The International

Arbitration Review

Law Business Research

Fifth Edition

Editor

James H Carter

The InternationalArbitration Review

The International Arbitration Review

Reproduced with permission from Law Business Research Ltd.This article was first published in The International Arbitration Review - Edition 5

(published in June 2014 – editor James H. Carter).

For further information please emailNick.Barette@lbresearch.com

The International

Arbitration Review

Fifth Edition

EditorJames H Carter

Law Business Research Ltd

THE MERGERS AND ACQUISITIONS REVIEW

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The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:

ABASCAL, SEGOVIA & ASOCIADOS

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ACKNOWLEDGEMENTS

Acknowledgements

ii

LO BAPTISTA, SCHMIDT, VALOIS, MIRANDA, FERREIRA & AGEL (LOB-SVMFA)

LOYENS & LOEFF LUXEMBOURG SÀRL

MARKIDES, MARKIDES & CO LLC

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SABEV & PARTNERS

SCHRECK LAW OFFICES

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SOFUNDE, OSAKWE, OGUNDIPE & BELGORE

SORY@LAW

SRS ADVOGADOS – SOCIEDADE REBELO DE SOUSA E ASSOCIADOS, RL

WASELIUS & WIST

WILMER CUTLER PICKERING HALE AND DORR LLP

WOLF THEISS

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Editor’s Preface ..................................................................................................viiJames H Carter

Chapter 1 JURISDICTION AND PROCEDURE IN INVESTMENT ARBITRATION: NEW DEVELOPMENTS ..............................1Miriam K Harwood and Simon N Batifort

Chapter 2 ASEAN OVERVIEW ................................................................18Colin Ong

Chapter 3 ANGOLA ..................................................................................38Lino Diamvutu

Chapter 4 AUSTRALIA .............................................................................48James Whittaker, Colin Lockhart, Jin Ooi and Timothy Bunker

Chapter 5 AUSTRIA ..................................................................................68Christoph Liebscher

Chapter 6 BELGIUM ................................................................................77Kathleen Paisley

Chapter 7 BRAZIL.....................................................................................89Luiz Olavo Baptista and Mariana Cattel Gomes Alves

Chapter 8 BULGARIA .............................................................................111Assen Alexiev and Boryana Boteva

Chapter 9 CANADA ................................................................................124Gordon L Tarnowsky QC, Peter J Cavanagh and Michael Beeforth

CONTENTS

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Contents

Chapter 10 CHILE ....................................................................................141Davor Harasić and Karina Cherro

Chapter 11 CHINA ...................................................................................152Keith M Brandt and Michael KH Kan

Chapter 12 COLOMBIA ...........................................................................157Alberto Zuleta-Londoño and Juan Camilo Jiménez-Valencia

Chapter 13 CYPRUS .................................................................................166Alecos Markides

Chapter 14 DENMARK ............................................................................176René Offersen

Chapter 15 ECUADOR .............................................................................188Javier Robalino, Leyre Suárez and Rafael Valdivieso

Chapter 16 EGYPT ....................................................................................198Adam El Shalakany

Chapter 17 ENGLAND AND WALES .....................................................205Duncan Speller and Christopher Howitt

Chapter 18 EUROPEAN UNION ............................................................218Edward Borovikov, Bogdan Evtimov and Anna Crevon-Tarassova

Chapter 19 FINLAND...............................................................................230Jan Waselius, Tanja Jussila and Josefine Hackman

Chapter 20 FRANCE .................................................................................241Jean-Christophe Honlet, Barton Legum and Anne-Sophie Dufêtre

Chapter 21 GERMANY .............................................................................250Hilmar Raeschke-Kessler

v

Contents

Chapter 22 GHANA ..................................................................................266Thaddeus Sory

Chapter 23 HONG KONG .......................................................................279Kwok Kit Cheung and Joseph Chung

Chapter 24 INDIA .....................................................................................291Shardul Thacker

Chapter 25 ISRAEL ...................................................................................307Shraga Schreck

Chapter 26 ITALY ......................................................................................335Michelangelo Cicogna and Andrew G Paton

Chapter 27 LITHUANIA ..........................................................................350Ramūnas Audzevičius

Chapter 28 LUXEMBOURG ....................................................................362Véronique Hoffeld and Antoine Laniez

Chapter 29 MALAYSIA .............................................................................372Avinash Pradhan

Chapter 30 MEXICO ................................................................................386José María Abascal

Chapter 31 NETHERLANDS ...................................................................400Daniella Strik and Georgios Fasfalis

Chapter 32 NIGERIA ................................................................................410Babajide Ogundipe and Lateef Omoyemi Akangbe

Chapter 33 POLAND ................................................................................413Anna Diaby and Marcin Asłanowicz

Contents

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Chapter 34 PORTUGAL ...........................................................................423José Carlos Soares Machado and Mariana França Gouveia

