Company law is the lifeblood of modern commerce. It regulates how businesses are incorporated, how they operate, and the boundaries of their legal authority. In Ghana, a number of cases have shaped the interpretation of company law and the relationship between the State and private entities. Few cases, however, have had as profound an impact as Attorney-General v. Balkan Energy Ghana Ltd [2012] SCGLR 998.
This case was not simply about a failed business deal. It was about corporate accountability, the scope of government contracting, and the duty of the State to protect public funds. At its core, the case asked whether a company without legal and technical capacity could bind an entire nation to an unenforceable and unlawful contract. The Supreme Court’s clear answer was: No contract contrary to law or public interest can be enforced against the State.
For Ghana, the ruling marked a turning point in public contracting, company law, and judicial oversight. For companies, it highlighted the importance of corporate capacity, transparency, and compliance. For citizens, it served as reassurance that the judiciary will intervene where national resources are at risk.
By the early 2000s, Ghana was struggling with severe electricity shortages. The “dumsor” crisis destabilised industries, disrupted daily life, and slowed down economic growth. One potential solution was the Osagyefo Barge, a floating power plant with capacity to generate about 125 MW. Constructed in the late 1990s at Aboadze, the barge had remained idle for years due to operational challenges.
In 2007, against this backdrop of desperation, the Government of Ghana entered into a Power Purchase Agreement (PPA) with Balkan Energy Ghana Ltd. The deal was straightforward on paper:
Balkan Energy was to refurbish and operate the Osagyefo Barge.
It was to deliver electricity to the national grid promptly.
In return, Balkan Energy would profit from revenues under the PPA.
The project was marketed as a “quick fix” to Ghana’s energy crisis. However, beneath the promises lay significant weaknesses.
Balkan Energy failed to refurbish and operate the barge. Timelines lapsed, promises were broken, and the crisis persisted. The State, meanwhile, was exposed to financial obligations under a non-performing contract.
By 2009, the Attorney-General, acting in the interest of the Republic, filed an action at the Supreme Court. The government sought to have the contract declared illegal, void, and unenforceable.
The dispute came before the Supreme Court of Ghana. The Attorney-General argued:
Balkan Energy lacked the legal and technical capacity to execute the contract.
The agreement violated Ghana’s laws governing public contracting.
The State could not be bound by a contract that was fundamentally flawed.
Balkan Energy countered, insisting that the contract was binding and enforceable.
The Supreme Court was tasked with answering the following:
Validity of the PPA – Was the contract valid and enforceable under Ghanaian law?
Corporate Capacity – Did Balkan Energy possess the legal and technical capacity to enter and perform the agreement?
Authority of the Attorney-General – Could the Attorney-General challenge a government contract on grounds of illegality and public interest?
Public Interest vs. Private Rights – How should the law balance contractual enforcement against the duty to protect the public purse?
In a unanimous decision, the Supreme Court held:
The PPA was illegal and void ab initio (invalid from the outset).
Balkan Energy lacked capacity and technical expertise to refurbish and operate the Osagyefo Barge.
The Government of Ghana could not be bound by a contract that was unlawful or contrary to public policy.
The Attorney-General was constitutionally empowered to revisit, challenge, and set aside contracts that undermine the public interest.
Accordingly, the Court declared the contract unenforceable and freed Ghana from the liabilities it imposed.
The decision relied heavily on the principle of corporate capacity.
Under Companies Code, 1963 (Act 179), section 27 required that companies state their objects in their regulations. Acts beyond those objects were considered ultra vires.
Under the more modern Companies Act, 2019 (Act 992), while companies have more general capacity, directors still owe a duty to ensure the company only undertakes activities it can lawfully and competently perform (see sections 190–197).
The Court found that Balkan Energy did not possess the technical expertise, resources, or capacity to execute the contract. Entering into the PPA was therefore beyond its powers and competence, rendering it unenforceable.
The doctrine of ultra vires—a central issue in this case—prevents companies from engaging in activities beyond their legal powers. The rationale is to:
Protect shareholders and creditors from managerial excess.
Ensure companies do not take on obligations they cannot fulfil.
By purporting to deliver power without capacity, Balkan Energy acted ultra vires.
Article 88 of the 1992 Constitution of Ghana establishes the Attorney-General as:
The principal legal adviser to the Government.
The guardian of public interest in all legal matters involving the State.
The Court confirmed that the Attorney-General has both the power and duty to challenge contracts that undermine legality and public interest—even if the State itself was a party to the contract.
Ghana’s Public Procurement Act, 2003 (Act 663) (as amended) requires competitive and transparent procurement. The Balkan Energy contract sidestepped these safeguards. The Court’s decision reinforced that:
Public contracts must comply with procurement laws.
Any contract contrary to public policy or law is unenforceable.
The Court’s reasoning aligns with international practice:
UK: Ashbury Railway Carriage and Iron Co v. Riche (1875) LR 7 HL 653 – A company cannot act beyond its stated objects.
Nigeria: Attorney-General of Bendel State v. Attorney-General of the Federation (1981) 10 SC 1 – The State must protect public resources from unlawful contracts.
Kenya: Kenya Anti-Corruption Commission v. Lands Ltd [2008] eKLR – Courts can set aside contracts that are tainted by illegality or lack of capacity.
Corporate Governance: Directors must ensure companies do not commit to projects outside their competence.
Due Diligence: Capacity and compliance checks are non-negotiable before contracts are executed.
Investor Confidence: The case reassures investors that Ghana will not tolerate illegality.
Procurement Discipline: State agencies must vet contractors rigorously.
Legal Safeguards: Contracts must undergo strict legal review before execution.
Public Interest Protection: The Attorney-General has a constitutional mandate to intervene.
The ruling reassures the public that the judiciary remains a safeguard against exploitation and waste of public resources.
At Vanderpuye-Orgle & Namoale @ LAW, we see Attorney-General v. Balkan Energy as a watershed moment. It demonstrates that:
Legal due diligence is critical: Governments and corporations must verify capacity before signing contracts.
Corporate honesty is essential: Companies must be transparent about their abilities.
Judicial oversight is a safeguard: Courts will protect the national interest when government contracts are unlawful.
We advise both corporations and government agencies to:
Conduct comprehensive capacity and risk assessments.
Ensure compliance with the Companies Act (Act 992), Public Procurement Act (Act 663), and other regulatory frameworks.
Seek legal review at every stage of contract negotiation.
Our firm is committed to ensuring clients avoid the pitfalls seen in Balkan Energy and enter into enforceable, lawful, and transparent agreements.
The Attorney-General v. Balkan Energy Ghana Ltd [2012] SCGLR 998 decision is a cornerstone of Ghanaian company law and public interest litigation. It reinforced that:
Companies must act within their lawful capacity.
The State cannot be bound by unlawful contracts.
The Attorney-General is empowered to defend public funds.
Beyond its immediate context, the ruling is a lasting precedent. It upholds corporate accountability, government responsibility, and judicial integrity.
At VON Law, we continue to guide businesses, investors, and public institutions towards lawful and transparent dealings. The lessons from Balkan Energy remind us all that corporate power must be exercised responsibly, and public interest must remain paramount.
Reference: https://ghalii.org/akn/gh/judgment/ghasc/2012/35/eng@2012-05-16