1.0. INTRODUCTION

“Ghanaian courts must be the primary arbiter in all disputes relating to natural resources in Ghana although decisionsmay be appealable to dispute resolution mechanisms outside of Ghana particularly to regional, continental and global judicial bodies.”1

1.1. BACKGROUND

Sometime in June 2007, petroleum was discovered in commercial quantities off the West Coast of Ghana, referred to as the Jubilee Fields. However, the first production of oil in the Jubilee fields occurred in December 2010. The Jubilee Field is estimated to have about 80 million barrels of proven reserves and upside potential of about 3 billion barrels of oil2. It has also been said that when considered as a proportion of Ghana’s annual income, production from the Jubilee Field at its peak is estimated to generate up to 30% of the government’s income, if pegged at a price of US$75/barrel.3 Ghana’s oil reserves can be said to be relatively small on a global scale as its potential three billion barrels are significantly below those of major oil producers such as Saudi Arabia with 265 billion, Canada with 175 billion, Venezuela with 95 billion and Nigeria with 38 billion.

Prior to the discovery, various petroleum agreements were executed between the Republic of Ghana and the International Oil Companies (IOCs) containing the terms and conditions for the exploration, development and production of petroleum in the country. One of such agreements is the Petroleum Agreement between the Republic of Ghana, Ghana National 1The Ghana Constitutional Review Commission (hereinafter called ‘the Commission’). The Report is dated 20 th December, 2011, at p. 619, available at www.crc.gov.gh< Accessed on 20. 04.13.2 Public Interest and Accountability Committee (PIAC) [2012]3 Rick Vander Ploeg, Radoslav (Radek) Stefanski and Samuel Wills – Harnessing Oil Revenue in Ghana, www.theigc.org - 15 July, 2011, pp.2-3 < Accessed on 20.4 13

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Petroleum Corporation, Kosmos Energy Ghana, H.C and the E.O. Group. One of the fundamental provisions of the agreement is article 24 which deals with dispute resolution mechanisms adopted by the parties to the agreement. It is provided under the said article that where the parties fail to resolve a dispute arising from the agreement amicably, the dispute shall be resolved through international arbitration in London.

Some commentators and stakeholders have expressed their disapproval of the practice where resource-endowed but poor countries consent to a provision in agreements for the extraction of natural resources in such countries that any disputes arising from the agreement shall be resolved by international arbitration.

1.2. DEFINITION AND SCOPE

The occurrence of dispute is as old as human existence itself. A dispute is generally defined as “a disagreement on a point of law or fact, a conflict of legal views or interests between parties.4 Over the years, various methods have been employed by humans to resolve disputes whenever they occur. These methods have included the use of brute force, combat, (war) litigation, Alternative Dispute Resolution (ADR) comprising but not limited to Arbitration, Mediation, Conciliation/Negotiation and Expert Determination. It must be stated however that the first two (2) methods of dispute resolution are rarely employed currently. In relation to commercial disputes in general, the most popular methods for the resolution of such disputes and in particular, disputes in the oil and gas sector are litigation and the body of methods popularly referred to as Alternative Dispute Resolution (ADR), which we have outlined above.

4 The case Concerning East Tumor, 1995 ICJ Reports 89,99.

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1.3. STATEMENT OF THE RESAERCH PROBLEM

This paper will seek to inquire and resolve the issue of whether Courts and other adjudicating bodies in Ghana are vested with the jurisdiction to settle or resolve all matters and disputes relating to natural resources with special reference to petroleum. The paper will also inquire into whether international arbitration relating to natural resource extraction is an affront to the sovereignty of the host-country.

In recent times, the issue of whether or not natural resource rich- countries should be the primary arbiters for the resolution of disputes relating to natural resources has attracted the attention of many commentators and stakeholders, in especially developing countries endowed with natural resources. The latest advocate of such a crusade is the Constitutional Review Commission of Ghana, as contained in its recommendations.5 Submitted to the government of Ghana. According to the Commission, the exercise of Ghana’s sovereignty over and interest in its natural resources cannot be complete without making the Courts of Ghana, primary arbiters in the resolution of disputes arising from the extraction and utilization of Ghana’s natural resources.

The paper will show that the courts of Ghana are already vested with jurisdiction to entertain any matter that may be brought before it, including disputes arising from and relating to the extraction of petroleum. The paper will however conclude that where the host State negotiators find it appropriate to consider arbitration mechanism instead of litigation in the domestic Court, then they ought to ensure that domestic instead of international arbitration is provided for in the agreement. In this regard, this

5 See the Commission’s report supra at n. 1 above.

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paper will provide a draft domestic arbitration agreement or clause as a guide to the host state negotiators.

1.3 SIGNIFICANCE/ OBJECTIVE OF THE INQUIRY

The fundamental objective of the paper is to proffer credible and empirical evidence to establish the position that Ghanaian Courts are vested with jurisdiction to entertain all matters or disputes except where the 1992 has assigned jurisdiction in some special matters to other institutions. It will be shown further that submission of disputes to international arbitration is an affront to the sovereignty of resource-rich but poor countries and that where it becomes necessary for host state negotiators to prefer arbitration mechanism to domestic courts, such negotiators ought to insist on domestic arbitration and may be guided by the draft arbitration clause that will be provided at the end of this paper. In the view of the paper, this project will serve as a process for the strengthening of the foundation for further inquiry by researchers and indeed that all stakeholders may be interested in building on that foundation. It also seeks to serve as a beacon for law and policy makers, as well as host state negotiators to fashion out appropriate legal and institutional frameworks geared towards total domestication of resolution of appropriate disputes relating to natural resource extraction.

1.4 METHODOLOGY

This section looks at the methodology employed to achieve the objective of the study, basically focusing on secondary materials.

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1.4.1 RESEARCH DESIGN/SOURCE OF DATA

Among the various research designs, case studies are frequently regarded as using both quantitative and qualitative research and a combination of both approaches. This study entitled “Current Approaches To Settlement of Dispute In the Oil and Gas Sector: A Case for Domestication of Dispute Resolution in the Upstream Oil and Gas Sector in Ghana” is an exploratory research that attempts to accumulate existing information and data regarding the issue whether or not Ghanaian Courts are vested with jurisdiction to entertain disputes relating to the extraction of petroleum in Ghana and whether submission of such disputes is not an affront to the sovereignty of the resource-rich but poor countries.

The paper will adopt secondary research methods as the dominant tool for the enquiry. To this end, the paper will make extensive references to secondary sources including the Laws of Ghana, scholarly books, articles, and Journals on the subject. Materials meant for secondary data also include various publications and reports regarding the resolution of disputes relating to the extraction of natural resources in resource-endowed countries, with special reference to Ghana.

