Summary

GPGC Limited v The Government of the Republic of Ghana - PCA Case No 2019-05 - Final Award - 26 January 2021

TABLE OF CONTENTS
I. INTRODUCTION
The Parties to the Arbitration and their Representatives
The Arbitration Agreement
The Arbitral Tribunal
II. PROCEDURAL HISTORY
III. THE DISPUTE
IV. SUMMARY OF FACTS
V. THE RELEVANT PROVISIONS OF THE EPA
VI. OUTLINE OF THE PARTIES' POSITIONS
Claimant's Position
GoG's Failure to Satisfy its Obligations under the EPA
GoG's Failure to Appoint an Authorized Representative
GoG's Failure to Allocate a Site
GoG's Failure to Satisfy its Contractual Obligation to Exempt GPGC from any Tax Liability
GoG's Failure to Satisfy its Contractual Obligation to Assist GPGC with the Conclusion of a "Water Supply Agreement"
GoG's Failure to Supply Gas to the Boundary of the Allocated Site or to Assist with the
Procurement of a Gas Supply from Ghana Gas
GoG's Failure to Satisfy its Contractual Obligation to Assist GPGC with the Conclusion of a "Grid Connection Agreement" with Ghana Grid Company
GoG's Failure to Assist GPGC with Procuring a Generation Licence from the Ghanaian Energy Commission
GoG's Termination Notice
GPGC's Entitlement to Claim the Early Termination Payment under the EPA
GoG's Position
GoG's Appointment of an Authorized Representative
Failure to Allocate a Site for the Project
Failure to Grant Tax Exemptions
Failure to Assist with Procurement of Water Supply
Failure to Assist with Procurement of Gas Supply
Failure to Assist with Conclusion of the Grid Connection Agreement
Failure to Assist with the Procurement of the WES Licence
GoG's Termination Notice
GPGC's Entitlement to Claim the Early Termination Payment under the EPA
VII. GPGC'S REPLY TO GOG'S DEFENCES
Respondent's Frustration Theory
GoG's Claim that the EPA Never Entered into Force
GoG had No Right to Terminate the EPA on the Basis of GPGC's Failure to Procure
Licences, Approvals and Agreements
GoG had No Right to Terminate the EPA by Reason of the Leasing of the Blue Ocean Site
GoG was Not Entitled to Terminate the EPA on the Basis of an Alleged Anticipatory
Breach of the EPA by GPGC
The Early Termination Payment
The First Component: the Early Termination Fee
The Second Component: Mobilization Costs
a. Kpone Site costs
b. Blue Ocean Site costs
c. The taxes incurred in the context of the mobilization activities
d. The costs incurred after the Resp. Termination Notice
The Third Component: Costs Reasonably Incurred by GPGC as a Result of Early
Termination
Demobilization Costs
The Early Termination Payment claimed by GoG
VIII. GOG'S REJOINDER
Adverse Inference
The Frustration of the EPA
The EPA did not Come into Effect
GoG's Right to Terminate the EPA for GPGC's Breach of its Conditions
Subsequent
The Provision of Assistance to GPGC
The Appointment of an Authorized Representative
GPGC's Breach of Conditions Subsequent: Failure to Obtain the WES Licence
GPGC's Breach of Conditions Subsequent: Failure to Execute the Grid Connection Agreement
GPGC's Breach of Conditions Subsequent: Failure to Execute the Water Supply Agreement and to Procure Gas Supply
Termination of the EPA due to GPGC's Acquisition of the Blue Ocean Site
Termination of the EPA on the Basis of GPGC's Breaches of Other Express Procedures and Requirements under the EPA
GPGC's Alleged Entitlement to the Early Termination Payment under the EPA together with Interest
GoG's Counterclaim
IX. RELIEF SOUGHT
X. ANALYSIS
The Operation of the EPA
Did Non-Satisfaction of the Condition Precedent Result in the EPA Never Coming into Effect?
The EPA Took Effect but GPGC Failed to Satisfy Certain Conditions Subsequent
Failure to Allocate/Provide Unimpeded Access to a Site
GOG's Authorized Representative
GPGC's Requests for Assistance
GPGC's Selection of the Blue Ocean Site
GPGC Commenced Construction at the Blue Ocean Site without the Necessary
Permits
The Importation of the GPGC Equipment into Ghana was Premature
The A-G's Advice
GoG's Asserted Right to Terminate the EPA Pursuant to Clause 24(d)
"Mutual Breach"
No Acceptance of GoG's Repudiation within a Reasonable Time
Conclusion
Early Termination Payment
Early Termination Fee (Clause 25(b)(i))
Guaranteed Capacity of the GPGC Plants
a. Assumed period of Continuous Operation
b. 12% Discount
Mobilization Costs
Demobilization Costs
Other Costs Reasonably Incurred: Preservation and Maintenance Costs
Conclusion
XI. INTEREST
XII. COSTS
XIII. DISPOSITIF

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THE ARBITRATION AGREEMENT

3. A dispute has arisen between GPGC and GoG under an Emergency Purchase Agreement dated 3 June 2015 entered into between GPGC and GoG, which was ratified by the Parliament of Ghana on 23 July 2015 (the "EPA").2

4. Clause 28(f) of the EPA provides, in relevant part, as follows:

"28. Miscellaneous

[...]

f. Dispute Resolution.

