Feud Over VRA Contract • Court To Hear Case Feb 26

The Accra High Court will, on February 26, 2007, commence hearing a case between two United States (US)-based companies which has implications for the country's energy needs.

The two are feuding over a contract signed with the Volta River Authority (VRA) in 2002 which would have culminated in the supply of 85 MW of power to supplement supplies from the Akosombo Dam and the Aboadze Thermal Plant.

Lushann International Energy Incorporated, the plaintiff, is seeking a declaration that the conduct of the defendant, G. E. Energy Rentals Incorporated, amounted to a breach of contract.

On January 10, 2002, the management of the VRA, under Dr Charles Wereko-Brobby, entered into an agreement with Lushann for the lease of the 85 MW power plant for a three-year period to supplement the energy supply in the system.

The statement of claim said in order to ensure efficiency, the plaintiff entered into an agreement with the defendant to jointly execute the project.

However, according to the plaintiff, the defendant used plaintiff's trade secrets and strategic information regarding its Power Purchase Agreement (PPA) with the VRA without its consent.

It further contended that the defendant interfered with the plaintiff's contractual relationship with the VRA, which resulted in the termination of the PPA, and misappropriated its trade secret.

It said on February 8, 2002, the plaintiff executed a PPA with the VRA for the emergency supply of power to Ghana.

According to the statement, after the execution of the PPA, the plaintiff, mindful of the time constraints, aggressively expended effort, time and resources towards its implementation.

These included negotiating and executing several agreements, making trips within the US, to Europe and Africa.

The statement said because of the estimated time of four to six months required to pour concrete for the installation of a permanent plant, the VRA and the plaintiff decided to resort to the temporary use of skid mounted units.

It said the plaintiff found out that the defendant had several of the skid mounted units in the US to rent out and so with the assistance of the defendant's personnel conducted an inspection of the units.

The plaintiff also indicated its interest in working with the defendant in order to deploy some of the units in Ghana in the performance of the PPA.

The statement said the plaintiff and the defendant then commenced discussions and negotiations aimed at exploring ways and means of implementing the PPA with the VRA and sent the defendant a copy of the PPA, a copy of the Letters of Credit opened in plaintiff's favour by the VRA and the names of its primary contacts at the VRA.

It said during those discussions, the plaintiff revealed its trade secrets, confidential business information and the strategic plans for power generation in Ghana and the rest of West Africa, with assurances from the defendant that the information would be utilised only to further the plaintiff's relationship with the VRA.

It was also to enable the defendant to assess plaintiff's invitation to form a limited joint venture with the defendant for the purpose of supplying power to the West African sub-region.

According to the statement, as a result of those discussions and negotiations, the plaintiff and the defendant executed a memorandum of understanding (MoU) on or about March 20, 2002 in furtherance of the plaintiff's PPA with VRA.

It said without the plaintiff's consent, the defendant began to make contacts with the VRA in respect of the plaintiff's PPA and thereby complicated the plaintiff's relationship with the VRA and succeeded in wresting the PPA from it.

The statement said the defendant was liable for tortuous interference with contractual relationship, misappropriation of trade secret, breach of implied covenant not to compete and breach of non-circumvention agreement.

In its statement of defence, G. E. Energy Rentals Incorporated denied each and every statement of fact and or allegation in the statement of claim.

It contended that the plaintiff's action was an abuse of the process of the court and failed to disclose a reasonable cause of action for which relief could be granted.

It said the defendant's rights and obligations were defined under and limited by the terms of the MoU, adding that the plaintiff materially breached the MoU and did not fulfil its conditions by not making the required down payment.

The statement said the defendant's conduct was taken in good faith and was legally justified, pointing out that the plaintiff was not entitled to any of the reliefs endorsed on the writ of summons and statement of claim.

It, therefore, prayed that the case be dismissed or stayed as frivolous, inconvenient and vexatious.