University of Ghana Escapes from US$165million Judgment Debt

A district court in the US has dismissed a suit to compel the University of Ghana (UG) to pay US$165million to an American insurance company for lack of jurisdiction.

The District Court, Southern District of New York, presided over by Naomi Reice Buchwald on August 15, 2022, told ACE American Insurance Company that it ought to have filed its case in the UK as was agreed between it and UG in a contract that ACE claims the school breached.

According to the court, the construction agreement had stated in clear terms that “the place of arbitration shall be in London, UK” meaning any such arbitration in the US was only permissible if it was impossible to conduct the arbitration in the UK.

According to the details, the school was required to lease land and grant a concession to construction company, CPA to finance, construct, operate and maintain various new infrastructure projects on its campus.

In 2016, CPA said that UG had not procured the necessary letters of credit as required under the agreement. It, therefore, exercised its right to terminate the agreement.

It also exercised the option of having an independent expert determine the Termination Value of the contract.

In 2018, the expert valued the deal at $165million.

The school would request that arbitration be used to resolve the dispute.

CPA however said UG had not met the necessary requirements and in 2019 tasked the ACE American Insurance Company to recover the $165million from UG.

ACE then initiated court action in the Southern District of New York. UG then filed a process urging the Court to dismiss the case for lack of jurisdiction.

On August 15, 2022, the court agreed and dismissed the case.

It also upheld UG’s view that such an action cannot be initiated against it because the school is not the “alter ego of the Republic of Ghana”.

This was UG’s response to the insurance company insisting it can take action against the University because the Foreign Sovereign Immunities Act permits it to do so.