Attorney-General and Minister for Justice, Godfred Dame, has noted that arbitral claims filed against the Government, if not diligently managed, have the tendency to collapse the entire Ghanaian economy.
In his speech at the Conference of Public Sector Lawyers on Tuesday in Accra, he stated that “A single arbitral claim, if successful can bring the economy of a developing country like Ghana, to its knees. In point of fact, over the past four years, the value of arbitral claims against the Republic has been over US$ 9 billion.”
He cited a few cases such as the the financial claim by ENI/Vitol against Ghana initially US$7Bn and subsequently reduced to US$915Million after a challenge in the course of the proceedings by Ghana, Cassius Mining Ltd’s claim against the Government of Ghana at value of about US$300 million, GCNet’s arbitral claim involves a claim of over GHC4Billion (the equivalent of about US$250Million) and the recently filed Eland arbitration claim against Government of Ghana involves a claim for a minimum US$320Million.
The ENI/Vitol against Ghana financial claim was recently dismissed in its entirety by the international arbitration tribunal.
He further revealed that domestically, there have been claims in excess of GHC10 trillion successfully defended by the Office of the Attorney-General against the State.
According to Dame, with the rapidly evolving business climate in Ghana and the frequent reference of disputes to arbitration by force of provisions in private agreements and specific statutes enjoying the same, the impact of arbitration on our economies cannot be underestimated. Arbitration is touted to assure neutrality, privacy and efficiency in the adjudication of disputes,
However, he stated that “there are certain glaring dangers that I think arbitration portends for Ghana and the developing world which seem to be overlooked.”
The A-G called for a reform of the laws governing arbitration and the institution of civil claims against the State, whilst taking a critical look at contracting and contract management on behalf of the State.
He explained that “be that as it may, litigation is ultimately unavoidable in some situations even in the most perfect of human environments. The need for reform of the laws regulating the conduct of arbitration involving the State has become more imperative because as I recently noted at the African Regional Forum at the International Bar Association Conference held in Mexico City, Mexico, we cannot discount the prejudice Ghana and the whole of Africa, in general, often suffers in international arbitration fora.”
“It is quite curious that in some instances, companies which fail to make out any claim in domestic courts of African countries succeed in extremely huge international arbitration actions, sometimes mounted on the back of contracts which have failed to receive the relevant statutory and constitutional approvals of the countries in which they operate. This phenomenon is not because of a weakness of the judicial systems of African countries, or indeed Ghana’s but simply because of the nature of international arbitration, particularly the secrecy of proceedings, flexibility of rules and the finality or non-appealability of awards, which I have just alluded to,” he added.
Mr Dame clarified that his surmise does not suggest that Ghana or any African nation should shy away from international arbitration.
However, “the vulnerability of arbitration to abuse and fraud highlights the necessity for more robust safeguards in commercial disputes involving state parties, where the hard-pressed purse of the nation is at stake. We must boost the integrity of our legal systems by setting up fair and efficient mechanisms for commercial dispute adjudication and strengthening the systems for the conduct of arbitration in our various countries,” he further remarked.
He recalled the recently launched Ghana Alternative Dispute Resolution Centre, which he believes presents a viable venue for the resolution of multi-billion dollar commercial disputes and cases involving the use of the nation’s natural resources right here in Ghana.
The Attorney-General has presented to Cabinet a proposed amendment to the State (Property and Contracts) Act, 1960, to mandate all contracts involving the State and its agencies as parties, to not only stipulate Ghana law as the governing law but also to have Ghana as the seat of arbitration and with the ADR Centre in Accra being the venue for the arbitration.
“With this amendment, the practice whereby the State and Ghanaian lawyers travel to various jurisdictions – Paris, New York, London, Singapore, etc. for the conduct of arbitration involving the Government of Ghana and where arbitral awards are enforced all over the world at enormous cost to the State, and in jurisdictions with legal systems alien to Ghana’s, will cease and will be consigned to history,” Mr Dame said.
He also put to rest concerns about the end of international expert’s involvement in arbitration for Ghana, saying, “You can still be involved in international arbitration in Ghana. As we all know, an arbitration is international not because of the forum or venue of hearing, but largely because of the parties involved and the underlying transaction. You can thus be still involved in international arbitration involving Ghana with Accra as the seat and venue of arbitration.”
