Ghana Set For Another Judgment Debt Over US$300M NIB Debt Default

Indian commodities group, Eland International is reportedly considering an investor arbitration against Ghana after an English court ruled that an arbitrator has no jurisdiction to hear its US$300 million claim against Ghana’s State Owned National Investment Bank.

The hint is from Eland’s lawyers, Steptoe & Johnson who had appeared in court for the company in London after and had been told that an arbitrator that had been appointed for its long-running issue with NIB lacked jurisdiction.

Investment arbitration is a procedure to resolve disputes between foreign investors and host States (also called Investor-State Dispute Settlement or ISDS).

And so, basically, if Eland decides to go on with the action, it means it will be suing the government of Ghana which owns NIB, for the US$300million that NIB owes it.

The possibility for a foreign investor to sue a host State is a guarantee for the foreign investor that, in the case of a dispute, it will have access to independent and qualified arbitrators who will solve the dispute and render an enforceable award.

If Eland decides to go on with the Investor Arbitration, Such a claim might be brought under the India-Ghana bilateral investment treaty, which was terminated by India in 2017.

The long-running dispute between Eland and NIB relates to a collateral management agreement that Thai and Ghanaian affiliates of Eland entered into with NIB in 2001. Under the deal, Eland would export goods such as sugar and rice to Ghana and NIB would hold the goods in bonds and guarantee payment to Eland.

They signed a further agreement three years later, which provided that disputes “may be referred to an Arbitrator under the Laws of the United Kingdom in London”.

Eland Thailand sued NIB in 2014 in a court in Accra, alleging that the bank had released the goods to third parties without paying for them or honouring its guarantees.

According to reports, these third parties happened to be members of the NPP and the erstwhile Kufuor government who virtually stole the goods, sold them and kept the money.

In connection to this, Ghanaian authorities last year brought criminal charges against the son of NIB’s former managing director Daniel Gyimah, accusing him of stealing money and land belonging to another contractor of the bank.

NIB counterclaimed against both Eland entities, alleging that the contracts were part of a fraudulent scheme. In 2016, the Accra court granted Eland’s request to stay the litigation in favour of arbitration.

Eland then served a notice of arbitration on NIB. After NIB failed to engage in the appointment process, Eland applied to the English Commercial Court and obtained an order from Mr. Justice Andrew Baker in 2020 appointing Simon Nesbitt QC of Maitland Chambers as sole arbitrator.

NIB meanwhile asked the Accra court to set aside its own stay order and resume the Ghanaian litigation. The court did so in March 2021, ruling that fraud claims were not arbitrable as a matter of Ghanaian law.

The bank then applied to the English court in July for a declaration that Nesbitt lacked jurisdiction. It invoked section 72 of the English Arbitration Act 1996, which concerns the rights of alleged parties who take no part in arbitral proceedings.