ADR- Seperability Doctirne- Balkan Energy Case
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Ghana School of Law**We aren't endorsed by this school
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LAW ADR
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Management
Date
Dec 25, 2024
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15
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UNIVERSITY OF PROFESSIONAL STUDIES, ACCRA (UPSA) DEGREE PROGRAMMEEVENING STREAMVIRTUAL (ONLINE) INTERIM ASSESSMENT COVER SHEETTake-Home IA STUDENTS’ SUBMISSION SHEETUNIVERSITY OF PROFESSIONAL STUDIESINTERIM ASSESSMENT - 2020/2021 ACADEMIC YEARSCHOOL OF LAWLEVEL 300BLAW 316: ALTERNATIVE DISPUTE RESOLUTION (ADR)Start Date: Friday, June 25, 2021 – 12pmEnd Date: Saturday, June 26, 2021 – 12pm10106471
STUDENT ID. NUMBER: DIGITAL/PHYSICAL ADDRESS OF THE STUDENT: House Number : C101/4 Kokomlemle Accra KOTOKO AVE. Adjacent Ghana Revenue Authority Head Office , Circle Accra
QUESTION ONE In the light of The Attorney General v Balkan Energy Ghana Ltd & Ors and Section 3 of the ADR Act, 2010 (Act 798), discuss the principle of separability of an arbitration agreement. (10 marks) It is a process in which two or more persons submit their matters in difference to one or more impartial persons for a binding decision, in otherwords, arbitration is a means of resolving a dispute without recourse to the court, thus the voluntary submission to a dispute to one or more impartial persons for a final and binding determination as established in Section 135 of ADR Act 2010(Act 798).The legal framework, within which arbitration operates in Ghana is the Alternative Dispute Resoution Act , Act 2010 (Act 798). This Act deals with matters such as the effects of arbitration agreement, awards , cost andenforcement. The act does not lay down procedure for the conduct of arbitration, however, as this will varied according to the nature of the dispute and the way in which the parties wished it to be handled. In this respect arbitration provides a more flexible method of resolving a dispute than proceedings in the ordinary court.Doctrine of Separability: An arbitration clause constitute a separate agreement independent of the substantive contract in which it is embedded . It will survive the invalidity or termination of the main contract unless the main contract was void ab initio or never came into existence. Thus, once the contract kicks into existence ,the arbitration clause becomes binding henceforth. The arbitrator has jurisdiction to adjudicate on the validity of the main contract unless the arbitration agreement itself is affected by a vitiating events.Section 3(1) of the ADR Act 2010 (Act 978) also provides that “Unless otherwise agreed by the parties , an arbitration agreement which forms or its intended to form part of another agreement , shall not be regarded as invalid, non existent or in effective because that other agreement is invalid or did not come into existent or hasbecome in effective and shall for that purpose be treated as a distinct agreement “.Similarly , in Heyman v Darwins Ltd [1942], AC 356 . In this case Darwin Ltd appointed Heyman as its seling agent under a contract containing a clause agreeing to refer disputes in “respect of this agreement” to arbitration . A dispute arose and Heyman claimed that Drawin Ltd had repudidated the contract. He accepted the repudiation , claimed that the contract was at an end and issue a writ. It was held that , the action should be
stayed, as the alleged repudiation only amounted to a breech of contract and therefore left the arbitration clause binding.The arbitral tribunal also has the mandate to determine whether or not it has jurisdiction to commence the arbitral proceedings as established in Section 24 of ADR Act 2010(Act 798).In the case of The Attorney General v Balkan Energy Ghana Ltd & Ors, the matter came up as a result of Power Purchase agreement entered into by the Government of Ghana and Balkan Energy for a rehabilitationofa Power Barge. As part of the agreement there was an arbitration clause which provided that the parties in the agreement will submit any dispute or their matters indifference through an arbitration process for a binding decision. A dispute