arbitration / adr news

The International Chamber of Commerce (ICC) has dismissed an international arbitration instituted by Micheletti Company Limited against the Government of Ghana in May 2023, claiming damages of $400,000. The company had also claimed accrued interest at the current Bank of Ghana forex rate plus 3% point starting from February 2009 till date of final payment. The international arbitration was instituted against the backdrop of what the claimant alleged to be a breach of contract relating to the rehabilitation of the Ohene Djan Sports Stadium in Accra. The ICC Tribunal, comprising Sadaff Habib (President), Shadrack Arhin and Justin Amenuvor (Members), in its partial award decided it had jurisdiction to hear the matter but dismissed the claims because the arbitration proceedings were filed outside the Limitations Act of Ghana.

Antecedent

In April, 2006, the Government of Ghana executed an agreement with Waterville Holdings (BVI) Limited for the rehabilitation of a forty thousand seating capacity of a number of sports stadia in the country in preparation for the 2008 African Cup of Nations. These stadia included the Ohene Djan Sports Stadium, the El Wak Stadium both in Accra, and the Baba Yara Sports Stadium in Kumasi. Under the agreement, the claimant, Micheletti, was the local sub-contractor for the rehabilitation of the Ohene Djan Sports Stadium in Accra, while Consar Limited was the local sub-contractor for the Baba Yara Sports Stadium in Kumasi. On August 1, 2006, however, the government terminated the agreement with the contractor on the basis that the agreement had not received approval from Cabinet. The government subsequently entered into negotiations with the sub-contractors, Micheletti Company Limited and Consar Limited, to continue with the rehabilitation of the stadia. The value of the work undertaken by the contractor was duly certified and the Government of Ghana subsequently paid for all the work certified as having been discharged. The arbitration proceedings instituted in 2023 were in respect of claims by Micheletti that had allegedly not been honoured by the government.

AG’s Argument

The Office of the Attorney General representing the Government of Ghana denied liability for any indebtedness and raised a preliminary legal objection in accordance with Article 5(1) of the ICC Rules of Arbitration. Assistant State Attorney, Anne-Marie Ayanru, contended that the claimant had not exhausted the Dispute Resolution Mechanisms procedure applicable under the FIDIC General Conditions of Contract, which required the parties to submit any dispute arising to a Dispute Adjudication Board (DAB) at first instance and, therefore, the Tribunal had no jurisdiction to determine the claim by Micheletti. Further, Ghana argued that even if the Tribunal were to find that it had jurisdiction, the claimant’s claim having been filed more than 14 years after the cause of action arose, was statute-barred under Ghanaian law, which is the substantive law of the Agreement. The AG’s Office argued that the right of the claimant to initiate any dispute resolution mechanism for a matter bordering on breach of contract, could only be enforced within a six-year period after accrual of the cause of action which occurred on May 19, 2009. The Tribunal agreed to a bifurcation of issues, which allowed a determination of the preliminary objection and the claim of the action being statute barred, first.

Micheletti’s Argument

Micheletti through its lawyers had argued that it had written to the respondent and proposed Gamey and Gamey to settle the dispute within 28 days but the respondent failed to respond to the notice, hence waived its right to an amicable settlement. This failure by the respondent, it said, gave the claimants the right to file an international arbitration. The claimant further relied on Section 25 of the ADR Act 2010, ACT 798 of Ghana and argued that the respondent did not raise any concern on the dispute resolution mechanism in response to the claimant’s letter of March 20, 2023, and that the respondent acknowledged receipt of the letter. On the issue of the claim being time-barred, the claimant averred that Section 4 of the Limitation Act, 1972 (NRCD 54) of Ghana does not apply because of Sub-Clause 14.8 GC of the Agreement. It also argued that under Kenya Arbitration Act, which was the seat of arbitration, the claimant’s claim is not time-barred.

Decision

The Tribunal, in its decision on the objection raised against jurisdiction, held that it had jurisdiction to hear the matter because the claimant had taken steps to notify the respondent of its intention to refer the dispute to a dispute adjudication board before commencing the arbitration proceedings, but such steps were ignored by the respondent. The Tribunal, however, agreed with the Government of Ghana that the action was statute-barred under Ghanaian law, having been instituted way beyond 2015, i.e. more than six years allowed by Ghana’s Limitation Act. The Tribunal therefore, dismissed the claims by Micheletti entirely as being inadmissible. The Tribunal is currently considering submissions by the parties on the amount of costs to award in favour of the Government of Ghana following the dismissal of the claim and will soon decide the question of the quantum of costs.