THE CONSTITUTIONALITY OF INTERNATIONAL BUSINESS ANDECONOMIC TRANSACTIONS INVOLVING THE GOVERNMENT; AN

ANALYSIS OF THE SUPREME COURT DECISIONS IN UPHOLDINGTHE SUPREMACY OF THE 1992 CONSTITUTION

By Odoi Reginald Nii*1

INTRODUCTION

That the people have an original right to establish, for their future government, suchprinciples as, in their opinion, shall most conduce to their own happiness, is the basison which the whole [American] fabric has been erected. . . . The powers of thelegislature are defined and limited; and that those limits may not be mistaken orforgotten, the constitution is written…. Certainly, all those who have framed writtenconstitutions contemplate them as forming the fundamental and paramount law of thenation, and consequently, the theory of every such government must be, that an act ofthe legislature, repugnant to the constitution, is void….that a law repugnant to theconstitution is void; and that courts, as well as other departments are bound by thatinstrument 2

It must be admitted that since the Re Akoto era where it was

believed that the Supreme Court missed a golden opportunity to

lay down the principled criteria upon which the interpretation of

the Constitution must proceed as well as to uphold the Supremacy

1 LL.B. (Kwame Nkrumah University of Science and Technology, Ghana) andPart 1 Student of Ghana School of Law at the time of writing thisarticle.2 Marbury v. Madison, 5 U.S. 137 (1803); Per Chief Justice Marshall at page 175-176

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of the Constitution3, subsequent Supreme Courts of Ghana

commendably have done everything in their power to ensure that

the will of the people which is expressed in the letter and

spirit of the constitution is not betrayed but rather is upheld.

It must be said that the duty of the Supreme Court and in fact

any court’s jurisdiction is nothing more than to uphold and

entrench the supremacy of the 1992 constitution which is the

fulcrum of their jurisdiction in actions commenced before it. Any

failure to do so amounts to a compromise and a betrayal of the

past ancestors of this land who through their toil at the expense

of their treasures and blood passed on to us a goodly heritage

and inheritance in the form of the civil rights and liberties now

enshrined in the 1992 constitution. This article seeks to analyze

certain Supreme Court decisions wherein the Supreme Court in

upholding the supremacy of the 1992 Constitution held that all

contracts specifically government’s international business and

economic contracts and transactions ought to submit to the

Constitution and its accompanying principles of good faith and

thus any contract which falls short of this and thereby runs

counter to the Constitution which is the supreme law of the land

shall be struck down as being null and void, unenforceable and of

no effect irrespective of the consequences arising therefrom.

Thus the essay would consider the cases of Attorney-General v Faroe

3 “Gyandoh, S O Jnr, “Principles of Judicial interpretation of the Republican Constitutionof Ghana” (1966) UGLJ 59 as cited in Bimpong-Buta, S Y, “The Role of theSupreme Court in the Development of Constitutional Law in Ghana”, 1st Ed. (Accra,Ghana: Advanced Legal Publications, 2007) at p 181”

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Atlantic Co. Ltd, 4 The Attorney General v Balkan Energy Ghana Ltd, Balkan Energy

Llc and Mr. Philip David Elders5, Martin Amidu v The Attorney-General and 2

others (a.k.a The Woyome case)6 and Martin Amidu v Attorney-General and 2

others, (a.k.a Isofoton case)7 and then sift out the useful and

authoritative roadmaps which must be followed religiously to

ensure that any international business or economic contract

specifically those entered into by government do not infringe the

Constitution. It also would go a long way to guide private

contracting parties who, in the exercise of their freedom of

contract, must do so without infringing the Grundnorm which the

1992 Constitution.

SUPREMACY OF THE 1992 CONSTITUTION

The concept of Supremacy of the Constitution confers the highest

authority in a legal system on the Constitution. It even concerns

institutional structure of the organs of the state. In upholding

this concept, judges’ criterion is the basic law and not public

opinion, or what the majority of the population think however

desirable society’s acceptance of the judgments may be. They have

to defy the general will as soon as constitutional guarantees are

at stake.8 Articles 1(2) and 2(1) of the Fourth Republican4 [2005-2006] SCGLR 2715 No. J6/1/2012, 16th May, 20126 S.C. No. J1/15/2012 dated 14th June 20137 S.C J1/23/2013 dated 21st July 20138 Ronald Dworkin, “Gleichheit, Demokratie und die Verfassung: Wir, das Volk unde dieRichter” (Frankfurt am Main: Fischer Taschenbuch Verlag, 1994) 171 and172 cited in Jutta Limbach “The Concept of the Supremacy of The Constitution” TheModern Law Review Vol. 64, No. 1 (Jan., 2001), pp. 1-10. See also Eric

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Constitution, 1992 assert the supremacy of the Constitution as

the fundamental law of Ghana. By these provisions, the

Constitution emphasizes that it provides the framework for

governance and thus it is the Constitution that governs. The

constitution, mirrors the will and aspirations of the Ghanaian

people and it is the supreme law of the land.9

Article 1(1) of the 1992 Constitution states that –

“The sovereignty of Ghana resides in the people of Ghana in whose name and forwhose welfare the powers of government are to be exercised in the mannerwithin the limits laid down in this constitution.

