Dr Benjamin Kunbuor - Attoney-General and Minister of Justice The Supreme Court has, in a unanimous decision, ruled that the power purchase agreement (PPA) between the government of Ghana and Balkan Energy Ghana over a lease agreement on the Osagyefo Power Barge in July 2007 was an international transaction not enforceable as infringing on Article 18 (5) of the Constitution.

The ruling brings to closure the long legal tussle between the two parties in which the Attorney-General (AG) sought a relief praying the court to declare the agreement as constituting an international business transaction since it did not go through parliamentary approval, to which Balkan Energy Ghana, the second defendant in the case, disagreed.

Balkan Energy Ghana, a subsidiary of Balkan Energy Company LLC of the United Kingdom, was sued by the state in 2007, challenging the legitimacy of the PPA that leased the Osagyefo Power Barge to Balkan Energy to operate.

In its ruling Wednesday, that lasted about an hour, the seven-member panel, presided over by Justice William Atuguba, declared that the signing of a memorandum of understanding (MoU) between Balkan Energy Ghana with the government over the Osagyefo Power Barge constituted an international transaction.

Reading the ruling, Justice Atuguba urged Parliament to initiate moves to clearly set the parameters to determine what constituted an international business transaction, since the current constitutional provision did not clearly define that aspect of transaction.

He ordered the High Court to dispose of the case following the Supreme Court’s decision on the matter.

The facts of the case were that the PPA was executed by the Ministry of Energy for lease to Balkan Energy Ghana of a 125 Megawatts dual-fired power barge, popularly known as the Osagyefo Barge, sited at Effasu in the Western Region.

The agreement also involved the repair, rehabilitation and inauguration of the Osagyefo Barge by Balkan Energy Ghana within 90 days as stipulated in the PPA, but the contract did not seek parliamentary approval, which was in contravention of Article 181 of the Constitution which deals with parliamentary ratification of loan agreements.

While Article 181 (1-4) deals with parliamentary ratification of loan agreements, Article 181(5) extends the requirement to “international business transactions” to which the government is a party.

It states, “This article shall, with the necessary modifications by Parliament, apply to an international business or economic transaction to which the government is a party as it applies to a loan.”

But the defendants contended that the PPA was a valid contract between the plaintiff and a Ghanaian company which, for them, was not an international business or economic transaction.

The defendants also referred to Section 315 and Schedule 1, Clause 1, of the Constitution, arguing that the term “non-Ghanaian company” was defined as “any association incorporated or to be incorporated outside Ghana not being an external company as defined in section 302 of this act”.

But the plaintiff disagreed, citing several factors which rendered the PPA an international business transaction, adding that the expression of interest in the inauguration of the barge and the negotiations for the PPA were conducted entirely by Balkan Energy LLC which entered into an MoU for the project.

The plaintiff further argued that the second defendant, the party which eventually executed the PPA, was nominated to do so by the first defendant and incorporated in Ghana some 11 days before the execution of the PPA.

The second defendant, the company incorporated in Ghana, had 100 per cent of its issued shares owned by Balkan Energy Limited (Balkan UK), a company incorporated and based in the United Kingdom.

On the indemnity provisions of the PPA, the plaintiff argued that the provisions potentially applied to foreign persons, citing Clause 15.4 of the PPA which provides that the government “shall indemnify and hold harmless Balkan Energy Company (BEC) and its officers and employees from and against all damages, losses and reasonable expenses suffered or paid by BEC as a result of any and all claims for personal injury, death or property damage to third parties…. and resulting from any act or omission of the government or its agents or employees”.

graphic.com.gh