How to resolve AdBlock issue? Ghana Wins Legal Victory in Arbitration Case Against GCNet
Sunday, 24 November 2024 | Ghana
An international arbitration tribunal in London has ruled in favor of Ghana in a legal dispute with Ghana Community Network Services Limited (GCNet), awarding the country $2,185,983.21 in legal fees. This sum includes $1,744,050.42 for legal representation and $441,932.79 for expert witness fees, with simple interest at USD SOFR + 1% if unpaid within 30 days of the ruling.
The case arose from GCNet’s claims against the Ghanaian government following the termination of a service agreement that had allowed GCNet to manage customs and trade systems at the country’s ports. Under the agreement, GCNet collected user fees on import and export transactions, providing the government with revenue-sharing benefits.
The original contract, signed in 2000, had been extended multiple times by successive Trade Ministers but without adhering to the required statutory procurement procedures. This failure to comply with Ghana’s procurement laws played a significant role in the government’s decision to terminate the agreement in April 2020 after a value-for-money assessment.
Following the termination, the government offered compensation as stipulated in the contract. However, GCNet rejected the offer and filed for arbitration in June 2022, seeking damages exceeding GH¢3.3 billion. GCNet alleged wrongful termination and claimed losses from government exemptions and discounts provided to importers.
Representing Ghana, Attorney-General Godfred Yeboah Dame argued that the termination was lawful and that any compensation owed to GCNet should not exceed the $6 million cap outlined in the agreement. The government’s legal team further contended that:
GCNet’s claims for losses due to exemptions and discounts were unfounded, as the policies aligned with Ghanaian law and international trade standards.
GCNet had waived its right to seek damages for these policies by failing to challenge them at the time they were implemented.
Compound interest was inapplicable under Ghanaian law, and any awarded sum should attract simple interest only.
The tribunal unanimously upheld Ghana’s position, ruling that the government’s termination of the agreement was lawful. Additionally, it found that GCNet had indeed waived its rights to claim damages related to the exemptions and discounts.
However, the tribunal determined that GCNet was entitled to $5.4 million for the early termination of the agreement, as outlined in the original contract terms. This amount was far below the billions GCNet had sought in damages.
The ruling also declared GCNet the unsuccessful party in the arbitration, ordering it to pay Ghana’s legal costs in full. This outcome highlights the government’s effective handling of the dispute and adherence to the rule of law, particularly concerning contract compliance and public procurement regulations.
The Attorney-General lauded the decision, emphasizing its importance in safeguarding public funds and ensuring accountability in contractual agreements. The government expressed its commitment to enforcing the tribunal’s ruling, including the payment of interest on legal fees if not settled within the stipulated 30-day window.
This victory not only saves Ghana from potentially massive financial losses but also reinforces the country’s efforts to ensure fair and lawful conduct in its dealings with private contractors.
The case arose from GCNet’s claims against the Ghanaian government following the termination of a service agreement that had allowed GCNet to manage customs and trade systems at the country’s ports. Under the agreement, GCNet collected user fees on import and export transactions, providing the government with revenue-sharing benefits.
The original contract, signed in 2000, had been extended multiple times by successive Trade Ministers but without adhering to the required statutory procurement procedures. This failure to comply with Ghana’s procurement laws played a significant role in the government’s decision to terminate the agreement in April 2020 after a value-for-money assessment.
Following the termination, the government offered compensation as stipulated in the contract. However, GCNet rejected the offer and filed for arbitration in June 2022, seeking damages exceeding GH¢3.3 billion. GCNet alleged wrongful termination and claimed losses from government exemptions and discounts provided to importers.
Representing Ghana, Attorney-General Godfred Yeboah Dame argued that the termination was lawful and that any compensation owed to GCNet should not exceed the $6 million cap outlined in the agreement. The government’s legal team further contended that:
GCNet’s claims for losses due to exemptions and discounts were unfounded, as the policies aligned with Ghanaian law and international trade standards.
GCNet had waived its right to seek damages for these policies by failing to challenge them at the time they were implemented.
Compound interest was inapplicable under Ghanaian law, and any awarded sum should attract simple interest only.
The tribunal unanimously upheld Ghana’s position, ruling that the government’s termination of the agreement was lawful. Additionally, it found that GCNet had indeed waived its rights to claim damages related to the exemptions and discounts.
However, the tribunal determined that GCNet was entitled to $5.4 million for the early termination of the agreement, as outlined in the original contract terms. This amount was far below the billions GCNet had sought in damages.
The ruling also declared GCNet the unsuccessful party in the arbitration, ordering it to pay Ghana’s legal costs in full. This outcome highlights the government’s effective handling of the dispute and adherence to the rule of law, particularly concerning contract compliance and public procurement regulations.
The Attorney-General lauded the decision, emphasizing its importance in safeguarding public funds and ensuring accountability in contractual agreements. The government expressed its commitment to enforcing the tribunal’s ruling, including the payment of interest on legal fees if not settled within the stipulated 30-day window.
This victory not only saves Ghana from potentially massive financial losses but also reinforces the country’s efforts to ensure fair and lawful conduct in its dealings with private contractors.