Chapter 35 ROMANIA .............................................................................430Tiberiu Csaki

Chapter 36 RUSSIA ...................................................................................440Mikhail Ivanov and Inna Manassyan

Chapter 37 SINGAPORE ..........................................................................453Paul Tan

Chapter 38 SPAIN .....................................................................................467Carlos de los Santos and Margarita Soto Moya

Chapter 39 SWEDEN ...............................................................................483Peter Skoglund and Sverker Bonde

Chapter 40 SWITZERLAND ....................................................................490Martin Wiebecke

Chapter 41 TURKEY .................................................................................506Orçun Çetinkaya

Chapter 42 UKRAINE ...............................................................................517Ulyana Bardyn and Roman Mehedynyuk

Chapter 43 UNITED ARAB EMIRATES..................................................531DK Singh

Chapter 44 UNITED STATES ..................................................................543James H Carter and Claudio Salas

Appendix 1 ABOUT THE AUTHORS .....................................................569

Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS .....597

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EDITOR’S PREFACE

International arbitration is a fast-moving express train, with new awards and court decisions of significance somewhere in the world rushing past every week. Legislatures, too, constantly tinker with or entirely revamp arbitration statutes in one jurisdiction or another. The international arbitration community has created a number of electronic and other publications that follow these developments regularly, requiring many more lawyer hours of reading than was the case a few years ago.

Scholarly arbitration literature follows behind, at a more leisurely pace. However, there is a niche to be filled for analytical review of what has occurred in each of the important arbitration jurisdictions during the past year, capturing recent developments but putting them in the context of the jurisdiction’s legal arbitration structure and selecting the most important matters for comment. This volume, to which leading arbitration practitioners around the world have made valuable contributions, seeks to fill that space.

The arbitration world is consumed with debate over whether relevant distinctions should be drawn between general international commercial arbitration and international investment arbitration, the procedures and subjects of which are similar but not identical. This volume seeks to provide current information on both of these precincts of international arbitration, treating important investor–state dispute developments in each jurisdiction as a separate but closely related topic.

I thank all of the contributors for their fine work in compiling this volume.

James H Carter

Wilmer Cutler Pickering Hale and Dorr LLPNew YorkJune 2014

266

Chapter 22

GHANA

Thaddeus Sory1

I INTRODUCTION

i Structure of the Law

Arbitration in Ghana is regulated by a comprehensive statute known as the Alternative Dispute Resolution Act 2010 (Act 798 (the Act)).2 The statute also regulates other out-of-court dispute resolution methods such as mediation and customary arbitration. The Act has improved efforts to institutionalise arbitration as an existing and viable option for dispute resolution outside the regular court structures.

The Act is divided into five parts. Arbitration is catered for in Part 1 and to some extent Part 4 of the Act. The rules set out in Part 1 of the Act stipulate mainly for the substantive and procedural rules in accordance with which arbitral proceedings must be conducted.3

Part 1 of the Act outlines the component parts and or stages of the arbitral process beginning with the arbitration agreement itself that emphasises the well-known principle of party autonomy, the composition of the arbitral tribunal,4 challenges to the jurisdiction of the arbitral tribunal and the arbitral process itself including the award and its enforcement.

1 Thaddeus Sory is the founding and managing partner at Sory@Law.2 This Act came into force on 31 May 2010.3 It is very easy for any arbitration practitioner to relate to the provisions of the Act, which

are largely consistent with the United Nations Commission on International Trade Law (UNCITRAL) Rules on the procedure for settling disputes by arbitration approved under the United Nations General Assembly Resolution 31/98.

4 This includes the appointment, challenges to appointment, revocation of appointment, vacancies existing in and fees and immunity of arbitrators,

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To initiate arbitral proceedings a person may refer the dispute to any person or institution on the one hand or to the Alternative Dispute Resolution Centre provided for under Part 4 of the Act. The procedure to be adopted at the arbitral proceedings initiated depends on the person or institution chosen by the parties to arbitrate over their dispute. Where any person or institution other than the Alternative Dispute Resolution Centre is chosen as the arbitrator then the ‘procedure and rules’ of the arbitral proceedings ‘shall be as the parties and arbitrators determine’.5 On the other hand the rules set out in the Second Schedule to the Act are the rules to be applied where the parties refer their dispute to the Centre for resolution.

