The National Security Minister,
Albert Kan-Dapaah at his vetting last week, had claimed that Ghana owes no
company for crudely abrogating the US$100 million traffic management contract,
but it has turned out that international arbitration processes have begun for
Ghana to cough up US$55m in judgment debt over the contract.
Beijing Everyway Traffic and
Lighting Tech Co Ltd, served a notice of arbitration on the government of Ghana
on February 10, kicking off an ad hoc arbitration procedure under the
China-Ghana bilateral investment treaty.
The arbitration is described as
one of the first known claims by a mainland Chinese investor against an African
country, seeking the colossal US$55 million from Ghana after its contract to
develop an intelligent traffic management system for Accra, was cancelled
replaced by other Chinese contractors.
Ghana-based policy think-tank,
IMANI Africa, said it petitioned President Akufo-Addo, last year, to warn off this
impending doom. The President graciously replied to IMANI that he’d look into
the matter.
IMANI boss, Franklin Cudjoe in a
mail sent to The Herald, wrote ”we are still waiting. But it looks like the
roads, finance and national security ministers, have to assure us that we
wouldn’t have to pay money carelessly that we critically need to fight
covid-19, and in the words of Kofi Bentil, “needlessly caused over [simple]
traffic management.”
Everyway is represented by Zhong
Lun Law Firm in Beijing, with the team led by partner Wei Sun, a well-known
construction arbitration specialist and secretary general of the Permanent
Forum on China Construction Law.
While, the lawyers believed the
claim was the first against an African state by a mainland Chinese investor,
GAR has recently learned there is another such claim under way, believed to be
against Nigeria.
Both claims are likely to be watched with interest, given the
extent of Chinese foreign direct investment in Africa in recent years.
According to the China Africa
Research Initiative, this soared from US$75 million in 2008 to US$2.7 billion
in 2019 and surpassed declining US investment in Africa in 2014.
Chinese company brings claim
against Ghana Alison Ross 11 February 2021 A busy road in Accra, Ghana
(shutterstock.com/Sura Nualpradid) Everyway says it entered an engineering,
procurement, installation and construction contract with the government of
Ghana’s Ministry of Roads and Highways in 2012.
The contract provided for the
Beijing company to design and build the Accra Intelligent Traffic Management
System Project and to supply equipment needed for this purpose. The project –
which involved the installation of CCTV and automatic number plate recognition
systems to catch traffic violations – was funded by a loan from China
Development Bank.
In December 2018, Everyway said
the Ghanaian parliament approved the contract and it came into effect in July
2019. Since then, the company says it has been carrying out works under the
contract but has yet to receive any payment from Ghana.
In November last year, Everyway
said Ghana rescinded its approval of the contract and approved a new contract
for the completion of the project, with two other Chinese contractors, Huawei
Technologies Company and the China National Import and Export Corporation.
Among other treaty breaches,
Everyway alleges that Ghana has unlawfully expropriated its investment in the
project, failed to accord it fair and equitable treatment or reasonable
protection and breached the umbrella clause of the China-Ghana BIT (applied through
the most-favoured nation clause).
According to a Ghanaian news
report from 7 November last year, the chairman of the Finance committee of
parliament Mark Assibey-Yeboah justified the change of contractor to the house
on the basis that background checks conducted on Everyway by the Ministry of
National Security had called the company’s reputation into question and
suggested that it lacked overseas experience and manpower to carry out the
project.
Opposition politician Govern
Kwame Agbodza objected to the change, warning that the termination of
Everyway’s contract was illegal and if parliament approved the new deal “we may
be setting this country up for [a] judgment debt sooner or later.”
On the same day, another
publication reported Agbodza, saying that if Everyway was not suitable to
perform the contract this should have been established through due diligence in
2018 and questioned why the matter had been taken from the Ministry of Roads
and Highways and passed to the National Security Ministry.
“What has the synchronisation of
traffic in Accra got to do with National Security?” he asked.
In a report dated November 9,
the chairman of the defence and interior committee of the Ghanaian parliament,
Seth Acheampong, defended the decision, suggesting the deal with the new
contractors differed from the original deal and was in line with conditions
imposed by “the people who are offering us the facility, the Chinese”.
The new contractors had to be
Chinese, he said. The China-Ghana BIT was the first entered between China and
an African country, in 1990, and provides that the tribunal which hears the
dispute shall determine its own procedure and “may… take as guidance” the rules
of the SCC Arbitration Institute or ICSID.
It says that each party in the
dispute should appoint its own arbitrator within 2 months of the notice of the
arbitration, and that they then have a further 2 months to select a national of
a third state with diplomatic relations with both China and Ghana as chair of
the tribunal. If the tribunal is not constituted within 4 months, either party
may invite the chair of the SCC Arbitration Institute to make the necessary
appointments.
There have been only a handful
of previous investor-state arbitrations led by mainland Chinese investors,
though claims by Hong Kong or Macao investors are slightly more common (and
have included a claim against Tanzania brought by the Macao-registered Standard
Chartered Bank).
The first known claim by a
mainland investor was brought by Beijing Shougang Mining Investment Company
against Mongolia in 2010.
Insurance company Ping An,
brought a claim against Belgium in 2012 and Beijing Urban Construction Company
led against Yemen in 2014 – the only other claim to feature a construction
contractor. There has also been a case against Greece, brought in 2019 by solar
power investors Wuxi T Hertz Technologies and Jetion Solar, and late last year
investors linked to business group DCH led a claim against Ukraine over a
blocked aerospace deal.
The Shougang and Ping An claims
ended with jurisdictional awards unfavourable to the Chinese investors, while
Beijing Urban Construction Company settled with Yemen following a favourable
jurisdictional award. Wuxi T Hertz and Jetion withdrew their claim in late 2019
for undisclosed reasons, and the DCH claim has only recently begun.
On February 9, GAR reported on a
“billion-dollar treaty claim” brought by Chinese property investors against an
African state, in a story about the promotion of London-based Robert Kovacs to
special counsel at Withers. Kovacs is working on the case, which GAR
understands to be against Nigeria. Contacted by GAR, Withers’ co-head of
international arbitration Hussein Haeri confirmed that the firm is representing
a mainland Chinese investor in a BIT against an African state but would give no
further details.
He would not confirm that the
claim is against Nigeria. In 2014, GAR reported on another arbitration arising
from Chinese investment in Africa, brought by a state not an investor under ICC
rules. In this case, the central African state of Chad sought US$1 billion from
the China National Petroleum Corporation for failing to pay a fine for alleged
environmental damage caused by oil dumping. The claim settled in late 2014, a
few months after being led.
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