Ghana’s Push for Compulsory Arbitration in Respect of Some Causes of Action- A Hit or A Miss?

Introduction

The word “arbitration” has gained a lot of traction in recent years. It is now “fashionable” or “chique” to incorporate arbitration clauses in all kinds of agreements. Even legislative drafters have caught on to this “new wave” of including arbitration provisions in public legislation. Hence, Acts of Parliament and subsidiary legislation passed in the last 3 years include alternative dispute resolution provisions as the means of settling disputes arising from the interpretation and/or application of those laws. This trend, for right or wrong, marks a departure from the traditional notion of the Courts being the only adjudicators of disputes concerning statutory interpretation.

In this article, the Author considers the concept and features of traditional arbitration vis-à-vis its relatively recent variant, statutory arbitration. The author relies on a number of statutes including recent banking and land legislation to demonstrate the difficulties with what has been referred to by some others as compulsory statutory arbitration.  The Author’s position is that despite the good intentions behind the incorporation of these provisions, the mechanics and operations of these provisions do not sit well with the general concept and notions of arbitration.

Essential Features of An Arbitration

Arbitration, in its simplest terms, is the voluntary submission of a dispute to one or more impartial persons for a final and binding determination.[1] It as the process by which a dispute or difference between two or more parties as to their mutual legal rights and liabilities is referred to and determined judicially and with binding effect by the application of law by one or more persons instead of by a court of law.[2]

Individuals or States may prefer arbitration for disputes settlement for reasons ranging from party autonomy, the neutrality of the forum to the expertise of the arbitral tribunal.[3]

The sine qua non for the commencement of arbitral proceedings is whether or not the Parties have an arbitration agreement. Section 2 of the Alternative Dispute Resolution Act, 2010 (Act 798) provides as follows:

(1)Parties to a written agreement may provide that a dispute arising under the agreement shall be resolved by arbitration.

(2) A provision to submit a dispute to arbitration may be in the form of an arbitration clause in the agreement or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing and may be in the form provided in the Fifth Schedule to this Act.

(4) For the purpose of this Act an arbitration agreement is in writing if

(a)  it is made by exchange of communications in writing including exchange of letters, telex, fax, e-mail or other means of communication which provide a record of the agreement; or

(b)  there is an exchange of statement of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

The provisions of Act 789, as reproduced above, is in line with the incontrovertible position of all legal systems that arbitral proceedings cannot commence without prior voluntary agreement between the Parties. Andrea Marco Steingruber emphasized this position of law in the Oxford International Arbitration Series[4], where he stated “The principal characteristic of arbitration is that it is chosen by parties by concluding an agreement to arbitrate. The arbitration agreement is considered the foundation stone of international (commercial) arbitration, as it records the mutual consent of the parties to submit to arbitration-mutual consent which is indispensable to any processes of dispute resolution outside national courts. Such processes depend for their very existence upon the agreement of the parties. Hence, this element of mutual consent is essential, as without it there can be no valid arbitration.”

It is this defining character or voluntary consent of parties before arbitral proceedings can commence that differentiates arbitration from the state adjudication process (i.e. judicial system). Whereas a person has no choice but to use the State’s judicial system to settle a dispute, the State does not have such coercive powers when it comes to arbitration. The Parties must voluntarily agree to submit their dispute to arbitration, and they cannot be forced to.

The consent to arbitration must be not limited to only the consent to refer the dispute to arbitration. The consent must also be in respect of the following:

1. The submission of the dispute to arbitration
2. The choice of the arbitrator
3. The choice of the arbitral institution (for institutional arbitration)
4. The choice of the rules of arbitration.
5. The venue of the arbitration
6. The language of the arbitration

Indeed, it has been concluded that an arbitration agreement which lacks all these elements may not be enforceable and deemed defective.[5]

One other advantage of arbitral proceedings is the confidentiality which underlines the entire proceedings. Unlike judicial proceedings which are held in public[6], arbitral proceedings and the award arising from same cannot be made public unless with the consent of the parties.[7]

Arbitrability of Certain Cause of Actions/Disputes

Despite the right of Parties to decide to submit their dispute to arbitration, it is also accepted that there are some causes of actions and disputes that the interest of the State looms too large to be left in the hands of “private persons” as “final decision makers”. This is the concept behind the arbitrability or otherwise of some disputes.