2.0. RELATED LITERATURE REVIEW

2.1. TYPES OF DISPUTE IN THE OIL AND GAS INDUSTRY

Disputes relating to petroleum activities may border on matters such as:6 (a) International Maritime Boundary Disputes, for example the Bukasso

Peninsular between Nigeria and Cameroon, Bangladesh and Myarimar over a Bay said to be rich in oil and gas, Barbados and Trinidad and Tobago and between Cuyana and Surinam.

6Anthony Connerty "Dispute Resolution In The Oil and Gas Industry” available online at www.dundee.ac.uk/cepmlp/journal/html/vol18/article8-8.html <Accessed on 15.4.13 This paper will however concentrate mainly on disputes between the host-state such as Ghana and the Foreign Oil Companies (FOCs) and mechanisms for their management and resolution.

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(b) Equipment

(c) Jurisdiction Disputes

(d) Oil Trading Contracts

(e) Gas Contracts

(f) Redetermination

(g) Quality Disputes

(h) Hedging

It is significant to state that nearly all transactions in the petroleum industry, especially in developing petroleum resource-rich countries are international in nature. The proponents for the resolution of disputes ensuing from the extraction of natural resources by way of international arbitration argue, quite strongly, that in most developing resource-rich countries, such as Ghana, nearly all the companies engaged in the extraction of petroleum and also minerals on a large scale are international companies, in the sense that their “owners,” controllers or investors are foreigners, even though they may set up subsidiaries to engage in the extraction of natural resources in Ghana and therefore in their view disputes between such companies and the host state ought to be settled by international adjudicating bodies.

The huge capital-intensive nature of the extraction of natural resources, especially petroleum and minerals coupled with the rather derogatory argument that the Courts in the developing resource-rich countries like Ghana cannot be either trusted or lack the capacity and the know-how to adjudicate disputes relating to natural resources, have also been some of the reasons given by the IOCs for the provision of international arbitration in petroleum agreements.

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In recent times, some commentators7 have strongly argued against the submission of an oil-rich country, (especially developing Countries) to international Arbitration and other foreign dispute resolution centres. They make the point that the insertion in a contract between the State and the international Oil Company (IOCs) for reference and submission to international dispute resolution Centers outside the jurisdiction of the host State is an affront to the sovereignty of the people who are the owners of the oil and gas reserves and resources. Others have also argued that in view of the fact that such international dispute resolution avenues consider only the commercial aspect of the contract without necessarily considering and addressing other important issues like human rights abuse, environmental rights and even political issues does not make International Arbitration Centers the ideal avenues for settlement of such disputes, as far as

developing Countries are concerned.

2.2.0. TYPES OF DISPUTE RESOLUTION MECHANISM

2.2.1. LITIGATION

Generally, unless a contract includes provisions requiring the parties to use an arbitration process, the dispute would usually be settled through the courts of the host country. However, despite the increasing use of international commercial arbitration, litigation in the host nation courts is said to be “probably… the major international dispute resolution process in use.”8

7Paul Samuel Tamuno:’ The Unsuitability and Inadequacy of the Option of Agreed Dispute Resolution Process in Disputes Between Foreign Oil Companies and Developing Oil Producing Countries.’ Available at http://CEPMLP_RNWP_2010_1pdf <Accessed on 01.05.138 See note 6 above

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2.2.2. EXPERT DETERMINATION

Dispute relating to technical aspects of the contract, for example whether specification of a particular product has been met; whether a specific test service is required; issues about cost of particular operations; the value of crude and dispute about fiscal policies are best resolved through expert determination. Normally the expert is a disinterested third party with special expertise in the subject of dispute. It is also faster and less costly than arbitration.

2.2.3. SENIOR EXECUTIVE NEGOTIATION

This method allows the senior executives to try and resolve a dispute at a meeting. The meeting is usually facilitated by a Conciliator or Mediator. It enables the parties to assess the strength and weakness of their respective cases. In the event that settlement fails, either party can proceed to another

intermediate dispute resolution step.

2.2.4. ARBITRATION

Arbitration is one of the processes used in petroleum contracts for the resolution of disputes that have not otherwise been resolved by way of the above-stated mechanisms. Arbitration is a step short of actual court action. For oil companies, it carries two main advantages over an actual court system. First, it is not in the court of the country that they have a dispute with. Second, arbitration procedures are, in theory, confidential.

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There are a number of recognised international arbitration organisations each of which have a set of rules that will apply to the arbitration process. These include UNCITRAL Rules, the London Court of International Arbitration Rules ("LCIA"), the International Chamber of Commerce Rules ("ICC") and the rules of the International Centre for Settlement of Investment Disputes ("ICSID"). In principle, a "neutral" venue ought to be chosen, being one that is not in the host country with which the contract is made and not in the country from which the relevant oil company or its parent organisation comes from. Choices of independent venues might include, for example, Paris, London or Stockholm. It is important to note however that this practice is more pronounced in transactions between developing oil-rich countries than in developed oil-rich countries such as the United Kingdom (UK), Norway and the United States of America (US) as will be demonstrated later in this paper.

In recent time, the concept of dispute management is also becoming popular in the oil and gas industry in particular. This concept involves collaboration and negotiation, assisted consensual non-binding processes in addition to the process whereby the parties may turn a blind-eye to the occurrence of the dispute and expect the perpetrator to rectify the cause and or the consequences of the breach giving rise to dispute.9 Additionally, some countries such the UK have established

9On this see Greg Gordon and John Paterson ( eds.) in OIL AND GAS LAW; CURRENT PRACTICE AND EMERGING TRENDS, Dundee University Press (2007) p. 432-433

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2.3. INTERNATIONAL PLATFORM FOR THE RESOLUTION OF DISPUTES IN THE OIL AND GAS INDUSTRY.

The Constitution10 enjoins the Government of Ghana in its dealings with other nations to endeavour to promote respect for international law, treaty obligations and the settlement of international disputes by peaceful means. The Government of Ghana is empowered under the Constitution11 to “conduct its affairs in consonance with the accepted principles of public international law and diplomacy consistent with the national interest of Ghana.”12 The Government of Ghana is further empowered by the constition to execute or cause to be executed treaties, agreements or conventions in the name of Ghana, subject to ratification by an Act of Parliament. The above provisions impose a constitutional imperative on the Government of Ghana, that in its dealings with other nations (and if we may be permitted to add other foreign investors) not only to execute agreements with them but also ensure total compliance with the terms and intendment of those agreements, treaties and conventions ratified by Ghana, subject to the national interest and the laws of Ghana.