arose between Ghana Government and the Balkan Group where Ghana government claimed that Balkan Energy did not have capacity and misrepresented itself for which Balkan Energy disputedand Triggered the arbitration clause on 23rdDecember ,2009 pursuant to the arbitration clause contained in thePower Purchase Agreement.Held:The Ghana Government raised the point that the PPA needed Parliamentary approval under Article 181(5) of the 1992 Constitution, but that this approval had not been sought and therefore the PPA was invalid, as having been executed in breach of a constitutional provision.The Government of Ghana argued before the arbitration tribunal that non-compliance with the constitutional provision made the PPA invalid, including its arbitration clause, and consequently the arbitral tribunal had no jurisdiction over the dispute before itHowever, the arbitral tribunal held that it had jurisdiction, and went further to rule that Ghana termination of the agreement amounted to breach of contract and the provision of the PPA and that the arbitration clause constitute a separate agreement independent of the substantive contract in which it is embedded,and will survive the invalidity or termination of the main contract unless the main contract was void ab initio or never came into existence , hence the doctrine of separability. Flowing from this , Ghana Government disputed the rulling in the arbitration tribunal and took the matter to Supreme Court of Ghana on the grounds that the whole transaction in the Ghana Government and the Balkan Energy was premised on illegality as it frowns on Article 181(5) of the Constitution ,1992 which provides that
“ An international transaction must go through parliament for approval before it can be binding as such the contract was void ab initio since it did not go through Parliament. Further the court opined that , the arbitration clause 22.2 in the Power Purchase Agreement dated 27th July 2007 between the Government of Ghana and Balkan Energy (Ghana) Limited does not constitute an international business transaction within the meaning ofArticle 181(5) of the Constitution1992. This is because applying the interpretation of Article 181(5) of the Constitution,1992 arrived at is clear that the international arbitration provision cannot, in and of itself, constitute an international business or economic transaction. An international commercial arbitration is not by itself an autonomous transaction commercial in nature which pertains to or impacts on the wealth and resources of the country. An international commercial arbitration draws its life from the transaction whose dispute-resolution it deals with. We therefore have difficulty in conceiving of it as a transaction separate and independent from the transaction that has generated the dispute it is required to resolve.Again in the case of GPGC Limited vrs The Governmetn of The Republic of Ghana By Notice of Arbitration dated 13 August 2018 (the “Cl. Notice of Arbitration”), GPGC commenced arbitration proceedings against GoG pursuant to Clause 28(f) of the EPA and Article 3 of the UNCITRAL Rules. GPGC Argument Was that at the time of the GoG’s purported termination, the GPGC Plants had not yet become operational, and GPGC had yet to engage in any type of business or commercial activity within the scope of Section 11. It could therefore not be held to be in breach of Section 11 for not having a license for those activities (the grant of which license had been considerably delayed by the Energy Commission).” as was canvassed by Ghana Government and that “It will be absurd and incongruous to read Clause 11(o) together with Clause 25(b)(i) since they deal with separate and independent matters - Required Payment andEarly Termination Payment.”However Ghana Positiion is that the Claimant cannot be held to have been able to locate a “site” for the Project, when the purported site grossly violated the provisions of the laws of Ghana and was unsuitable for the Project. In truth and in fact, no Site was identified for the Project. The Respondent cannot be held liable for any obligations arising thereunder. The Tribunal is respectfully urged to reject the assertion by Claimant that it satisfied all of its Conditions Precedent.”
