Two separate applications filed by Investcom Consortium and Scancom Limited, operators of the Areeba mobile phone network, to stay proceedings in a suit by David Andreas Hesse, a shareholder in the company, pending arbitration, were yesterday dismissed by the Commercial Division of the High Court.
According to the court, the disadvantage to the plaintiff, who was an individual fighting arbitration proceedings in London and a separate action against Scancom Ltd in another forum far outweighed the advantages to the defendants if stay was granted.
The court, presided over by Mrs Justice Cecilia H. Sowah, awarded ¢3 million costs against either of the defendants and adjourned the substantive case to February 8, 2007.
In the substantive case, Mr Hesse has sued the defendants seeking an order to reverse the alleged capital increase, the alleged dilution of his shares from six per cent to two per cent and the alleged transfer of his shares to Investcom Consortium.
He is also seeking an order to restore his six per cent shares in Scancom Ltd or in the alternative an order directed at the company to purchase his shares in Scancom Ltd after a valuation of Scancom Ltd by independent auditors.
Furthermore, the plaintiff is seeking an order of perpetual injunction to restrain Scancom Ltd, acting by itself or its shareholders and officers, from removing him as a director of Scancom Ltd in breach of the Shareholders Agreement and the law.
In addition, Mr Hesse is seeking an order to restore 3.4 per cent shares of Scan Construction Ltd in Scancom Ltd or an alternative order that 914,600 of the ordinary shares of Scancom Ltd, representing his 25 per cent interest in Scan Construction Ltd, be restored to him.
He is also seeking an order that the parties go into account to determine the amount of dividends due him on his shares and an order directed at the defendants to pay such amount to him.
It was in those proceedings that the defendants, by separate applications, both filed asking for a stay of proceedings pending arbitration.
In its ruling, the court held that Investcom's application was premised on Ghana's Arbitration Act 1961, Act 38, especially Section 40, and the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted in New York on June 10, 1958.
It stated that counsel for Investcom submitted that so long as the agreement had not been shown to be void, inoperative or incapable of being performed, then the court was obliged to stay proceedings so that respect was given to the mode agreed by the parties.
In respect of Scancom Ltd, counsel for the plaintiff submitted that it was not a party to the Shareholders Agreement, nor had it shown that it was a beneficiary, and, therefore, had no ground to file the application.
The court concluded that Scancom Ltd, not being a party to the Shareholders Agreement, had no locus in filing an application for stay.
The plaintiff raised the issue whether the UK was a country recognised or declared by the President of Ghana to be a reciprocating party to the UN Convention and if not whether an application which proposes London as the forum for the arbitration could be granted when the law applicable was Ghanaian law.
The court held that the countries recognised by the President of Ghana to be parties to the UN Convention did not include the UK, as the law stood currently, and in effect an arbitral award obtained in the UK could not be enforced in Ghana.
It said the particulars of the matters pleaded satisfied the requirements of the law and were sufficient to justify a refusal of stay in order that it would try those serious issues.
It was of the view that the plaintiff had more than discharged the burden on him to show cause why effect should not be given to the agreement to submit to arbitration in London.
The court held that there would be a double proceeding if the case between the plaintiff and Scancom Ltd was referred for arbitration in London, while the case against Investcom, who was not a party to the agreement, would have to continue in Ghana.
In that way, it held, there would be inconvenience, as well as a financial strain on witnesses who might have to testify in the case.
Story by Stephen Sah