The term “Arbitrability” refers to matters, or disputes of which are not capable of settlement under arbitration.[8]  The issue of arbitrability is essential to invoke the jurisdiction of the arbitral tribunal because if the subject matter is not arbitrable, the jurisdiction of the tribunal cannot be invoked to settle any dispute arising out of the subject matter.[9]

According to Carbonneau and Janson[10], arbitrability determines the point at which the exercise of contractual freedom ends and the public mission of adjudication begins. Redfern and Hunter[11] argue that every country, influenced by its socio-economic circumstances and policies, determines which matters are to be arbitrable and which should not be.

By its very nature, an arbitration agreement is guided by the principle of party autonomy which allows parties to determine the scope and extent of an agreement. Thus, where an award is made in respect of a matter not within the scope of the agreement between the parties, it would ultimately not be arbitrable.[12]

In certain circumstances, national courts have provided reasons why certain matters are not arbitrable within that legal regime. The Supreme Court of the United States, for instance held in the case of Continental Airlines Inc. v. Zimmerman[13] that due to the importance of bankruptcy proceedings to the smooth functioning of the economic fibre of the United States, it was imperative that any decision relating to bankruptcy should be reserved for a Court and not for an arbitral tribunal.

The concept of arbitrability is not alien to the jurisprudence of Ghana. Section 1 of Act 798 provides for matters beyond the scope of application of the Act. By purposive interpretation, Section 1 of the Act provides for matters not subject to arbitration in Ghana. The matters listed therein are not matters, disputes of which can be settled by arbitration- they are therefore not “arbitrable”.

Section 1 of the Act provides as follows:

“This Act applies to matters other than those that relate to

(a) the national or public interest;

(b) the environment;

(c) the enforcement and interpretation of the Constitution; or

(d) any other matter that by law cannot be settled by an alternative dispute resolution method.”

The ambit of the provisions of Section 1 of the Act is what is commonly referred to as “Arbitrability Provisions”.

This means that in Ghana, where the dispute between the Parties relates to the enforcement and interpretation of the constitution, or will affect the environment or will be of public interest, Parties who may be directly involved in the transaction or facts leading to the dispute will not have the option/right to submit such disputes to arbitration. A court of competent jurisdiction must settle those disputes.

Statutory Prescriptions for Compulsory Arbitration

“Compulsory arbitration” sounds like an oxymoron considering the fact that arbitration is voluntary between the parties. Be that as it may, in Ghana, there are statutes with mandate that for disputes arising from the application of those statutes, the Parties must submit themselves to arbitration. In this part, we will set out these laws and analyse whether each of them fits the generally accepted conditions to invoke the jurisdiction of an arbitral tribunal.

1.Land Act, 2020 (Act 1036)

The Land Act, 2020 was assented to in December 2020  to revise, harmonise and consolidate the laws on land to ensure sustainable land administration and management, effective and efficient land tenure and to provide for related matters.[14]

Section 2 of the Act provides that the highest interest/title in land is the allodial title and can be held by the State, a Stool/Skin, Family, Clan or Individual. It is trite that in Ghana, an Individual who holds allodial title interest in land must have acquired it from a family, stool/skin or clan.[15]

It is common for there to be disputes with respect to the ownership of interest in land. Section 98 of the Act provides that “An action concerning any land or interest in land in a registration district shall not be commenced in court unless procedures for resolution of dispute under Alternative Dispute Resolution ACT, have been exhausted.”

A reading of this section means that a person who is challenging the interest of another in a land, cannot commence an action in court unless the person has exhausted the alternative dispute resolution procedures provided for under Act 798. What are the alternative dispute resolution mechanisms provided for under Act 798?