One of the most important United Nations’ Conventions which over the years continues to serve as an effective means for resolution of disputes in the oil and gas sector is the United Nations Convention On the Law of the Sea, commonly known as UNCLOS III.13 Under the Convention,14 the sovereignty of a coastal State extends beyond its land territory and internal waters to an adjacent belt of the sea, described as the territorial sea. It is said that the

10Article 40(c) of the 1992 Constitution of the Republic of Ghana11Article 73. Emphasis mine.12Article 75 (1) and (2)13We shall however refer to it as “the Convention”14Article 2 of the Convention

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first session of this U.N Convention began in Caracas in 1974, however discussions as to dispute resolution processes continued until the convention was approved in 1982.15

The Convention further provides that States that are parties to the convention “shall settle any disputes between them concerning the interpretation or application of this convention by peaceful means.”16It is further stipulated under the Convention that States which are parties to the Convention shall be free to choose from one of the methods of dispute settlement set out in the annexes to the convention which include; Conciliation, Arbitration and special Arbitration. It is clear from the foregoing that the Convention deals exclusively with disputes largely relating to the oil and gas industry touching on jurisdictional dispute, between member states, especially relating to matters such as maritime, environment, and pollution.

The legitimate question that arises immediately is; ‘How are disputes between an individual investor, for example, International Oil Company (IOC) and Host State relating to the oil and gas sector resolved?’ Before we attempt to answer the question, it is important to highlight the antecedence to the recognition of the rights of an investor to the resolution of a dispute between it and the Host State.

It is well noted by Rudolf and Christoph that; “Under traditional international law, investors did not have direct access to international remedies to pursue claims against foreign states for violation of their rights. They depended on diplomatic protection by their home states.”17This fundamental principle re-echoes the well articulated statement of international law in the oft-cited

15It is said that the first session of this U.N Convention began in Caracas in 1974, however discussions as to dispute resolution processes continued until the convention was approved in 1982. On this see Anthony Connerty; above at note 6 16Article 279 of the Convention17Rudolf Dolzer and Christoph Schreuer: Principles of International Investment Law Oxford University Press Great Clarendon Street, Oxford (2008) p.211

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case of Mavrommatis Palestine Concessions thus: “It is an elementary principle of international law that a State is entitled to protect its subject, when injured by acts contrary to international law committed by another state, from whom they have been unable to obtain satisfaction through the ordinary channels. By taking up the case of one of its subjects and by resorting to diplomatic action or international judicial proceedings on his behalf, a State is in reality asserting its own rights-its right to ensure, in the person of its subjects, respect for the rules of international law.” 18

It is important at this stage to highlight some of the well-known limitations to the practice of dispute resolution between an individual investor and the host State, otherwise known as ‘diplomatic protection.’ These limitations include the fact that the commencement of the proceedings for the resolution of the dispute depends on the political discretion of that individual investor’s government. Again, the state may decide to withdraw the investor’s claim or even accept a reduced claim.19It must be stated however that in terms of disputes between states pertaining to the ownership of petroleum resources, the mechanism of diplomatic protection is still relevant.

As will be shown later in this paper in view of the limitations referred to above, most agreements between a state and an investor of another state contain international Arbitration clause for the resolution of disputes that may ensue between the parties. Many reasons have been assigned for the preference by the IOCs in particular for disputes relating to oil and gas extraction, to be settled by a foreign adjudicating body. These reasons include;

18Ibid. The case is also reported in the PCIJ, Series A, No. 2 p.12.19Barcelona Traction Light and Power Co. Ltd (Belgium v Spain) ICJ Reports, 1970, p.44. Also available at p.212 Rudolf et al.

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(a) Lack of impartiality of the local Courts and adjudicating bodies. Many commentators, mostly from the developed resource-rich countries have supported the assertion by the IOCs that the local courts lack independence and thus cannot be trusted to render an impartial decision in favour of the host state. According to Rudolf et al, “In many countries, an independent judiciary cannot be taken for granted and executive interventions in court proceedings or a sense of judicial loyalty to the forum state are likely to influence the outcome of proceedings…particularly where large amounts are involved.”20 Thus, for most of the IOCs, the local courts may have the propensity to exhibit xenophobic tendencies against a foreign company.21 This claim is said to have led Chevron to have instituted an arbitration proceeding against Equador based on Chevron’s claim that”…Equador’s judicial system is incapable of functioning independently of political influence…”

(b) In addition, submission of disputes ensuing from oil and gas transactions, especially in resource-rich developing countries to international adjudicating bodies is justified by some commentators and the OICs on the ground that “domestic courts may be bound to apply domestic law even if it is at odds with international legal rules protecting legal rights of investors.”22

(c) It has also been said that the local courts ought not be the venue for the resolution of settlement of disputes arising from oil and gas transactions in oil-rich developing countries because such courts…”

20Rudolf et al at p.21421Mohammad Alramahi ‘Dispute Resolution in Oil and Gas Contracts’. (2011), available on line at http://ssrn.com/abstract=2159702>Accessed on 01.05.1322Ibid

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lack the expertise to deal with the sometimes highly technical questions of international investment law.”23

(d) Another reason assigned for the preference of international adjudicating bodies over local adjudicating tribunals is the claim that the local courts may resort to some legal principles such as the act-of-state doctrine which “enjoins courts from examining the legality of official acts of foreign states in their own territory.”24

Indeed not only the competence and impartiality of the local courts are discounted by the IOCs, but also local dispute resolution mechanisms like arbitration and mediation systems. For instance, it has been said that in most of the oil-rich underdeveloped countries, there is “non-existence of a pool of skilled and qualified persons to act as neutrals…”25

2.4. SETTLEMENT OF OIL AND GAS DISPUTES IN GHANA

In contrast to the above claims, strong arguments have been marshaled by some commentators and stakeholders, mostly from developing resource-endowed countries, in favour of adjudication of disputes arising from oil and gas transactions in the host state. They argue, that submission of oil and gas disputes to international adjudicating bodies is an affront to and indeed a violation of the internationally accepted principle of sovereignty of the host state over its natural resources.26 One of such stakeholders is Ghana’s 23Ibid24Id p.215. For instance the United State of America (USA) Supreme Court has stated that it lacks the jurisdiction to examine the validity of the appropriation of property by a foreign government in its territory notwithstanding an allegation that it amounts to a breach of international law. See the case of Banco National de Cuba v Sabbatino, 376 US 398, 3 ILM 381 (1964)25Alfred Fiadjoe in “Alternative Dispute Resolution: A Developing World Perspective”, published by Routledge Cavendish, Australia (2004) at p.72. These claims shall be subjected to critical analysis in the subsequent pages of this paper. 26See n. 6 above. This paper will revert in detail to the various arguments proffered for and against dispute resolution by international adjudicating bodies.

