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Constitutionally Illegal Contracts: The Missing Limb of Illegal Contracts In Ghana (Part 2)

Introduction

The article continues in Part II where it continues with the forum for unconstitutional contracts by providing further explanations by way of an example. It will move on to discuss the doctrine of restitution under constitutional illegal contracts and conclude the two-part article.

Forum for Resolving Unconstitutional Contracts

The choice of forum for hearing of a constitutionally illegal contract can be demonstrated by way of this example. Article 266 of the 1992 constitution prevents the creation of freehold interest in land for a non-citizen. It also debars a non-citizen from holding a leasehold interest in land for more than 50 years. An agreement for the conveyance of an interest in land which goes contrary to the above provisions will have to be instituted at the high court and further to other courts superior to the high court on an appeal basis. The matter can only be brought to the supreme court and not the high court where the said provision is beset with ambiguity, imprecision or lack of clarity[1]. The high court or Court of Appeal will also be enjoined by article 130(2) to halt proceedings and refer the matter to the supreme court where it suo motu or by either party, an ambiguity is raised concerning the said provision.

Restitution Under Constitutionally Illegal Contracts

There is a marked difference in restitution under statutory and public policy illegal contracts and constitutionally illegal contracts. For the latter, restitution is nonexistent. The law permits no exceptions contrary to both the old[2] and latest approach adopted by the court under City and Country Waste Limited v Accra Metropolitan Assembly[3]. This is borne out by the caution thrown by Justice Date Bah in famous Woyome case[4];

The supremacy of the Constitution in the hierarchy of legal norms in the legal system has to be preserved and jealously guarded. Thus, the flexibility that the Supreme Court introduces in the CCWL case is to be exercised sparingly in the case of breaches of the Constitution [Emphasis mine]

A contract void for want of constitutional propriety cannot confer any right on parties there to nor any benefits there under. The overarching aim is to protect the sanctity of the supremacy of the constitution. Affording a party restitution under this type of illegal agreement amounts to the whittling away of the supremacy of the constitution. To quote in extenso the words of the court in the Woyome case;

Although one accepts the cogency of the argument that there is need to avoid unjust enrichment to the State through its receipt of benefits it has not paid for, there is the higher order countervailing argument that the enforcement of the Constitution should not be undermined by allowing the State and its partners an avenue or opportunity for doing indirectly what it is constitutionally prohibited from doing directly. The supremacy of the Constitution in the hierarchy of legal norms in the legal system has to be preserved and jealously guarded. [Emphasis supplied]

In the Woyome case the court was called on to determine whether a party in an illegal contract owing to the failure to comply with article 181(5) of the constitution can seek payment for the fulfilment of obligations there under. The court answered in the negative. After drawing the difference between an unconstitutional contract and contract illegal by statute and policy the learned Justices delivered themselves as follows;

 “The requirement that international business contracts to which the Government is a party should be approved by Parliament has a purpose and it should be made clear to Government and its partners that non-compliance with the requirement, directly or indirectly, will have consequences. We are accordingly inclined to the view that, where article 181(5) has been breached, a restitutionary[sic] remedy would be in conflict with the Constitution and therefore not available[Emphasis mine]”

The court in this case, just as it did in Attorney-General v Faroe Atlantic and Amidu (No. 2) v A-G, Isofoton S A & Forson (No. 1)[5] ordered the refund of payment made by the state. The supreme court seized the opportunity in its recent decision in Ndebugre v Attorney General & Aker ASA & Anor[6] to restate and affirm the above position in the words of Justice Benin when he says; 

“The plaintiff has raised this issue in view of the court’s decisions in these cases: Amidu (No. 3) v. Attorney-General, Waterville Holdings (BVI) Ltd & Woyome (No. 2) (2013-2014) SCGLR 606; Amidu (No. 2) v. Attorney- General & 2 others, supra, called Amidu cases, for short. These cases decided, inter alia, that when the contract is invalid because it violated the Constitution then all acts done under it including payment of money could not hold and that no order of restitution could be made under such invalid contracts. It was for that reason that payments made under those contracts were ordered to be refunded to the State.” [Emphasis added]

Conclusion

The concept of illegality of contracts cannot remain as it was yesteryears. It cannot be contracts illegal by policy and statute only. The topic needs to take cognizance of the effect of constitutional provisions and case law. In the case of Ghana, this article has attempted an exposition. It has discussed the meaning of illegal contracts and identified the problems with the scope as presently covered by writers and scholars. With a focus on Ghanaian law, it has argued for an expansion of the scope and meaning of the subject. In simple terms, illegal contracts should include unconstitutional contracts. 

It is the belief of this writer that teachers, scholars, lawyers and judges will help contribute, teach and develop the scope of illegality in contractual arrangements in the manner attempted in this article. The peculiarity of our constitution[7] and the development of our law, albeit heavily influenced by common law makes the concept of illegality inherited from the common law moribund if it does not take cognizance of local factors. It is therefore important to redefine and re-carve the boundaries of concepts and subjects as the law grows. That has been the task carried out by this article on the subject of illegality of contracts in Ghana. 


[1] See Republic v Special Tribunal; Ex Parte Akosah as affirmed in Osei Boateng v National Media Commission

[2] Under this approach, restitution can only exist where the parties are not in pari delicto, to wit, not equally guilty and where one party to an executory contract repents or changes his mind before the purpose of the illegal contract is substantially fulfilled. The approaches are discussed in City and Country Waste Limited v Accra Metropolitan Assembly

[3] (2007-2008) SCGLR 409

[4] Amidu (No. 1) v A-G, Waterville Holdings (BVI) Ltd Woyome (No.1) [2013 – 2014] 1 SCGLR 112

[5] [2013-2014] 1 SCGLR 167

[6] WRIT No. J1/5/2013

[7] Tuffuor v Attorney-General [1980] GLR 637, SC per Sowah JSC at 647-648; Kuenyehia v Archer [1993-94] 2 GLR 525 at 561-562 per Francois JSC

Jonathan Asare

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