A failure by the government of Ghana to fully comply with a tribunal decision from the United Kingdom has led to the award of a judgement debt of over US$111 million to Trafigura.
The District of Columbia Court in the US has granted a Motion for Default Judgement for Ghana Power Generation Company (GPGC) ordering the government of Ghana to pay $111,493,828.92, plus mandatory post-judgment interest.
This followed a January 26, 2021 Final Award issued by the UK tribunal after Ghana breached its contractual obligations by terminating a power purchase agreement with GPGC on February 18, 2018.
According to the government of Ghana, GPGC could not meet certain demands contained in the contract, leading to its termination.
However, GPGC was awarded US$134,348,661 in damages by the UK tribunal, calculated based on an Early Termination Payment formula in the purchase agreement.
The award included an interest rate of six-month USD LIBOR plus 6%, and reimbursement of GPGC’s arbitration fees and expenses totaling $3,309,877.74, with interest at three-month USD LIBOR, compounded quarterly.
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Ghana, despite the ruling, made partial payment of $1,897,692.40, leaving a significant outstanding balance.
GPGC then filed a case in the U.S. District Court on January 19, 2024, under the New York Convention and Chapter 2 of the Federal Arbitration Act, seeking to recover the compounding debt after Ghana failed to pay the remaining amount.
On January 23, 2024, the U.S. court served Ghana with the petition through the Minister of Foreign Affairs and Regional Integration, Shirley Ayorkor Botchwey, according to court documents.
The documents were delivered in Ghana on January 29, 2024, with a signed confirmation of receipt.
However, Ghana failed to respond by the March 29, 2024 deadline and did not appear in the court proceedings.
The court recognised the UK arbitral awards and determined that it had jurisdiction over the case, citing the New York Convention which the U.S. has ratified.
Ghana, according to the court, had expressly waived its sovereign immunity and committed to international arbitration under the power purchase agreement.
According to a memorandum opinion by Chief Judge James E. Boasberg Tuesday, August 06, 2024, the arbitral award between the non-U.S. parties arose out of a commercial relationship, which falls under the New York Convention.
The Convention requires that member states recognize and enforce such awards, regardless of the parties’ citizenship or domicile.
While the judge did not grant pre-judgment interest to GPGC, the court will award post-judgment interest at the rate specified in U.S. codes, adding to the financial burden on Ghana.
