GCNET’s ₵4bn arbitration claim against Ghana dismissed

An international arbitration tribunal in London has dismissed the ₵4 billion claim filed by Ghana Community Network Services Limited (GCNet) against the Republic of Ghana. The tribunal’s decision, issued in a 202-page ruling on 18 November 2024, rejected GCNet’s assertions under Article 18 of the UNCITRAL Arbitration Rules (1976). The tribunal also ordered GCNet to pay the Government of Ghana US$2,185,983.21 in legal fees.

This sum includes US$1,744,050.42 for legal representation and US$441,932.79 for the fees and expenses of Ghana’s expert witness. Interest will accrue on the total amount from 30 days after the award at a rate of USD SOFR + 1%.

GCNet was represented by Quinn Emanuel Urquhart & Sullivan LLP, along with two Ghanaian firms—Beyou and Co. and ENS Africa. Ghana’s defense was led by the Office of the Attorney-General under Attorney-General Godfred Yeboah Dame, which avoided the need for foreign counsel, saving the country millions of dollars in legal fees.

Background

GCNet’s arbitration arose from a dispute over the termination of a Service Agreement between the company and the Government of Ghana, under which GCNet was granted the exclusive right to develop, operate, and maintain an electronic customs payment and trade document system at Ghanaian ports. The agreement, initially signed in 2000, was extended several times, but the last extension expired in December 2023.

In April 2020, the NPP government, following a value-for-money assessment, terminated the agreement. GCNet rejected the compensation offer outlined in the contract and instead sought ₵3.3 billion in damages, including ₵2.1 billion for alleged wrongful termination and ₵1.19 billion for breaches related to government policies on exemptions and discounts for certain importers. GCNet also sought pre-award interest and legal fees.

Ghana’s defense

Ghana firmly rejected GCNet’s claims, asserting that the termination was lawful under the terms of the agreement. The Attorney-General argued that the agreement provided a specific framework for calculating compensation in the event of early termination, which capped potential damages at US$6 million. Ghana also disputed GCNet’s claims regarding government exemptions and discounts, stating that these policies were within Ghana’s legal rights and did not breach the contract.

The Attorney-General further argued that GCNet had waived its right to claim damages for the impact of the exemptions and discounts by not retracting this waiver within the statutory limitation period.

The tribunal’s decision

After a week-long oral hearing in April 2024 and subsequent submissions, the tribunal ruled in favor of Ghana. The tribunal concluded that the government lawfully terminated the agreement on 28 April 2020, and GCNet had waived its right to claim damages from the exemptions and discounts. The tribunal also found that the impact of these policies did not constitute a breach of the agreement.

While upholding Ghana’s position, the tribunal awarded GCNet a compensation sum of US$5.4 million, in line with the agreement’s terms for early termination. However, the tribunal ruled that GCNet was the “unsuccessful party” in the arbitration and ordered it to pay US$2.19 million in legal fees to Ghana.

This ruling is a major victory for Ghana, saving the country billions in potential damages and legal costs.