Court of Appeal reverses High Court refusal to Enforce the Award of Federation of Cocoa Commerce

In January 2022, the Court of Appeal on 20th January 2022 presided over by Justice B. Ackah-Yensu, Justice Amma A. Gaisie and Justice Eric Kyei-Baffour, unanimously overturned the decision of the Commercial Division of the High Court Accra, in the case of Suit No: H1/46/21titled  Dutch African Trading Company BV Vrs West African Mills Company LTD.thereby enforcing an international arbitration award between the Applicant and the Respondent. 

The decision of the Court of Appeal in this matter re-affirms the principles engraved in section 59 of the ADR 2010 Act 798, thereby giving force to the provisions on Recognition and Enforcement of Foreign Arbitral awards. By this decision, it is clear that once an award satisfies the grounds stipulated in section 59 of Act 798 and by extension, the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, the courts of Ghana as a signatory to the convention will have no choice but to recognize and enforce the award.

The Parties, Dutch African Trading Company (DATC) and West African Mills Company (WAMC) entered into an agreement to trade in coco butter and coco liquor. They executed a total of twelve agreements in respect of the relationship. The contracts contained a key provision subjecting all the twelve agreements to the rules of the Federation of Cocoa Commerce (FCC), which rules both parties are conversant with. Rule 1(1.3) of the FCC rules stipulates that in the event that parties incorporate the FCC rules into their contract by reference, disputes arising under the contract between the parties shall be submitted to arbitration under the FCC, in accordance with the FCC Arbitration and Appeal rules. 

DATC submitted a claim to FCC for arbitration on grounds that the respondent WAMC had breached the contract between the parties. The Respondent objected to the jurisdiction of the tribunal to hear the matter, stating that the there was no arbitration agreement between the parties and as such the tribunal has no basis to sit to determine the claims. The Appellant on the other hand claimed that by referring to the FCC rules in their contracts the parties had agreed that any dispute arising in respect of the twelve contracts shall be submitted to arbitration before the FCC tribunal in London. The tribunal agreed with the Appellant’s submission, thus the dispute was determined on the merits and both parties were represented before the tribunal and an award was made in favor of the Appellant. The Respondent subsequently petitioned the FCC Appeals board, requesting that the award, which hitherto was made one in respect of both coco butter and coco liquor, be bifurcated to reflect the decision in respect of each subject matter. The appeals board agreed and the award was split. 

The Appellant sought to enforce the awards before the Ghanaian courts. The High court refused to grant the award recognition and enforcement, agreeing with the Respondent’s argument that there was no express provision in the agreements between the parties to submit the dispute to arbitration hence there was no arbitration agreement, and as a result, the award sought to be enforced was contrary to Ghanaian laws on arbitration, including Act 798. 

Dissatisfied, the Appellant petitioned the Court of Appeal. One of the germane grounds tabled before the court was that the trial judge erred in law when she held there was no arbitration agreement, therefore the award is unenforceable. This ground was the stratum of four other grounds; i.e. whether the tribunal had jurisdiction to hear the matter, whether the Respondents were coerced to partake in the arbitration proceedings, and whether the award deserved to be set aside. 

The Appellant in support of the main ground argued that by virtue of Section 59 of the ADR Act, and by Article IV of the Convention on the Recognition and Enforcement of Foreign arbitral awards (1959), (the New York Convention) the award was made by a competent authority which had jurisdiction to render the award. The Appellant further argued that the contracts, the basis of the award refers to the FCC rules to resolve any dispute arising between the parties in respect of the contracts; thus the relatio imperfecta form of arbitration agreement is equally valid as the relatio perfecta, as if there were an express clause contained in the contracts. 

The Respondent’s argument in response to the Appellant’s was very simple: there was no binding arbitration agreement between the parties and so the award was unenforceable by the Ghanaian courts. The High court relied on Section 2 (1) (2) and (3) of Act 798 to hold that there was no arbitration agreement. The above mentioned section relates to the form of an arbitration agreement. It is mandatory that the agreement is in writing but discretionary that it be contained in the main contract or as a separate agreement.