(2) This constitution shall be the supreme law of Ghana and any other law foundto be inconsistent with any provision of this constitution shall, to the extent ofthe inconsistency, be void.

This principle as applicable in Ghana was carved by all the

people of Ghana as stated in the preamble of the 1992

Constitution which also provides that;

“IN THE NAME OF THE ALMIGHTY GOD

We the people of Ghana;

Barendt, An Introduction to Constitutional Law (New York: OxfordUniversity Press, 1998) 24.9 Dotse JSC in Nana Addo Dankwa Akufo-Addo, Dr. Mahamudu Bawumia andJake Otanka Obetsebi-Lamptey v John Dramani Mahama, the ElectoralCommission and National Democratic Congress (NDC) Writ No. J1/6/2013,29th August, 2013

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IN EXERCISE of our natural and inalienable right to establish a frame work ofgovernment which shall secure for ourselves and posterity the blessings ofliberty, equality of opportunity and prosperity; 210

IN A SPIRIT of friendship and peace with all people of the world; AND IN SOLEMNdeclaration and affirmation of our commitment to Freedom, Justice, probity andAccountability;

The principles that all powers of Government spring from the sovereign will ofthe people;

The principle of universal Adult suffrage;

The rule of Law;

The protection and preservation of Fundamental Human Rights and Freedoms,Unity and Stability for our nation;”

DO HEREBY ADOPT, ENACT, AND GLUE TO OURSELVES THIS CONSTITUTION

Thus clearly it is without doubt that the Constitution in the

hierarchy of legal norms and laws in the legal system is most

supreme and thus these principles have to be preserved and

jealously guarded. It was for this reason that in the case of

Charles Mate Kole and Nene Azago Kwesitsu I v The Electoral Commission and The

Attorney General 10 it was stated emphatically that; 

The Constitution of Ghana by virtue of articles 1 and 2 is the supreme and mostfundamental law of Ghana and it is clear from articles 2 and 130 as construedby this court that subject to the High Court’s jurisdiction in the enforcement ofprivate fundamental human rights this court is the Trustee of the 1992Constitution of Ghana. Clearly then if a genuine break with the infamous caseof  In Re Akoto  (1961) 2 GLR 253, SC is to be made by this court then this courtcannot shut its eyes to breaches of the Constitution when they loom large in acase before it.11

10 [2013] 53 GMJ 82-98 11 supra at p. 92 per Atuguba JSC

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In conclusion, this principle of Supremacy of the Constitution is

necessary in a democratic state as Ghana and it is quite clear

over the years that the upholding of the supremacy of the

Constitution is itself of great constitutional utility.12 The

better course for Ghana, except in grave circumstances, is for

the Judiciary to uphold and entrench the supremacy of the

constitution as clearly contemplated by articles 1, 2, 3(4), 35, 37(1) and

41(b) of the constitution.13

INTERNATIONAL BUSINESS OR ECONOMIC TRANSACTION DEFINED

For the purpose of this article, it is necessary to consider

Article 181(1)–(5) of the 1992 Constitution;

(1) Parliament may, be a resolution supported by the votes of a majority of allthe members of Parliament, authorize the Government to enter into anagreement for the granting of a loan out of any public fund or public account.

(2) An agreement entered into under clause (1) of this article shall be laid beforeParliament and shall not come into operation unless it is approved by aresolution of Parliament.

(3) No loan shall be raised by the Government on behalf of itself or any otherpublic institution or authority otherwise than by or under the authority of an Actof Parliament.

(4) An Act of Parliament enacted in accordance with clause (3) of this article shallprovide -

12 Edward Wiredu Ag CJ in Amidu v President Kufuor [2001-2002] SCGLR 8613 Per Atuguba JSC in Nii Kpobi Tettey Tsuru III (La Mantse andPresident Of La Traditional Council) La Mantse’s Palace Lumoshishi,Kowe, La vrs The Attorney-General No. J6/1/2009,  19th May, 2010 PerAtuguba JSC

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(a) That the terms and conditions of a loan shall be laid before Parliament andshall not come into operation unless they have been approved by a resolution ofParliament; and

(b) That any moneys received in respect of that loan shall be paid into theConsolidated Fund and form part of that Fund or into some other public fund ofGhana either existing or created for the purposes of the loan.

