By: Ama Gyamfuah
An international arbitration tribunal in London has rejected claims filed by Ghana Community Network Services Limited (GCNet) against the government of Ghana, awarding the government $2,185,983.21 in legal fees.
The total award includes $1,744,050.42 for legal representation and $441,932.79 for expert witness fees.
If unpaid within 30 days of the ruling, the sum will accrue simple interest at USD SOFR + 1%. GCNet initiated arbitration in June 2022, contesting the Government of Ghana’s termination of its service agreement for managing customs and trade systems at Ghanaian ports.
Under the agreement, GCNet charged fees for import and export transactions. Originally signed in 2000, the contract was repeatedly extended by various Trade Ministers, but without the necessary statutory approvals, violating Ghana’s procurement laws.
In 2020, the government terminated the contract after conducting a value-for-money assessment and offered compensation according to the terms of the agreement.
GCNet rejected the compensation offer and sought over GH¢3.3 billion in damages, including claims for wrongful termination, government exemptions, and discounts provided to importers.
The government, represented by Attorney-General Godfred Dame, defended the termination as lawful and argued that compensation should not exceed the $6 million cap specified in the agreement.
The government argued that:
– GCNet’s claims for losses due to exemptions and discounts were unfounded, as the policies were in line with Ghanaian law and global trade standards.
– GCNet forfeited its right to seek
damages from such policies by not raising objections earlier.
– Compound interest was not applicable under Ghanaian law, and any awarded amount should accrue simple interest only.
The tribunal unanimously ruled in favor of Ghana, concluding that:
– The termination of the agreement in April 2020 was lawful.
– GCNet had waived its right to claim damages from exemptions and discounts.
– GCNet was entitled to $5.4 million for early termination, as specified in the agreement.
Additionally, the tribunal deemed GCNet the losing party and ordered it to pay Ghana’s legal costs. This ruling represents a significant victory for Ghana, saving billions of cedis in potential liabilities and emphasizing the importance of adhering to proper legal and contractual procedures.
