IN BRIEF: ARBITRATION AGREEMENTS IN GHANA

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Authors: J. K Afedo, K. K. Quashigah, K. Kuenyehia Sr, K. D. Amoah and S. Kuenyehia (Kimathi & Partners Corporate Attorneys)

Arbitration Agreement

Arbitrability

Are There Any Types of Disputes That are not Arbitrable?

Yes. The Alternative Dispute Resolution Act 2010 (Act 798) (the ADR Act) expressly states that matters involving the following are not arbitrable:

  • national or public interest;
  • the environment;
  • the enforcement and interpretation of the Constitution; and
  • other matters that by law cannot be settled by an alternative dispute resolution method (including criminal action and abuse of human rights).

The general rule is that only matters that can be subjected to compromise and settlement are to be referred to arbitration. Section 72 of the Courts Act 1993 (Act 459) provides that all civil matters can be settled out of court, including through arbitration. Although the ADR Act does not expressly mention disputes in the areas of intellectual property, antitrust, competition law, securities transactions and intracompany disputes, such disputes may be settled through arbitration.

Requirements

What Formal and Other Requirements Exist for An Arbitration Agreement?

The ADR Act provides that an arbitration agreement must be in writing. In order to satisfy the requirement of writing, the law stipulates that the arbitration agreement may be in the form of an exchange of letters, telex, fax, email or other means of communication providing a record of the agreement. An arbitration agreement is valid even where it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other, or when reference is made in a contract to any document containing an arbitration clause.

Enforceability

In What Circumstance is an Arbitration Agreement No Longer Enforceable?

An arbitration agreement may not be enforceable if waived by the parties or if the parties decide to submit the matter to the jurisdiction of the courts, or if declared null and void by the arbitral tribunal.

However, an arbitration agreement is not rendered unenforceable by reason of the death, merger or dissolution of a party to the agreement. The obligations of a party under an arbitration agreement may be transferred to their successors, personal representatives or liquidator on the death, merger or dissolution of such a party. In addition, a party to an arbitration agreement who is not notified of an arbitral proceeding may apply to the High Court to set aside the arbitration agreement.

Arbitration agreements that form part of a contract are generally deemed to be independent of the other terms of the contract. Thus, the invalidity or unenforceability of the underlying contract does not affect the arbitration agreement or clause.

Separability

Are There Any Provisions on The Separability of Arbitration Agreements from The Main Agreement?

Yes. The ADR Act specifically provides that an arbitration agreement that forms or is intended to form part of another agreement shall remain valid, effective and enforceable even if that other agreement is invalid, did not come into existence or has become ineffective. The arbitration agreement is regarded as separate and distinct from the other invalid, ineffective or non-existent agreement. Additionally, the arbitration agreement, once concluded, is irrevocable unless the parties express a contrary intention in that agreement.  

Third Parties – Bound by Arbitration Agreement

In Which Instances Can Third Parties or Non-Signatories Be Bound by An Arbitration Agreement?

In principle, arbitration agreements cannot be extended to third parties that are not signatories to the arbitration agreement. The ADR Act does not make any express provision for the imposition of liability arising from an arbitration agreement on account of assignment, agency or insolvency. However, the assignment of the underlying contract may be presumed to include the acceptance of any arbitration agreements contained in or incorporated into the underlying contract. Similarly, a principal may be bound by an arbitration agreement entered into by an agent. Under the ADR Act, the occurrence of death does not discharge a party to an arbitration agreement from liability. The implication is that a successor-in-title will be required to discharge the liabilities arising from the arbitration agreement entered into by the deceased. This may also be presumed for situations of insolvency.

Third Parties – Participation

Does Your Domestic Arbitration Law Make Any Provisions with Respect to Third-Party Participation in Arbitration, Such as Joinder or Third-Party Notice?

The ADR Act does not contain any provisions with respect to third-party participation in arbitration. However, third parties may participate where the arbitration agreement in a main contract entered into by the parties extends to ancillary contracts that one of the parties to the main contract executes with a different party, or where the parties agree to the joinder of a third party. Also, under the Contracts Act of Ghana 1960 (Act 25), a third-party beneficiary of the main contract may enforce an arbitration agreement contained in the main contract as if it were a party to the contract.

Groups of Companies

Do Courts and Arbitral Tribunals in Your Jurisdiction Extend an Arbitration Agreement to Non-Signatory Parent or Subsidiary Companies of a Signatory Company, Provided That the Non-Signatory Was Somehow Involved in The Conclusion, Performance or Termination of The Contract in Dispute, Under The ‘Group of Companies’ Doctrine?

Under the principle of separate legal personality, companies in the same group will not be bound by an arbitration agreement entered into by a parent company or subsidiary company, or another company in the same group, unless the corporate veil is lifted.

The ADR Act provides that parties that submit a matter for arbitration must have an agreement between them. This implies that the arbitrator, or the tribunal as the case may be, shall not have the mandate to extend any arbitral proceedings to another party that was not a party to the agreement.

The law does not grant any exemption to companies in this regard, and hence the ‘group of companies’ doctrines may not be applicable in Ghana, unless the corporate veil is lifted.

Multiparty Arbitration Agreements

What are the Requirements for A Valid Multiparty Arbitration Agreement?

There is no express provision relating to multiparty arbitration agreements under the ADR Act. Thus, the requirements for a valid bilateral agreement would, in principle, be the same as those set out for the validity of a multiparty arbitration agreement. Additionally, whenever an issue regarding the composition of the arbitral tribunal arises, the appointing authority shall decide on it based on the principles of equal treatment and due process of law.

Consolidation

Can an Arbitral Tribunal in Your Jurisdiction Consolidate Separate Arbitral Proceedings? In Which Circumstances?

Consolidation of arbitration proceedings is subject to the agreement of the parties. The ADR Act provides, at section 31(6), that the parties may agree to permit the arbitrator to consolidate separate arbitral proceedings, and hold concurrent hearings. Consolidation is usually considered by the courts where:

  • the subject matter of the dispute is identical in both proceedings;
  • the parties are the same;
  • the actions are about the same thing;
  • there is the possibility of prejudice or confusion of interest arising in relation to the separate proceedings;
  • there are some common questions of law or fact in the actions;
  • the right to relief claimed in each action arises out of or in respect of the same transaction or a series of transactions in each action; or
  • for some other reason, it is desirable to consolidate.

Where the above factors exist and the parties agree, there is no reason why arbitral proceedings should not be consolidated.