Judgment Debt Default: U.S. court awards $111 million to Trafigura against Ghana

Ghana disregarded a previous tribunal verdict from the United Kingdom, which led to this ruling.

After Ghana terminated a power purchase deal with Ghana Power Generation Company (GPGC) on February 18, 2018, a UK tribunal found on January 26, 2021, in its Final Award, that Ghana had broken its contractual duties.

According to Ghana, the contract was terminated because the foreign power company did not fulfill certain contractual obligations.

The tribunal, however, disapproved and granted GPGC $134,348,661 in damages, which were computed using the purchase agreement’s Early Termination Payment formula.

The award includes compensation of GPGC’s arbitration fees and expenses in the amount of $3,309,877.74, with interest at three-month USD LIBOR, compounded quarterly, and an interest rate of six-month USD LIBOR + 6%.

Following fruitless attempts to obtain the outstanding payment from Ghana, GPGC filed a lawsuit on January 19, 2024, in the U.S. District Court, claiming recovery of the mounting debt under the Federal Arbitration Act’s Chapter 2 and the New York Convention.

According to court records, Ghana’s Minister of Foreign Affairs and Regional Integration, Shirley Ayorkor Botchwey, received the petition from the US court on January 23, 2024.

The signed certification of receipt accompanied the delivery of the documents to Ghana on January 29, 2024.

Ghana did not show up for the court proceedings, nevertheless, and did not reply by the deadline of March 29, 2024.

Citing the New York Convention, which the United States has adopted and which recognizes arbitral awards made in the United Kingdom, the court decided that it had jurisdiction over the matter.

The court further observed that Ghana had agreed, in the power purchase agreement, to submit to international arbitration and had specifically relinquished its sovereign immunity, a report by adomonline.com said.

Chief Judge James E. Boasberg stressed that the arbitral judgment between the non-U.S. parties resulted from a commercial transaction, which is covered by the New York Convention, in his memo ruling dated August 6, 2024.

Irrespective of the parties’ citizenship or place of residence, the Convention mandates that member states acknowledge and uphold these awards.

Although GPGC was not granted pre-judgment interest by the judge, Ghana will still be burdened financially by the court’s award of post-judgment interest at the rate set forth in US regulations.