The Supreme Court, Ghana, in the recent unreported consolidated cases of WESTCHESTER RESOURCES LIMITED VS ASHANTI GOLDFIELDS COMPANY LIMITED & AFRICORE GHANA LIMITED VS ASHANTI GOLDFIELDS LIMITED held that the trial of a case on its merits in the High Court despite a prior reference to arbitration under the Arbitration Act, 1961, (now repealed by the Alternative Dispute Resolution Act 2010, (Act 798) was a nullity for lack of jurisdiction.

Facts of the case

The respondents sued the appellant in the High Court, Accra for damages for breaches of an Exploration and option Agreement (the Agreement). Pursuant to an arbitration clause in the said Agreement, the trial judge upon application by the respondents’ stayed the action and referred the claims therein to arbitration. Clause 12 of the Agreement provided that:

if at any time during the continuance of this Agreement or after its expiry or termination, any question or dispute shall arise regarding the rights, obligations and liabilities of the parties which they are unable to resolve amicably, such question or dispute shall be referred to arbitration in accordance with the Arbitration Act, 1961 (Act 38). In such event there shall be two arbitrators, one to be appointed by each party.”

Each party appointed an arbitrator. Subsequently, an umpire was nominated but the appellant objected to the appointment of the umpire who was then a serving Supreme Court Judge on the grounds that he could not properly be appointed as umpire. Amidst this wrangling, the appellant’s nominated arbitrator resigned and the appellant quickly appointed another arbitrator. The parties could also not agree on the procedural rules to govern the arbitration. Subsequent to correspondence between the parties, the matter went back to the trial court for determination at the instance of the respondent.

At the Supreme Court, the appellants raised two preliminary objections to the whole trial. For the purpose of this article I will only refer to the objection which relates to Arbitration which was that once the reference was made by the court to arbitration, the court could not resume jurisdiction over the case and try it on the merits. The respondents also argued that since both parties participated in the trial, the appellants could not now seek to challenge the jurisdiction of the court.

The Supreme Court unanimously upheld the preliminary objection and held that the trial in the court below despite their prior reference to arbitration under the Arbitration Act, 1961, (Act 38) now repealed was a nullity for lack of jurisdiction. The Supreme Court therefore set aside the judgments of the High Court and Court of Appeal.

The Supreme Court reasoned that from the moment the suit was referred to arbitration in accordance with the arbitration clause, the whole matter fell to be regulated by the Arbitration Act, 1961 (Act 38), the applicable legislation at the time the suits commenced. The Supreme Court took the position that there was no provision in Act 38 which would have warranted the resumption of jurisdiction over the matter in the circumstances that transpired after the case had been referred by the court to arbitration.

The Supreme Court was of the view that any problems about vacancies in the position of arbitrators was provided for under Act 38 and that there was nothing in Act 38 that empowered the trial court to resume jurisdiction to try a case on its merits in the event that the parties could not agree on the procedural rules.