Biloune and Marine Drive Complex Ltd v Ghana Investments Centre and the Government of Ghana

Year of the award: 1989 - 1990
Forum/Rules: Ad Hoc Tribunal (UNCITRAL rules)
Applicable law: Investment agreement, law of Ghana, international law

Arbitrators:
Mr Stephen M. Schwebel, President
Mr Don Wallace, Jr.
Mr Monroe Leigh

Executive summary

Mr. Antoine Biloune, a Syrian national held a 60% equity interest in MDCL, a corporation incorporated in Ghana. MDCL was initially granted a lease in November 1985 by GTDC (a corporation owned and formed by the Ghanaian Government to operate tourist facilities) to renovate and manage a restaurant at the Marine Drive Complex in Accra, Ghana. In 1986, MDCL formed a joint venture with GTDC for the construction of a 4-star hotel resort complex. The project was approved by the Ghana Investments Centre in the "GIC Agreement". MDCL accomplished substantial remodeling and construction, when the Accra City Council issued an order to stop work citing the lack of a building permit. The City Council then demolished part of the project, and Mr. Biloune, and other investors were subjected to financial scrutiny by the authorities, after which Mr. Biloune was arrested, held in custody for 13 days without charge, and subsequently deported from Ghana to Togo. The Government then closed the site of the project. Mr. Biloune was not permitted to return to Ghana and MDCL was not allowed to carry out any further work on the project, which remained uncompleted.

On the basis of the arbitration clause contained in the GIC Agreement, Mr. Biloune initiated arbitration under UNCITRAL rules against the GIC and the Government of Ghana claiming that the respondents had effectively expropriated MDCL's assets and his interest in MDCL and that they therefore had to pay compensation.

The Tribunal concluded that when viewed in conjunction, the issuance of the stop work order, the partial demolition of the construction, the arrest and detention of Mr. Biloune, the requirement of filing assets declaration forms, and the deportation of Mr. Biloune without possibility of re-entry had the effect of causing irreparable cessation of work on the project. These actions constituted constructive expropriation of MDCL's contractual rights in the project and accordingly the expropriation of the value of Mr. Biloune's interest in MDCL. The Tribunal concluded that the Government of Ghana was under an obligation under the law of Ghana and under international law to compensate Mr. Biloune.

The Tribunal referred to the customary international law principle according to which, in case of expropriation, compensation should restore the Claimant to the position that it would have enjoyed but for the expropriation. The Tribunal stated that there existed "a generally accepted principle of international law that prompt, adequate and effective compensation be paid in case of expropriation". The Arbitral Tribunal concluded that the most appropriate method of compensating Mr. Biloune was to award him the amount of his actual investment in MDCL along with interest up to the date of payment and costs. The Tribunal declined to make an award on the basis of lost future profits in the absence of sufficient proof.