(5) This article shall, with the necessary modifications by Parliament, apply to aninternational business or economic transaction to which the Government is aparty as it applies to a loan. (Emphasis mine).

The interpretation of this Article of the Constitution has arisen

before the Supreme Court of Ghana in a number of cases wherein

the Supreme Court put to bed any controversy surrounding the

interpretation of the provision and its accompanying effects.

FAROE ATLANTIC CO. LTD V. THE ATTORNEY GENERAL

The first case to be considered is the case of Faroe Atlantic Co. Ltd

v. The Attorney General14. In this case, on 24th July 1998 the

Plaintiffs (hereinafter "the Respondents") issued a writ of

summons against the Defendant in his capacity as the chief legal

advisor to the Government of Ghana for certain reliefs

specifically that the court order Specific performance of an

agreement in writing described as the Power Purchase Agreement

made between the Government of Ghana, acting by and through the

Ministry of Mines and Energy for the purchase of electric power

by the Government of Ghana from the Plaintiffs, as amended by

exchange of letters dated 15th and 16th days of June 1998 and or

in the alternative, damages for breach of the Power Purchase

14[2005-2006] SCGLR 271 7

Agreement ("P.P.A"). The Respondents applied by summons for

summary judgment for the reliefs indorsed on the writ of summons.

After hearing learned counsel for the parties and reading the

various affidavits and the exhibits annexed to them, the High

Court entered final judgment against the Appellant. Subsequently,

the High Court per His Lordship, Nana Gyamera Tawiah gave

judgment for the Respondents in the sum of US$6298354.00 plus

interest thereon at the rate of 5% from 1st October 1999 to the

final date of judgment. The court further ordered that the

advance payment of US$855,000.00 made to the Plaintiff by the

Government of Ghana is to be refunded by the Plaintiff. Costs of

¢100 million was awarded in favor of the Plaintiffs. The

Appellants, being dissatisfied with this judgment appealed to the

Court of Appeal. The Court of Appeal dismissed the appeal and

awarded ¢15 million costs against the Appellant. The Appellant

thus appealed against the Court of Appeal judgment to the Supreme

Court. In allowing the appeal, the Supreme specifically

interpreted Article 181(5) of the 1992 Constitution saying;

“The plain meaning of article 181(5) would appear to be that where the Government of

Ghana enters into "an international business or economic transaction" it must comply

with the requirements, mutatis mutandis, imposed by article 181 of the Constitution.

Those requirements clearly include the laying of the relevant agreement before

Parliament. The agreement is not to come into operation unless it is approved by a

resolution of Parliament. The purpose of the framers of the original provision was to

ensure transparency, openness and Parliamentary consent in relation to debt

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obligations contracted by the State.” 15… international business or economic

transactions are to be treated, mutatis mutandis, as the same as loan agreements,

from the point of view of the requirements contained in article 181. This, to my mind,

means that an international business transaction or international economic

transaction to which the Government is a party must be submitted to Parliament for

approval, even though the nature of the obligation embodied in such transaction is not

one of debt.” The Court thus held that the Power Purchase Agreement

entered into with the United Kingdom Company to generate and

supply electricity to the Government of Ghana in Ghana was

clearly a transnational or supranational transaction which

qualifies for characterization as an "international business

transaction" to which the Government of Ghana is a party, within

the meaning of article 181(5) and therefore needed to comply with

the obligations imposed in relation to it by article 181(5). Thus

it overturned the decision of the Court of Appeal which awarded

damages to the respondent for breach of contract by the

appellants as well as loss of profit and interest on the amounts

claim until the final date of judgment.

Thus from the above decision, it was emphasized that Article 181(5) was

distinct from the preceding sections of Article 181 relating to

loan agreement. It was clear that Article 181(5) specifically

deals with international business or economic transactions,

rather than loans and thus taking into account its language, the

overall effect is that, as with loans, international business or

economic transactions to which the Government is a party also

15 Per Dr. Date-Bah JSC9

require parliamentary authorization. Where the Constitution

stipulates that parliamentary authorization shall be required for

certain transactions, then any transaction to which the

provisions are applicable that is concluded without the

authorization of Parliament cannot take effect without such

authorization. This conclusion is in line with the framers of the

various constitutions of Ghana when a historical excursion is

taken in order to discover such true intent of the framers. The

origin of the current article 181 is article 133 of the 1969

Constitution. That provision dealt exclusively with loans and

made no reference to international business or economic

transactions. (Emphasis mine) The essence of the constitutional

safeguard requiring parliamentary approval of such loan

agreements was to help reduce Ghana’s huge debts owed as a result

of the many loans it had acquired from foreign donors, it being

an adverse consequence of the coup d’état of the 24th February.16

These original provisions of 1969 Constitution were maintained

unchanged in the 1979 Constitution as article 144. It was in the

1992 Constitution that this long-standing provision on the giving

and raising of loans was modified so as to include another

category of contract, namely "an international business or

economic transaction to which the Government is a party".

