US court dismisses $165 million claim against University of Ghana

A United States District Court has dismissed a lawsuit seeking to compel the University of Ghana (UG) to pay $165 million to ACE American Insurance Company over a disputed construction project.

The case arose from a public-private partnership agreement the University entered into with CPA Ghana in 2015 to finance, construct, operate and maintain various infrastructure projects on the Legon campus.

Under the agreement, the University was to lease land and grant a concession to CPA Ghana to undertake the projects.

In 2016, CPA Ghana alleged that the University had failed to procure the required letters of credit under the agreement and subsequently terminated the contract.

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The company later invoked the contract’s dispute resolution provisions, leading to the appointment of an independent expert who, in 2018, assessed the contract’s termination value at $165 million.

Before the assessment was issued, the University had indicated its preference for resolving the dispute through arbitration.

However, CPA Ghana declined to proceed with arbitration, arguing that the University had failed to satisfy the necessary conditions. In 2019, the company assigned ACE American Insurance Company to recover the $165 million from the University.

The insurer subsequently filed an action against the University in the US District Court for the Southern District of New York.

UG challenged the suit, arguing that the American court lacked jurisdiction to hear the matter.

In a ruling delivered on August 15, 2022, Judge Naomi Reice Buchwald upheld the University’s objections and dismissed the case.

The court found that the construction agreement expressly provided that any arbitration arising from the contract should take place in London, United Kingdom, making arbitration in the United States inappropriate unless proceedings in the UK were impossible.

The court also agreed with the University’s argument that it was not the “alter ego of the Republic of Ghana” and therefore could not be sued under the provisions of the US Foreign Sovereign Immunities Act relied upon by the insurance company.

Based on those findings, the court dismissed the action against the University of Ghana, bringing the proceedings in the United States to an end.