Supremacy of Domestic Law in Investor-State Arbitration: Micheletti v Ghana in focus (Part I)


A: Background

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In 2008, Ghana had the opportunity to showcase its glorious exploits in everything football to the world. We held a wonderful African Cup of Nations football tournament that will be remembered for many years to come. But it seems it is not only the beautiful display of football that will be enduring in our minds. Almost 16 years after the joy and thrill has ended, the one lingering spectre of the show has been a never-ending theatre of court cases[1] and arbitration proceedings.[2] Of all the legal tussle that have blighted the aftermath of the otherwise successful tournament, the most memorable was what eventually became known as the Woyome[3] case.  Thankfully, the then Attorney-General , Mr. Godfred Yeboah Dame, strived to execute the judgment the Government got in its favour. He was successful in that endeavour.[4]

 

With the curtain on that illustrious legal saga drawn to a close with the Attorney-General working tirelessly to successfully seize Mr. Woyome’s assets in execution - and a Sole Commissioner having previously been appointed to look into the then thriving business of judgment debts - Ghanaians thought the African Cup of Nations tournament, 2008 (popularly called “CAN 2008”) football tournament’s ‘breach of contract’ claims had reached it end. Boy, were we so wrong.

 

Like the fabled quills of the fearful porcupine, as soon as one court case or arbitration hearing involving a CAN 2008 contract ends, another one quickly emerges on the legal scene. So it was that in 2023, a Ghanaian company described as a “local sub-contractor” that worked on the Ohene-Djan Sports stadium project in Accra for CAN 2008 dragged Ghana (through Ministry of Youth and Sports) to international arbitration. The company, called Micheletti Co. Ltd. (simply called “Micheletti”), claimed $400,000 from Ghana for breach of contract for refurbishment work it carried on at the Accra stadium from about 2006 up to 2008, plus general damages from February, 2009.

 

In this article, the decision of the arbitration tribunal, is discussed, and more especially, the reasons why Micheletti lost. Also, the influence Ghana’s sovereign domestic law had on the tribunal’s decision will be analyzed in the light of previous arbitration decisions that failed to consider similar legal arguments urging international arbitration tribunals to respect and apply Ghana’s domestic laws as the laws applied to particular arbitral proceedings. For good measure, the article looks at other aspects of the arbitration processes and procedure. For instance, with both parties being Ghanaian (Micheletti and Ministry of Youth & Sports – represented by the Republic of Ghana) what informed the choice of international arbitration as the dispute resolution method in the underlying contract? Also, what might have motivated the parties to fail to choose the seat of the arbitration proceedings?


 

B: What was Micheletti’s case against Ghana?[5]

The International Chamber of Commerce’s (ICC) flagship International Court of Arbitration has dismissed an international arbitration claim filed by a construction firm, Micheletti Co. Ltd., against the Government of Ghana. The claim was filed in May 2023 for damages for breach of contract relating to the rehabilitation of the Accra Sports Stadium.[6] In its partial award on jurisdiction, the Tribunal upheld the contention of the Attorney-General of Ghana that the arbitration proceedings were statute-barred as the action had been instituted out of the time allowed by the Limitations Act of Ghana.

The full facts are that in April 2006, the respondent, the Government of Ghana, entered into an agreement with Waterville Holdings (BVI) Limited to rehabilitate several sports stadia in the country in preparation for CAN 2008. Under the agreement, the claimant, Micheletti, was the local sub-contractor for rehabilitating the Accra Sports Stadium in Accra. But in August 2006, the Government terminated the agreement with the main contractor on the basis that the agreement had not received approval from Cabinet. The Government subsequently entered into negotiations with the sub-contractors, including Micheletti, to continue with the rehabilitation of the stadia.

 

The value of the work undertaken by the contractor was certified and the Government of Ghana duly paid for all the work certified as having been discharged. Then in 2023 Micheletti dragged Government of Ghana to arbitration alleging that it had outstanding payments from the Government. Therefore, Micheletti claimed, among others, special damages of $400,000, plus interest from February, 2009 at the current Bank of Ghana forex rate plus three per cent point till date of final payment and administrative fees and arbitral costs.

 

The Government’s legal representative, the Attorney-General, denied any liability for any indebtedness. He also raised a preliminary legal objection contending, among others, that

Micheletti’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.

