Procedural challenges in international arbitration

The Micheletti Company Ltd v Ministry of Youth and Sports of Ghana, ICC Case No. 27732/CPB (8 March 2024) illustrates key procedural challenges in international arbitration, particularly regarding jurisdiction, dispute resolution mechanisms, and statutory time limitations. This partial award, issued under the ICC rules, addressed two fundamental legal issues: the arbitral tribunal’s jurisdiction and whether the Claimant’s claims were time-barred under Ghanaian law. The tribunal upheld its jurisdiction but ultimately dismissed the claims as statutorily time-barred, highlighting the importance of compliance with procedural and substantive legal requirements in arbitration.

One of the critical aspects of this case was the determination of jurisdiction. The Respondent contested the tribunal’s authority, arguing that the Claimant had failed to exhaust the contractual dispute resolution process, particularly the requirement to submit disputes to a Dispute Adjudication Board (DAB) and engage in amicable settlement efforts, as per GCC Sub-clauses 20.2 and 20.4. The tribunal, however, found that the Claimant had satisfied the procedural requirements, implying that the Respondent had either waived its right to enforce the pre-arbitration steps or had failed to raise concerns in a timely manner. This underscores an essential principle in arbitration: parties must actively participate in the dispute resolution process and cannot later object to procedural steps they themselves neglected.

The second major issue was whether the Claimant’s claims were time-barred under Ghanaian law. The tribunal’s dismissal of the claims under Section 4(1) of the Limitation Act of Ghana underscores the significance of statutory time limits in arbitration. The Claimant attempted to argue that (1) the right to payment under GCC Sub-Clause 14.8 negated the application of statutory limitation periods, (2) the Respondent had acknowledged liability in correspondence, thereby renewing the limitation period, and (3) the Kenya Arbitration Act should apply instead. However, the tribunal strictly adhered to Ghanaian law, reinforcing the principle that contractual provisions do not necessarily override statutory limitation periods unless explicitly stated. This outcome serves as a cautionary precedent for contractors in international projects, emphasizing the need to initiate claims within prescribed legal deadlines, regardless of ongoing negotiations or contractual entitlements.

Another procedural complexity in this case was the determination of the seat of arbitration. Since the arbitration agreement did not specify a seat, and the parties failed to agree on one, the ICC Court fixed Nairobi, Kenya, as the seat under Article 18(1) of the ICC Rules. This decision highlights the critical role of the seat in determining applicable procedural laws, including those governing time limitations. While the Claimant argued that the Kenya Arbitration Act should apply, the tribunal adhered to Ghanaian law as the governing substantive law, reinforcing the distinction between procedural and substantive legal frameworks in arbitration.

In conclusion, this case demonstrates the interplay between contractual dispute resolution mechanisms, statutory limitations, and arbitration jurisdiction. The tribunal’s decision to uphold jurisdiction but dismiss the claims as time-barred reflects a rigorous adherence to legal formalities, serving as a reminder that procedural missteps can entirely bar otherwise valid claims. For contractors engaging in international EPC/Turnkey projects, this ruling underscores the necessity of strict compliance with contractual dispute resolution procedures and statutory deadlines, as failure to do so can result in the forfeiture of substantive legal rights.