US court affirms $111m judgment debt against Ghana over power contract violation

A United States district court in Columbia has affirmed an $111 million judgment debt against Ghana in favour of Ghana Power Generation Company (GPGC).

In a ruling delivered on August 6, James Boasberg, the presiding judge, held that the court can entertain the enforcement order filed by GPGC.

BACKGROUND

In June 2015, the Ghanaian government entered a four-year emergency purchase agreement (EPA) with GPGC, a company that is majorly owned by Trafigura, a Singaporean firm.

The agreement was also ratified by the Ghanaian parliament on July 23, 2015.

The agreement entailed that the GPGC would dismantle two existing gas-turbine power plants in Italy, transport them to Ghana, install and maintain them.

In February 2018, under the administration of President Nana Akufo-Addo, the agreement was terminated.

The Ghanaian government had said the agreement was terminated because the company did not reach “financial closure nor achieved full commercial operation date”.

The government also stated that the company did not obtain a licence for the sale of electricity from the country’s energy commission.

Responding, GPGC had said the termination of the agreement was done “suddenly and without any credible contractual or legal justification”, adding that the government failed to meet its obligations under the power purchase agreement (PPA).

In January 2021, the United Nations Commission on International Trade Law (UNCITRAL) tribunal, chaired by John Beechey, ruled that Ghana had not complied with its contractual obligations.

The tribunal held that the country decided to terminate the emergency purchase agreement in a bid to save cost.

The tribunal issued a final award of $134,348,661 with an interest rate, reimbursement of GPGC’s expenses for arbitration — all of which amounted to some $170 million against Ghana.

The final award opened the floodgates of legal disputes between the company and the Ghanaian government.

In June 2021, a London commercial court dismissed an appeal application from the Ghanaian government.

The court held that the country failed to appeal the tribunal judgment within the stipulated time.

The Ghanaian government had told the court that the delay in filing the appeal was due to the country’s presidential and parliamentary elections. The government also said some key officials in the attorney-general’s office had contracted COVID-19.

The case is similar to Nigeria’s P&ID legal tussle and the recent judgment involving Zhongshan Fucheng Industrial Investment Co. Ltd versus the Ogun state government.

THE VERDICT

Boasberg ruled that the court has jurisdiction over the enforcement of the foreign arbitral award under the New York Convention.

The judge also ruled that the court will award post-judgment interest against Ghana since the country failed to fully comply with the final award issued in 2021.

“For the foregoing reasons, the court will issue a contemporaneous order granting the motion for default judgement and awarding $111,493,828,” the judge ruled.

GHANA AG REACTS

Reacting to the judgment on Wednesday, Godfred Yeboah Dame, Ghana’s attorney-general and minister of justice, said the judgment debt was not a new award.

Dame said the new judgment was issued because the Ghanaian government has not exhausted the payment of the final award issued in 2021.

“This award was given way back in 2021, and the government since then has had the obligation to pay, and indeed they have been making efforts to pay,” the AG said.

“It is the failure to exhaust payment which has led to the company seeking enforcement orders in other jurisdictions. It is not the case where there has been a new judgment or a fresh award given by any court or any tribunal anywhere.

“The impression that is sought to be created by the publication that I have seen today — another judgment debt, a new judgment debt, US court awards, there is no US court which is awarding judgment against the government of Ghana.

“It is only an enforcement order, and that enforcement order is on account of a failure to pay a judgment debt which accrued way back in January 2021 as a result of an award that was given that time.”