The procedure set out in the Second Schedule of the Act for regulating arbitration proceedings are not novel. The arbitral proceedings are initiated by notice of arbitration. This is followed by the appointment of the arbitrator(s) by the parties if the arbitration agreement provides a method for appointing the arbitrator(s). In the absence of agreement as to the method of appointing the arbitrators, each party is at liberty to appoint an arbitrator and the two appointed shall then appoint a third arbitrator as chairperson.6 The process of arbitration itself as set out in the rules, mirror the practice generally followed in arbitral proceedings even internationally.

ii Distinctions between international and domestic arbitration law

The Act has introduced some novel rules on arbitration. The Act provides for an arbitration management conference that must be convened within 14 days from the date of appointment of the arbitrator(s) for purposes of determining the issue(s) to be resolved at the arbitration, the law and rules of evidence to be applied in the arbitral proceedings among others.7 This stage of the arbitral process is generally not provided for in international arbitration. There may be a pretrial conference in international arbitration but the main difference between the arbitration management conference under the Act and the international pretrial conference, lies in the fact that the Act heavily regulates the matters to be conducted in the domestic arbitration management conference.

In addition to the arbitration management conference, the Act empowers the arbitrator(s) to encourage settlement of the dispute referred to arbitration. This is provided for under Section 47 of the Act. This evolutionary process by which there is a metamorphosis from arbitration, through mediation and then a very probable return to arbitral proceedings is not available in international arbitrations.

The Act also provides for expedited arbitral proceedings. These proceedings enable parties to have the arbitral proceedings expedited. This is provided for under Section 60 of the Act. In international arbitration there is no provision made for special arbitration proceedings other than that to which the parties have committed under the same rules.

The numerous occasions in which the High Court of Ghana may intervene in domestic arbitral proceedings provides another distinction between arbitration under

5 Section 5(2) of the Act.6 Sections 12 to 14 of the Act.7 See Section 29 of the Act.

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the Act and international arbitration. First of all, the court has a mandatory obligation to compel recourse to arbitration where an arbitration agreement can be established8 and is empowered to refer a dispute to arbitration with the parties’ consent where the court itself takes the view that a matter is better resolved by arbitration.9 The instances just discussed are unlikely to arise in international arbitration.

The High Court of Ghana, unlike in international arbitration, also has ample powers of control over arbitral proceedings from the time an arbitrator is appointed to the end of the proceedings. The High Court has very limited jurisdiction to determine challenges to the appointment of arbitrators,10 revoke their appointment under specific circumstances,11 and question their jurisdiction where a party is dissatisfied with the ruling of the arbitral tribunal on the question of the tribunal’s jurisdiction,12 as well as to determine references to it of points of law by a party.13 This procedural avenue is not available to parties in international arbitration. The High Court may also entertain an application by a party to an arbitration agreement who complains that they have not been notified of the arbitral proceedings; to question the validity of the arbitration agreement or whether the matters submitted to arbitration are covered by the arbitration agreement; to question the constitution of the arbitral panel; or to challenge the award on grounds of lack of jurisdiction or serious irregularity.14

iii Structure of the courts

Article 126(1) of the 1992 Constitution classifies the courts of Ghana into two broad categories, the superior courts and the inferior courts. The inferior courts include the circuit and district courts as well as ‘such lower courts or tribunals as Parliament may by law establish’. The superior courts comprise the Supreme Court, the Court of Appeal and the High Court. The Supreme Court is the highest court of the land in accordance with whose decisions all other courts of the land must dispose of cases over which they preside.15 The next court in the hierarchy of courts is the Court of Appeal whose decisions are also binding on all courts lower than it.16 In the list of the courts set out in Article 126(1) the High Court is provided for as the lowest of the superior courts. The High Court is, however, the court with the widest jurisdiction. The High Court is the only Superior Court with jurisdiction in all matters, civil and criminal unless the Constitution or some other statute restricts that jurisdiction in relation to a specific matter.17 The

8 Section 6 of the Act.9 Section 7 of the Act.10 Section 16 3(b) of the Act.11 Section 18.12 Section 26.13 See Section 40 of the Act.14 Section 28(1) and (3) of the Act.15 Article 129(1) of the Constitution.16 Article 136(5) of the Constitution.17 Article 140 of the Constitution.

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High Court is therefore the only court with original jurisdiction in all matters relating to arbitral proceedings.18

Decisions of the High Court are not final, but are subject to appeal to the Court of Appeal.19 Although the Constitution says in Article 137, clause 2 that an appeal ‘lies as of right’ against a judgment, decree or order of the High Court to the Court of Appeal, the Act has in some respects restricted this right of appeal by introducing qualifications of leave that must be obtained as a condition precedent to the exercise of such a right of appeal.20

There appears to be another limitation on the right of parties to appeal in arbitral matters. Although Article 137(2) of the 1992 Constitution guarantees the right of litigants to appeal as of right from decisions of the Court of Appeal to the Supreme Court, it appears that after the determination of an appeal from a judgment of the High Court in an arbitral matter by the Court of Appeal, there is no further right of appeal to the Supreme Court. The Act makes no provision for further appeals from the Court of Appeal upon the determination of an appeal by the Court of Appeal from a decision of the High Court in a matter pertaining to arbitration, to the Supreme Court. There are many authorities that say that where a statute that regulates a particular matter does not expressly provide for an appeal, the right of appeal cannot be exercised by an aggrieved party.21

iv Local institutions

The only statutory institution in Ghana that resolves disputes by arbitration is the National Labour Commission. This institution’s mandate insofar as settling disputes by arbitration is concerned is restricted to labour disputes. To this extent, investors may only be interested in this institution where a dispute arises between them and their employees.

