$165m arbitral award: US court grants UG’s motion against Ace US Insurer’s petition

The US District Court of New York has granted a motion filed by the University of Ghana against a petition by US Ace Insurance Company, Chubb.

In upholding the respondent, UG’s claim, the court presided over by Naomi Reice Buchwald held that the petition lacked personal jurisdiction.

On September 15, 2015, the University of Ghana entered into a public-private partnership with CPA Ghana,  pursuant to which UG would lease land and grant a concession to CPA to finance, construct, operate, and maintain various new infrastructure projects on UG’s campus.

The US insurer, Chubb issued a corporate country risk insurance policy for the Partnership, insuring the activities contemplated under the Agreement against certain covered losses, including any default by UG on an arbitration award. 

In May 2016, CPA notified UG that it had not satisfied one of its obligations under the Agreement which was the failure to procure the requisite letter of credit for CPA. 

Subsequently, CPA issued a notice of default, which UG failed to cure. 

On May 1, 2018, CPA delivered to UG a notice of termination. Under the Agreement, when the Agreement is terminated due to an event of default by UG, the parties are required to appoint an independent expert to determine the “Termination Value” of the contract.

Accordingly, after CPA issued the notice of termination to UG, the parties commenced the  “Expert Determination” process and selected a London-based expert,  Nicholas Vineall QC, to calculate the Termination Value.

On August 1, 2018, Mr. Vineall rendered a Termination Value Award totaling approximately $165,000,000. 

However, before the announcement of Mr. Vineall’s determination, UG sent CPA a notice of arbitration.

The notice sought to commence arbitration in London to resolve disputes related to, inter alia, the validity of the Agreement and the propriety of the Expert Determination process.

Thereafter, UG and CPA each selected an arbitrator for the three-person tribunal.

However, CPA maintained that UG had not satisfied the negotiation and mediation prerequisites to arbitration and refused to permit the arbitration to move forward.

Between 2018 and 2020, UG sent several correspondences to CPA seeking to advance the arbitration, to no avail. 

Amid this stalemate, on October 11, 2019, CPA and Chubb executed an Assignment Agreement, according to which CPA assigned to Chubb all rights of recovery and interests in the Termination  Value Award. 

Subsequently on July 30, 2021, the Ace Insurer, Chubb filed this petition pursuant to the  Federal Arbitration Act (“FAA”), and the  Convention on the Recognition and Enforcement of Foreign Arbitral  Awards seeking, inter alia, to confirm and enforce an alleged foreign arbitration award against University of Ghana.

In August 2021, there was wide media reportage to the effect that the University of Ghana had been slapped with a $165m judgment debt by a New York Court for wrongful termination of its contract with Africa Integras LLC in 2018.

Following this, the University debunked such claims and urged the General public to disregard the same.

It further noted that the circumstances of the project and its termination had wrongly been represented and stated categorically that no court had issued a judgment against them.

Per this ruling, the court made the finding that the petitioner, Chub had failed to site apposite authority supporting its view that a court may infer consent to jurisdiction based on a contingent arbitration provision with an unsatisfied precedent.

Additionally, the court found that the respondent, the University of Ghana has no contact with the United States and is an agency or instrumentality but not the alter ego of the Republic of Ghana.

The court, as a result, granted the UG’s motion and accordingly directed the motion pending to be terminated and the case duly closed.