PCA's findings in upholding Ghana’s objection against Beijing Everyway case

The underlying contract between the two parties is an Engineering, Procurement, Installation, and Commissioning contract signed on 17 September 2012 (the “EPIC Contract”)

Is allowance instantly strangers applauded

The Permanent Court of Arbitration (PCA) on January 30, 2023, upheld an objection raised by the Republic of Ghana, the respondent in a case filed against it by the Beijing Everyway Traffic and Lighting Technology Co. Limited.

In its response to the notice of arbitration filed on June 30, 2021, the Government of Ghana among others, raised a jurisdictional objection, claiming that the Claimant’s claims in the arbitration were not covered by the scope of the China-Ghana Agreement.

This was therefore upheld by the Tribunal as follows;

“The Tribunal upholds the Respondent’s objections to the Tribunal’s jurisdiction and finds that it has no jurisdiction to decide the Claimant’s claims in this arbitration,” it held.

This arbitration concerns a dispute arising out of an investment treaty claim brought by Beijing Everyway Traffic & Lighting Tech. Co., Ltd against the Government of Ghana under the Agreement between the Government of the People’s Republic of China and the Government of the Republic of Ghana concerning the Encouragement and Reciprocal Protection of Investments concluded on 12 October 1989 (“the ChinaGhana Agreement” or “the Treaty”.

The underlying contract between the two parties is an Engineering, Procurement, Installation, and Commissioning contract signed on 17 September 2012 (the “EPIC Contract”)

Under the EPIC Contract, Everyway agreed to supply equipment and provide technical services to GoG for the planning, design, construction, supervision, operation, and training for the “Accra Metropolitan Area Traffic Management Project” (the AITMS Project)

During the execution of the EPIC Contract, Everyway issued two Interim Payment Certificates, which to date remain unpaid.

Subsequently, on 19 November 2020, the Parliament of Ghana rescinded the EPIC Contract with Everyway.

However, to Everyway, this move was made to award the same contract to two third-party companies.

Following this, Everyway, on 30th  December 2021, served Ghana with a notice purporting to terminate the EPIC Contract and followed it up with the commencement of arbitration proceedings on May 17, 2021, under the Rules of the London Court of International Arbitration(LCIA) seeking the payment of the Interim Payment Certificates along with other financial compensations arising from alleged breaches of the EPIC Contract.

The Claimant’s Position

Everyway’s case was that the subject matter of the current dispute falls under the jurisdiction of the Tribunal. 

As regards Article 10(1) of the Treaty, the Claimant acknowledges that the scope of the provision is unclear and requires interpretation by reference to Article 31(1)56 of the Vienna Convention on the Law of Treaties of 1969 (the“VCLT”).

According to the Claimant, Article 10(1) of the Treaty, when interpreted “in good faith per the ordinary meaning to be given to the terms of the treaty in their context and the light of its object and purpose”, should be understood to include not only the question of the amount of compensation for expropriation but also the question of the unlawfulness of expropriation of the Claimant’s investment.

The Respondent’s Position

The Republic of Ghana among others contended that the provision of Article 10(1) of the ChinaGhana Agreement limits the Tribunal’s jurisdiction to the determination of the quantum of expropriation and that it has no jurisdiction to determine whether Ghana;

 (i) expropriated the Claimant’s investment in the AITMS Project under Article 4 of the Treaty;

(ii) failed to afford equitable treatment and protection to the Claimant’s investment pursuant to Article 3(1) of the Treaty; and 

(iii) breached its contractual obligations with the Claimant under the EPIC Contract pursuant to the Umbrella Clause obligations applicable in this arbitration through Article 3(2) of the Treaty.

Tribunal’s findings

The Tribunal made two main findings which include the fact that the MFN provision in Article 3(2) of the Treaty cannot be used to extend the Tribunal’s jurisdiction to the Claimant’s claims in this arbitration.

Also, it did not consider that the parallel arbitration proceedings between the Parties under the LCIA Rules affect the question of jurisdiction in the arbitration and that while the factual background of the two arbitrations is similar, the LCIA Arbitration is a distinct matter which concerns Ghana’s obligations under the EPIC Contract, whereas this arbitration concerns Everyway’s obligations under the China-Ghana Agreement.

DECISION

Following these, the PCIA thus upheld Ghana’s objections to its jurisdiction noting that it has no jurisdiction to decide the claimant’s claims in the arbitration.

It furthermore invited the parties to directly confer on the issue of costs in respect of the arbitration to date, and failing such agreement, to inform it of their agreed format and timetable of their costs submissions within thirty days of receipt of the award.