GCNet loses GH¢4bn arbitration claim; Ghana awarded $2.2 million cost

An international arbitration tribunal in London has ruled decisively in favor of the Government of Ghana in its legal dispute with Ghana Community Network Services Limited (GCNet).

The tribunal rejected GCNet's claims and awarded Ghana $2,185,983.21 in legal costs, comprising $1,744,050.42 for legal representation and $441,932.79 for expert witness fees.

Should the payment be delayed beyond 30 days, the award will accrue simple interest at USD SOFR + 1%.

The dispute dates back to June 2022, when GCNet initiated arbitration, challenging the Ghanaian government's decision to terminate a long-standing service agreement. Under this agreement, GCNet had been responsible for managing customs and trade systems at Ghana's ports, generating revenue by collecting fees from importers and exporters. Originally signed in 2000, the contract had been extended multiple times by various Trade Ministers without obtaining the required statutory approvals, thereby violating Ghana's procurement laws.

In 2020, after a value-for-money assessment, the government terminated the agreement and proposed compensation in line with contractual terms. However, GCNet rejected the offer and sought over GH¢3.3 billion in damages, citing wrongful termination and financial losses due to exemptions and discounts provided to importers.

The Attorney-General Godfred Dame represented Ghana, arguing that the termination was lawful and any compensation owed should not exceed the $6 million cap stated in the contract. The government further maintained that:

• GCNet’s claims concerning exemptions and discounts were invalid, as these policies adhered to Ghanaian laws and international trade norms.
• GCNet had forfeited the right to seek damages by not raising objections to these policies earlier.
• Compound interest was not applicable under Ghanaian law, limiting any financial award to simple interest.
  
  The tribunal ruled unanimously in favor of Ghana, concluding that:
• The government's termination of the agreement in April 2020 was lawful.
• GCNet had waived its rights to damages related to exemptions and discounts.
• GCNet was entitled to only $5.4 million for early termination, as stipulated in the contract.

Additionally, the tribunal declared GCNet the unsuccessful party and ordered it to bear the legal costs incurred by Ghana.

This outcome represents a significant win for the Government of Ghana, safeguarding the nation from potential liabilities amounting to billions of cedis and reinforcing the importance of adherence to legal and contractual obligations.