Clearly, it is inferable that the purpose of the framers in

16 See The Proposals of the Constitutional Commission for aConstitution for Ghana of 1968 which were laid before the ConstituentAssembly which drew up the 1969 Constitution (at p. 158) at paragraph589.

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expanding the provision was to ensure transparency, openness and

Parliamentary consent in relation to this additional category of

contracts17 with the wider aim of streamlining Ghana’s use of

the public purse and so as to manage its judgment and overall

public debt problems which did not augur well for national

growth.

The Attorney General v Balkan Energy Ghana Ltd, Balkan Energy Llcand Mr. Philip David Elders

The next case to be discussed is the case of The Attorney General

v Balkan Energy Ghana Ltd, Balkan Energy Llc and Mr. Philip David Elders.18 In

this case, the third defendant, Mr. Phillip David Elders, a

businessman resident in Texas, USA, identified a business

opportunity in Ghana and persuaded the owner of the second

defendant to invest in it. The nature of the business was that

the Government of Ghana wanted to generate electricity urgently

from a power barge located in its Western Region.  The barge

needed rehabilitation and the Government wanted to negotiate with

a private investor to achieve this and bring its generating

capacity urgently on stream.  With a view to achieving this,

Balkan Energy LLC, the second defendant, entered into a

17 Report of the Committee of Experts (Constitution) on Proposals for aDraft Constitution of Ghana (1991), which constituted the proposalsout of which the 1992 Constitution, clause 17(5) of Appendix M.18 No. J6/1/2012, 16th May, 2012

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Memorandum of Understanding (“MOU”) with the Government of Ghana

on 16th May 2007. Because of the statutory licensing requirements

involved in such projects, the 1st defendant was incorporated in

Ghana and made a party to the agreement. Accordingly, on

27th July 2007, Balkan Energy (Ghana) Limited, the first

defendant, which had been incorporated in Ghana 11 days

previously, entered into a Power Purchase Agreement (“PPA”) with

the Government of Ghana.  Subsequently, a dispute arose between

the parties to this PPA.  The Government of Ghana claimed that

the second and third defendants had misrepresented to it that

they could make the power barge operational within 90 working

days and that it was on the basis of this misrepresentation that

it had entered into the MOU and the PPA.  However, this had not

happened. This led to arbitration proceedings against the

Government of Ghana under the auspices of the Permanent Court of

Arbitration at The Hague, the Netherlands. The Attorney-General

in June 2010, issued a Writ of Summons in the Commercial Division

of the High Court, Accra, claiming a declaration that the PPA is

an international business transaction that needed Parliamentary

approval and was unenforceable because it did not have such

approval.  The plaintiff also claimed that the arbitration

agreement contained in clause 22.2 of the PPA was an

international business transaction and was also in breach of

article 181(5) and therefore unenforceable. This matter

eventually came to the Supreme Court of Ghana for interpretation

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on the effect of the transaction vis-à-vis the Constitution. The

Supreme Court unanimously held as follows;

“Our general impression, upon reading the submissions of the parties, is that theoverall transaction involved here was a foreign investment by a US investor in apower generation project to supply power to the Ghana Government and thatthe Government was a party to this transaction. We are viewing the transactionin the round, without resorting technically to the piercing of the corporate veildoctrine.  We interpret “transaction” in this context as meaning a series ofagreements or acts united by their purpose of attaining the project objective ofthe parties to it. We will now set out the circumstances which support thisimpression and whether a transaction of this nature comes within the ambit ofarticle 181(5)…The PPA between the Government and the first defendant was theresult of negotiations between a foreign investor (the third defendant acting onbehalf of owner of the second defendant) and the Government.  This is asignificant foreign element in the transaction.  Secondly, the first defendant,though a Ghanaian company, is wholly-owned by a foreign entity, incorporatedin the United Kingdom.  Thirdly, the managing director of the first defendant is aforeigner, the third defendant, and control of the management of the firstdefendant is in foreign hands.  Fourthly, the PPA contains a clause providing forinternational commercial arbitration.  Lastly, there were other clauses in the PPAwhich are usually associated with foreign investment transactions, such as thewaiver of sovereign immunity clause…. All these circumstances cumulatively leadus to the conclusion that the answer to the first question referred to this Court isthat the Power Purchase Agreement dated 27th  July 2007 between theGovernment of Ghana and Balkan Energy (Ghana) Limited constitutes aninternational business transaction within the meaning of Article 181(5) of theConstitution…. The case is accordingly remitted to the High Court for this Court’sinterpretation of article 181(5) of the 1992 Constitution to be applied in theproceedings before it.” 19

