US court cancels $165 million debt against UG

US court cancels $165 million debt against UG

The United States District Court in the Southern District of New York has set aside a $165 million judgment debt against the University of Ghana (UG).

This follows a petition filed by ACE American Insurance Company (Chubb), an insurance company which has taken over the rights of recovery and interest from CPA Ghana, a company with which UG entered into a partnership in 2015, to engage in infrastructure projects on its campus.

The petition asked the court to compel UG to pay the $165 million judgment debt to the insurance company for allegedly breaching its obligation under the partnership agreement with CPA Ghana.

But in a ruling, the court – presided over by Naomi Reice Buchwald – ruled that the motion asking the court to order UG to pay the judgment debt did not meet the threshold to determine the merits of the motion.

Specifically, the court dismissed the motion for lack of personal jurisdiction, jurisdiction, and improper location.

“For the foregoing reasons, the court grants UG’s motion to dismiss the motion for lack of personal jurisdiction,” the court said.

The context

On September 15, 2015, UG entered into a public-private partnership with CPA Ghana.

Under this partnership, UG was supposed to lease land and grant a concession to CPA Ghana to finance, construct, operate and maintain various new infrastructure projects on its campus.

Also under the partnership, when the agreement was terminated due to default by UG, both parties were required to appoint an independent expert to determine the “termination value” of the contract.

The termination value estimated the net present value of future rental income that CPA Ghana was expected to generate and was to be calculated according to a pre-determined formula.

Termination

CPA Ghana served notice of termination to UG, after which both parties commenced the process of “expert determination” by submitting documents to a selected expert based in London to calculate the termination value.

A day before the expert’s decision was announced, UG sent a Notice of Arbitration to CPA Ghana, seeking to commence arbitration in London with the aim of resolving disputes over the validity of the agreement and the relevance of the process for determining the expert.

Subsequently, the UG and CPA Ghana selected an arbitrator for the tribunal.

However, CPA Ghana argued that UG failed to meet the negotiation and mediation preconditions to arbitration and refused to allow the arbitration to go ahead.

The UG, between the period of 2018 and 2022, submitted several correspondences to CPA Ghana, seeking to move the arbitration forward but to no avail.

Amidst the standoff, CPA Ghana on October 11, 2019 assigned to ACE American Insurance Company (Chubb) all rights of recovery and interest in the assignment of termination value.

However, no payment on the termination value was made and the London arbitration could not progress.

Petition

ACE American Insurance Company filed the motion to compel UG to pay the judgment debt.

However, UG, in response to the motion, argued that the motion either be dismissed for lack of personal jurisdiction, lack of jurisdiction in the matter and inappropriate venue, or stay the motion pending ongoing arbitration between UG and CPA. in London, UK. .

The court subsequently dismissed the motion for the above reasons.

The court accepted UG’s argument that it had no jurisdiction over UG to compel the school to pay the judgment debt because there was ongoing arbitration between UG and CPA in London, the agreed venue for arbitration under the partnership agreement.

“Given that the precondition for arbitration in New York has not occurred, the court cannot infer that UG has consented to personal jurisdiction here.

“Indeed, the petitioner cites no relevant authority in support of his view that a court may infer consent to jurisdiction based on a contingent arbitration clause with an unsatisfied condition precedent.

“Thus, the court cannot exercise personal jurisdiction over UG on this basis,” the court said.


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John A. Bogar