The District of Columbia Court has handed down a significant ruling against the Ghanaian government, ordering it to pay $111.5 million, along with post-judgment interest, to the Ghana Power Generation Company (GPGC).
The decision comes after Ghana failed to comply fully with a UK tribunal’s 2021 award, which found the West African nation in breach of a power purchase agreement.
The UK tribunal had originally awarded GPGC $134.3 million in damages after Ghana unilaterally terminated the agreement in February 2018. The Ghanaian government argued that the termination was justified due to the foreign power company’s alleged failure to meet contractual obligations.
However, the tribunal ruled otherwise, calculating the damages based on an Early Termination Payment formula in the contract and including interest at six-month USD LIBOR plus 6%, as well as arbitration fees.
Despite the ruling, Ghana made only partial payments, leaving a substantial balance unpaid. GPGC, seeking enforcement of the award, turned to the U.S. District Court in January 2024 under the New York Convention, which governs the recognition and enforcement of foreign arbitral awards.
The court served notice to Ghana’s Minister for Foreign Affairs, Shirley Ayorkor Botchwey, but the Ghanaian government failed to respond by the court’s deadline.
Chief Judge James E. Boasberg, in his August 6 memorandum, affirmed the court’s jurisdiction, citing the New York Convention and noting that Ghana had explicitly waived its sovereign immunity by agreeing to international arbitration in the original contract.
While the judge declined to award pre-judgment interest, the decision to impose post-judgment interest adds to Ghana’s financial obligations at a time when the country is already grappling with significant economic challenges.
This ruling underscores the risks associated with international arbitration for sovereign states and highlights the growing financial pressures on Ghana as it navigates its obligations under global legal frameworks.