TWO US ENERGY COMPANIES IN COURT OVER CONTRACT

AN Accra High Court on Monday dismissed an application by G.E. Energy Rentals Incorporated, a US -based company, for an extension of time to enable it to appeal against the court’s order that the case in which Lushann International Energy Incorporated, another US company, has sued should be heard.
The two are feuding over a contract signed with the Volta River Authority (VRA) in 2002 which has implications for the country’s energy needs and would have culminated in the supply of 85 MW of power to supplement supplies from the Akosombo Dam and the Aboadze Thermal Plant.
The court, presided over by Mr Justice K.A. Ofori-Atta, awarded costs of ¢4 million against G.E. Energy Rentals in favour of Lushann International and Mr Philip Dampare, a co-plaintiff.
At the instance of the defendant company’s solicitor, the court fixed Wednesday, February 28, 2007 for the hearing of the case.
According to the solicitor, Mrs Brenda Aikins, counsel for the defendant company, Mr Ace Ankomah, was indisposed.
Counsel for the plaintiff and co-plaintiff, Mr Atta Akyea and Mr Kwame Boafo, asked for costs of ¢5 million each because, according to them, the application was an abuse of the court process. But the court rather awarded costs of ¢2 million each in their favour.
The court had earlier in December dismissed a preliminary application by the defendant company which sought to dismiss the action brought against it by Lushann International.
In that application, the defendant company argued that a court in Texas, USA, had dismissed a similar case which Lushann International instituted against it.
However, the Accra High Court reasoned that the matters raised by Lushann International should be the subject matter of the trial in Ghana.
When the court fixed a date for yesterday’s hearing, the defendant company, on January 29, 2007, filed for an extension of time to enable it to appeal against the court’s decision to go into the merits of the matter.
The court ruled that the application for extension was inexcusable and accordingly dismissed it to pave the way for the hearing of the substantive matter.
In the substantive matter, Lushann International is seeking a declaration that the conduct of G.E. Energy Rentals amounted to a breach of contract.
On January 10, 2002, the management of the VRA entered into an agreement with Lushann for the lease of an 85 MW power plant for a three-year period to supplement the energy supply in the system.
In order to ensure efficiency in the execution of the project, Lushann International entered into an agreement with G. E. Energy Rentals to jointly execute it.
However, according to the plaintiff, the defendant used plaintiff’s trade secrets and strategic information regarding its Power Purchase Agreement (PPA) with the VRA without its consent.
It further contended that the defendant interfered with the plaintiff’s contractual relationship with the VRA, which resulted in the termination of the PPA and misappropriated its trade secret.
It said on February 8, 2002, the plaintiff executed a PPA with the VRA for the emergency supply of power to Ghana.
According to the statement, after the execution of the PPA, the plaintiff, mindful of the time constraints, aggressively expended effort, time and resources towards its implementation.
These included negotiating and executing several agreements, making trips within the US, to Europe and Africa.
Lushann International said because of the estimated time of four to six months required to pour concrete for the installation of a permanent plant, the VRA and the plaintiff decided to resort to the temporary use of skid mounted units.
It said the plaintiff found out that the defendant had several of the skid mounted units in the US to rent out and so, with the assistance of the defendant’s personnel, it conducted an inspection of the units.
According to the statement, the plaintiff and the defendant then commenced discussions and negotiations aimed at exploring ways and means of implementing the PPA with the VRA and sent the defendant a copy of the PPA, a copy of the letters of credit opened in plaintiff’s favour by the VRA and the names of its primary contacts at the VRA.
It said during those discussions, the plaintiff revealed its trade secrets, confidential business information and the strategic plans for power generation in Ghana and the rest of West Africa, with assurances from the defendant that the information would be utilised only to further the plaintiff’s relationship with the VRA.
It was also to enable the defendant to assess plaintiff’s invitation to form a limited joint venture with the defendant for the purpose of supplying power to the West African sub-region.
As a result of those discussions and negotiations, the plaintiff and the defendant executed a memorandum of understanding (MoU) on or about March 20, 2002 in furtherance of the plaintiff’s PPA with VRA.
It said without the plaintiff’s consent, the defendant began to make contacts with the VRA in respect of the plaintiff’s PPA and thereby complicated the plaintiff’s relationship with the VRA and succeeded in wresting the PPA from it.
In its statement of defence, G.E. Energy Rentals denied each and every statement of fact and or allegation in the statement of claim.
It contended that the plaintiff’s action was an abuse of the process of the court and failed to disclose a reasonable cause of action for which relief could be granted.
It said the defendant’s rights and obligations were defined under and limited by the terms of the MoU, adding that the plaintiff materially breached the MoU and did not fulfil its conditions by not making the required down payment.