AG Saves Ghana GH¢4bn In GCNet Case

Godfred Yeboah Dame

The Attorney General and Minister for Justice, Godfred Yeboah Dame, has successfully fended off another mammoth international arbitration claim against Ghana by defending the country against a GH¢4 billion claim made by Ghana Community Network Services Limited (GCNet).

An international arbitration tribunal seated in London dismissed the claims by GCNet and ordered the company to pay Ghana US$2,185,983.21 in legal fees, comprising of 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.

GCNet had instituted the action challenging 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 Content Management System (CMS) and TradeNet portion of the Services.

The 10-year agreement, which was initially entered into in 2000 and became effective in 2002, had expired in December 2012, and the then Minister for Trade and Industry, Hannah S. Tetteh, by a letter dated November 30, 2012, extended the agreement for one year.

In 2013, by an agreement dated August 26, 2013, the Minister for Trade and Industry, Haruna Iddrisu, extended the life of the agreement for five years, ensuring that it would end in December, 2018.

Before the lapse of the five years in October 2016, another Minister for Trade and Industry, Ekwow Spio-Garbrah, extended the duration of the agreement by a further five years, thus, the agreement was set to end in December 2023.

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

Termination

When the New Patriotic Party (NPP) administration took office in 2017, the contract was terminated on April 28, 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.

Arbitration

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 a total of GH¢4 billion made up of damages, legal fees and other expenses.

Ghana’s Case

Ghana roundly rejected GCNet’s claims and invited the Tribunal to hold that the country had validly terminated the agreement between the parties.

The Attorney General asserted that the Agreement between the parties included an express and exhaustive regime for assessing GCNet’s entitlements to damages after termination, and thus, provided no scope for the application of common law principles on the measure and assessment of unliquidated damages.

Regarding GCNet’s claim for losses occasioned by the government’s policy on exemptions granted to some importers, Ghana argued that GCNet had no contractual right that was violated.

According to the Attorney General, even if GCNet had a contractual right to be protected against the effect of the government policy on exemptions, GCNet had by its conduct, irrevocably waived that right and was precluded from basing a claim on it.

Decision

The Tribunal unanimously decided that Ghana had validly terminated the Agreement on April 28, 2020, within the meaning of Article 11.3, and the termination was lawful.

The Tribunal also unanimously decided that GCNet waived its rights to seek damages for the impact of the exemptions and discounts on its fees. The Tribunal found by a majority decision that the impact of the exemptions and discounts on GCNet’s fees did not breach the Service Agreement.

BY Gibril Abdul Razak

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