At the moment the most popular institution in Ghana for the resolution of arbitration disputes is the Ghana Arbitration Centre. This Centre was established on the initiative of a team of Ghanaian lawyers. It is a private institution. The Centre has its own rules of arbitration. These rules are to a very large extent consistent with international rules on arbitration and can easily be assimilated by arbitration practitioners.

The Act also establishes a statutory body corporate with perpetual succession known as an alternative dispute resolution centre whose objectives are to ‘provide facilities for the settlement of disputes through arbitration [...] and other voluntary dispute resolution procedures’, to keep a register of arbitrators to provide on request and to provide guidelines on their fees.22 Although the Act has been in force for almost four years, the alternative dispute resolution centre established by the Act is yet to be set up. In July 2013, the Chief Justice of Ghana called on the government of Ghana to put in

18 Section 135 of the Act. 19 Article 137(1) of the Constitution.20 See Sections 26(5), 28(2) of the Act.21 See the case of In Re Parliamentary Election For Wulensi Constituency; Zakaria v. Nyimakan

[2003-2004] 1 SCGLR 1.22 Sections 114 and 115 of the Act.

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place the necessary structures and systems that will make Ghana an arbitration centre and an attractive destination for disputants.23 At the time of writing the centre is yet to be established.

v Trends or statistics relating to arbitration

The introduction of the Act and a more concerted campaign over the last three years to entrench arbitration as a progressive, viable and reliable method for resolving disputes, has been received positively by businessmen in Ghana. Quite recently, the International Chamber of Commerce (ICC) announced its intentions of establishing an arbitration centre in Ghana for businesses in Ghana and government this year.24

The number of domestic arbitration disputes settled by the Ghana Arbitration Centre have also increased quite significantly in the last year. The reason for the increase is attributable partly to the fact that the courts now have no option but to refer every dispute in which there is an arbitration agreement to arbitration unless the dispute is not arbitrable within the context of Section 1 of the Act.25

II THE YEAR IN REVIEW

i Developments affecting international arbitration

LegislationThis year has not seen the introduction of any legislation with regard to arbitration. Apart from Section 5 of the Act that imposes an obligation on the courts to enforce arbitration agreements by ensuring that parties who stipulate for them in their agreements do not undermine them by pursuing other dispute resolution options, Ghana had earlier, with a view to attracting foreign direct investment, statutorily guaranteed arbitration as a dispute resolution option available to all investors in the event that a dispute arises relating to their investments in Ghana between such investors and the Ghana government. This is stated clearly in Section 29 of the now repealed Ghana Investment Promotion Centre Act 1994 (Act 478). Under ACT 478 investors were assured of their right to insist on arbitration as the dispute resolution option after efforts to amicably resolve a dispute between an investor and the government fail. The new Ghana Investment Promotion Centre Act 2013 (Act 865) has, however, abolished the right of an investor to insist on arbitration unless there is an arbitration agreement that guarantees to the investor the right to insist on arbitration as the method of dispute settlement between the government and such an investor. Section 33 of Act 865 provides that in the absence of an arbitration agreement between the government and the investor and there is disagreement between the government and the investor as to the method of dispute settlement then the method of dispute settlement shall be mediation.

23 See the Daily Graphic of 31 July 2013.24 Citifm business News of Friday 31 January 2014.25 Section 1 of the Act excludes from the scope of arbitration, matters relating to national or

public interest, the environment,the enforcement and interpretation of the Constitution; or any other matter that cannot by law be settled by an alternative dispute resolution method.

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The National Petroleum Authority Act 2005 (Act 691) also guarantees arbitration as a dispute resolution mechanism for petroleum service providers regarding specific contractual matters. Arbitration panels set up under the National Petroleum Authority Act are set up by the Board established under the same Act but must be in accordance with the provisions of the Alternative Dispute Resolution Act. This means that for the purposes of contractual disputes affecting petroleum service providers the Board of the National Petroleum Authority assumes the function of an appointing authority in terms of constituting an arbitral panel for determination of such disputes.

Court rules or practicesIn terms of procedure, Order 64 of the High Court (Civil Procedure) Rules 2004 (CI 47) regulates arbitral proceedings. Under the Rules, the High Court may, at anytime before final judgment, refer a matter pending before it to arbitration where the parties desire that the matter in dispute be referred to arbitration. Such an arbitrator may be appointed by the parties or by the Court with the consent of the parties. Having regard to the fact that there is now a substantive statute that regulates arbitral proceedings, a substantial part of the rules of court on arbitral proceedings are redundant because such matters have been regulated by the Act.

