. We are expecting ours sometime this year (we cancelled Dec 07), there doesn't seem to be much rhyme or reason but I would be suprised if it came through in less than 6 months. Rejoice though, think of all the developments where you would have no chance even if you did go through the courts.
Although Arenal come in for a lot of stick they have played the game honourably on refunds, so you will just have to wait.
Do not under any circumstances take this through court, you will die a slow painful and costly death.
We have had to "bridge" for our refund and it will cost us money, but at least we can expect the deposit to come in.
Will