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Constitutional Review Commission. The Commission in its Final Report27 reflected these concerns to the effect that; “Ghanaian Courts must be the primary arbiter in all disputes relating to natural resources in Ghana although such decisions may be appealable to dispute resolution mechanisms outside of Ghana particularly to regional, continental and global judicial bodies.”

The Constitution,28has vested the judiciary with the jurisdiction to resolve disputes of any matter, except where the Constitution itself has given the jurisdiction to resolve any particular matter to another institution or body. It is significant to note also that under the Constitution,29 justice emanates from the people and therefore must be exercised in a manner that ensures their participation, which also involves resort to other domestic methods of dispute resolution that are swift, less technical, cumbersome, costly and indeed ensures finality.

It is in this regard that the judiciary itself has instituted measures to ensure that certain matters are submitted to, what is now known as the judicial sponsored Alternative Dispute Resolution (ADR), even regarding matters that the judiciary has jurisdiction to resolve. Again, the setting up of the Commercial High Court30 which is being replicated in the other Regions in Ghana, is also significant. Interestingly, the fundamental role of the Commercial Court is to resolve, inter alia, disputes of commercial nature by resort to compulsory mediation processes for the resolution of disputes pending before the Commercial Court.

27 See n. 1 above P.619, of the report Emphasis supplied.28See chapter 11 and particularly article 125 and 140 of the 1992 Constitution of the Republic of Ghana hereinafter referred to as ‘the Constitution’29See article 125(1) of the 1992 Constitution of Ghana30Order 58 High Court of Ghana Civil Procedure Rules CI 47

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In addition, the Alternative Dispute Resolution Act,31 also attests to the recognition by Ghana, that with the exception of the under-listed matters, not every dispute can be settled by ADR to achieve justice by all concerned. The said matters32 include;

a) The national or public interest b) The environment c) The enforcement and interpretation of the Constitution.

This implies that any other matter which has not been excluded by law for settlement by way of ADR may be settled by the process of ADR. The Act defines33 Alternative Dispute Resolution to mean description of methods of resolving collective description of disputes otherwise than through the normal trial process. Significantly, under the Act34, parties to an agreement and litigating in a dispute in Court can consent to a stay of proceedings and to resolve the matter by way of arbitration in accordance with the agreement. In the same vein, the Court can refer the matter to Arbitration with the consent of the parties even, though no such agreement between the parties. Again, the establishment of an Alternative Dispute Resolution Centre under the Act35 is also commendable. This is because, as already indicated, parties to a matter, especially foreign investors have cited the non-existence of a formidable Centre for resolution of investment issues which involve huge capital or other resources, to justify their choice of foreign Arbitration and other Dispute resolution Centre for the settlement of disputes that may arise between them and the State or individuals.

31Ghana’s Alternative Dispute Resolution Act, 2010 (Act 798) 32See s. 1 of ACT 79833S. 13534Sections 2,5,6, Act 79835Section 114

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2.5. DISPUTE RESOLUTION MECHANISMS CONTAINED IN SELECTED MODEL PETROLEUM AGREEMENTS

As earlier indicated, parties to petroleum agreements normally provide for various dispute resolution mechanisms indicated above. A case in point is Article 24 of the Petroleum Agreement between the Republic of Ghana, Ghana National Petroleum Corporation, on the hand and Kosmos Energy Ghana, H.C and the E.O. Group36 on the other. Under the said Agreement37, any dispute or difference arising between the and GNPC on one hand and either of the other parties on the other hand, in relation to or in connection with or arising out of any terms and conditions of the agreement shall be resolved amicably through consultation and negotiation. The provision however limits that process to thirty (30) days, after notification by any of the parties to the others of the occurrence of the dispute, unless a longer period is agreed between the parties, failing which any of the parties “shall have the right to have such dispute or difference settled through international arbitration”.

Arbitration is however one of the dominant processes provided in petroleum contracts for the resolution of disputes that the parties are not able to resolve through consultation conciliation or negotiation. Unless a contract includes provisions requiring the parties to use an arbitration process, the dispute would usually be settled through the courts of the host country.

It is interesting to note that not only does the Kosmos agreement provide for the resolution of disputes by an international arbitration body in London, but also “…that no Party shall be required to take any steps to pursue or

36Hereinafter called the Kosmos Agreement37Article 24 (1) of the Kosmos Agreement.

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exhaust the judicial remedies available under the laws of Ghana with respect to the dispute before a Party institutes an arbitration proceeding under the Convention.”38 This provision can at best be described as a ‘brutum fulmen’39. This is because as will be shown subsequently in this paper, not every dispute arising from the agreement can be referred to the arbitral tribunal. As earlier pointed out, matters bordering on the environment, interpretation and enforcement of the Constitution, as well as the public interest have been excluded by Act 798 from being referred to and settled by way of arbitration.

This point is important in that the Kosmos agreement stipulates that; “Any Arbitral Tribunal constituted pursuant to this Agreement shall apply the laws of the Republic of Ghana in force on the Effective Date, consistent with such rules of international law as may be applicable, including rules and principles as have been applied by international tribunals.”40 It is however difficult to understand what might have informed the inclusion of the emphasised portion of this quotation from the Kosmos agreement. It is suggested that subsequent petroleum agreements should ensure that the agreement is subject to the laws of Ghana simpliciter, as the qualification, “consistent with such rules of international law as may be applicable, including rules and principles as have been applied by international tribunals” tends to subject Ghanaian law to rules of international law which may effectively defeat the purpose of choosing Ghanaian law as the applicable law.

It is important to emphasis the position that notwithstanding the fact that parties to Ghana’s petroleum agreement may agree to submit all disputes, including those relating to the environment to arbitration, usually international arbitration, an objection can be raised through the appropriate processes to urge on the Arbitral body to decline jurisdiction to the extent that the matter before it relates to any of the matters specified under 38Article 24 (10) of the Kosmos Agreement39This phrase is a legal term that refers to something which is ineffectual or void. See Black’s Law Dictionary 10th ed. (2011) p. 22140 Article 24

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Ghana’s ADR Act,41 or that the subject matter of the dispute or part of it borders on the interpretation of Ghana’s Constitution. A case in point is Attorney General V Balkan Energy Co. Ltd.42 In that case, the Attorney General of Ghana sued Balkan Energy in the High Court of Ghana pursuant to an earlier decision obtained by the Attorney General to refer a constitutional matter which formed part of the matter before the arbitration body to the Supreme Court of Ghana.

In addition, where a petroleum agreement provides that the agreement shall be construed in accordance with a law other than the law of the host country, any dispute arising from the agreement shall be construed in accordance with that law, especially where, as in the case of Ghana such agreements are subject to parliamentary approval or ratification.43 This is because ratification or approval of the agreement by Ghana’s Parliament does not elevate it into a law. We are fortified by this position by the Constitution44which enumerates the sources of law in Ghana which clearly does not include ratified or approved agreements.