19 Per Dr. Date-Bah JSC13

MARTIN AMIDU V THE ATTORNEY-GENERAL AND 2 OTHERS (A.K.A THEWOYOME CASE)

Similarly, in the recent decision of Martin Amidu v The Attorney-

General and 2 others (a.k.a The Woyome case)20 the above issue was

considered. After Ghana won the bid to host AFCON 2008, the

Government of Ghana became obliged to rehabilitate football

stadia and other sporting facilities in Ghana. It thus set in

motion a procurement process for the award of appropriate

contracts in accordance with the Public Procurement Act, 2003

(Act 663). Vamed Engineering Gmbh & CO KG (referred to

subsequently as ‘Vamed’) was one of the companies which submitted

a tender for the award of a contract to rehabilitate the stadia

and subsequently Vamed became one of two companies which were

shortlisted by the Government’s evaluation committee. It later

assigned all its rights to Waterville (referred to as the 2nd

defendants). The Central Tender Review Board gave “concurrent

approval for the award of the contract to Messrs VAMED

Engineering.”  However, by a letter addressed to the Managing-

Director of Vamed, the Minister for Education, Youth and Sports

purported to terminate the procurement process “due to the high

commitments implied in the submissions, the inconclusive and the

non-assuring nature of the financial submissions”. This was

protested against. It entered into negotiation with Government

regarding the purported abrogation which resulted in a Memorandum

of Understanding between them.  The MOU stated that the20 S.C. No. J1/15/2012 dated 14th June 2013

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Government would award the Ohene Djan and El Wak stadia project

on a turnkey basis to the second defendant. Even before the

formal signing of the agreements, the Deputy Minister of

Education and Sports authorized the second defendant’s access to

the sites of the stadia and in reliance on such approval the

second defendant commenced works involving the demolition of

structures and the excavation and clearing of the sites.

Subsequently, however, the Government terminated the agreements

with the second defendant, by a letter written by the Attorney-

General. It then entered into negotiations with the sub-

contractors of the 2nd defendant, Micheletti and Co Ltd and

Consar Ltd, to continue with the rehabilitation and refurbishment

of the Ohene Djan, Baba Yara and El Wak stadia.  The agreement

reached with them was that Government would pay the sub-

contractors the value of the work already executed by the

2nd defendant before the date of takeover by the sub–contractors

of the work.  The sub-contractors would then pay the

2nd defendant the value of the work it had undertaken. The

Government of Ghana subsequently paid for all the work certified

by BIC, totaling some E22, 365,624. The 3rd defendant wrote to

the Government, asserting that the 2nd defendant’s claim was

grossly exaggerated and giving his opinion as to what was due

from Government to the 2nd defendant. Whilst negotiating with

representatives of the Republic, the 3rd defendant obtained

judgment in default of defence against the 1st defendant on this

writ.  Negotiations continued between the 1st defendant and the

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3rd defendant which resulted in Terms of Settlement which were

filed with the High Court on 4th June 2010.  These terms of

settlement were signed by both parties to the action in the

presence of their counsel. The 1st defendant subsequently, on

28th July 2010, issued a writ seeking to set aside the consent

judgment on the ground, inter alia, that it was procured by a

mistake due to fraudulent misrepresentation by the 3rd defendant.

Against the backdrop of the facts set out above, the Plaintiff a

former Attorney General has sued the defendants in this action

invoking the original jurisdiction of this Court seeking inter alia

that monies paid under the transactions which was not laid before

parliament made the contract null and void and thus the monies

ought to be refunded. The Supreme Court in upholding the interpretation in

the previous case held that;21

“…There should be less room to award a restitutionary remedy where the breachis of a constitutional provision.  A contract which breaches article 181(5) of theConstitution is null and void and therefore creates no rights. Although oneaccepts the cogency of the argument that there is need to avoid unjustenrichment to the State through its receipt of benefits it has not paid for, there isthe higher order countervailing argument that the enforcement of theConstitution should not be undermined by allowing the State and its partners anavenue or opportunity for doing indirectly what it is constitutionally prohibitedfrom doing directly. The supremacy of the Constitution in the hierarchy oflegal norms in the legal system has to be preserved and jealously guarded.The requirement that international business contracts to which theGovernment is a party should be approved by Parliament has a purposeand it should be made clear to Government and its partners that non-compliance with the requirement, directly or indirectly, will have