Arbitration institution rules or practicesThe rules in accordance with which arbitral proceedings are prosecuted depend on the forum in which the arbitral proceedings are initiated. Where the arbitral proceedings are initiated at the yet-to-be-established alternative dispute resolution centre, the rules to be complied with are set out in the second schedule of the Act. These rules are in substance identical to the UNCITRAL Rules on arbitration in terms of procedure. On the other hand where the parties initiate their proceedings in some other forum, the parties are at liberty to adopt their own rules to regulate the arbitral proceedings. The Ghana Arbitration Centre also has its own rules that parties may adopt in proceedings initiated at the Ghana Arbitration Centre or determine the rules of procedure to be adopted by them in such private proceedings.

ii Arbitration developments in local courts

Interpretation and enforcement of arbitration clausesThe coming into force of the Act has rendered the interpretation and enforcement of arbitral clauses less controversial. Under the Act, the Court has no option but to refer a matter to arbitration where the parties have stipulated for arbitration in their agreement. The Act leaves no discretion to the Court. The only exception to the rule imposing a mandatory obligation on the Court to enforce arbitration clauses in agreements is where the dispute is non-arbitrable within the meaning of Section 1 of the Act, which renders non-arbitrable matters relating to the enforcement of the Constitution of Ghana, the environment and public interest. Even before the Act, the attitude of the courts was always to respect and enforce arbitral clauses in agreements.

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Qualifications of or challenges to arbitratorsThe Act is quite liberal with regard to the qualifications of arbitrators. Section 12 of the Act says that a person of any nationality may be appointed as an arbitrator regardless of the experience or qualification of such a person regarding the subject matter of the dispute provided the parties are agreed. There is no strict educational requirement necessary to qualify as an arbitrator. A person with no knowledge at all of arbitration will be unlikely to survive the arbitral process in his or her capacity as arbitrator because they will be found wanting in many areas and at various stages of the arbitral process. Challenges to arbitrators have been quite rare in Ghana. This is mainly attributable to the fact that the parties themselves are in control of the appointment process.

Judicial assistance in evidence gathering for arbitration proceedings can be see for example in Order 64, Rule 5 of the Rules of the High Court, which provides that processes may issue to parties and witnesses in arbitral proceedings may issue in the same manner as in an ordinary action. Default in compliance with such process or treating the arbitral panel with contempt attracts the same sanction against the defaulting party that may be enforced by proceedings initiated in the High Court. The High Court also has an obligation to support arbitral proceedings by making orders for the preservation of evidence, injunctions and the preservation or sale of property while arbitration proceedings are pending and ongoing.26 A party to arbitral proceedings may by application to the High Court refer a point of law that arises in arbitral proceedings to the High Court for determination.27 The power of the High Court to determine questions of law in the course of arbitral proceedings may be precluded by agreement between the parties.28

Enforcement or annulment of awardsThe Act provides for the enforcement of all awards local and foreign, in Ghana. Section 59 of the Act recognises the enforcement regime of the New York Convention, which is set out in the first schedule of the Act. Arbitral awards are enforceable insofar as they are regular, valid, proper and still subsisting and in respect of which no appeal is pending under the law applicable to the arbitration. The award may be enforced but the party wishing to enforce the award must produce the award in question in English.

iii Investor–state disputes

Cases, pending or decided, involving the local state as partyThere have been two quite recent and very significant awards of the Permanent Court of Arbitration (PCA) involving investors and the government of Ghana. The awards were delivered this year although the arbitral proceedings were initiated about two years ago (Balkan Energy Limited (Ghana) v. The Republic of Ghana and Bankswitch Ghana

26 Section 39 of the Act.27 Sections 19, 22 and56 of the Act.28 Sections 40 of the Act.

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Limited v. The Republic of Ghana).29 The awards in these disputes have raised a few issues in international commercial arbitration in the areas of arbitrability, separability of arbitration contracts, the competence principle and estoppel in relation to Ghana law.

