Attorney General Vrs Balkan Energy Ghana Ltd and Others [2012] GHASC 35 (16 May 2012)

Key Facts

Transaction Type

Issues

• The first issue referred to the Supreme Court is whether the Power Purchase Agreement dated 27th July 2007 between the Government of Ghana and Balkan Energy (Ghana) Limited qualifies as an international business transaction under Article 181(5) of the 1992 Constitution. The plaintiff argued that factors such as the foreign ownership and management of the Ghanaian company, foreign currency payments, and international arbitration clauses demonstrate the transaction's international nature, while the defendants contended the transaction does not cross national borders and is purely domestic.
• The second issue is whether the arbitration provisions in clause 22.2 of the Power Purchase Agreement between the Government of Ghana and Balkan Energy (Ghana) Limited qualify as an international business transaction under Article 181(5). The plaintiff asserted that the arbitration clause itself requires parliamentary approval as a separate international transaction, but the defendants argued that arbitration agreements are autonomous and do not inherently constitute business or economic transactions.

Holdings

• The court further held that the arbitration provisions in clause 22.2 of the PPA do not constitute an international business transaction under Article 181(5). The arbitration clause was deemed autonomous and not a standalone economic transaction, as it merely addresses dispute resolution and does not independently involve the Government’s wealth or resources.
• The court held that the Power Purchase Agreement (PPA) dated 27th July 2007 between the Government of Ghana and Balkan Energy (Ghana) Limited constitutes an international business transaction under Article 181(5) of the Constitution. This determination was based on factors such as the foreign ownership and management of the Ghanaian company, the inclusion of international arbitration clauses, and provisions related to foreign currency payments and tax warranties.

Remedies

• The Supreme Court directed that the case be returned to the High Court to apply their interpretation of Article 181(5) in the ongoing proceedings, ensuring the constitutional provision is correctly applied.
• The Supreme Court determined that the Power Purchase Agreement (PPA) between the Government of Ghana and Balkan Energy (Ghana) Limited is an international business transaction as defined in Article 181(5) of the Constitution, due to factors such as the foreign ownership and management of the Ghanaian company, and the international elements in the agreement's clauses.
• The court concluded that the arbitration provisions in clause 22.2 of the PPA do not, by themselves, constitute an international business transaction under Article 181(5), as they are dependent on the main transaction and not independently commercial in nature.

Legal Principles

• The judgment explicitly endorsed the principle of 'substance over form' in determining the international nature of transactions. It held that the legal personality of a Ghana-incorporated company (Balkan Energy Ghana Ltd.) should not overshadow its foreign ownership, management, and the transaction's cross-border implications. The court emphasized that the true nature of the transaction—foreign investment in Ghanaian infrastructure—must dictate its classification under Article 181(5), even if the company was formally incorporated locally.
• The court used the purposive approach to interpret Article 181(5) of the 1992 Constitution, emphasizing the need to balance parliamentary oversight with practical governance. It concluded that only 'major' international business transactions involving significant foreign elements or cross-border impacts require parliamentary approval. This interpretation prioritized the constitutional values of probity and accountability while avoiding an overly restrictive definition that would paralyze government operations.

Precedent Name

• Asare v Attorney-General
• Re F.G. (Films) Ltd.
• Morkor v Kumah (No. 1)
• R v LCC, ex p. London and Provincial Electric Theatres Ltd.
• Heyman v Darwins Ltd.
• Attorney-General v Faroe Atlantic Co. Ltd.
• Daimler Co. Ltd. v Continental Tyre and Rubber Co.

Key Disputed Contract Clauses

• Clause 29.2(g) guarantees no foreign exchange restrictions or taxes (except nominal stamp duty) will apply to the PPA. The plaintiff emphasized this as a significant factor in the transaction's international characterization.
• Clause 22.2 specifies binding arbitration at the Permanent Court of Arbitration in the Hague, governed by UNCITRAL rules. The plaintiff argued the arbitration clause itself constitutes an international transaction requiring parliamentary approval, while the defendants disputed this classification.
• Clause 2.6 of the PPA requires the Government of Ghana to facilitate duty-free importation of equipment, obtain operating permits, and provide visas for foreign personnel. The plaintiff argued this clause demonstrates the transaction's international nature due to its foreign element.
• Clause 24 requires the Government of Ghana to irrevocably waive its immunity from legal process in any jurisdiction. The plaintiff cited this as a foreign element reinforcing the transaction's international nature.
• Clause 15.4 obligates the Government of Ghana to indemnify the defendant company against damages arising from the Government's actions. The plaintiff highlighted this as evidence of the transaction's exposure to foreign liabilities.
• Clause 12.1 mandates that all payments to Balkan Energy (Ghana) Limited be made in US dollars. The plaintiff contended this foreign currency requirement is a key indicator of the transaction's international character.

Cited Statute

• Arbitration Act, 1961
• Energy Commission Act
• Alternative Dispute Resolution Act, 2010 (Act 798)
• 1992 Constitution of Ghana
• Convention on the Contract for the International Carriage of Goods by Road, 1956
• English Arbitration Act, 1996
• European Convention on International Commercial Arbitration, 1961
• Convention on International Civil Aviation, 1944
• United Nations Convention on Contracts for the International Sale of Goods, 1980
• Convention for the Unification of Certain Rules Relating to International Carriage by Air, 1929

Judge Name

• J. Ansa
• W. A. Atuguba
• V. Akoto-Bamfo (Mrs.)
• S. O. A. Adinyira (Mrs.)
• Dr. S. K. Date-Bah
• Anin Yeboah
• N. S. Gbadegbe

Passage Text

• A business transaction is 'international' under Article 181(5) if the nature of the business has a significant foreign element, the parties (other than the Government) have foreign nationality/residence, or the company's central management and control are outside Ghana. The court emphasized that 'major' transactions requiring parliamentary scrutiny must be purposively interpreted to avoid absurd results while ensuring probity and accountability.
• The Power Purchase Agreement dated 27th July 2007 between the Government of Ghana and Balkan Energy (Ghana) Limited constitutes an international business transaction within the meaning of Article 181(5) of the Constitution. This conclusion is based on the cumulative circumstances: the PPA resulted from negotiations with a foreign investor, the first defendant is wholly-owned by a foreign UK entity, its managing director is a foreigner, and the PPA includes clauses for international arbitration, waiver of sovereign immunity, and foreign currency payments.
• The arbitration provisions contained in clause 22.2 of the PPA do not constitute an international business transaction within the meaning of Article 181(5). An international commercial arbitration is not an autonomous transaction but derives its nature from the underlying agreement. The arbitration clause alone does not meet the criteria of a 'business or economic transaction' impacting the country's wealth or resources.

Damages / Relief Type