[...]

xv. Where any dispute or disagreement, not being an Invoice Dispute, arising out or in connection with this Agreement cannot be settled cannot by negotiation, then the dispute shall be settled finally by ad-hoc arbitration to be conducted in accordance with the UNCITRAL Rules in effect on the date of the institution of arbitration by either Party.

xvi. The matter shall be heard and decided, and awards rendered by a panel of three arbitrators (the "Arbitration Panel"). GPGC and the GoG shall each select one arbitrator and those two arbitrators shall select a third arbitrator; provided, however, that in the event the two arbitrators cannot agree on a third arbitrator, the Secretary-General of the Permanent Court of Arbitration shall select the third arbitrator being an individual with substantial experience in the power industry. The venue and seat for the Arbitration shall be London, England and the law of the arbitration shall be the English law.

xvii. In arriving at their decision, the arbitrators shall consider the pertinent facts and circumstances and be guided by the terms and conditions of this Agreement; and, if a solution is not found in the terms of this Agreement, the arbitrators shall apply the governing law of this Agreement. Both Parties shall have the right to present documentary evidence, witnesses and to cross- examine witnesses. The decision of the arbitrators shall be final and binding upon both Parties, and neither Party shall seek recourse to a law court or other authorities to appeal for revisions of such decision. The Parties shall be entitled to seek, and the arbitrators shall be entitled to grant provisional remedies. Reasonable expenses of the arbitration shall be borne as the arbitrators may determine. On request of either Party, a transcript of the hearings shall be prepared and made available to the Parties, provided, that the cost of such transcript shall be paid by the requesting Party. The arbitrators shall be required to render a final decision within six (6) months of the date of the commencement of the arbitration." [Emphasis omitted]

5. On 10 January 2019, the Parties agreed that the final sentence of Clause 28(f)(xvii) of the EPA, which requires a final decision to be rendered within six (6) months of the date of the commencement of the arbitration, shall not apply to the present arbitration.

...

II. PROCEDURAL HISTORY

10. By Notice of Arbitration dated 13 August 2018 (the "Cl. Notice of Arbitration"), GPGC commenced arbitration proceedings against GoG pursuant to Clause 28(f) of the EPA and Article 3 of the UNCITRAL Rules.

11. On 5 December 2018, GoG submitted its Response to the Cl. Notice of Arbitration (the "Resp. Response").

12. By email dated 3 March 2019, sent on behalf of both Parties by GPGC, the Parties circulated an agreed draft of Procedural Order No. 1. They invited the Tribunal to confirm its availability for a five-day hearing in the week of 10 February 2020. That same day, the Presiding Arbitrator informed the Parties that he had no availability before the week commencing 6 April 2020.

...

XIII. DISPOSITIF

555. On the basis of the submissions, facts and matters in the record before it, the Tribunal

finds and hereby AWARDS as follows:

1. DECLARES that the EPA has been validly terminated by GPGC on account of GoG's repudiatory conduct;

2. ORDERS GoG to pay to GPGC the full value of the Early Termination Payment, together with Mobilization, Demobilization and preservation and maintenance costs in the amount of US$ 134,348,661, together also with interest thereon from 12 November 2018 until the date of payment, accruing daily and compounded monthly, at the rate of LIBOR for six-month US dollar deposits plus six per cent (6%).

3. ORDERS GoG to pay US$ 309,877.74 in respect of the Costs of the Arbitration, together with US$ 3,000,000 in respect of GPGC's legal representation and the fees and expenses of its expert witness, together with interest on the aggregate amount of US$ 3,309,877.74 at the rate of LIBOR for three-month US dollar deposits, compounded quarterly.

4. DISMISSES GoG's counterclaim for an Early Termination Payment in its entirety.

5. All and any other claims and counterclaims of whatsoever nature are hereby dismissed.

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Arbitral Tribunal
Mr John Beechey, CBE (Presiding Arbitrator)
Mr J. William Rowley QC
Professor Albert K. Fiadjoe