The brief facts of the Balkan case are that the government of Ghana desired investment partners from the private sector to assist in the generation of electrical power from a barge. A power purchase agreement (PPA) was concluded between the government and Balkan Energy (Ghana) Limited for this purpose. Although Balkan was incorporated in Ghana, its directors and shareholders were foreign. Disagreements having arisen between the government and Balkan, Balkan initiated arbitral proceedings against the government under the auspices of the PCA. Before the PCA the government questioned the validity of the PPA and argued that:a the determination of the validity of the PPA or the arbitration clause contained

in it required an interpretation of the Ghana Constitution that is non-arbitrable because such matters fall within the exclusive original jurisdiction of the Supreme Court of Ghana to determine, Ghana law being the law applicable to the PPA;30

b the competence-competence principle codified in Article 21(1) of the UNCITRAL Rules does not apply where the existence or validity of the agreement to arbitrate is questioned;31

c although the separability principle provides that an arbitration agreement is not invalid because the contract underlying it is invalid, the law that renders the underlying contract invalid may also render the arbitration clause invalid; and32

d the government is not estopped from relying on the provisions or Article 181(5) of the 1992 Constitution of Ghana to contest the validity of the PPA.33

The Ghana government lost on all the arguments summarised above. The tribunal held that:

Arbitration tribunals are not infrequently confronted with the need to interpret and apply constitutional provisions relevant to the resolution of disputes submitted to them, just as they are normally required to interpret and apply treaties that are relevant to the disputes. There is nothing abnormal in exercising a judicial function necessary for the proper administration of justice. Hence the Tribunal does not consider that, in asserting its competence to determine its jurisdiction in this case, it is disregarding or in anyway contradicting the force of Article 130 of the Constitution of Ghana.34

29 The discussion is based on the interim award of the PCA in the Balkan case dated 22 December 2010 and the award in the Bankswitch case dated 11 April 2014.

30 See paragraphs 64, 66, 71, 77, 78, 116 and 140 at pages 21, 22, 25, 27, 28, 42 and 54 thereof, of the award.

31 Paragraph 74, at page 27 of the award.32 Paragraph 76 at page 27 of the award.33 Paragraphs, 80 and 126 at pages 29, 47 of the award.34 See paragraph 143 at page 54 of the award.

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The tribunal also affirmed the principles of competence-competence and separability and held that it had jurisdiction to determine arguments questioning its jurisdiction even if it were agreed that the PPA is void ab initio, the arbitral clause being separable from the PPA.35 The tribunal also upheld the estoppel arguments made against the government.36 The same issues were raised in the Bankswitch case. As happened in the Balkan case none of the arguments found favour with the tribunal, which ruled in favour of Bankswitch on all the points just discussed.

Cases decided locally involving investors and other statesThere are no cases decided locally by an arbitral panel involving investors and other states in Ghana. The disputes determined in domestic institutions so far are disputes involving local corporate entities and individuals.

III OUTLOOK AND CONCLUSIONS.

The decisions of the PCA in the Balkan and the Bankswitch cases have significant implications for international arbitration, particularly with regard to the enforcement of the awards against the government. The position taken by the tribunal in the two awards regarding the arbitrability of issues affecting the Constitution and the jurisdiction of the arbitral tribunal to determine such issues will surprise many Ghanaian lawyers.

The now entrenched legal principle in Ghana is that any law or act executed by any body or institution is valid and effective only to the extent that such law or act is consistent with the Constitution. To the extent that they are inconsistent with the Constitution they are null and void.37 Articles 2 and 130 provide clearly that the only forum for determining questions on the interpretation and enforcement of the Constitution is the Supreme Court of Ghana. The undoubted constitutional law position in Ghana is that the forum for determining issues of constitutionality is not negotiable under any circumstances. The question that then arises is this: does the government of Ghana, and even the Ghana parliament, acting jointly and severally have the capacity in view of the constitutional provisions of Articles 1, 2 and 130 to compromise the exclusive original jurisdiction of the Ghana Supreme Court to determine constitutional issues by stipulating in agreements with investors that, when such matters are raised before, at or during arbitration proceedings, the arbitral tribunal has concurrent jurisdiction with the Supreme Court to determine them?

35 Paragraphs 100 and 106 to 107, at pages 37, 38 of the award.36 Paragraphs 162 to 167, at pages 60 to 61 of the award.37 Articles 2 and 130 of the Constitution.

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This will mostly be answered in the negative by Ghanaian lawyers.38 This is because the primary source of law in Ghana is the Constitution.39 Having regard to the Supreme nature of the Constitution in accordance with which the ‘powers of government are to be exercised in the manner and within the limits laid down in’ there can be no doubt that the awards of the PCA in the two cases just examined notwithstanding the question as to whether or not the agreement the subject matter of the award is valid will continue to linger even at the enforcement stage of the award.40 While the Balkan case was pending for determination by the PCA, the Supreme Court reaffirmed the position that all constitutional issues must be referred to the Supreme Court for determination. The decision of the Supreme Court resulted from fresh proceedings instituted by the Attorney-General of Ghana to determine the constitutionality of the agreement concluded between Ghana and Balkan.41

It is important to note here that the agreements were concluded before the coming into force of the Act.42 The Act having come into force, a further argument can be made with regard to agreements concluded after the Act that, the parties are presumed to have concluded the arbitration agreement against the backdrop of the Act, Section 1(a) and (c), which completely excludes from arbitration matters relating to ‘the national and