21 Per Dr. Date-Bah JSC16

consequences.  We are accordingly inclined to the view that, where article181(5) has been breached, a restitutionary remedy would be in conflict withthe Constitution and therefore not available. The Government’s action inpaying the 2nd defendant for the work it did prior to the conclusion of theterminated 26th April agreements was unconstitutional, according to the analysisalready set out above. In our view, it was fundamentally erroneous in ignoringthe effect of article 181(5) of the 1992 Constitution on the transaction.  From theanalysis earlier made of the penumbra effect of article 181(5), we would reaffirmthat there is no liability of the State to the 2nd defendant.  The 2nd defendant isthus obliged to return all monies paid to it pursuant to the transaction.The settlement, pursuant to which the monies were paid, was founded onan unconstitutional act and should be treated as null and void.”

MARTIN AMIDU V ATTORNEY-GENERAL AND 2 OTHERS, (A.K.A ISOFOTONCASE)

The last case to be considered is Martin Amidu v Attorney-General and

2 others, (a.k.a Isofoton case)22 which was decided a month after the

preceding case. The facts of this case were as follows. There was

an agreement concluded with the Minister for Food and Agriculture

on 22nd September 2005 for “Solar PV Powered Water Pumping and

Irrigation Systems in Remote Rural Areas in Ghana” and another

one concluded in 2001 with the Minister of Energy for “Solar

Electrification in Ghana Phase II.”  The Plaintiff, a former

Attorney-General of the Republic of Ghana, contended that these

agreements were international business or economic transactions

to which the Government is a party, within the meaning of Article

181(5) of the Constitution. After the conclusion of the said two

agreements, the Government of Ghana, through the Office of the

22 S.C J1/23/2013 dated 21st July 201317

President, approved the execution by a different company

(Elecnor) of a “Solar Rural Electrification Project” and also the

execution by a company called Incatcma Indema of an “Irrigation

Equipment (Solar power pumps, Sprinkler Irrigation equipment”

project.  The approval of these projects was incompatible with

the rights of the 2nd defendant, as he perceived them.  The

1st defendant alleged that the action by the Office of the

President amounted to re-awarding the contracts that the

2nddefendant considered it had concluded. The 2nd defendant,

accordingly, gave a power of attorney to the 3rd defendant to sue

the Government of Ghana to enforce its contract rights.  The

3rd defendant, therefore, commenced two actions, on behalf of the

2nd defendant, against the Republic of Ghana claiming damages for

breach of contract. The 2nd defendant obtained judgments in

default of appearance. The default judgments were subsequently

set aside to enable the matter to be settled out of court. An

amicable settlement was reached and it was agreed that the

2nd defendant be paid US$ 1,300,000, comprising $450,000 in

respect of the claim against the Ministry of Energy and $850,000,

in respect of the claim against the Ministry of Food &

Agriculture. The 2nd and 3rd defendants later initiated garnishee

proceedings on the basis of these consent judgments and obtained

garnishee orders nisi. Part payment was already made when the

plaintiff brought this action seeking inter alia that the second

defendant entered into two international business agreements with

the Republic of Ghana, which were not laid before Parliament for

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the approval of Parliament and accordingly, not having been laid

before Parliament and approved by Parliament, they are void.

Plaintiff claim was that, on a true and proper interpretation of

Article 181(3) and (4) of the 1992 Constitution, the laying

before Parliament and the approval of the terms and conditions of

an agreement for a loan raised by the Government on behalf of

itself or any other public institution or authority does not

exempt from being laid before Parliament for approval any

international business or economic transaction to which the

Government is a party that will be financed by the loan approved

under Article 181(3) and (4). In upholding the plaintiff’s claims

and ordering the refund of monies paid back to the Government of

Ghana, the Supreme Court unanimously held that;

“It is evident that this purpose of ensuring transparency, openness andParliamentary consent in relation to international business transactions orinternational economic transactions to which the Government is a party deservesto be applied as much in relation to the so-called implementation agreements asto project loan agreements.  In other words, the purposive approach insistedupon by the 2nd Defendant, when reasonably applied, should lead to theconclusion that an international business or economic transaction to whichthe Government of Ghana is a party should not cease to be treated as such,under article 181(5), simply because activities under it are to be financedunder a loan agreement that has already been approved by Parliament.This conclusion connotes that the two impugned agreements entered intoby the 2nd Defendant are null and void, because they were not approved byParliament. There was thus no liability of the Republic ofGhana to the 2nd Defendant.  The unconstitutional contracts,concluded in breach of article 181(5), cannot lawfully found the consentjudgments relied on by the 2nd Defendant.  The said consent judgments arevitiated by the unconstitutionality of the contracts on which they are based

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and, apart from declaring those judgments to be in breach of article 181(5)of the Constitution, this Court has jurisdiction under article 2(2) of theConstitution to order that the said judgments be set aside.