The preamble of Act 798 provides for the means of alternative dispute resolution anticipated by the Act. The preamble states, amongst others, that the Act is an “AN ACT to provide for the settlement of disputes by arbitration, mediation and customary arbitration….”

A reading of the provisions of section 98 of the Land Act in the context of the preamble of Act 798 will show that the law is suggesting that before a person can proceed to court to initiate an action in respect of their interest in land, that person must have demonstrated that he has attempted to solve the dispute by either arbitration, mediation and customary arbitration without fail.

With respect, this statutory prescription flies in the face of all the known essential perquisites for arbitration vis:

1. The Parties would not have consented in an agreement to subject the dispute to arbitration (either customary or commercial arbitration)
2. The Parties would not have agreed on the arbitration center or the rules of arbitration.
3. Arbitration does not fail. It must result in an award/binding decision and so a dissatisfied party to an arbitral award cannot re-litigate the issue in a court of law[16].
4. The land tenure system is that of public interest as there is only 1 State Entity (i.e. Lands Commission) which serves as the registry of lands. If parties are allowed to subject land disputes to arbitration, the award will not be made public or registered at the Lands Commission. On the grounds of public policy, disputes relating to interest in land should not be arbitrable.

On these grounds enumerated above, it is the opinion of the author that section 98 of the Land Act is inconsistent with the general body of laws in Ghana and should be struck out as such.

2.Banks and Specialized Deposit Act, 2016 (Act 930)

Act 930 was passed in 2016 as an “Act to amend and consolidate the laws relating to deposit-taking; to regulate institutions which carry on deposit-taking business, and to provide for related matters.”

Section 41 of the Act provides as follows:

(1) Where a person is aggrieved with a decision of the Bank of Ghana in respect of

(a)  matters under sections 107 to 122 or sections 123 to 139;

(b)  withdrawal of the registration of a financial holding company;

(c)  matters which involve the revocation of a licence of a bank or a specialised deposit taking institution; or

(d)  an action under sections 102 to 106 and where the Bank of Ghana determines that there is a serious risk to the financial stability or of material loss to that bank or specialised deposit- taking institution or financial holding company

and that person desires redress of such grievances, that person shall resort to arbitration under the rules of the Alternative Dispute Resolution Centre established under the Alternative Dispute Resolution Act, 2010 (Act 798).

This provision expressly states that the dispute resolution mechanism for any person aggrieved by the decision of the Bank of Ghana can only be through arbitration under the rules of the Alternative Dispute resolution Center established under Act 798. Unlike the Land Act, this Act goes further by naming an arbitral centre to administer the administration. Be that as it may, unfortunately, this Act also sins against the essential feature of arbitration.

First, as of the date of the passage of the ADR Act up to now, the Alternative Dispute Resolution Center has not been constituted, and hence this provision cannot be enforced. Furthermore, like the Land Act, this statutory prescription contradicts all requirements for arbitration vis:

1. The Parties would not have consented in an agreement to subject the dispute to arbitration (either customary or commercial arbitration).
2. The issue of banking system is that of public interest as there is only 1 State Entity (i.e. Bank of Ghana) which serves as the regulator of the Industry. If parties are allowed to subject such causes of action to arbitration, the award will not made public to serve as a guide or information to all stakeholders. On the grounds of public policy, disputes relating to interest in financial interest institutions and banks interest, should not be arbitrable.

Additionally, section 142 of the Act further provides that “With respect to an arbitration proceeding against the Bank of Ghana, a member of the decision-making body, a staff of the Bank of Ghana, an agent of the Bank of Ghana, or Arbitration Panel in reaching a decision, may examine whether the defendant acted unlawfully or in an arbitrary or capricious manner having regard to:

(a)  the peculiar facts,

(b)  the provisions of this Act,

(c)  a directive of the Bank of Ghana, or

(d)  Iny other enactment.