Therefore, Micheletti’s right to initiate any dispute resolution mechanism for a matter bordering on breach of contract could only be enforced within six (6) years after the accrual of the cause of action, which occurred in May, 2009.

The Tribunal agreed to determine the preliminary objection and the claim of the action being statute barred, first. The Tribunal held that it had jurisdiction to deal with the claim. Secondly, the tribunal agreed with the Government of Ghana that the claim was statute-barred under Ghanaian law, as it was made way beyond 2015, that is, more than the six years allowed by Ghana’s Limitation Act, 1972 (NRCD 54) which made the claim inadmissible. Therefore, Micheletti’s claim was dismissed.


 

C: Why Micheletti lost the case: Application of Limitation Act.[7]

As stated earlier, Micheletti lost its claim because it was filed too late. For that reason, the tribunal did not have to waste any more time to even take evidence and determine whether Micheletti deserved to collect the $400,000 it was claiming plus interest and costs. The position of Ghanaian law is that a party who intends to sue another person must ensure that the cause of action is not statute-barred. Persons who intend to sue others must know that they do not have all the time in the world to wait and file the case at their pleasure. The law and rules of procedure require that certain cases must be brought within certain specific time periods. Thus, it is important for the plaintiff to consider the various limitations stipulated in the Limitations Act.

 

There may be exceptions regarding the calculation of the limitation period. For instance, the limitation period for suing for breach of contract is 6 years.[8] But where the 6-year period has passed but there is evidence that there has been communication between the parties in which the debtor has acknowledged his indebtedness less than 6 years to the date the plaintiff intends to sue, the plaintiff can do so. In the case of Micheletti, it could not prove any such exception showing the Government had admitted its indebtedness or at all.

 

In Part II, we continue with the discussion regarding whether Prof. Date-Bah has been vindicated on his view that domestic laws of States must be respected by international arbitration tribunals, in view of the decision in the Balkan Energy case.

 











FOOTNOTES


[1] Reference is made to cases such as Alfred Agbesi Woyome v Attorney-General & Others Suit No. RPC/152/2010, HC, the decision of which culminated in Mr. Martin Amidu’s case against the Attorney-General, Waterville Holding and Alfred Agbesi Woyome in the Supreme Court case of Amidu v Attorney General, Waterville Holdings (BVI) Ltd & Woyome[2013-2014] 1 SCGLR 606

[2] For instance, Waterville Holdings (BVI) Limited v The Attorney-General of the Republic of Ghana , ICC Case No. 20561/

[3] Amidu v Attorney General, Waterville Holdings (BVI) Ltd & Woyome[2013-2014] 1 SCGLR 606

[4] Indeed, when the defunct UT Bank put in a ‘notice of claim’ claiming to be a mortgagee of some properties attached in execution, the Supreme Court dismissed the claim: See: Amidu v Attorney- General, Waterville Holdings (BVI) Ltd & Woyome (UT Bank Ltd (Under Receivership) claimant) UT Bank (as claimant) alleged that, it had a mortgage over Mr. Woyome’s (3rd defendant/judgment debtor) properties at Trassacco Valley, Accra, and so, those properties could not be sold in satisfaction of Mr. Woyome’s judgment debt. The Supreme Court held that, since UT Bank had failed to register the mortgages as required by law, the properties were owned by Mr. Woyome. Therefore, they were free from any encumbrance or charge and could be taken in execution of the judgment against Mr. Woyome. UT Bank’s claim to the properties was dismissed.

[5] This section of the article is based on the Tribunal’s decision as reported on https://www.myjoyonline.com/2006-accra-stadium-rehabilitation-icc-throws-out-micheletti-in-arbitration-against-ghana/ (accessed on 24th January, 2025)

 

[6] The ICC Tribunal composed of Sadaff Habib as the President, Shadrack Arhin and Justin Amenuvor as members

[7] For detailed discussion, see Francisca Serwaa Boateng, THE HANDBOOK ON CIVIL PROCEDURE & PRACTICE IN GHANA (2023) p. 42-48

[8] See: Infitco Company Ltd v Frigo Ghana Ltd [2017-2020] 2 SCGLR 335 which also shows how to proceed with the trial when a party raises limitation in its statement of defence and Ghana Commercial Bank Ltd (No. 2) v Plange & Others (No. 2); Ghana Commercial Bank Ltd (No. 2) v Boateng & Others (No. 2) (Consolidated) [2013-2014] SCGLR 767

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