Resolving Contract Disputes in Ghana

CAN JUDGMENT DEBTS SERVE AS CATALYST FOR RAPPROCHMÉNT ON USING GHANA AS CENTRE FOR COMMERCIAL DISPUTE RESOLUTION? 

By Saeed Musah-Kaleepha

I will appoint a Sole Commissioner to thoroughly examine the judgment debt and negotiated settlements conundrum and recommend for immediate implementation, legislative and systems remediation. The overall purpose should be to refashion and systematise the procedures for negotiating, contracting, executing, monitoring and resolving disputes involving business transactions where government is a party. In particular, Ghanaian fora must be the primary venue for the resolution of disputes over contracts that are performed in Ghana.

That was President John D. Mahama in his Critical Policy Actions, September 4, 2012. He expresses the need to purge government of the numerous judgment debts and in his words "negotiated settlements conundrum".

This write-up is meant to welcome the President's call in part and also to take the call a step further from a practitioner's perspective.

The very fact that business agreements are signed and executed means there is a possibility that differences might arise over those contracts. They may not necessarily be disputes but in some cases lack of clarity on aspects of the contract would mean the parties might require assistance in establishing such clarity. It is for this reason that parties include dispute resolution clause or an arbitration clause, by whatever name called, in their contract documents.

Over the years Ghanaian/state officials have demonstrated their preference, perhaps by deed, for choosing a foreign forum for the resolution of commercial disputes involving the Government of Ghana. The widely patronised of such institutions are the London Court of Arbitration, the Permanent Court of Arbitration in the Hague and the Arbitration Centre of the International Chamber of Commerce (ICC) based in Paris among others.

The implication is that both parties will have to travel to these locations with their documents, counsel and support staff. And worse of all hire foreign lawyers to represent them if they are to be represented by counsel since in most of those jurisdiction, our lawyers do not have license to practice there. Two cases or narrations give us a good picture of this phenomenon.

First, when Mr. Theophilus Cudjoe, former Executive Director of the Serious Fraud Office (SFO) [now Economic and Organised Crimes Office (EOCO)], appeared before the Public Accounts Committee of Parliament to answer questions relating to the CP judgment debt case, he said he had to carry four boxes of documents to London whenever they had to go for a hearing on the matter before the arbitral tribunal. 

In the second case we are told by former President Kufuor that in the Vodafone case, the Government of Ghana had to engage the services of a UK lawyer, a Queens Counsel (QC) for that matter, to represent the republic at the rate of about five hundred pound sterling per hour. This probably does not include other incidental costs.

These and several other inconveniences are some of the daily experiences for both corporate and private interests who have issues that has to be resolved in the corporate arena.

In January this year, this author was engaged by an institution in Ghana to provide some training services and the contract document states that all disputes shall be resolve at the International Chamber of Commerce with Ghana as the place for hearing. The author immediately requested that aspect of the contract to be revised and his preference for a resolution under Ghana's Act 651 was accepted. One would imagine what will happen to many others who sign similar contracts with that institution with such a dispute resolution clause. Truth is, the contract sum can hardly pay for the fees of the panel, travel and other incidental costs.

This brings us to the issue of using a foreign forum with Ghana as the place for arbitration. At least one state institution in the regulatory sector is reported to have adopted this practice because of certain challenges it encountered in earlier cases including fees, choice of law and procedure.

There however two pieces of legislation that seem to give foreign investors some latitude in the choice of forum for the resolution of disputes with the Government of Ghana. These are the Free Zones Act and the Ghana Investment Promotions Act. Section 32(3) of the Free Zones Act, 1995 (Act 504) provides "[w]here in respect of any dispute, there is disagreement between the licensee and the Government as to the method of dispute settlement to be adopted, the choice of the licensee shall prevail." This is an almost verbatim quotation of section 29(3) of the Ghana Investment Promotions Centre Act, 1994 (Act 478) except for the replacement of the word 'investor' with the word 'licensee'. These two laws provide that where government is party to a trade dispute involving a foreign company, the dispute can be resolved either in accordance with the rules of procedure of the United Nations Commission on International Trade Law (UNCITRAL), or within the framework of any bilateral or multilateral agreement between Ghana and the country that the foreign party is a national or in accordance with any national or international machinery for the settlement of investment disputes as agreed by the parties.

It is recognised that governments' attempt to promote investment by creating a congenial investment or business climate. Such a climate must of necessity extend to both the local investor and the foreign investor whether that investor is in partnership with government or in partnership with other private citizens. Therefore while section 32 of Act 504 and section 29 of Act 478 have sought to promote 'amicable settlement' of commercial disputes, this resolve has been bolstered by the Alternative Dispute Resolution (ADR) Act, 2010 (Act 798), which in itself has replaced the good old Arbitration Act, 1961 (Act 38). And most importantly the ADR Act has also accommodated the New York Convention which is essentially meant for the recognition of foreign arbitral awards.

The global trend for promoting the resolution of commercial disputes locally is through the establishment of local dispute resolution centres. Though there exists the Ghana Association of Chartered Mediators and Arbitrators (GHACMA) and other ADR agencies their presence can be very much felt if there is greater collaboration between players in commerce and industry and government agencies.

Another trend is the establishment of dispute resolution centres under the national chambers of commerce. Such an establishment carries with it the respect of the chamber of commerce and serves as a rallying ground for all business interests. Key examples are the Arbitration Institutes of the Stockholm Chamber of Commerce (SCC) and the Finland Chamber of Commerce. And it is the case in Bulgaria, Russia, Bombay, Oslo and Hamburg among others. The Canada Chamber of Commerce however has a national committee that operates under the ICC rules. One is almost certain that GHACMA and as the leading ADR institution in Ghana and other ADR agencies will be more than willing to partner in any effort meant to establish a dispute resolution centre in Ghana just as they lent their support in the establishment of the Court -Connected Mediation of the Judicial Service of Ghana.

While the President's call renews hope among the dispute resolution fraternity, it is expected that any effort to resolve disputes in Ghana may have to be the use of a non-state forum since parties (especially foreign parties) have fears of bias in favour of the state alongside the effect of being infected with the delays, bureaucracy and sometimes inefficiencies of the public sector. These are debilitating factors which motivates (Alternative) Dispute Resolution practitioners to often profess the need for the establishment of non-state justice systems.

In this regard the key first step, is to empower the existing ADR instituions and collaborate more effectively with the Ghana National Chamber of Commerce and Industry (GNCCI) and other chamlbers of commerce in Ghana. Then we can begin to expect that some progress will be made especially in terms of the dispute resolution clauses that are fist of all contained in contract documents which can be made to reflect an intent to have issues resolved in Ghana

Significantly, one factor that influences the choice of forum is the institutional arrangement that exists to ensure professionalism and the conformity of the rules for dispute resolution in line with globally accepted standards before even consideration is given to the choice of arbitrator or mediator that is empaneled to handle the matter.

Finally, there is also the need to develop dispute resolution services for different professions to make room for the nuances and usages of those trades and institutions. Indeed in the UK for instance, the Royal Institute of Chartered Surveyors (RICS) has a dispute resolution section which handles claims withing the built environment. And foreclosure mediation is gaining currency in the United States of America. We are already doing well with labour dispute resolution although we could be doing better if the National Labour Commission had not been a state agency.