US embassy cable - 04ACCRA2303

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