22 May Attorney-General v Faroe Atlantic Co. Ltd [2005- 2006] SCGLR 271
“An international business or economic transaction to which the Government of Ghana is a party requires Parliamentary approval. Contracts in breach of Constitutional provisions cannot be enforced.”
A Company entered into a Power Purchase Agreement (PPA) with the Government of Ghana (“GoG”), acting through the Minister of Mines and Energy, for the purchase of electric power. The Company instituted proceedings against the GoG for breach of contract, claiming relief by either specific performance or damages. The High Court entered summary judgment granting relief in favour of the Company.
The Defendant ultimately appealed to the Supreme Court questioning the legality of the summary judgment entered against it and damages that were founded.
The issue before the Supreme Court was whether or not damages could lawfully be assessed on a contract, being an international business or economic transaction to which GoG was a party, where parliamentary approval was not obtained per Article 181(5) of the 1992 Constitution.
The Supreme Court held that the PPA was indeed unconstitutional and therefore void. The Company was then not entitled to any damages for breach of contract.
Insight: New foreign investors and contractors transacting with the Government of Ghana may be unfamiliar with the constitutional requirement for parliamentary approval of international business and economic transactions involving the GoG; however, noting this stipulation is critical for future legal enforcement.