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A U.S. District Court document has revealed a series of critical errors by Ghana’s legal team that led to the country’s failure to overturn a substantial $134 million judgment awarded to the British energy firm Trafigura.
The judgment, initially issued by the English courts, stems from a complex legal dispute over a power purchase agreement between Trafigura’s subsidiary, the Ghana Power Generation Company (GPGC), and the government of Ghana.
The legal conflict began on January 26, 2021, when a UK tribunal issued a final award, ruling that the Ghanaian government had breached its contractual obligations under the power purchase agreement with GPGC. This breach occurred when Ghana unilaterally terminated the agreement on February 18, 2018. The tribunal’s decision was unequivocal, finding Ghana liable for an early termination payment of $134,348,661 to GPGC.
In addition to the early termination payment, the tribunal ordered Ghana to reimburse GPGC for its arbitration fees and expenses, amounting to $3,309,877.74. The tribunal also imposed interest on this sum at the three-month USD LIBOR rate, compounded quarterly, further increasing the financial pressure on Ghana.
Despite the tribunal’s clear and binding ruling, Ghana’s response was inadequate. Instead of settling the full amount owed, the government made partial payments totaling $1,897,692.40, leaving a significant balance of $111,493,828.92 unpaid, with interest continuing to accrue on the outstanding amount.
The situation worsened when Ghana attempted to challenge the UK judgment, but only after missing the appropriate legal deadlines in the UK courts.
On August 6, 2024, Chief Judge James E. Boasberg of the District of Columbia court issued a memorandum detailing Ghana’s attempt to bring the case to American courts. However, this effort came after Ghana’s legal team had already missed crucial deadlines to contest the award in the UK, a failure that would have serious consequences.
Judge Boasberg’s opinion highlights the procedural failures that led to Ghana’s predicament. Initially, Ghana managed to secure an extension from the UK courts to challenge the tribunal’s award. However, despite this extension, the legal team missed the new deadline. When Ghana later sought a second extension, the UK courts denied the request, stating that Ghana’s grounds for challenging the award were “intrinsically weak.”
As a result of these missteps, Judge Boasberg granted a Motion for Default Judgment in favor of the Ghana Power Generation Company, awarding GPGC the sum of $111,493,828.92, representing the outstanding balance owed by Ghana. The judgment also included mandatory post-judgment interest, further increasing the financial burden on the Ghanaian government.
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