Duty of the courts to uphold a stabilisation clause
Petroleum Agreements by their special nature envisage negative impacts that can impair a smooth operation of the agreement. As such, and with the intent to sustain its developmental objectives, states normally afford Contractors in such agreements necessary protections from political, legal and/or other socio-economic impediments that could stultify the viability of such agreements. It is therefore, not uncommon that, in most international investment or economic agreements stabilization clauses are included in the agreements to assure the investor the necessary protections. The Petroleum Agreement under consideration is not an exception. Such clauses must, at all times, be upheld and respected by the contracting parties and the domestic courts of the Host Country as in the instant case, unless the agreement or subsequent agreement by the parties, sanction their discontinuance. The domestic court of the Host Country cannot therefore lawfully disregard or depart from the bindingness of stability clauses in Petroleum Agreements.
Effect of later fiscal legislation on a stabilised agreement
It is quite clear therefore that, the parties to the contract including the State never intended that, subsequent fiscal legislations such as Act 896 can operate to amend the Agreement. Therefore, the only applicable legislations in terms of the imposition or waiver of taxes are those specifically mentioned under the Petroleum Agreement. To that extent, I am unable to appreciate why the Learned Justices of the two lower courts having recognised that the Appellant was a privy to the Agreement, and also, a beneficiary under the stability clause still sought to apply fiscal legislations which were promulgated subsequent to the effective date of the Agreement. That in my considered view is perverse and demonstrably erroneous.
Effect of parliamentary ratification of a petroleum agreement
The Petroleum Agreement therefore takes its efficacy from the acceptance and approval by the Parliament of the Republic of Ghana, just like the creation of a legislation by the very institution that is empowered by the Constitution to impose taxes or grant tax waivers. On that basis, it would be wholly incongruous to accept the submission that, in so far as an imposition or waiver of a tax must be informed only by an act or resolution of Parliament, the Petroleum Agreement not being an Act of Parliament, qua an Act, cannot insulate the Appellant from the liability of the taxes. When the State undertakes the performance of an obligation, and vests another with certain entitlements, the State cannot be permitted to turn around and obviate its due contractual performance, especially a contract which has also been ratified by the Parliament of the Republic of Ghana.
Against this background, it must be emphasized that, the principle of vested rights plays a critical role in underpinning the legal certainty and stability that stabilization agreements seek to guarantee in investor-state relations. Section 34(i)(c) of the Interpretation Act, 2009 (Act 792), affirms that, the repeal or amendment of a law does not affect substantive rights, obligations, or liabilities that have already accrued. Our courts have consistently reinforced this principle through decisions that emphasize the non-retrospective effect of legislative changes. See CFAO VS. ZACCA [1972] 1 GLR 366; GHANA PORTS AND HABOURS AUTHORITY VS. ISSOUFOU [1991] 1 GLR 500). The case law establishes that vested rights are not to be overridden by subsequent legal amendments unless a clear and express intention to do so is evident. While an enactment may have a clear and express intention to apply retrospectively, this cannot extend to substantive rights which remain protected under Article 107 of the 1992 Constitution.