However the tribunal DISMISSES GoG’s counterclaim for an Early Termination Payment in its entirety and all and any other claims and counterclaims of whatsoever nature are hereby dismissed. Therefore , IN THE MATTER OF AN ARBITRATION CONDUCTED UNDER THE 2013ARBITRATION RULES OF THE UNITED NATIONS COMMISSION ONINTERNATIONAL TRADE LAW between GPGC Limited and The Government of the Republic of Ghana reaffirmed the doctrine of separability as was earlier on adjudicated in the Balkan Energy caseConclusion The essence of separability in arbitration clauses in contract is to protect the sanctity of Contract. This is to ensure that parties to contract must exhibit good faith as well as good will
QUESTION TWO “If we transform the way conflict is perceived and if we employ effective conflict resolution skills, differencescan be used to explore a wealth of possibilities, work for mutual benefits and clarity and improve relationships”. Discuss the veracity or otherwise of this statement. (10 marks)IntroductionA conflict or negotiation situation is one in whicfh there is a conflict of interests or or what one wants ins’t necessarily what the other wants and where both sides prefer to search for solutions, rather than giving in or breaking-off contact.Few enjoyed dealing with conficts-either with friends,or strangers , subordinates, peers , bosses . This is true when the conflict becomes hostile and when strong feelings become involved . Resolving conflict can be mentally exhausting and emotionally draining.But it is important to realize that conflict that requires resolution is neither good nor bad.There can be positiveand negative outcome of conflict. It can be destructive but can also play a productive role for you personally and for your relationships-both personal and professional.The important point is to manage the conflict , not tosuppress conflict and not to let conflict escalate our of control . Many seeks to avoid conflict when it arises butthere are many times when we should use conflict as a critical aspect of creativity and motivation .Types of ConflictThere are five different types of conflict handling behaviour: competing, collaborating, compromising, avoiding and accommodating. Competing has high concern for personal goals and low concern for relationships. Collaborating is the search for a mutually satisfactory solution. It involves high cooperation and low confrontation. Compromising is a mid-way solution, best suited to situations where the conflicting partiesare relatively equal in power and have mutually independent goals. Avoiding is delaying or ignoring the conflict in the hope that over time the conflict situation will resolve itself. Accommodating is a search for
common ground. It involves high cooperation and low confrontation. However there are five stages which conflict arise , the Latent Stage,Perceived Stage , Felt Stage ,Manifest and AftermathIn the Latent Stage , Participant in the conflict are not yet aware of the conflict , whilst in Perceved Stage where the participant are now aware of the existence of conflict , In felt stage it is to be known as the stress and anxiety stage , the Manifest stage is whent the conlict is open and can be observed and the Aftermath is when we have an outcome of conlict , resolution or dissolution.Consequent of ConflictConflict per se is neutral, neither good nor bad. It can have positive as well as negative consequences for the parties involved and for the larger social system of which the disputing paties are members.Conflict situations should be either resolved or used beneficially. Conflicts can have positive or negative effects for the organization, depending upon the environment created by the manager as she or he manages and regulates the conflict situation.Positive effects of conflictsOn the positive side, conflict can bring opportunity, drama, development, and growth to individuals, groups, and organizations, resulting in increased cohesion and trust. It can lead, as well, to more effective personal andorganizational performance. Positive consequences for individuals involved in conflict can include:1.Reconciliation of the interests of the disputing parties: Most conflicts can end with at least some satisfaction of the legitimate interests of the parties involved, usually through some integrative agreement of mutual benefit. Rarely do conflicts have to end in clearcut win/lose outcomes.2.A sharpened sense of identity and solidarity: As individuals engage in conflict, their sense o who they are as persons, with unique needs tends to be sharpened. As they differentiate themselves from one another, they uncover ways in which they are similar and different. The similarities enhance rapport and a sense of solidarity, the difference help to sharpen a sense of identity.
3.Interaction: Conflict tends to promote interaction at an interpersonal level and create a new system of which all parties are instantly a part. As one party change, all the other parties must then change to restore the equilibrium. 4.Internal change: As disputing parties experience conflict and engage in dialogue with others of differi ng needs and beliefs, they are confronted with the prospect of making adjustments in their positions. The pressure to explore new ideas and feelings can challenge an individual to move from rigidity to flexibility, with consequent internal change5.Clarifying the real problem: Conflicts often emerge around different solutions to a particular problem shared by the disputing parties. As dialogue is conducted and the parties begin to explore the interests underlying the contrary positions, the real problem can be identified and addressed. Again Some of the positive effects of conflict situations are (Filley, 1975):· Diffusion of more serious conflicts. Games can be used to moderate the attitudes of people by providing a competitive situation which can liberate tension in the conflicting parties, as well as having some entertainment value. In organizations where members participate in decision making, disputes are usually minor and not acute as the closeness of members moderates belligerent and assertive behaviour into minor disagreements, which minimizes the likelihood of major fights.· Stimulation of a search for new facts or resolutions. When two parties who respect each other face a conflict situation, the conflict resolution process may help in clarifying the facts and stimulating a search for mutually acceptable solutions.· Increase in group cohesion and performance. When two or more parties are in conflict, the performance and cohesion of each party is likely to improve. In a conflict situation, an opponent's position is evaluated negatively, and group allegiance is strongly reinforced, leading to increased group effort and cohesion.· Assessment of power or ability. In a conflict situation, the relative ability or power of the parties involved can be identified and measured.
