The Public Interest Safeguards in Arbitration in Ghana

Date01 November 2020
Published date01 November 2020

The practice of public-private arbitration at the international plane, especially investor-state dispute settlement (ISDS) by arbitration, reveals systemic and endemic deficiencies.1 The United Nations Commission on International Trade and Development (UNCTAD) has summarised the issues as ‘a perceived deficit of legitimacy and transparency; contradictions between arbitral awards; difficulties in correcting erroneous arbitral decisions; questions about the independence and impartiality of arbitrators; and concerns relating to the costs and time of arbitral procedures.’2 The ISDS mechanism has also become a very powerful tool that multinational business entities use to challenge measures adopted by states in the public interest. More than 70 per cent of the 2013 investor-state claims concerned investments in the services sector, where public interest regulation is important, such as the supply of electricity or gas, telecommunications, construction, tourism, banking, real estate services, water, media and advertising.3 This should concern a developing country such as Ghana as its constitution accords the state authority and policy space to take all necessary action to ensure and maximise the public interest.4

In view of the limitations that international arbitration, in particular ISDS, places on states’ regulatory autonomy, legal scholarship in international investment law has focused mainly on the implications of treaty-based arbitration for public interest regulation and the strategies to address that.5 The scholarship can be grouped into those for transnational investment and trade regimes (including international arbitration) because of their abiding belief in the good of these global regimes for national development and the need for free trade and investment thereof.6 There are also scholars who are critical and skeptical about the role of private capital alone in national development and about the regimes’ ability to limit what states want to do in order to advance the very development objective that is used to justify these regimes.7 There is a third group of scholars who in seeking to bridge these two divisions argue that it is possible to have ‘a nuanced system of international private law, sensitive to both the sovereign state's public values and the private rights and interests of foreign investors whose protection is central to the object and purpose of the regime.’8

This article is written within these contexts. The question it addresses is whether the concerns about the limitations that public-private arbitration places on public interest regulation can be addressed from within the terms of the legal regime's governing arbitration. The article contributes to the debate about the implications of investment and commercial arbitrations for public interest regulation by analysing the question of how the Ghanaian legal system ensures that the use of arbitration to resolve disputes between public and private actors does not undermine the public interest.

A number of conclusions can be made from the analysis undertaken on Ghana's arbitration system. The first is that the Alternative Dispute Resolution Act 2010 (Act 798) (ADRA),9 the primary legislation governing arbitration in Ghana, insulates the public interest issues from both domestic arbitration and international arbitration by providing that certain matters of the public interest including the interpretation of Constitution of the Republic of Ghana 1992 (the Constitution) and matters relating to the environment and human rights are not arbitrable. The position of the ADRA is influenced by the constitutional assignment of exclusive or original jurisdiction to the Supreme Court of Ghana and the High Court when it comes to interpreting the Constitution and enforcing fundamental human rights. This is to ensure that certain functions inherent in the nature of government are not assigned to private arbitrators. While these ideals can be achieved in domestic arbitration, this cannot be the case in international arbitration where issues involving constitutional arbitration have been entertained by tribunals. To safeguard the public interest in public-private arbitration, the ADRA also provides for a monitoring role of the courts in arbitration proceedings while ensuring that the integrity of the arbitration is not jeopardised by the involvement of the courts. The involvement of the courts, whether in the course of arbitration or in the enforcement of a final award, ensures that both the public and private interests are protected and that the role of the state in the protection of both the public and private individuals, whether foreign or domestic, is not left absolutely in the hands of private actors.

The second point is that Ghana's legal system does not maintain a difference between public-private arbitration and private-private arbitration when it comes to the arbitrability of certain issues. All issues that are not arbitrable in public-private arbitration cannot be arbitrated simply because the dispute involves private parties. Therefore issues bordering on crime and fundamental human rights and constitutional interpretation cannot be arbitrated. Again, this is a mechanism intended to protect the public interest in public-private arbitration. Similarly, where the subject of a dispute is one that is arbitrable, the involvement of the state or its organs even in their public character does not make any difference; the subject-matter will be arbitrable as will be the case in private-private arbitration. However, domestic arbitration is conducted in accordance with procedures specified by the state and the private parties and in accordance with the ADRA. Contract-based arbitration involving domestic private parties and the state are conducted in accordance with ADRA and the agreement between the state and the private party. Treaty-based arbitrations normally between the foreign party and the state are conducted in accordance with the applicable convention and the agreement between the parties and will be enforced in accordance with the ADRA and the applicable convention. The ADRA accords a lot of respect for party autonomy. So if the subject-matter is capable of arbitration it can be resolved in a forum and in accordance with the terms and procedures specified by the parties.

The third point is that the ADRA is silent on what happens in arbitration involving a private company exercising a public function, whether the same considerations as applicable to public-private arbitration also apply when private companies exercise a public function or whether such arbitration will be treated as private-private arbitration. In international commercial and investment arbitrations the actions of such a company might be attributable to the state to the extent that it exercises public functions despite being private. However, public companies that are independent of government control will be treated as separate from the state and their actions will not be attributable to the state even if they perform a public function. In such a case, only those companies can be sued directly and not the state.10

The common law is part of the Ghanaian legal system under Article 11(1) and (2) of the Constitution. Therefore, it might be argued that the state can under the common law delegate its functions to a private company and that if it does so, the same considerations as applicable to public-private arbitration will apply to arbitration involving such a company. However, as argued by Professor Kojo Yelpaala, the principle of constitutional law and administrative law is that ‘the State itself is an instrument of its citizenry that is given certain functions and responsibilities which would tend to limit the powers of the State to delegate. The State cannot therefore authorize its agents and instrumentalities to do those things that the State itself is not authorized to do or prohibited from doing.’11 The principle that the state cannot delegate particularly works in the case of constitutional functions of the state. For example, the constitutional functions of the courts and the executive cannot be assigned to a different institution or person unless the Constitution is amended to allow that to happen. This is the reason for the removal of an issue such as constitutional interpretation from being the subject-matter of arbitration. So the question of a private company exercising a public function independently does not seem to be one that will arise in Ghana given the constitutional and administrative laws of Ghana.

The fourth and final point is that arbitration in Ghana is a governance system. The ADRA specifically establishes the legal and institutional framework for arbitration. Under the Ghana Investment Promotion Centre Act 2013 (Act 865) (GIPCA) and Ghana's investment treaty framework, the promotion and protection of investment is primarily aimed at meeting national development objectives. The protection of investments in this context is aimed at providing a secure and stable environment for investment in the hope that foreign business will bring about development. This approach is consistent with the duties of the government under the Constitution, including Article 1(1), to exercise the powers of government in the name of and for the welfare of the people of Ghana. Arbitration in Ghana is promoted not only in the interest of private business but in the public interest as well. Therefore constitutional law plays an important role in the system for private-public arbitration in Ghana because it sets the framework governing the role of the state in protecting the public interest and bringing about development. Trade, commercial and investment agreements and arbitration are part of important policy measures that the state adopts to meet its development objectives.

The role of the Constitution in the arbitration system in Ghana is also reflected in the fact that...

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