The Meaning and Import of Article 181 (5) of the 1992 Constitution and its Effect on Statutory Corporations Set Up with Commercial Functions
Introduction
Article 181(5) of the 1992 Constitution requires that all international business or economic transactions to which the Government is a party must be laid before Parliament for approval before it can come into effect.
Thus, for a transaction to fall within article 181 (5) of the Constitution, it must have the following elements:
- It must be an international business or economic transaction and;
- The Government of Ghana must be a party to the transaction.
The Meaning of International Business Transaction Under Article 181 (5) of the Constitution.
A business transaction is “international” within the context of article 181(5) where the nature of the business which is the subject-matter of the transaction is international, in the sense of having a significant foreign element, or the parties to the transaction (other than the Government) have a foreign nationality or reside in different countries or, in the case of companies, the place of their central management and control is outside Ghana.[1]
Whereas a lot of Government transactions may be international, not all such transactions may fall within the meaning of article 181(5) of the Constitution. It is only those transactions that have a “significant” foreign element that will fall within the ambit of article 181(5) of the Constitution. The word “significant” is used to denote the fact that the foreign elements or contacts that lead to a judgment of internationality in relation to a transaction have to be subjected to a qualitative assessment before reaching that judgment.
As an example, the sale of cars domestically to the government would not be an international trade transaction, in spite of the incidental fact that the cars sold were imported. The fact of their importation, when qualitatively assessed by a Court, may well result in a decision by the Court that their importation is not a significant foreign element in the transaction in question. This qualitative assessment is important in separating business transactions which are international within the meaning of article 181(5) from those that are not. Another example will be documentary letters of credit and contracts for the international sale of ordinary goods or for the carriage of goods by sea. The Court have held that, the framers of the Constitution did not have in their contemplation, subjectively or objectively, transactions of this nature: that is, transactions of ordinary commerce [2]
With respect to the meaning of business or economic transaction, where a transaction is commercial in nature or pertains to or impacts on the wealth and resources of the country, it would be a business or economic transaction and a subject of interest in any examination of Article 181(5).[3]
An economic or business transaction would also fall within the ambit of article 181(5) of the Constitution where a party to the transaction (apart from the Government), though a Ghanaian company, is wholly-owned by a foreign entity, incorporated in a foreign jurisdiction or its managing director is a foreigner and control of the management of the company is in foreign hands. [4]
The Meaning of Government Under Article 181(5) of the Constitution
The main question for determination is whether or not a public institution set up to undertake a commercial venture falls within the meaning of “Government” under article 181(5) of the Constitution? Upon proper interpretation of article 181(5) of the Constitution, the Court have held that it is reasonable to infer that the framers of the Constitution did not intend for statutory corporations set up as commercial ventures to fall within the meaning of Government under article 181(5) of the Constitution. Thus, “Government” in the context of article 181(5) means, ordinarily, the central government and not operationally autonomous agencies of government.
Where an agency has a separate legal personality distinct from central government, it usually comes under sectoral ministerial supervision. The Board of the corporation and the appropriate Ministry should then exercise oversight of its international business or economic agreements. That oversight should be exercised within the context of the procurement laws of this country. Parliament would be sucked into unnecessary minutiae if it were to have the function of approving the international business or economic agreements of statutory corporations.[5]
The Supreme Court in the case of Felix Klomega vs. The Attorney-General, Ghana Ports and Harbours Authority, Meridian Port Holdings Limited and Meridian Port Services Limited [2013] DLSC2748 agreed with the case of the defendants that the term “Government” when used in the various parts of the Constitution refers to the Executive, the Legislature and the Judiciary, as well as their organs and departments, but cannot be applied to agencies such as the Ghana Ports and Harbour Authority (the 2ndDefendant), established under the circumstances and for the purposes set out in its constitutive Act. They also agreed with the case of the defendants that in the context of Article 181(5), Government means Government acting qua Government and not an agency of Government.
This is however not an absolute rule. If, on the facts of a particular case, central government was found to have made a particular statutory corporation its alter ego, then under the circumstances of that particular case, there could be a possibility of holding that statutory corporation as coming within article 181(5) of the Constitution. The Court have held the idea that a statutory corporation, though legally distinct from the Government, can in appropriate circumstances be held to be an alter ego of the Government is one that should serve the useful purpose of an exception to the general. The general rule is therefore that statutory corporations set up to undertake commercial ventures do not come within the meaning of Government under article 181(5) since it is a separate legal entity distinct from Government.
Effect of Non-Compliance with Article 181(5) of the Constitution
A contract which breaches article 181(5) of the Constitution is null and void and therefore creates no rights.[6]
Conclusion
The foregoing analysis of case law draws to a conclusion that international business or economic transaction of statutory corporations set up with commercial functions will not fall within article 181(5) of the Constitution since “Government” in the context of article 181(5) means, ordinarily, the central government and not operationally autonomous agencies of government. This is not an absolute rule though. Such institutions may however fall within article 181(5) if it becomes the alter ego of the central Government to evade parliamentary scrutiny and approval of its agreements that would have otherwise fallen within the ambit of article 181(5). In such circumstance the exception would apply and the agreement will be deemed null and void if not approved by Parliament under article 181(5).
In Ghana, most of the constitutive Acts of these statutory corporations provides for their governing Boards to be appointed by the President in accordance with article 70 of the Constitution and dissolves when executive power changes. Will this qualify such institutions as the alter ego of the Government? Although the Supreme Court discussed the alter ego doctrine as a possible exception to the general rule under the case of Felix Klomega vs. The Attorney-General, Ghana Ports and Harbours Authority, Meridian Port Holdings Limited and Meridian Port Services Limited [2013] DLSC2748, the Court is yet to develop the “customized Ghanaian version” of the doctrine that would be applicable in Ghana.
The Supreme Court have called upon Parliament to enact legislation to clearly define the meaning of article 181(5) and the transactions that will fall within it whenever it had been called upon to interpret the said provision. Deciphering which transactions will fall within the ambit of article 181(5) is still debatable among legal practitioners despite the interpretation provided by the Supreme Court. What is needed is a clear enactment giving a clear meaning to article 181(5) and stating in specific terms the exceptions to the general rule to avoid future ambiguities. The Parliament of Ghana, is therefore humbly called upon to act.
[1] The Attorney General Vrs Balkan Energy Ghana Limited & Others (J6/1/2012) [2012] GHASC 35 (16 May 2012)
[2] The Attorney General Vrs Balkan Energy Ghana Limited & Others (J6/1/2012) [2012] GHASC 35 (16 May 2012)
[3] ibid
[4] ibid
[5] Felix Klomega vs. The Attorney-General, Ghana Ports and Harbours Authority, Meridian Port Holdings Limited and Meridian Port Services Limited [2013] DLSC2748
[6] Martin Alamisi Amidu Vs. The Attorney General, Waterville Holdings (BVI) Ltd and Alfred Agbesi Woyome [2013] DLSC2759