Indeed, even if the ratified or approved agreements can be given a liberal interpretation, which we deny, to include such ratified petroleum agreements, it will still be subject to the Constitution, which is the supreme law of the land and which renders void all laws, however described, if it is inconsistent with any of the provisions of the Constitution.45 Thus, where any of the provisions of a petroleum agreement is inconsistent with a provision of the Constitution, the aggrieved party may file appropriate processes at the Supreme Court for declaration to that effect, notwithstanding the fact in

41See section 1 of Act 79842Suit No. J/1/2012 dated 16th May 2012.43Article 181 and 268 of the Constitution of Ghana44The 1992 constitution of Ghana45Article 1(2) the Constitution of Ghana,1992.

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appropriate cases, where the agreement stipulates that same is subject to or to be construed in terms of a law other than that of Ghana. Most of the petroleum agreements between a developing host state and an IOC cited by this paper confirms the assertion that such agreements usually provide for the settlement of disputes in a foreign country, usually the UK and the US. For instance the Kosmos agreement provides that; “Any arbitration proceeding pursuant to this Agreement shall be conducted in accordance with the Arbitration Rules of the Centre in effect on the date on which the proceeding is instituted. The Parties agree that any arbitration proceeding conducted pursuant to this Agreement shall be held in London, England at the International Centre for Dispute Resolution. The language of the arbitration shall be English. The arbitration proceeding and any award shall be held strictly confidential, except as required for enforcement.”46

In the case of Afghanistan, the model petroleum agreement provides that all disputes shall be submitted to the ICSID, seat of arbitration being London, England. The Azerbaijan agreement also provides that disputes shall be referred to UNCITRAL and that the seat of the arbitration shall be Stockholm. The model petroleum agreements of Iraq, Libya and Indonesia on the other hand provide that all disputes shall be referred and resolved by the ICC and that the place of the arbitration shall be Paris, in France and Geneva, in Switzerland respectively.47Conversely, a number of the Model Petroleum agreements from the developed petroleum-producing countries cited so far have provided for the resolution of dispute under the local laws and in adjudicating tribunals established in those countries. For instance, the Norwegian model Petroleum Agreement provides thus; “Unless the Parties agree to bring a dispute before the courts of law, any dispute arising in

46Article 24 (12) of the Kosmos agreement47Tim Boykett, Marta Peirano, Simone Boria, Heather Kelley, Elisabeth Schimana, Andreas Dekrout. Rachel OReilly: “Oil Contracts.How to Read and Understand a Petroleum Contracts”. Version 1.1 2012 at p.178 .A catalogue record for this book is available from the British Library. ISBN: 5800086962958Times Up Press Industriezeile 33b 4020 Linz. Also available online at AustriaWebsite: www.timesup.org <Accessed on.05.13

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connection with this Agreement shall be settled by arbitration in Norway pursuant to Norwegian law. The provisions of the Act no. 25 of 14 May 2004 relating to arbitration shall apply…”48

2.6. ANALYSIS

2.6.1. NON-COMPLIANCE AND THE DOCTRINE OF SEPARABILITY

As mentioned above, the provision of settlement of disputes by international arbitration in a petroleum agreement notwithstanding, a party to a petroleum agreement with the Government of Ghana and who wishes to refer and settle any dispute arising from the agreement to the ICSID or the ICC in accordance with the respective agreement may face some obstacles, if some legal imperatives are not met. For instance, the Constitution49 stipulates that; “Any transaction, contract, or undertaking involving the grant of a right or concession by or on behalf of any persons including the Government of Ghana, to any other person or body of person, howsoever described, for the exploitation of any mineral, water or other natural resource of Ghana shall be

subject to ratification by parliament.” It is suggested that the word ‘approval’ used in the Constitution50 may be given a liberal interpretation to include ‘ratification’. It will therefore mean that where in both cases parliamentary approval or ratification is not sought, the agreement shall be declared null, void and of no legal effect. The issue of the legal effect of non-compliance with the constitutional imperative for parliamentary approval has become the subject of a number of cases before Ghana’s High Court, leading to their referral to the Supreme Court for interpretation. One of such cases is Attorney General v. Faroe Atlantic Co. Ltd51. 48Article 29 of the Norwegian Model Petroleum Agreement available at www.regjeringen.no/upload/OED/vedlegg/konsesjonsverk pdf< accessed on 02.05.1349Article 268 (1) of the 1992 Constitution of Ghana. Emphasis provided.50Article 181 (2) and by extension 181 (5) states that “An agreement entered into under clause (1) of Article 181) (1) and (5) shall be laid before Parliament and shall not come into operation unless it is approved by a resolution of parliament” On this see Article 268 (2).51[2005-6] SCGLR 271

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Another case in point is Attorney General v. Balkan Energy Ghana Ltd. & Ors52 where the Supreme Court of Ghana held that an Arbitration clause is not separate from and autonomous of the agreement as a whole. The court therefore ordered that the entire agreement be remitted to the High Court to determine the legality or other wise of the agreement for non-compliance with that mandatory constitutional provision.53The reasons underlying that decision was that in the opinion of the court, “an international commercial arbitration draws its life from the transaction whose dispute resolution it deals with. We therefore have difficulty in conceiving of it as a transaction separate and independent of the transaction that has generated the dispute it is required to resolve.” 54

It is however not difficult to identify what may respectfully be termed as ‘internal inconsistency’ in the said reasoning of the Supreme Court. The basis of this assertion is that the court in the sentence preceding the one quoted above had treated the Arbitration clause separately when it stated that even though the main Power Purchase Agreement constituted an international business transaction, the arbitration clause did not. This is because in the opinion of the court, “…applying the interpretation of article 181(5) arrived above, it is clear that international arbitration provision cannot, in and of itself constitute an international business or economic transaction.” It was on this basis that the court assumed jurisdiction to entertain the application for interpretation of the relevant constitutional provisions.

52Suit No. J/1/2012, dated 16th May, 201253See Article 181, especially clause 554P.41. Emphasis supplied.

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In the respectful opinion of this paper, the above reasoning of the Supreme Court of Ghana relating to the inseparability of arbitration provisions in a substantive agreement can at best be described as per incuriam. First of all, the decision is contrary to the relevant provision of Ghana’s Alternative Dispute Resolution Act55, which states that; “Unless, otherwise agreed by the parties, an arbitration agreement which forms or is intended to form part of another agreement shall not be regarded as invalid, non-existent or in- effective because that other agreement (i.e. the principal agreement) is invalid or did not come into existence or has become in-effective and for that purpose be treated as a distinct agreement.”

