Sibton Switch Systems loses arbitration against BoG
A relief sum of $478 million being claimed against the Bank of Ghana (BoG) by payment platform, Sibton Switch Systems, has been dismissed by the London International Court of Arbitration (LCIA).
The LCIA dismissed all claims brought by Sibton Switch Systems Limited against the BoG in relation to the Bank’s termination of the Master Agreement between the two parties for the Ghana Retail Payment Systems Infrastructure in 2017.
The arbitration award issued in favour of the BoG on July 28, 2021, was due to the failure of Sibton Switch Systems to comply with the orders of the Tribunal of the LCIA including an earlier interim award made by the Tribunal on the 25th of June 2019 in favour of the Bank of Ghana, which required Sibton Switch to make an interim award payment for security of costs.
The LCIA has ordered Sibton Switch Systems to pay to the Bank of Ghana in full, the costs of the arbitration, in respect of the Bank of Ghana’s legal fees.
On the 9th of April 2018, Sibton Switch filed a Request for Arbitration with the LCIA against the Bank of Ghana for breaching the Master Agreement for the Ghana Retail
Payment Systems Infrastructure entered into by the two parties.
Following the 2016 elections and on the appointment of a new Management of the Bank of Ghana, it became necessary to review the terms of the contract entered into by the previous administration. In reviewing the contract, the new Management of the Bank reached the conclusion that Sibton had neither acquired the licence nor fulfilled the condition precedent for the effectiveness of the rights and obligations of the parties.
The Agreement, which dealt with the grant of exclusive rights to Sibton Switch to build, operate and own the Ghana Retail Payment Systems Infrastructure was therefore terminated on the basis that it never came into effect. The Claimant, Sibton Switch, went to the LCIA seeking relief in the sum of USD 478 million from the respondent, Bank of Ghana.
The contract awarded to Sibton Switch was one-sided in favour of Sibton Switch and was severely detrimental to the interests of Bank of Ghana. For example, the Public Procurement Authority approval for the project provided that the Bank of Ghana’s maximum liability was to be GH¢300,000.
Contrary to this approval, the corruptly procured contract with Sibton Switch provided that the Bank of Ghana had a huge potential liability of USD $478 million (GH¢2.6 billion). In addition, the tender price of Sibton Switch was more than 33 times more expensive than the next most expensive bid.
Following the termination of the contract with Sibton Switch in 2017, the Bank of Ghana’s subsidiary, GhIPSS, was able to deliver mobile payment systems interoperability at a small fraction of the cost, saving the Ghanaian taxpayers billions of Cedis.