This provision gives an arbitral tribunal the jurisdiction to “review” administrative acts or omissions against a public institution established by the Constitution[17] and its officers. This provision is inconsistent with Article 141 of the 1992 Constitution, which vests in the High Court, the jurisdiction to review decisions of lower bodies established under the 1992 Constitution. Article 23 of the 1992 Constitution also provides that persons aggrieved by decisions of administrative bodies shall have the right to seek redress before a court.

Date Bah[18] sitting as the Sole Arbitrator is the arbitral proceedings involving Dr Kwabena Duffour as Claimant and Nii Amanor Dodoo as Respondent observed as follows “Moreover there are issues relating to whether the special procedure prescribed by Act 930 is constitutional, being in apparent conflict with Article 23 of the 1992 constitution when it is invoked in relation to an alleged unlawful exercise of administrative authority.”

The author is of the opinion that these provisions in the Act 930 are not only at variance with the general essential conditions for a dispute to be referred to arbitration but are also unconstitutional

Conclusion

Arbitration is generally deemed as a dispute-resolution mechanism where parties agree to arbitrate their disputes. The mutual and voluntary consent requirement  is a condition of every valid arbitration proceeding. When involuntary, as mentioned by the numerous clauses examined, it does not only defeat the wider aim of the alternative dispute settlement, but it also raises doubts in the minds of the parties who have been forced to participate in a process they did not chose to participate in.  Arbitration must be voluntary and any attempt to make it otherwise by statute, should be discouraged.

[1] Blackaby and others Redfern & Hunter on International Arbitration, 6^th Ed. Oxford University Press (2015) pg 2

[2] Halsbury’s Laws of England (4^th Edition, Butterworths 1991), para 601, 332.

[3] Blackaby and others Redfern & Hunter on International Arbitration, (6^th Ed. Oxford University Press, 2015) pages 28-31

[4] “Consent in International Arbitration” (Oxford University Press, 2012)

[5] See Schmitthoff “Defective Arbitration Clauses” [1975] J.B.L. 9

[6] Except in certain cases expressly provided for my law like matrimonial causes

[7] See Expert Report of Stephen Bond in Esso/BHP v Plowman (1995) 11 Arbitration International No 8 at page 273.

[8].L.A. Mistelis S.L. Brekoulakis (ed), Arbitrability: International and Comparative Perspectives (Kluwer Law Intl, 2009) pages 3-4.

[9] The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the New York Convention), Article V (2)(a); the UNCITRAL Model Law on International Commercial Arbitration, 1985 (as amended in 2006) (the Model Law), Article 34 (2)(b)(i).

[10] T.E. Carbonneau, F. Janson, “Cartesian Logic and Frontier Politics: French and American Concepts of Arbitrability”, [1994] 2 Tul. J. Int’l & Comp. L. (Tulaine Journal of International and Comparative Law) 193, at p.194.

[11] N. Blackaby, C. Partasides, A. Redfern, M. Hunter, Redfern and Hunter on International Arbitration (5^th Edition Oxford University Press, 2009) at p.124

[12] A. Rogers, “Arbitrability”, [1992] 1 A.P.L.R. (Asia Pacific Law Review) 2, at p.1.

[13] 464 U.S.1038, 104 S.Ct. 699, 79 L.Ed.2d 165, January 9, 1984.

[14] See the preamble of Act 1036.

[15] Aidoo v. Adjei (1976) 1 GLR 431; Golightly v. Ashirifi (1955) WACA 49; Akyea-Djamson v. Duagbor (1989-90) 1 GLR 223 S.C; Nyasemhwe v. Afibiyesan [1977] 1 GLR 27-36

[16] The Act 798 has provided for the grounds of intervention by the High Court in arbitral proceedings but these grounds do not suggest that an arbitral award can be the subject of an appeal in the high court.

[17] See Article 183 of the 1992 Constitution

[18] A retired justice of the Supreme Court of Ghana