This provision can indeed be described as a ‘statutory affirmation’ of the aged-old doctrine of ‘separability’ of arbitration agreement contained in the agreement,56 which is said to have “gained a solid footing” in the United States of America (USA)

This paper is of the opinion that the Supreme Court did not respectfully need to state that an arbitration provision was not independent of the substantive agreement before going ahead to treat the whole agreement as one. This is because, the authorities are to the effect that a domestic court is vested with jurisdiction to satisfy itself “that the arbitration agreement is [not] null and void or is inoperative or incapable of being performed or that there is in fact no dispute between the parties with regard to the matter referred” before

55Act 798 S. 3 (1)56It is interesting to observe that the said s.3 of Act 798 is a verbatim representation of Section 7 of the United Kingdom Arbitration Act 1996. Indeed, the said provision of the UK Arbitration Act is itself almost a replica of the relevant sections of London Court of International Arbitration Rules (the LCIA Rules) See art. 23 (1) thereof which states that; “An arbitration clause which forms part of the contract and which provides for arbitration under these Rules shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitration tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.” On this, see also the case of HEYMAN VRS. DARWINS LTD. [1942] A.C.356.

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considering whether to grant an application for stay of proceedings to refer an arbitration57 agreement to the agreed arbitration body.58

We must be quick to point out however that, the doctrine of separability of an arbitration agreement contained in a principal agreement has not escaped serious criticisms and demand for its repeal or abrogation. One of such critics is Professor Stephen J. Ware59 in his paper: ‘Employment Arbitration and Voluntary Consent’ Author argue against the separability doctrine as, according to him, no dispute should be sent to arbitration unless the parties have formed an enforceable contract requiring an arbitration of that dispute, which means that the entire agreement has to be examined to ensure that everything contained therein conforms to law.

2.6.2. LACK OF IMPARTIALITY AND EXPERTISE OF LOCAL COURTS

It has been said earlier in this paper that some commentators have outlined a number of reasons to justify the provision of international arbitration in petroleum agreements, especially between a developing oil-rich country and an IOC, on the grounds that local courts usually aligned themselves with the executive arm of government and therefore lack neutrality and independence.60 It is the opinion of this paper that, that assertion cannot be supported by a modicum of evidence, at least as far as Ghana is concerned.

57Indeed as far back as 1967, the US Supreme Court firmly established the doctrine of separability in the case of Prima Paint Corp; Inc. v. Flood & Conklin Manufacturing co. ltd388 U.S. 395 (1967) at p. 402, where the Court held that: “Arbitration clauses as a matter of federal law are “separate” from the contracts in which they are embedded.” 58See Atkins Encyclopedia of Court Forms in Civil Proceedings; stated at page 68 of volume 6 (1989 issue) cited with approval by Annin Yeboah Jsc. In the case of Republic Vrs. High Court, Tema, Exparte MY SHIPPING PVT LIMITED AND DEEJONES PETROLEUM & GAS LTD &ORS, 2011 1 [SCGLR] at page 659 Professor J. Ware in a Paper entitled ‘Employment Arbitration And Voluntary Consent’. 25 Hofstral rev. 83. 128-138 (1996) also available in the selected Works of Stephen J Ware at http://works.bepress.com/stephen-ware/21 Accessed on 02.o5.1360See page13 of this paper

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This is partly because, the Ghana Constitution guarantees the independence of the judiciary thus;

“(1) In the exercise of the judicial power of Ghana, the Judiciary, in both its judicial and administrative functions, including financial administration, is subject only to this Constitution and shall not be subject to the control or direction of any person or authority.

(2) Neither the President nor Parliament nor any person acting under the authority of the President or Parliament nor any other person whatsoever shall interfered with Judges or judicial officers or other persons exercising judicial power, in the exercise of their judicial functions; and all organs and agencies of the State shall accord to the courts such assistance as the courts may reasonably require to protect the independence, dignity and effectiveness of the courts, subject to this Constitution.”61

Even more significant is the fact that, with the use of the Judicial Review mechanism, the courts in Ghana have, over the years, given countless

61See art. 127 (1) and (2)

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decisions against the executive. Indeed in one case62 the court declared an act of the executive as contrary to law and therefore void. On the related issue of lack of expertise, it is argued that this justification is not tenable either, in the sense that over the years, the courts have developed specialized courts to deal with special subject matters that may come before them. A case in point is the establishment of the Commercial Courts in Ghana.63 Furthermore, the courts have over the years adjudicated and settled disputes bordering on highly complex technical matters such as engineering construction, medicine, manufacturing usually with the assistance of a referee who is an expert in the particular subject in relation to which the dispute has arisen. The oil industry cannot arguably be said to be any different from the aforementioned subjects.

2.6.3. INTERNATIONAL ADJUDICATING BODIES AND SOVERIEGNTY OF HOST-NATIONS62See the case entituled: In The Matter Of An Application For Judicial Review: Article 23 & 296 Of The Constitution, 1992 And Order 55 of Ci.47, between: Albert Anthony Ampon and 1. The Attorney General, 2. The Head of Civil Service; Suit No. AP 95/2009; Coram S.K.A. Asiedu, J. sitting as Justice of the High Court of Ghana, dated 2nd December 2009, unreported. Where the court, in declaring an executive act void, stated thus; “...the decision of His Excellency the President of Ghana interdicting the Applicant, ordering a refund by the Applicant of the sum of US$20,000 and directing the Head of the Civil Service to impose further disciplinary measures against the Applicant on the basis of the National Security Report on Investigations into allegations against the former Minister of Youth and Sports, Alhaji Muntaka Mohammed Mubarak, was unlawful.” P. 42. Emphasis mine. See also the case of Ghana Bar Association vs. The Attorney General & Another [1995-96] 1 GLR 598 @ page 605 where the court per E. Wiredu JSC. (as he then was) stated that: ‘In this country, however, under the new order of constitutional supremacy, the Constitution, 1992 has vested the power of supervising and the enforcement of the Constitution in the Supreme Court, the judges of which have sworn to uphold and defend its provisions without fear or favour. Parliamentary sovereignty as practised in Britain is alien to our new legal order. The Constitution, 1992 has vested the power of judicial review of all legislations in the Supreme Court. It has dealt away with either an executive or parliamentary sovereignty and subordinated all the arms or organs of state to the Constitution. The court as the repository and watchdog of the Constitution, 1992 is enjoined to protect, defend and enforce its provisions and should not allow itself to be diverted to act as an independent arbiter of the Constitution, 1992’.63See Order 58 of the Ghana Civil Procedure Rules, CI 47 by which that division of the High Court is empowered to adjudicate on commercial cases. Recently other divisions like the Financial, Land, Labour and Industrial in addition to Environmental Court have also been set up. In England, following the Lord Woolf reforms on Access to Justice dated July 1996, the Civil Procedure Rules (CPR) were enacted requiring the court to encourage parties to resort an ADR mechanism the is most suitable for their case and to facilitate the use of such procedure. See Greg Gordon et al. p. 443.

