Ghana AG: Confirms $235M Teshie Desalination Arbitration Award

• Ghana Water Limited (GWL) has been ordered to pay US$235 million in an international arbitration award related to the Teshie Desalination Plant.
• The International Chamber of Commerce (ICC) tribunal found Befesa Desalination Developments Ghana Ltd validly terminated its Water Purchase Agreement, entitling it to contractual termination payments.
• A separate US$402 million claim for alleged unpaid water charges was rejected by the tribunal as it could not be recovered alongside termination payments.
• A parallel arbitration, based on a Ghana state guarantee, held the Republic of Ghana liable for GWL's obligations.
• The Ghanaian government is actively negotiating to acquire the Teshie plant to avoid the US$235 million payout and restore its operations.

This aspect of the ruling highlights the significant implications of state guarantees in international commercial agreements.

The Ghanaian Attorney-General's Office, in a statement issued on Wednesday, September 23, 2026, addressed a substantial international arbitration award of US$235 million levied against Ghana Water Limited (GWL) concerning the Teshie Desalination Plant. This significant financial obligation stems from a dispute over the facility, which provides water to eastern Accra. While confirming the award, the Attorney-General highlighted that the tribunal simultaneously dismissed a separate claim totaling approximately US$402 million, which sought alleged unpaid water charges. This dual outcome underscores the complexities of the legal proceedings.

The International Chamber of Commerce (ICC) tribunal, in its decision, affirmed that Befesa Desalination Developments Ghana Ltd had legitimately terminated its Water Purchase Agreement (WPA) with Ghana Water. Consequently, Befesa was deemed entitled to receive contractual termination payments. The arbitration, identified as ICC Case No. 29029/CPB, was initiated by Befesa and Standard Bank of South Africa Limited against Ghana Water on October 23, 2024. The tribunal's ruling clarified that the claims for termination payments and unpaid charges could not be recovered concurrently, leading to the rejection of the larger US$402 million demand.

The final award mandated Ghana Water to pay US$235 million, net of all applicable taxes, as termination payments. This sum includes pre-award interest, meticulously calculated up to March 31, 2026. Furthermore, the ruling stipulates that additional interest will accrue on the outstanding debt component starting from April 1, 2026. According to the Attorney-General's assessment, this awarded amount represents 58.4% of the total monetary claim initially sought, using the US$402 million figure as a comparative benchmark.

Beyond the principal sum, the tribunal also directed the reimbursement of a proportional share of the claimants' legal expenses. Specifically, 58.4% of Befesa's and Standard Bank's reasonable defence and representation costs are to be covered. This comprehensive award arises directly from the termination of the Water Purchase Agreement that governed the operations of the Teshie desalination plant, a critical infrastructure asset for the region.

Crucially, a parallel arbitration, ICC Case No. 29030/CPB, was concurrently pursued by Befesa against the Republic of Ghana itself. This separate action was predicated on the state guarantee provided for the project. The Attorney-General confirmed that the tribunal's decision in this parallel case largely mirrored the findings against Ghana Water, effectively holding the Ghanaian state primarily responsible for the utility's contractual obligations. This aspect of the ruling highlights the significant implications of state guarantees in international commercial agreements.

In an effort to mitigate the financial impact of the US$235 million award, the Ghanaian government has been actively engaged in negotiations to acquire the Teshie desalination plant. These discussions with Befesa commenced even before the final arbitration award was issued. The government's stated objective for this proposed acquisition is to gain full ownership of the facility, thereby avoiding the substantial payout and facilitating the restoration of the plant's operations. Officials express hope that these negotiations will conclude swiftly, ensuring the plant can return to full service in the shortest possible time.

This case sets a precedent for the enforceability of international arbitration awards against Ghanaian state entities and the Republic itself, particularly concerning state guarantees on commercial contracts. Lawyers advising on infrastructure projects or public-private partnerships in Ghana should review contractual dispute resolution clauses and state guarantee provisions in light of this significant financial liability.

Source: Reporting based on original coverage by Myjoyonline.