Careful analyses of the above cases clearly shows how the Supreme

Court has ironed out a uniform and unambiguous interpretation of

Article 181 (5) and thus setting out the true meaning and effect

of same with respect to international business or economic

transactions to which the government is a party. Evidently, it

has shown that the Constitution is the Supreme law of the land

and as the supreme law of the land, the Constitution is

applicable at all times. All acts and things, particularly those

done for and on behalf of the Republic of Ghana, must always be

tested against its provisions. The logical deduction is that no

law, treaty, agreement whether international or not supersedes

the supreme law of the land. There is nothing higher than the

highest not greater than the greatest. The Constitution

acknowledges our God-given, unalienable rights and secures those

rights in that acknowledgment. Anything made in pursuance of this

Constitution are made within the strict and limited confines of

the Constitution itself. Not even international law can supersede

our constitution. It is insane to say that the powers granted

under the Constitution can be construed to provide the authority

to usurp, pre-empt or eradicate it. This analysis was perfectly

summed up in a writing by Thomas Jefferson when he said; “Our

peculiar security is in the possession of a written constitution. Let us not make it a blank

20

paper by construction. I say the same as to the opinion of those who consider the grant

of the treaty making power as boundless. If it is then we have no constitution.” 23

DOES EQUITY STEP IN TO GRANT RELIEF TO AN INNOCENT PARTY UNDERSUCH BREACH?

In Nokes, Introduction to Evidence 24, the author says: "Estoppel is a rule by

which a party to litigation is stopped from asserting or denying a fact ... It is thus a rule

of exclusion, making evidence in proof or disproof of a relevant fact inadmissible.  An

estoppel has been so described because a man's own act or acceptance stoppeth or

closeth up his mouth to allege or plead the truth.”

Section 26 of the Evidence Decree, 1975 (NRCD 323) provides that;

“Except as otherwise provided by law, including a rule of equity, when a partyhas, by his own statement, act or omission, intentionally and deliberately causedor permitted another person to believe a thing to be true and to act upon suchbelief, the truth of that thing shall be conclusively presumed against that partyor his successors in interest in any proceedings between that party or hissuccessors in interest and such relying person or his successors in interest.”

The applicability of this rule of law was discussed in the case

Frabina Ltd v Shell Ghana Ltd25. One would be tempted to argue that the

above provision as well as the principles of equity would always

step in so as to prevent a wrong from being without a remedy.

Consequently, it would be argued that the rules of equity should

23 Thomas Jefferson, “The Life and Selected Writings of Thomas Jefferson”, pg. 573 ina letter written to Wilson C. Nicholas on September 7, 180324 (4th Ed.) at p.21325 [11/08/2010] CIVIL APPEAL NO. J4/31/2009

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come into play in order to prevent a party who has benefited

under a contract which subsequently is declared null and void

from going away freely without any liability under the said

contract which he has already had some benefit and has caused

some other party to change his position in furtherance of such

misrepresentation to that others detriment. Thus many plead

various kinds of estoppel and principles of good faith in order

to protect themselves from the harsh effects of the

interpretation as given in the above cases. However, it has been

said in Okorie alias Ozuzu v. The Republic 26 that the question whether a

breach of the constitution causes some injury such as miscarriage

of justice is irrelevant since the mere breach of the

constitution carries with it the stigma of illegality,

impropriety, etc. Also, in the case of Tuffour vrs. Attorney-General 27

it was stated emphatically that; “this court does not think that any act or

conduct which is contrary to the express or implied provisions of the Constitution can

be validated by equitable doctrines of estoppel. No person can make lawful what the

Constitution says is unlawful. No person can make unlawful what the Constitution says

is lawful. The conduct must conform to due process of law as laid down in the

fundamental law of the land or it is unlawful and invalid.” It was for these

reasons that Mrs. Wood JSC in the Faroe Atlantic case (supra)

stated clearly that, “this gross violation of the supreme law of

our land, which has rendered an otherwise lawful contract

unconstitutional, cannot be validated by the estoppel doctrine of res judicata”.