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The sovereignty of a State over its natural resources is indeed recognized worldwide, as contained in the United Nations General Assembly Resolution on Permanent Sovereignty particularly over natural resources, thus; “Every state has and shall freely exercise full permanent sovereignty, including possession, use and disposal over all its wealth, natural resources and economic activities.”64

In this regard, the provision in the petroleum agreements executed between Ghana and the IOC that disputes arising from such agreements shall be referred to international arbitration bodies has come under vehement criticisms by a number of commentators, especially from developing oil-rich countries. Among others, these critics argue that the provision for international arbitration in petroleum agreements is an affront to the sovereignty of the host country.65This claim underlies the call by many Ghanaians that “Ghanaian Courts must be the primary arbiter in all disputes relating to natural resources in Ghana although such decisions may be appealable to dispute resolution mechanisms outside of Ghana particularly to regional, continental and global judicial bodies.”66

The Commission’s report to the extent that it creates the impression that Ghanaian Courts are not primary arbiters in matters relating to oil and gas cannot however pass without a comment. As stated earlier in this paper, the Courts of Ghana, especially the High Court and the Supreme Court-in respect of constitutional matters are already rested with jurisdiction to entertain any matter not excluded by the Constitution, disputes pertaining to a petroleum

64Resolution 3281 dated December 12, 1974, Chapter II, Article 2. Thus, this paper wonders why inpite of this widely accepted principle, host resource-rich but developing countries such as Ghana allow the IOCs to have international arbitration inserted in petroleum agreements instead of domestic adjudication of such dispute.65On this see Tamuno at note 7 above.66The constitutional Review Commission Report, page 619. Emphasis provided.

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agreement not excepted.67 This is because, the entire oil and gas agreements are subject to the Constitution and the laws of Ghana, their ratification by Parliament notwithstanding. Thus, the Superior Courts in Ghana are not precluded from hearing any matter concerning a breach of any provisions in the various petroleum agreements.

For instance, in respect of constitutional issues such as non-compliance with the mandatory provisions of the constitution,68 international Arbitration institutions lack the jurisdiction to adjudicate such constitutional issues, as that is the exclusive preserve of the Supreme Court of Ghana. Indeed, where a party commences proceedings in the High Court of Ghana for the resolution of a dispute under a Petroleum Agreement, which the High Court has jurisdiction to entertain, the authorities are to the effect that the mere fact that the agreement contains a provision that disputes must be submitted to an International Arbitration Centre for resolution in itself does not preclude the High Court to assume jurisdiction to hear the matter.

The point being made however, is that the Courts of Ghana, especially the High Court and the Supreme Court-in respect of Constitutional matters-have jurisdiction to entertain the resolution of any matter or dispute pertaining to a petroleum agreement. It is however the duty of the Defendant to file an appropriate application before the Court to stay proceedings of the case and refer same to the Arbitral body agreed between the parties. The point must be stressed however that a Defendant who fails to file the application for stay of proceedings timiously will deny himself the right to have the matter

67See art. 140(1)68See art. 181 and 268

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referred to the Arbitral body.69It is however stipulated in Act 798 that; “The grant of an application shall serve as stay of proceedings in the Court.”70

Further, where the State or any other party commences proceedings in the High Court of Ghana for the resolution of a dispute under a petroleum Agreement, the authorities are to the effect that the mere fact that the agreement contains a provision that disputes must, after the initial mechanisms like negotiation, conciliation and expert determination have failed be submitted to an International Arbitration Centre for resolution does not preclude the High Court to assume jurisdiction to hear the matter. We must hastily state however that the above submission must not be taken to mean interference by the Courts with contracts duly executed between parties. Indeed the Courts are admonished severally to “strive to uphold dispute resolution clauses in agreements” as same is considered “to be sound business practice” 71The point being made is that parties cannot contract out of the jurisdiction of the Court in Ghana

It is also the submission of this paper that where the laws of Ghana have specifically excluded any matter from being heard other than by the Courts, parties cannot agree to submit it to arbitration. For instance the Alternative Dispute Resolution Act72 (Act 798) the Act inter alia precludes the settlement of disputes relating to the following matters;

69The above matters, in addition to what is meant by timious filing of an application for stay of proceedings have been exquisitely discussed by Anin Yeboah JSC in the case of Republic Vrs. High Court, Tema, Exparte MY SHIPPING PVT LIMITED AND DEEJONES PETROLEUM & GAS LTD &ORS, 2011 1 [SCGLR] 237. It is interesting to note that Justice Anin Yeboah’s exposition on when to file the application for stay of proceedings which must be “after appearance and not before the date fixed for hearing” was given on 29th April 2010. This date is significant in that the “purposive” interpretation given by Anin Yeboah JSC appears to have been adopted by the law-makers when they provided under section 6 of Act 798that a party may, after entering appearance apply to the Court to refer the matter or part thereof subject to an arbitration clause for arbitration. 70S. 6 of Act 79871 See the case of BCM Ghana Ltd. vrs. Ashanti Goldfield Ltd, [2005-2006] SCGLR 602, at p. 61172s. 1 of the Act

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(a)The national or public interest73

(b)The environment(c) The enforcement and interpretation of the Constitution

Thus, even though parties to a petroleum agreement may agree to submit all disputes, including those relating to the environment to arbitration, usually international arbitration, an objection can be raised through the appropriate processes to urge on the Arbitral body to decline jurisdiction as far as the matter before it relates to any of the matters specified under Act 79874 is concerned, as happened in the Bulkan75 case when the Attorney General of Ghana secured a decision by the Arbitration body to refer a constitutional matter to Supreme Court of Ghana. It needs to be emphasised that where a petroleum agreement stipulates that the agreement shall be construed in accordance with a law other than the law of the host country, any dispute arising from the agreement shall be construed in accordance with that law, especially where, as in the case of Ghana, such agreements are subject to Parliamentary approval or ratification as mandated under the Constitution.76

This is because, ratification or approval by parliament of the Agreement does not elevate it to the status of law. We are fortified by this position by the Constitution77, which provides for composition of the laws of Ghana which clearly does not include ratified or approved agreements. Indeed, even if the ratified or approved agreements can be given a liberal interpretation, which we deny, to include such ratified petroleum agreements, it will still be subject to the Constitution which is the supreme law of the land and which renders 73The public interest (also referred to as the national interest) is defined widely by Article 295 (1) of the constitution to include “any right or advantage which inures or is intended to inure to the benefit generally of the whole people of Ghana”. 74See again s. 1 of the Act75See n. 42 above76See art. 181 and 268 of the constitution77See art. 11

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void all laws, however described if it is inconsistent with any of the provisions of the Constitution.78

Additionally, this paper disagrees with the Commission’s recommendation that decisions of Ghanaian courts relating to natural resources “…may be appealable to dispute resolution mechanisms outside of Ghana particularly to regional, continental and global judicial bodies.” In our respectful opinion, to subject the final decision of Ghanaian Courts relating to the extraction of natural resources in Ghana to other adjudicating bodies outside Ghana’s jurisdiction is itself an affront to the sovereignty of Ghana. Even more serious is the fact that the Commission seems to advocate the submission of all decisions of Ghanaian Courts bordering on the enforcement and interpretation of the Constitution, the national interest and the environment but related to natural resources without exception to foreign adjudicating bodies, as appellate bodies of Ghanaian Courts’ decisions. Indeed, the Commission’s said recommendation flies in the face of section 1 of the Alternative Dispute Resolution Act79.