Conflicts often involve groups and occur between group members. Conflict can have positive consequences for all group members that are parties to the dispute. Some of them include:1.Increased trust: As individuals enter into any experience with one another in group setting, trust is low, resulting in defending behaviors on the part of group members. In conflict situations this tendency is exacerbated, since the disputing parties perceive the possibility of their failing and being hurt. As individuals share their thoughts and feelings with one another in the group, trust builds, freeing energy previously spent in defending2.Incensed productivity and results: As conflict is exposed and the parties involved express their thoughts and feelings, the group can be healed of some of the negative feelings that tend to prevail in conflict situations. As the group is freed of diverting emotions and discovers new solutions, its productivity can increase. 3.Group unity: Conflict fosters a sense of group unity and identity as disputing parties reconcile individual differences. Without conflict, groups become stagnant and uncreativeNegative Results of Conflict:Destructive effects of conflicts include:· impediments to smooth working,· diminishing output,· obstructions in the decision making process, and· formation of competing affiliations within the organization.The overall result of such negative effects is to reduce employees' commitment to organizational goals and organizational efficiency (Kirchoff and Adams, 1982)Often the positive benefits of conflict are overshadowed by harmful consequences that result when disputing parties attempt to achieve their goals at the expense of others. Such forcing exchanges often bring about an
escalation of the conflict that is difficult to reverse. When forcing methods are used, any of the following negative consequences can follow:1.Minor differences can escalate into major conflicts involving actions imposed by a power person or group on another, resulting in greater loss to the system as a whole.2.The number of issues in the conflict can increase, resulting in greater complexity and greater difficulty in managing the situation.3.Specifics can give way to global concerns, which often cause the person to be equated with and confused with the issue at stake or the entire relationship between the disputing parties to be called intoquestion.4.The intention can shift from getting a specific interest satisfied to beating the other parties at all costs.5.The number of parties can increase, making it even more difficulty to de-escalate the conflictConflict OutcomesConflict always manifests itself in some specific outcomes. Three possible outcomes can emerge1.Dominance or imposition, resulting in resentment and sometimes destructive consequences.2.Withdrawal or avoidance, resulting in resentment and lowered self-image.3.Compromise of resolution, resulting in at least some of the beneficial consequences being achievedThese outcomes are dependent on the approach or strategy used to deal with the conflict. The choice among alternative strategies can spell the difference between resentment and mutual respect. These outcomes result from five basic approached, or strategies, available to address the conflict situation.Benefits of ConflictWhile many businesses strive to promote synergy and cohesiveness, conflict inevitably tends to crop up. Although conflict is typically looked at as a negative occurrence, it can actually help in some cases. Instead of trying to get rid of conflict, businesses may want to find a way to deal with it to improve their situations.
Engages EmployeesOne of the potential ways that conflict can benefit your organization is that it creates engagement with the employees. For example, when an idea is presented at a meeting, you do not want everyone to simply agree with the presenter for fear of a conflict. Instead, you want employees to be able to speak freely. When employees disagree with an idea, they should be able to speak up and voice their opinion. If they are afraid of conflict, a bad idea could be implemented.Getting Employees' AttentionAnother way that conflict can benefit your company is that it helps employees stay focused on the task at hand. In some cases, when you have meetings regularly, employees become immune to them and start to daydream. If a bit of conflict is expected in the meeting, it will keep the employees on the task at hand. When employees are encouraged to speak their minds and tell the truth, it can improve the quality of meetings overall.Improves Employee RelationshipsAnother way that conflict could potentially help your business is that it can help you improve your employee relationships. When you feel comfortable enough to disagree with someone, it can strengthen your relationship over the long term. After engaging in a conflict in a professional manner, you can move on and continue working together in the future. Businesses that allow conflict tend to develop stronger relationships between their employees.Improves Employee MoraleWhen employees are allowed to speak freely and not shy away from conflict, it can actually improve their morale. Workers who are allowed to speak freely tend to feel more valued overall. When an employee feels that his opinion is important, he will feel more comfortable in the company.