The Court of Appeal reversed the decision of the High court holding that there was a valid arbitration agreement between the parties albeit it was by way of reference to the FCC rules in the main contracts. Here, the court re-affirmed the principle that “ an arbitration agreement is key to the arbitral process, without which there can be no arbitration, and an award obtained in the absence of an arbitration agreement would not be enforceable”

The Court in its decision distinguished the parties’ case from the above stated principle. It referred to section 2 (4) of Act 798. That provision among other things, recognises that an arbitration agreement can be said to exist, if the exchange of communications in writing between parties provides a record of the parties agreement to arbitrate. This includes the exchange of pleadings between parties, in which reference has been made to an arbitration agreement but contains no denial of the existence of such agreement. The court reasoned based on that provision that,

“...what is required as proof of an arbitration agreement is evidence that the parties have agreed to submit their disputes to arbitration. This evidence according to our laws should be in writing, should be incorporated in the contract itself or in a separate agreement, and may even be inferred from an exchange of communication in writing or in an exchange of pleadings where there is no denial of the existence of the arbitration agreement. …” 

The court also referred to the United Nations Commission on International Trade Law (UNCITRAL) Model Law which admits “... reference in a contract to a document containing an arbitration clause, provided that the contract is in writing and the reference is such as to make that clause part of the contract” as evidence of the existence of an arbitration agreement between the parties. The court again referred to clause 1.2 of the FCC rules which provided unequivocally that  any contract incorporating the FCC rules will be deemed to incorporate the FCC Arbitration and Appeal rules. The court further referred to clause 1.3 of the FCC rules which specifically provided for FCC Arbitration. It provided among other things that, any dispute arising under a contract which incorporates the FCC rules shall be settled by the FCC Arbitration rules. Section 6(2) of English Arbitration Act which per the FCC Arbitration rules was the governing law for the arbitration was also considered by the court. By that provision, incorporation by reference to a document containing an arbitration clause is also a recognised as a valid agreement to refer a dispute to arbitration.  Thus the court concluded that by incorporating the FCC rules into their twelve contracts, the parties agreed to  submit their dispute to FCC Arbitration in accordance with the FCC arbitration rules which provide extensively for the arbitration process. On this authority, the court held that there was an agreement to submit to arbitration by reference to or incorporation of the FCC rules into the main contracts.

The issue whether the Respondent was compelled to submit to arbitration was rendered moot by the finding that there was an agreement to submit to FCC arbitration. The court concluded that there was no evidence on record to prove the Respondent was compelled to submit to arbitration. Rather, it found that the Respondent submitted to the jurisdiction of the tribunal, and was afforded adequate opportunity to make its case, whereupon the Respondent petitioned the FCC Appeals board that the original award rendered be made two separate awards in respect of coco butter and coco liquor, which request the board granted. Thus it was absurd for the Respondent to turn around to say it was compelled to submit to arbitration.

As to whether the FCC tribunal had jurisdiction to hear the matter on the merits, her ladyship Barbara Ackah-Yensu JA in her concurrent judgment, referred to the competence-competence doctrine explaining that if a tribunal is alleged not to have jurisdiction, it is presumed to have the power to consider and rule on the jurisdictional challenge, subject to a subsequent review by a court of competent jurisdiction. That owing  to Section 30 of the English Arbitration Act, and Sections 24 and 25 of Act 798 that the Respondent duly objected to the jurisdiction of the tribunal to hear the matter, which objection the tribunal considered and overruled. That accordingly the tribunal did no wrong, and by virtue of the doctrine of competence-competence it was authorised to determine its own competence, and rightly so.

Finally, the court determined that there was no basis in law, particularly in section 59 of Act 798, which is a replica of the Article IV and V of the New York convention, necessitating a setting aside of the award. The court stated that the relevant pivotal requirements of section 59 were satisfied by the Appellant and there was no appeal or application for challenge pending in respect of the award to render the award unenforceable.

This decision of the court of appeal clearly demonstrates the willingness of the Court to recognise and enforce foreign arbitral awards, so long as they are in tandem with international arbitration rules and principles and Ghanaian laws on arbitration. It is also very significant in the jurisprudence of arbitration in Ghana because it clarifies and re-affirms the Act 798 section 59 grounds on which an arbitration award will be recognised and enforced in Ghana. Additionally, the decision expands the Section 4 provision on the form of arbitration agreement. Furthermore, it re-emphasises the doctrine of Competence-Competence, that is, the capacity of an arbitral tribunal to rule on its own jurisdiction.

With this decision, it is hoped that the High court in the future will be guided by the principles elucidated by the Court of Appeal in this judgment, particularly the erudite opinion of her ladyship Barbara Ackah-Yensu JA, who is also a co-author of the latest book on ADR in Ghana.

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