Identifier
Created
Classification
Origin
04ACCRA2303
2004-11-23 15:19:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Accra
Cable title:  

GOVERNMENT OF GHANA'S MIXED RESPONSE TO WESTERN

Tags:  ECPS EINV GH 
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UNCLAS ACCRA 002303 

SIPDIS

SENSITIVE

PASS TO DEPT. OF COMMERCE FOR RASHIDA PETERSEN

E.O. 12958: N/A
TAGS: ECPS EINV GH
SUBJECT: GOVERNMENT OF GHANA'S MIXED RESPONSE TO WESTERN
WIRELESS INTERNATIONAL'S ARBITRATION FILING

REF: ACCRA 01980

UNCLAS ACCRA 002303

SIPDIS

SENSITIVE

PASS TO DEPT. OF COMMERCE FOR RASHIDA PETERSEN

E.O. 12958: N/A
TAGS: ECPS EINV GH
SUBJECT: GOVERNMENT OF GHANA'S MIXED RESPONSE TO WESTERN
WIRELESS INTERNATIONAL'S ARBITRATION FILING

REF: ACCRA 01980


1. (SBU) Summary. The Ministry of Justice (MoJ) has responded
to Western Wireless International's (WWI) filing for
international arbitration under UNCITRAL rules (reftel). The
MoJ claims that WWI is restricted by contract to settling
disputes with the GoG in Ghanaian courts under Ghanaian law
and therefore, the GoG will not submit to international
arbitration. WWI counters that it has the right to file and
it will pursue the case regardless of GoG participation. A
contradictory statement from the National Communications
Authority (NCA) on November 22, however, states it will
respond to Westel's desire for arbitration. End Summary.

THE MOJ'S RESPONSE
--------------

2. (SBU) A letter from the Ministry of Justice (MoJ) to WWI
dated November 4, says that Westel's License Agreement with
the GoG requires any arbitration be carried out under the
Ghana Investment Promotion Act (GIPC) of 1994. The letter
states that Westel's primary investor, WWI, is therefore also
bound by the agreement. The letter concludes by saying the
MoJ will not submit to UNCITRAL arbitration out of respect
for the terms of the License Agreement. WWI's response on
November 12 asserts that WWI and Westel are legally separate
entities and that WWI, not Westel, filed for arbitration. In
addition, WWI quotes portions of the GIPC, which appear to
give direct investors like WWI the express right to file for
arbitration under UNCITRAL rules.

MIXED MESSAGE FROM THE NCA
--------------

3. (SBU) Westel's managing director Bill Taylor told EconOff
WWI would go forward with the arbitration process regardless
of GoG participation. He feels the MoJ's refusal to
participate in arbitration is either a delaying tactic or an
attempt to call WWI's bluff. In response, Westel made its
case directly to the public November 16 with a full-page
explanation of its position in Ghana's two most prominent
newspapers: The Ghana Times and Daily Graphic. The NCA,
which the bulk of WWI's complaint is directed against,
responded on behalf of the GoG November 22 with similar
advertisements in both papers. Both parties stick to their
previously stated positions (reftel) and neither appears to
provide room for reconciliation. In contrast to the MoJ's
letter, the NCA's response concludes "Though it was the wish
of the NCA to have had a speedy resolution of this matter
without resorting to the courts or other legal processes, the
NCA has no choice than to respond to Westel's desire for
arbitration."

CHANCE FOR A SETTLEMENT
--------------

4. (SBU) Bill Taylor says he spoke with Minister of
Communications Kan-Dapaah --who's Ministry nominally controls
the NCA- at a recent public event and both men expressed the
hope that a settlement could be reached. Taylor explained
Westel would drop its case if the GoG would rescind either
the USD 25 million penalty or USD 27.5 million spectrum fee
(reftel). Kan-Dapaah has not responded formally, but that is
no surprise with December's elections looming.

COMMENT- POSSIBLE CONSEQUENCES OF ARBITRATION
--------------

5. (SBU) In Post's view the filing for arbitration under
UNCITRAL rules is a desirable outcome. Whether the GoG
eventually decides to participate in the arbitration process
or not, WWI will go forward. In any event it is the proper
venue for the settlement of international investment
disputes. If the GoG does not participate they risk a
considerable adverse award. WWI is seeking USD 190 million,
but admits confidentially an award of USD 60 million is more
likely. Regardless of the amount, if the GoG refuses to pay
the consequences could be dire: Section 527 of the Foreign
Relations Authorization Act mandates that the USG cutoff all
foreign aid and vote against IFI loans if a country fails to
pay an arbitration award within 3 years. It is unlikely the
GoG would take such a risk for a case that could be settled
safely out of court after the elections. Post is concerned
that the GoG appears to be replaying past mistakes--similar
efforts were made in an attempt to avoid arbitration over
VALCO--and will raise our concern with GoG officials. End
Comment.
YATES