An international arbitration tribunal in London has dismissed the claim by Ghana Community Network Services Limited (GCNet) for over GH₵4 billion in damages against the Government of Ghana. The decision, issued in a comprehensive 202-page award dated November 18, 2024, ruled in favor of Ghana, finding the contract termination lawful and ordering GCNet to pay Ghana over $2 million ($2,185,983.21) in legal fees and expenses.
Background of the dispute
GCNet was engaged by the Government of Ghana under a Service Agreement signed in 2000 and effective from 2002.
The company was granted exclusive rights to develop and operate an electronic system for customs processing at Ghana’s ports, with a fee structure tied to the volume and value of import and export transactions.
The initial agreement expired in 2012 but was extended thrice until 2023, despite lacking requisite approvals from the Public Procurement Authority (PPA).
Following a value-for-money assessment, the government terminated the agreement in April 2020, offering compensation as stipulated in the contract.
GCNet rejected the compensation offer, claiming damages exceeding the contractual cap, and initiated arbitration in June 2022, alleging wrongful termination and breaches of the agreement.
GCNet’s demands
GCNet sought GH₵3.3 billion in damages, comprising GH₵2.1 billion for wrongful termination, GH₵1.19 billion for alleged past breaches caused by government exemptions and discount policies and GH₵2.015 billion in pre-award interest and about $4 million in legal fees.
Attorney-General’s defense
The Attorney-General Godfred Yeboah Dame, robustly defended the termination and refuted GCNet’s claims.
Valid termination
The Attorney-General maintained that the termination was lawful under Article 11.3 of the agreement, which capped compensation for early termination at $6 million.
Ghana argued that GCNet’s additional claims were outside the scope of the contract.
Exemptions and discounts
The Attorney-General argued that GCNet had no contractual right to protection from the financial impact of government policies.
According to Dame, GCNet had waived any potential claims through its conduct.
The Attorney-General held the view that exemptions and discount policies were legally permissible and consistent with Ghanaian and international trade laws, including the World Trade Organization’s regulations.
Interest claims
Ghana rejected GCNet’s claim for compound interest, citing the Contracts (Amendment) Act, 2023, which reflects Ghana’s firm policy against compound interest in contracts involving the government.
Tribunal’s judgment
The Tribunal unanimously upheld Ghana’s termination of the agreement, finding it lawful and consistent with Article 11.3 of the contract.
Waiver of rights
In the view of the court, GCNet was deemed to have waived its right to claim damages related to exemptions and discounts and by its conduct and failure to act within the limitation period, GCNet could not revive these claims.
Compensation
The Tribunal awarded GCNet $5.4 million as stipulated in the agreement for early termination, far below its multi-billion-cedi demand.
Legal costs
The Tribunal found GCNet to be the unsuccessful party, ordering it to pay Ghana over $2 million ($2,185,983.21) for legal representation and expert fees, with simple interest accruing at the rate of USD SOFR + 1%.
Implications of the decision
The ruling marks a significant victory for Ghana, avoiding a potential GH₵4 billion liability.
The Attorney-General’s reliance on in-house legal expertise also saved the nation millions in legal fees.
