A recent U.S. District Court document has revealed a string of errors made by Ghana’s legal representatives, ultimately leading to the country’s failure to contest a significant $134 million judgment in favor of British energy company Trafigura.
This judgment, initially issued by English courts, resulted from a intricate legal dispute arising from a power purchase agreement between Trafigura’s subsidiary, Ghana Power Generation Company (GPGC), and the Ghanaian government.
Shaping the foundation of this legal dispute was a UK tribunal’s decision on January 26, 2021, which delivered a conclusive final award.
The tribunal determined that Ghana had violated its contractual commitments under the power purchase agreement with GPGC by unilaterally ending the agreement on February 18, 2018.
The tribunal’s verdict was severe, holding Ghana responsible for paying GPGC a substantial sum of $134,348,661 as compensation for early termination.
The far-reaching judgment imposed a dual financial burden on Ghana, encompassing not only the $134 million early termination payment but also an additional $3,309,877.74 in arbitration fees and expenses incurred by GPGC.
Furthermore, the tribunal’s ruling stipulated that Ghana must pay interest on this amount, calculated at a three-month USD LIBOR rate and compounded quarterly, thereby exacerbating the country’s financial obligations.
Ghana’s reaction to the tribunal’s decisive ruling was insufficient, as the government failed to settle the debt in its entirety. Instead, it made incomplete payments amounting to $1,897,692.40, leaving a substantial outstanding balance of $111,493,828.92. This unresolved amount continues to accrue interest, further exacerbating the financial liability.
The situation became even more complicated when Ghana attempted to contest the UK judgment, but did so after missing the applicable deadlines for filing an appeal in the UK courts, thereby potentially forfeiting its right to challenge the ruling. This belated effort to contest the judgment added another layer of complexity to the already contentious issue.
In a memorandum issued on August 6, 2024, Chief Judge James E. Boasberg of the District of Columbia court outlined Ghana’s attempt to bring the case before American courts. However, this effort came too late, as Ghana’s legal team had previously missed crucial deadlines to challenge the award in the UK, a mistake that would ultimately have significant and far-reaching repercussions.
According to Judge Boasberg’s opinion, Ghana’s legal struggles can be attributed to a string of procedural missteps. Notably, Ghana had initially obtained an extension from the UK courts to contest the tribunal’s award, but subsequently failed to capitalize on this opportunity, leading to a cascade of consequences that ultimately culminated in their current difficult situation.
Ghana’s legal team squandered the opportunity provided by the initial extension, missing the revised deadline. The situation worsened when the UK courts rejected Ghana’s plea for a second extension, dismissing their arguments against the award as fundamentally flawed and “intrinsically weak”, thereby shutting down their chances of challenging the tribunal’s decision.
The series of mishaps by Ghana’s legal team culminated in a devastating outcome, as Judge Boasberg ruled in favor of GPGC, granting a default judgment totaling $111,493,828.92, the remaining amount due from Ghana.
To make matters worse, the judgment also mandated post-judgment interest, further intensifying the financial strain on the Ghanaian government, which now faces an even more formidable debt burden.
