The government of Ghana has lost its bid to overturn a UK court ruling that awarded $140 million in damages to a power company over a contract dispute. The High Court in London dismissed Ghana’s challenge on the grounds that it had been properly served with the court documents via email and post, and that requiring diplomatic channels would cause unnecessary delays.
The case stems from a contract signed in 2015 between Ghana and GPGC, a subsidiary of Singapore-based commodities giant Trafigura, to provide emergency power supply amid an energy crisis. The contract was terminated in 2018 by the new government of Ghana, which claimed it was overpriced and unnecessary.
GPGC sued Ghana for breach of contract and won an arbitration award of $134.3 million plus interest in January 2021. Ghana sought to set aside the award, arguing that it was tainted by fraud and corruption, but the UK court upheld it in February 2021.
Ghana then tried to challenge the process of serving the court documents, invoking the State Immunity Act, which requires that any document initiating legal proceedings against a state must be served through diplomatic channels. However, the court ruled that the documents were not initiating proceedings, but rather part of a continuing process of enforcement, and that Ghana had waived its immunity by participating in the arbitration.
The court also noted that Ghana had acknowledged receiving the documents via email and post, and had agreed to the court dates. It said that requiring diplomatic service would generate multiple periods of serious delay, especially as Ghana’s lease on its London premises was due to expire soon.
The ruling is a blow to Ghana, which faces mounting public debt and fiscal pressure amid the COVID-19 pandemic. The judgment debt amounts to about 0.5% of Ghana’s gross domestic product and could affect its credit rating and borrowing costs. Ghana has not yet indicated whether it will appeal the ruling or pay the award. It has until October 26 to apply for permission to appeal.
Trafigura, on the other hand, welcomed the decision and said it hoped for a swift resolution of the matter. It said it remained committed to investing in Africa’s energy sector and supporting its development.
The case is one of several disputes involving African governments and foreign investors over power contracts. Experts say that such cases highlight the need for transparent and fair negotiations, as well as effective dispute resolution mechanisms.
Source: [ Ghana Web]
