Thirteen lawyers from Ghana and international law firm Foley Hoag collaborated to secure a significant tax arbitration victory for Ghana against Tullow Ghana Limited. The tribunal, constituted under the International Chamber of Commerce (ICC) rules, dismissed all of Tullow's claims and upheld the Ghana Revenue Authority's (GRA) tax assessment of over US$393 million, including a 100 per cent penalty. This dispute concerned Tullow's income tax liability for the 2016-2019 tax years on proceeds received from business interruption insurance.
The Ghanaian team was led by Attorney-General Dominic Akuritinga Ayine and Deputy Attorney-General Justice Srem-Sai. Other team members included Solicitor-General Helen Akpene Awo Ziwu and state attorneys Anna Pearl Akiwumi Siriboe, Grace Oppong Dolphy, and Adwoa Obenewah Amoah. The GRA worked closely with these lawyers to defend the assessment. International counsel Foley Hoag's team was led by partner Tafadzwa Pasipanodya and included Nicholas Renzler, Nour Nicolas, Sun Young Hwang, Jago Chanter, and Bojana Bilankov. Peter Shults of Shults Law Firm served as co-counsel.
The dispute centered on Tullow's challenges to the income tax assessment, the penalty, the time limits for assessing certain tax years, and the GRA's enforcement proceedings. However, the tribunal unanimously declared that the GRA's assessment did not breach Article 12 of the Petroleum Agreements. This ruling upheld the income tax assessment and the penalty, while rejecting Tullow's limitation challenge concerning the 2016 and 2017 tax years.
Furthermore, the tribunal held that the GRA's enforcement proceedings in January 2023 did not breach Article 24.10 of the Deepwater Tano Petroleum Agreement. This decision was hailed as a significant victory for Ghana and the GRA. Foley Hoag's Pasipanodya described the ruling as a resounding victory, highlighting that the tribunal applied the standard used by the Ghanaian Supreme Court when reviewing administrative decisions.
The tribunal examined whether the GRA's conclusions could reasonably have been reached on the material before it. Pasipanodya noted that the award holds significance for other states defending tax revenue measures, reflecting the caution arbitral tribunals exercise when reviewing a sovereign state's tax administration. This victory underscores the importance of collaboration between local and international counsel in defending Ghana's tax assessments.
The team from Foley Hoag played a crucial role in supporting Ghana's defense against Tullow's challenges. Their collaboration with the Ghanaian team contributed to the successful outcome of the arbitration. The GRA's efforts to defend its tax assessment were also commended.
The ruling has far-reaching implications for Ghana and other states defending tax revenue measures. Key aspects of the ruling include the tribunal's application of the Ghanaian Supreme Court's standard for reviewing administrative decisions and its cautious approach to reviewing a sovereign state's tax administration.
Key points
- The lawyers behind Ghana's US$393m tax arbitration victory were led by AG Dominic Ayine and Foley Hoag.
- The tribunal upheld the Ghana Revenue Authority's tax assessment of over US$393 million, including a 100 per cent penalty.
- The ruling holds significance for other states defending tax revenue measures.