She made reference to the decision in In Re Kwabeng Stool; Karikari &

26(1974) 2 GLR 272 C.A.27 1980) GLR 632 Per Sowah JSC

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Another v. Ababio II and others28 where Ampiah JSC stated

that ....Estoppels of all kinds are subject to one general rule; they cannot override

a statutory provision. (in this case Constitutional). Thus where a particular formality is

required by statute no estoppel will cure the defect. Thus, irrespective of the

unfortunate consequences following a contract being declared null

and void, the Constitution and its provisions must without

sympathy reign supreme.

CONSTITUTIONAL VALUES AND FREEDOM OF CONTRACT

Generally, contract law believes in freedom of contract in that

the individual parties to any contract are free to insert any

terms and conditions into any agreement they freely enter into.

It further provides that individual persons have freedom to form

contracts without government restrictions. Thus, individuals

choose with whom to contract, whether to contract or not, and on

which terms to contract. Many legal scholars like Robert Nozick

advocate that freedom of contract should be allowed since it

embodies the expression of the independent decisions of separate

individuals pursuing their own interests under a minimal state.

However, in the application of the general principles of private

law, the constitutional values that simultaneously guarantee and

restrict the freedom of contract are the highest standard. The

provisions of the Constitution must determine the general aims of

28 (2001-2002) SCGLR 51523

private law and thus must be taken into account in the

interpretation and application of private law provisions. Every

democratic state like Ghana based on the rule of law must

guarantee the freedom and opportunity of people to organize their

lives themselves.29 However it is important to take into account

that the collective rights of the entire public or nation as

enshrined in the constitution could be violated and thus should

be prohibited. Restrictions not provided by law may be derived

from principles such as good faith taking into account the

corresponding constitutional limitations. Thus in general, every

contract must though freely entered into, show respect for

fundamental rights and freedoms, justice, fairness, order, good

faith, reasonableness, and other values set out in the

Constitution and arising from its substance. The restrictions on

the freedom of contract however must comply with the Constitution

and be suitable for attaining the desired aim and intention of

the framers of the constitution.30 Thus in the United States case

of Reid v Covert31 the U.S. Supreme Court held in their opinion that;

“…No agreement with a foreign nation can confer power on the Congress, or anyother branch of government, which is free from the restraints of thisConstitution. Article VI, the Supremacy clause of the Constitution declares, “ThisConstitution and the Laws of The U.S. which shall be made in pursuance thereof,and all the Treaties made, or which shall be made, under the Authority of theUnited States, shall be the supreme law of the land…. There is nothing in this

29 R. Maruste (Note 3), p. 7530 Irene Kull, Principle of Good Faith and Constitutional Values inContract Law, pp 142-14931 October 1956, 354 U.S. 1,

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language which intimates that treaties and laws enacted pursuant to them donot have to comply with the provisions of the Constitution nor is there anythingin the debates which accompanied the drafting and ratification which evensuggest such a result… It would be manifestly contrary to the objectives of thosewho created the Constitution, as well as those who were responsible for the Billof Rights – let alone alien to our entire constitutional history and tradition – toconstrue Article VI as permitting the United States to exercise power under aninternational agreement, without observing constitutional prohibitions. In effect,such construction would permit amendment of that document in a manner notsanctioned by Article V. The prohibitions of the Constitution were designed toapply to all branches of the National Government and they cannot be nullified bythe Executive or by the Executive and Senate combined.” 32

CONCLUSION

All the discussions above have gone a long way to cement the

Ghanaian judiciary’s commitment in upholding and enforcing the

Supremacy of the 1992 Constitution above all else especially in

the case of international business and economic transactions

wherein the Government is a party. Irrespective of the somewhat

unfairness of the decisions of the Supreme Court as stated above,

that is the true reflection of the substance of Ghana’s

Constitution. This should thus remain the true effect and meaning

of Article 181 of the 1992 Constitution. However, it must be

stated that Article 181 (5) says that the provision applies with

“necessary modifications” by Parliament. Thus it is submitted that in

order to avoid the somewhat unjust consequences of upholding the

Supremacy of the 1992 Constitution, Parliament should make

categories of contracts which ought to be brought before it for

32 Ibid. at pg. 1725

approval since clearly it would be impracticable for Parliament

to scrutinize and approve every single business transaction with

international ramifications entered into by the Executive. Thus

it can be said that in an instance where the contracts are in

pursuance of a prior loan agreement entered into with the

government as a party, the only major and autonomous

international agreements which financially commit the State are

required to be submitted to Parliament for approval thereafter.

But in the interim, as suggested in the Balkan case, a

certification by the Attorney-General that an international

business transaction to which the Government is a party is

“major” or not should be accorded great weight by the courts,

although it cannot be conclusive. 

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