Ghana wins GHC4bn arbitration suit

An international arbitration tribunal seated in London has dismissed the claims of Ghana Community Network Services Limited (GCNet), instituted against the Republic of Ghana under Article 18 of the Arbitration Rules of the United Nations Commission on International Trade Law of 1976 (the UNCITRAL Rules).

The Tribunal ordered GCNet to pay Ghana US$2,185,983.21 in legal fees. This comprises US$1,744,050.42 in legal representation and US$441,932.79 for fees and expenses of Ghana’s expert witness, together with interest on the aggregate amount of US$2,185,983.21, as simple interest from 30 days following the date of the Tribunal’s Award until payment at the rate of USD SOFR + 1%.

GCNet was represented by an English law firm called Quinn Emanuel Urquhart & Sullivan, LLP and two Ghanaian firms – Beyou and Co. and ENS Africa. Ghana was represented by the Office of the Attorney-General, led by the Attorney-General, Godfred Yeboah Dame.

Factual background

By a notice of arbitration dated 30 June 2022, GCNET challenged the right of the Government of Ghana to terminate a Service Agreement it had with the Government by which GCNET was granted the exclusive right to develop, customise, update and operate an electronic system for processing customs payment and trade documents at ports in Ghana.

Under the agreement, GCNet was authorised to charge all users of the services a fee equivalent to 0.40% of the Final Invoice FOB value of all import transactions and 0.15% of all export transactions which pass through the CMS and TradeNet portion of the Services.

The agreement was initially entered into in 2000, and became effective in 2002. It was for an initial term of 10 years, up to 2012. Following its expiry in December, 2012, the Minister for Trade and Industry, Hanna S Tetteh, by a letter dated 30 November 2012, extended the agreement for one year.

In 2013, by an agreement dated 26 August, 2013, the then Minister of Trade and Industry, Haruna Iddrisu, extended the life of the agreement for five (5) years, ensuring that it would end in December, 2018. Before the lapse of the five years, in October, 2016, another Minister of Trade and Industry, Ekwow Spio-Garbrah, extended the duration of the agreement by a further 5 years. Thus, the agreement was set to end in December, 2023.

Extensions

All the extensions made by the various Ministers of Trade working under the John Mahama administration were without the requisite statutory approval of the Public Procurement Authority or recourse to any of the procedures for public procurement set out in the PPA law.

The NPP administration, which took office in 2017, terminated the GCNet agreement on 28 April 2020 after a comprehensive value-for-money assessment. In the termination notice given to GCNet, the Government indicated that it would pay to the company the compensation stated in the agreement for early termination. GCNet rejected this offer, claiming compensation on various heads far above and beyond what is stated in the agreement.

Following a breakdown of attempts by GCNet to reach an amicable resolution with the Government, GCNet commenced the arbitration proceedings pursuant to Article 13.2 of the Agreement with Ghana. The company asserted that the contract was unlawfully terminated by the Government of Ghana and sought 3.3 billion Ghana Cedis in damages from the Government.