38 Article 130 of the Constitution says categorically that all matters relating to the interpretation and enforcement of the Constitution is within the jurisdiction of the Supreme Court of Ghana to the exclusion of all other courts and adjudicating bodies including tribunals to determine. Where constitutional matter arises in the course of proceedings before a court other than the Supreme Court the proceedings must be stayed and the specific constitutional issue referred to the Supreme Court for determination. See the cases of Republic v. High Court (Fast Track Division) Accra; Ex parte Electoral Commission (Mettle-Nunoo & Others Interested Parties) [2005-2006] SCGLR 514 at 559, Republic v. High Court (Fast Track Division) Accra; Ex parte Commission on Human Rights and Administrative Justice (Richard Anane, Interested Party) [2007-2008] 1 SCGLR 213 at 235. The court from which the proceedings emanated is then required to dispose of the matter in accordance with the interpretative position taken by the Supreme Court.

39 This is clear when we examine Article 1 clause 1 of the Constitution says that ‘The Sovereignty of Ghana resides in the people of Ghana in whose name and for whose welfare the powers of government are to be exercised in the manner and within the limits laid down in the Constitution.

40 In quite recent decisions of the Supreme Court, the Court reiterated the law that the Constitution is the supreme law of the land for which reason agreements concluded in breach of any of its provisions are null and void. See the cases of Martin Alamisi Amidu v. Attorney-General & Others Unreported Judgment of the Supreme Court dated the 14th day of June, 2013 and Martin Alamisi Amidu v. Attorney-General & Others Unreported Judgment of the Supreme Court dated 21 June 2013.

41 See the decision of the Court in Republic v. High Court (Commercial Division) Accra; Ex parte Attorney-General (Balkan Energy Ghana Ltd & Others Interested Parties [2012] 2 SCGLR 1183.

42 The Act came into force on 31 March 2010.

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public interest’ and ‘the enforcement and interpretation of the Constitution’. The effect of such an argument will be that the parties agreed that matters relating to ‘the national and public interest’ and ‘the enforcement and interpretation of the Constitution’ are not, within the context of the arbitration agreement, arbitrable.

The position taken by the PCA on the claimants’ arguments of estoppel against the Ghana government also fly in the face of authoritative constitutional law decisions in Ghana on the point. The law in Ghana is that the principle of estoppel has no application in the face of clear constitutional provisions forbidding a matter.43

While the issue of separability of arbitration agreements from the contracts in which they are embodied appears settled, the Supreme Court in the case of Attorney-General v. Balkan Energy Ghana Limited & Others44 spoke on the same principle in quite an ambivalent manner. In the case just cited the Court held that a PPA concluded between the Ghana government and Balkan Energy (Ghana) Limited was void. Having so held, the Supreme Court declared the status of the arbitration agreement that was contained in the PPA as follows:

An international commercial arbitration is not by itself an autonomous transaction commercial in nature which pertains to or impacts on the wealth and resources of the country. An international commercial arbitration draws its life from the transaction whose dispute resolution it deals with. We therefore have difficulty in conceiving of it as a transaction separate and independent from the transaction that has generated the dispute it is required to resolve.45

The ruling of the Supreme Court on the arbitration agreement appears ambivalent. First of all, the Supreme Court held that the arbitration agreement that formed part of the PPA was not an ‘international business or economic transaction’ the effect of which is that the arbitration agreement itself was valid. Indeed in the final order of the Court, the Court stated that that the arbitration agreement did not require parliamentary approval as required by the Constitution.

The second part of the ruling of the Supreme Court on the arbitration clause is, however, problematic. The Supreme Court held that the arbitration agreement took ‘its life from the transaction whose dispute resolution it deals with’. The Supreme Court therefore held that it did not conceive [because it had ‘difficulty’ in doing so] of it as ‘a transaction separate and independent from the transaction that has generated the dispute it is required to resolve’. The Supreme Court’s position on the arbitration agreement contained in the PPA is crystal clear. The Supreme Court very loudly, but by implication, held that as the arbitration agreement was not a transaction separate and independent from the transaction that has generated the dispute it is required to resolve, the illegality of the PPA contaminated the arbitration agreement contained in it (the PPA) rendering the arbitration agreement also illegal.

43 See the case of Tuffuor v. Attorney General [1980] GLR 637, which has been applied subsequently in other cases.

44 [2012] 2 SCGLR 998.45 At page 1037 of the report.

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This decision remains the law in Ghana. The decision, however, flies in the face of the position in international commercial arbitration on the principle of separability or autonomy of arbitration agreements. The decision is actually per incuriam the clear provisions of Section 3(1) of the Act which provides in very unambiguous language that the arbitration agreement is valid even if the agreement from which it draws its life is ‘invalid or did not come into existence or has become ineffective’.

