An international arbitration tribunal in London has ruled in favour of Ghana, dismissing a GH¢3.3 billion ($4 billion) claim by Ghana Community Network Services Limited (GCNet) over the termination of a service agreement. The tribunal also ordered GCNet to pay $2,185,983.21 in legal costs to the Ghanaian government.

The costs include $1.74 million for legal representation and $441,932 for expert witness fees. If unpaid within 30 days, the amount will attract simple interest at the Secured Overnight Financing Rate (SOFR) plus 1%.

Background to the Dispute

GCNet filed for arbitration in June 2022 after the Ghanaian government ended its contract for managing customs and trade systems at the country’s ports. The agreement, signed in 2000 and extended several times, allowed GCNet to charge fees on import and export transactions.

However, Ghana’s Attorney-General, Godfred Dame, argued that the extensions were not properly approved under the country’s procurement laws. Following a value-for-money assessment, the government terminated the deal in April 2020, offering compensation of up to $6 million, as outlined in the agreement.

GCNet rejected the offer, claiming wrongful termination and seeking damages for government exemptions and discounts granted to importers.

The Tribunal’s Decision

The tribunal unanimously ruled that the termination was lawful and that GCNet had waived its rights to claim damages related to government policies, such as tax exemptions and discounts. It also rejected GCNet’s demand for compound interest, citing Ghanaian law.

While GCNet was awarded $5.4 million for early termination, as stipulated in the contract, this was significantly below its original claim. The tribunal ruled that GCNet, as the unsuccessful party, must cover Ghana’s legal costs.

Implications of the Ruling

The decision is a major victory for Ghana, sparing the country billions of cedis in potential liabilities. It also underscores the importance of adhering to legal and contractual frameworks in public-private partnerships.

The ruling is seen as a win for fiscal prudence and governance in Ghana, with the government successfully defending its decision to prioritise value-for-money in public contracts.

Source:TheDotNews