In the respectful opinion of this paper these concerns and recommendations expressed by the Constitutional Review Commission do not only appear to be belated but also untenable, as the courts of Ghana are already primary arbiters in all disputes, including those related to natural resources except where the Constitution has assigned the jurisdiction to adjudicate on specific matters to other adjudicating institutions and also because the jurisdiction of Ghanaian courts emanating from the sovereign will of the citizens of Ghana cannot be subservient to another adjudicating body outside Ghana.

78See art. 1(2) of the Constitution79Ghana’s Alternative Dispute Resolution Act (Act 798) . As already highlighted in this paper, Act 798 excludes matters bordering on the environment, public interest and the enforcement and interpretation of the Constitution from being adjudicated upon even by the Alternative Dispute Resolution Centre established under the laws of Ghana.

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2.6.4. INTERNATIONAL ARBITRATION AND NON-COMMERCIAL ISSUES

International arbitration usually deals with commercial matters directly relating to the agreement and its performance. It is well known however that in the course of the extraction of natural resources, especially in developing resource-endowed countries issues like human rights abuse, environmental and indeed constitutional and political issues may ensue. Thus, even after the resolution of the commercial aspect of the dispute persons adversely affected by the activities of the IOC will then have to resort to the local courts for remedies, which may involve huge cost to those affected persons who may not be sufficiently resourced to commence and maintain a suit against these powerful International Oil companies. These challenges could be avoided if the parties submit to the jurisdiction of the court and insists that under the laws of Ghana the courts are vested with jurisdiction to deal with such matters.

2.6.5. ARBITRATION AGREEMENTS AND THE COURTS OF GHANA

Indeed numerous authorities are to the effect that under the Constitution, the jurisdiction of the High Court cannot be ousted by a statute or an agreement between parties, as held in the case of Akyem v Adu; Adu v Brantuo 80(Consolidated) thus:

“(2) There was a presumption that no matter was deemed to be beyond the jurisdiction of a superior court unless it was expressly shown to be so… Similarly there was a strong presumption against the construction of statutes so as to oust established jurisdiction or else restrict the jurisdiction of the Superior Courts.”

80[1976] 2 GLR 63, where it is stated in holding (2) thereof.

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Indeed, the courts in Ghana is vested with jurisdiction not only to strike out an agreement between parties that tends to oust their jurisdiction, but also to examine the arbitration provision to their satisfaction that it conforms to the laws of Ghana, as was held in the case of In re Ghana Private Road Transport Union (GPRTU); Tetteh and ors v Essilfie, thus; “… the courts always have the power to inquire into the validity of such exclusionary clauses (arbitration agreements) to determine if they relate to the ordinary conditions of contract olnly; or can be classified as being against public policy to make the enforcement of such a clause illegitimate”81

Where however the court is satisfied that the matters before it may more appropriately be resolved by way of arbitration, then the dispute ought to be referred, in the case of Ghana, to the Arbitration Centre established under Act 798. The paper is of the view however that should arbitration be the preferred mode for the settlement of any dispute under a petroleum agreement, the host State’s actors, especially from developing resource-rich countries, charged with the responsibility to negotiate petroleum agreements, must ensure the inclusion of a clause to the effect that all disputes which the parties are not able to resolve amicably be submitted to domestic arbitration tribunals. It is important to state that this paper is not adverse to resolution of appropriate disputes arising from a petroleum agreement by arbitration. The position of the paper is that under the laws of Ghana, the Ghanaian courts are vested with jurisdiction to entertain all matters except where the Constitution has assigned jurisdiction to another institution and that in all cases domestic dispute resolution mechanisms should be the preferred mechanism.

3.0. CONCLUSION

81[2001-2002] SCGLR 786, at 792. See also the case of Mensah v Ghana Football Association, High Court Cape, Coast Suit No. SC 28/88, 4th May 1988, unreported applied by the Supreme Court in the GPRTU case supra.

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We have in this paper highlighted the various dispute resolution mechanisms, which pertain to the oil and gas sector. We have shown that arbitration, especially international arbitration is increasingly becoming a popular mechanism for the resolution of dispute in the oil and gas industry. There is however evidence to the effect that litigation in the courts is still the most dominant82mechanism for the resolution of disputes in the industry. This paper however proposes that where arbitration ought to be resorted to as the most favourable mechanism, domestic arbitration tribunal ought to be the preferred seat of the arbitration.

The host country’s negotiators who have to negotiate the agreement may be guided by the draft arbitration clause hereunder:

“All or any dispute with the exception of matters relating to interpretation of the Constitution of the Republic of Ghana, the environment and the national interest relating to or arising between the parties to the main agreement and this arbitration agreement and any question relating to its existence, validity or termination which cannot be resolved between the parties by consultation, negotiation and an independent expert determination within thirty (30) days from the occurrence of the dispute shall be settled by arbitration in accordance with the Alternative Dispute Resolution Act of Ghana and the applicable rules by three members.”

The arbitration shall be held in Accra, Ghana in the English language. The arbitral award shall be final and binding upon the parties and may be entered in a domestic court of competent jurisdiction for enforcement.”

As has been highlighted in this paper, domestic courts, as in the case of Ghana, will normally not abdicate their jurisdiction to entertain such disputes

82Anthony Connerty, see n.6 above

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unless the Constitution does not permit them to assume jurisdiction in such matters. The Courts would normally stay proceedings instead of abdication. It is further proposed that the government of Ghana should, as a matter of urgency operationalize the Alternative Dispute Resolution Centre established under Act 798 to facilitate domestic resolution of disputes arising from a petroleum agreement.

In consonance with current trends in the oil and gas industry, the paper proposes for the establishment of a Commission akin to an umpire whose main function will be to assist the parties to a dispute to settle same in the preliminary stage as a condition precedent to resort to domestic arbitration and litigation.

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