It appears that the issues just discussed will linger on even at the enforcement stages of the award. Section 59 of the Act recognises the New York Convention on the Recognition and Enforcement of Foreign Tribunal Awards. Article V, clause 1(a) and (c) and 2(a) of the Convention recognises that a domestic court may refuse to enforce an arbitral award at the request of the party against whom it is invoked, if that party furnishes to the competent authority where recognition and enforcement is sought that the said agreement is not valid under the law to which the parties have subjected it or the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, or the subject matter of the difference is not capable of settlement by arbitration under the law of that country.

Given the provisions of the New York Convention, it is still possible for Ghana to argue that under Ghana law the agreements and the arbitral agreements contained in them and that were upheld by the PCA in the two awards are invalid especially in view of the decisions of the Ghana Supreme Court in Attorney-General v. Balkan Energy & Others, Martin Alamisi Amidu v. Attorney-General & Others and Martin Alamisi Amidu v. Attorney-General & Others. Ghana may yet argue that the parties did not contemplate that issues regarding the Ghana Constitution reserved exclusively for the Ghana Supreme Court and expressly declared as non-arbitrable will arise for determination. If the parties had contemplated it, they would have stipulated clearly that such matters are not arbitrable and especially that the Ghana government cannot negotiate away the Supreme Court’s original jurisdiction. Accordingly, Ghana may further argue that the award contains decisions on matters beyond submission to arbitration because under Ghana law, the PCA could not purport to determine a matter exclusively within the Supreme Court’s jurisdiction.

Reading the applicable principles of the New York Convention, it is very easy to note that while the PCA relied heavily on customary principles of international law to jettison the arguments canvassed by the Ghana government before it in the two cases, the New York Convention emphasises the law applicable to the parties and indeed the law of the country upon which the arbitration agreement was concluded.46

The fact that the same issues may arise at the enforcement stage of the award was recognised by the tribunal in the Balkan case. Referring to the New York Convention and a number of authorities on the point, the tribunal agreed that;

46 Ghana argued this point before the tribunal in the Balkan case. See paragraph 79 at page 28 of the award.

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Articles II(3) and V(1) of the Convention recognise that both arbitral tribunals and courts may consider and decide disputes about the arbitrators’ jurisdiction. Articles V(1)(a) and V(1)(c) of the Convention contemplate that an arbitral tribunal may have made an award notwithstanding jurisdictional objections and will have addressed issues of the validity of the arbitration agreement. That fact that such determinations are subject to judicial review, as at stage of enforcement, has as its premise that arbitral tribunals are entitled to pass upon their jurisdiction without prior judicial determination.47

In view of the issues that have arisen in the two awards of the PCA just discussed, it is very likely that in the near future, the Supreme Court will have to review its decision in Attorney-General v. Balkan Energy (Ghana) Limited to take into account the principle of separability, which in my view the Court did not properly apply in that case. There may also be a call for legislative intervention to declare expressly that the government has no capacity to conclude agreements that purport to deny the jurisdiction of the courts in matters involving the Constitution. Perhaps no legislative intervention is required. All the government must stipulate in its agreements with investors is that the non-arbitrable provisions of the Act are applicable to the arbitration agreement.

47 See paragraph 114 and page 40 of the award.

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Appendix 1

ABOUT THE AUTHORS

THADDEUS SORYSory@LawThaddeus Sory is the founding and managing partner of Sory@Law. He has extensive experience as an arbitrator and commercial litigator and has had remarkable success in a wide range of areas of legal practice. Thaddeus has been involved in numerous domestic arbitrations for major corporations in various commercial and financial disputes. He has tremendous experience in litigation and has been involved in arguably the biggest commercial, constitutional and administrative law disputes in the Republic of Ghana. He has also assisted and advised offshore counsel in foreign arbitration proceedings on issues of Ghanaian law.

Thaddeus has recently been nominated by Who’s Who Legal as their legal adviser for Ghana for 2013–2014 and selected by Arbitration Law Experts as their recommended lawyer in Ghana for 2014–15. In the years 2012 and 2013 respectively, he was featured by the well-known Chambers and Partners publications, in which he was described as ‘a battle horse who knows all his procedures’ and ‘an excellent litigation practitioner’.

Thaddeus has been lawyer for the Ghana Football Association for almost a decade and has not only represented state institutions like the Commission on Human Rights and Administrative Justice, Kumasi Metropolitan Assembly, The National Commission on Civic Education and the Volta River Authority among others in a number of disputes but has advised and acted as a resource person at workshops for a number of charitable institutions such as WaterAid, Actionaid, and the Legal Resources Centre.

About the Authors

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SORY@LAWNo. 4, 2nd CloseBoundary Road ExtensionEast LegonPO Box CT 10021 Cantonments AccraGhanaTel: +233 28 1066 364thaddysory@gmail.com www.sorylawgh.com