Supreme Court Rules on Balkan Energy Deal

Dr. Joe Oteng-Adjei, Energy Minister

THE Supreme Court yesterday stayed proceedings of a case at an Accra High Court involving Balkan Energy Ghana Limited and the Government of Ghana after it ruled that there were certain issues raised in the case which needed interpretation from the court.

The court presided over by Justices Sophia Akuffo, Date-Bah, Sophia Adinyera, Sule Gbedegbe and Vida Akoto Bamfo indicated that the High Court usurped the jurisdiction of the Supreme Court by not referring to it certain constitutional matters which needed interpretation as requested by the state.

It therefore ordered the Supreme Court registrar to place the case docket before the court so it would be empanelled for the determination of those matters.

The state, led by the Minister for Justice and Attorney General, alleges that Balkan Energy Ghana Limited, owned 100 percent by Balkan Energy Company LLC, a company based in USA in 2007, entered into a Power Purchase Agreement with Government of Ghana for the Osagyefo Badge.

However, although government was part of the deal, the agreement did not pass through parliament for approval.

So when the Mills administration came into office, it observed the anomaly and raised issues about it but the company took the government to an Arbitration Tribunal outside Ghana.

The state on the other hand decided to drag Balkan Energy Ghana Limited, its mother company Balkan Energy Company and one Phillip David Elders to the High Court to seek certain reliefs.

The Attorney-General was seeking an injunction restraining the company, its agents, affiliates and subsidiaries from instituting or pursuing arbitration proceedings or any other proceedings against government outside the jurisdiction of Ghana.

The AG, in the course of proceedings, observed that some portions of their reliefs were constitutional matters which needed to be interpreted by the Supreme Court.

Although the state moved an application for these aspects to be sent to the Supreme Court, the High Court refused to do so. It therefore appealed against the High Court ruling, which went in its favour yesterday.

The Supreme Court was to determine whether or not the agreement between government and Balkan Energy Limited and the arbitration provisions contained in the said agreement constituted an international business transaction under article 181 of the constitution.

The AG is urging the Supreme Court to give a true and proper interpretation of article 181(5) of the constitution to the effect that the words 'international business or economic transaction to which the Government is a party applies to a business transaction between the government and a company incorporated in Ghana, owned wholly by foreigners and capable of enjoying the status of a strategic foreign investor under the Ghana Investment Promotion Center Act, 1994(Act 479)'.

It is the submission of the AG that an interpretation which permits such entity to escape the mandatory requirements of article 181(5) by Parliament would be inconsistent with the letter and spirit of Article 181.

The AG observed that without this interpretation, the absurd result would be that Ghanaians who enter into loan transactions with the government under the same article 181 will have to comply with having their agreements laid before and approved by Parliament, while a wholly foreign-owned company with all the characteristics of an international business will escape that requirement.

'It is our submission that the mischief that article 181 sought to cure is to ensure that both Ghanaians and foreigners who enter into business or economic transactions with government do not escape the requirement of parliament approval to promote probity and accountability'.

Other reliefs being sought at the High Court by the state include a declaration to the effect that the 'Power Purchase Agreement made on July 27, 2007 between the government of Ghana and Balkan Energy constitutes an international business transaction to which government was a party and is unenforceable as it infringes article 181 of the 1992 constitution.

The state also seeks a declaration that clause 22.2 of the said agreement constitutes an international business transaction to which the government was party, and is therefore unenforceable as it infringes article 181(5) of the 1992 constitution.

In addition, they requested the court to award cost against defendants.

By Mary Anane