Balkan Energy (Ghana) Limited v. Republic of Ghana
PCA · Investment (ICSID and treaty) · Ghana · 22 Dec 2010
Why it matters
This interim award is significant for its robust application of the doctrines of competence-competence and separability in the face of a state's anti-arbitration injunction. The Tribunal affirmed that an arbitration clause survives even if the main contract is allegedly void under national law, and that a state cannot use its own courts to block an international arbitration it agreed to. The decision reinforces the pro-arbitration stance under the New York Convention and clarifies that states must respect their arbitration commitments.
Summary
The dispute arose from a Power Purchase Agreement (PPA) between Balkan Energy (Ghana) Limited and the Republic of Ghana for the refurbishment and operation of a power barge. After disagreements over performance, Ghana invoked arbitration but later obtained an injunction from the Ghanaian High Court restraining Balkan from proceeding, arguing the PPA was void for lack of parliamentary approval under Ghana's Constitution. The Tribunal, constituted under UNCITRAL Rules and administered by the PCA, had to decide its own jurisdiction. Applying the principles of competence-competence and separability, the Tribunal held that the arbitration clause in the PPA is separate from the main contract, so even if the PPA is invalid, the arbitration agreement remains valid unless specifically challenged. The Tribunal found no evidence that the arbitration clause itself was invalid. It also rejected Ghana's argument that the injunction should halt the arbitration, noting that the New York Convention obligates states to respect arbitration agreements. The Tribunal therefore affirmed its jurisdiction and ordered the arbitration to proceed on the merits, while urging Ghana not to pursue contempt proceedings against Balkan. The award is an interim decision; the final award on the merits is not included in this document.
The detail
Parties: Balkan Energy (Ghana) Limited v. Republic of Ghana
Case number: PCA Case No. 2010-7
Outcome: The Tribunal upheld its jurisdiction, rejecting Ghana's challenge that the PPA and arbitration clause were void for lack of parliamentary approval. The Tribunal ordered the arbitration to proceed on the merits.
Applicable law: Power Purchase Agreement (PPA) dated 27 July 2007; UNCITRAL Rules (1976); Ghanaian law; New York Convention; Netherlands Arbitration Act 1986
Issues in play: The dispute involved a collision between Ghana's constitutional requirement for parliamentary approval of international agreements and the principle of separability of arbitration clauses under the UNCITRAL Rules and New York Convention. The Tribunal had to decide whether the alleged invalidity of the PPA affected the arbitration agreement.
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