Ghana awarded $2.2m cost in GCNet ¢4bn arbitration claim

An international arbitration tribunal in London has ruled in favor of the Government of Ghana, dismissing claims filed by Ghana Community Network Services Limited (GCNet) and awarding Ghana $2,185,983.21 in legal costs. 

This award includes $1,744,050.42 for legal representation and $441,932.79 for expert witness fees, with simple interest at USD SOFR + 1% applicable if not paid within 30 days.

GCNet initiated arbitration proceedings in June 2022, contesting the government's termination of a service agreement under which GCNet managed customs and trade systems at Ghanaian ports. Under this agreement, GCNet collected user fees on import and export transactions.

Originally signed in 2000, the contract had been extended several times by various Trade Ministers. However, these extensions lacked proper statutory approval, violating Ghana's procurement laws. Following a value-for-money assessment in 2020, the government terminated the agreement and offered compensation in line with the contract terms. GCNet rejected the offer, demanding over GH¢3.3 billion in damages, including claims of wrongful termination and losses from government exemptions and discounts provided to importers.

Represented by Attorney-General Godfred Dame, Ghana defended the termination, arguing that it was lawful and that compensation could not exceed the $6 million cap specified in the agreement. The government also maintained that:

• GCNet’s claims regarding exemptions and discounts were unfounded, as these policies adhered to Ghanaian laws and global trade practices.
• GCNet had forfeited its right to challenge these policies by failing to contest them earlier.
• Compound interest was not applicable under Ghanaian law, and any compensation awarded should only attract simple interest.

The tribunal's unanimous ruling confirmed that:

• The government's termination of the agreement in April 2020 was lawful.
• GCNet had forfeited its right to claim damages related to exemptions and discounts.
• GCNet was entitled to $5.4 million for early termination, in accordance with the contract.

Additionally, the tribunal classified GCNet as the unsuccessful party and ordered it to cover Ghana's legal expenses.

This ruling marks Ghana's legal victory, averting potential liabilities worth billions of cedis while underscoring the critical need for adherence to legal and contractual standards.