Improves IdeasConflict can help improve the quality of ideas that are ultimately produced by the business. When you get a group of people together who are speaking freely and unafraid of conflict, their ideas can be adapted and honed to become more attractive. The company will be less likely to put out poor ideas for new products or servicesConflicts Teaches flexibility and how to listen. If we are in conflict we are not only going to have others adjusting to us and our perspectives, but we will also be adjusting to others and their perspectives. Humility and openness are two admirable qualities to come from conflict. We have to discipline ourselves to not alwayshave to be right. If we need to be right we make another wrong, and we come to be viewed as disagreeable, controlling, fragile and egotistical; none of which are qualities of a good leader. They are the makings of a spoiled brat. Additions and subtractions must be made to any new idea in business in an effort to make it the best it can be. Each contract we have with customers and/or our team will always be born from the conflict natural to any successful negotiation. The more open and flexible we can be, the better a reputation we develop for being fair and intelligent.The key to any successful conflict resolution is the ability to listen. Most are so focused on litigation they havezero ability to listen; their only desire is to win. Successful relationships and/or negotiations cannot be forged with defensive, dominating people. Listening takes patience and the discipline to control our impulses to speak. It takes being able to put ourselves and our thoughts to the side so we can fully take another perspectivein. To truly listen to someone, listening must be active, not passive. When we listen we thrive amongst the elite in the business world. Listening gives us access to the information we need to make smart and lucrative decisions.Conflicts also teaches us patterns of behavior and leads to solution. As we engage in conflict we learn about how others work, their style of communication, and their points of view. Knowing patterns helps us to be more effective in our relationships as they provide some level of predictability. Predictability is effective when strategizing in negotiations. When we listen, we get to know how people think and we gain insight into
how they operate. This knowledge helps us define and work within their patterns, allowing us to respect limitsand to predict where and when we can push without being offensive and still get the deal done. Knowing patterns makes us more prepared and confident when dealing with any type of uncertainty or disagreement.When structures or agreements that are in place are no longer working, something new has to come into play. Change is hard. It creates discomfort and we naturally want to hang on to what once worked even when it’s clearly outdated and in need of upgrading. To be successful all things need to be in the process being “in development.” For our businesses to grow the entire foundation of our businesses must be consistently analyzed, discussed, negotiated and fine-tuned. Conflict is the backdoor to reinvention and innovation.Practice communication skills is developed through conflict. Communication is a skill that requires self-control, patience and intelligence. It requires that we be real and authentic. If we back down from conflict we end up being disingenuous. We end up not communicating our perspective out of some form of fear. Conflict is hard for everyone, yet the more we engage in conflict the better a communicator we become. This is not to say we should go out and create conflict, but the intention is not to be afraid to participate in conflict when it arises. Deal with it and be open to the element of surprise.Conflicts helps us to set limits and develop practical emotional control. People need to know where we start and they stop. Conflict is the perfect place to set limits and make new agreements which fall in line with the respect and integrity of all involved. Without respect and mutuality successful connections cannot develop or flourish. As we communicate needs and boundaries we allow others to learn a great deal about us and how we work. We also learn a lot about ourselves, making us that much more successful. Conflict teaches us when to back off and when to activate for ourselves by asking someone else to back off. We do not have to be so emotional all the time. If we want to be taken seriously we must approach conflict seriously. We must learn to remain calm and to use the least amount of words to get our point across, all the while remaining firm and flexible when setting our way. Perseverance and self-control are the keys to successful conflict resolutions. When we are in control of ourselves people can better relate to us, count on us and trust our intentions.
Conclusion While many businesses strive to promote synergy and cohesiveness, conflict inevitably tends to crop up. Although conflict is typically looked at as a negative occurrence, it can actually help in some cases. Instead of trying to get rid of conflict, businesses and individuals may want to find a way to deal with it to improvetheir situations. The benefits is outline on the following Engages Employees or individuals, Getting Employees' or individuls Attention, Improves Employee or indudal Relationships, Improves Employee or individual Morale, Improves Ideas. Having analysed the above and looking at the question “If we transform the way conflict is perceived and if we employ effective conflict resolution skills, differences can be used to explore a wealth of possibilities, work for mutual benefits and clarity and improve relationships”. Discuss the veracity or otherwise of this statement. It is to be noted that with the above discussion the veracity of the statement is true that we don’t only have the negative aspect of conflict , there are also positive aspect of conflict as espoused in the discussion .