20 Jul Act 930 – The Sanctity Of Party Autonomy In Arbitration Under Threat?
This blogpost focuses on the imposition of compulsory arbitration under the Banks and Specialised Deposit Taking Institutions Act, 2016 (Act 930) and its potential effect on voluntariness required for the enforcement of Arbitral Awards under the New York Convention.
In this short essay, I examine whether the right to voluntarily submit to arbitration has been taken away by Act 930 and how this may affect dispute resolution within the Banking Industry of Ghana.
Introduction To Arbitration
Arbitration per Section 135 of the Alternative Dispute Resolution Act, 2010 (Act 798) (the “ADR Act” or “Act 798”), is the voluntary submission of a dispute to one or more impartial persons for a final and binding determination. There are several reasons why businesses and individuals in Ghana are increasingly leaning towards arbitration to resolve disputes.
In arbitration proceedings, parties are at liberty to select the rules and procedure for the conduct of the arbitration proceedings. Parties may decide on ad hoc rules for arbitration or may agree to follow institutional rules of any arbitration institution/ center of their choice. The freedom to select arbitrators enables parties to empanel experts in particular fields for industry related arbitrations.
Party Autonomy Doctrine
Arbitration operates under the doctrine of party autonomy. This means that generally, arbitration cannot be initiated or conducted against a party who has not consented to or who isn’t a party to an arbitration agreement. For Ghanaian Law governed agreements, arbitration can only be initiated pursuant to the provisions of Act 798. The principle of party autonomy in arbitration proceedings aims to provide parties the opportunity to voluntarily decide whether or not they are willing to refer their disputes to arbitration.
ACT 930.
In 2016, Act 930 was enacted to consolidate the laws relating to deposit-taking and regulate institutions that carry on deposit-taking business, among other things.
A key feature of Act 930 is the mandatory resolution of disputes arising from grievances with a decision of the Bank of Ghana in respect of specific matters including withdrawal of registration of a financial holding company and the revocation of the license of a bank or specialised deposit taking institution, by arbitration and under the rules of the Alternative Dispute Resolution Centre established under Act 798[1].
By the wording of the Act, it is evident that Arbitration is the only means of resolving disputes arising under the specified circumstances. This invariably takes away ability of the parties to voluntary decide to submit to arbitration. The further implication of the provision is that, under Act 930, parties unwilling to submit to arbitration may be left without redress. Act 930 goes on to govern the arbitration and the institution to conduct and oversee the arbitral proceedings. All these constitute a departure from the principle of party autonomy which is the very foundation of arbitration.
One may argue that, by engaging in activities regulated by Act 930, a party automatically enters into an arbitration agreement which takes effect under Section 141 of Act 930.
For clarity, the ADR Act specifies what constitutes an arbitration agreement in writing. Under the ADR Act this includes an arbitration agreement made by exchange of communications in writing including exchange of letters, e-mail or other means of communication which provide a record of the agreement, or an exchange of statement of claim and defense in which the existence of an arbitration agreement is alleged by one party and not denied by the other.
The law therefore makes no direct provision for arbitration agreements arising automatically under legislation or by operation of law. Under the ADR Act, Arbitration agreements shall be by the written consent of the parties.
Effect On The Business Environment Of Ghana
Besides depriving parties of the right to decide the mode of resolution of their disputes, a major effect this may have on business and investments in Ghana is in respect of the international recognition and enforcement of Arbitration awards granted under arbitration proceedings held in accordance with Section 141 of Act 930. This is more probable where parties to an arbitration agreement seek recognition of an arbitral award under the New York Convention.
The New York Convention, which ensures the enforcement and recognition of international arbitral awards and to which Ghana is a signatory, defines the term “agreement in writing” as an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams[2]. This therefore raises an issue as to whether arbitration entered into under Section 141 of Act 930 and without express agreement of the parties involved will be subject to international recognition and enforcement under the New York Convention. For obvious reasons, this may raise many concerns for foreign investors willing to invest in the Banking and Financial sectors of the economy.
Conclusion
It is important to reiterate that party autonomy remains the underlying principle on which the arbitration process operates. Therefore, legislation which seeks to deprive parties of this autonomy and compels them to arbitration like the Banks and Specialized Deposit-Taking Institutions Act 2016, Act 930 may be problematic and affect the international business climate of the country, and should be reviewed.
[1] Section 141 of Act 930
[2] Article 2 (2) of the New York Convention;
Author:
Priscilla Wepia Ametame