The BoG is under no obligation to seek parliamentary approval for its directives-Supreme Court affirms

Bank of Ghana

“…The 1st Defendant was under no obligation to comply with the provisions of Article 11(7) in issuing its Directives of December 2018 and for that matter, any other directives of that nature.”

The above affirmation was made by the Supreme Court of Ghana on Wednesday, July 28, 2021, in its ruling in a case filed by the Association of Finance Houses (as Plaintiff) with the Bank of Ghana and the Attorney General as 1st and 2nd Defendants respectively.

The Association of Finance Houses, a company limited by guarantee, acting in the capacity of a person under Articles 2(1) and 130 of the 1992 Constitution of Ghana, brought an action at the apex Court against the Bank of Ghana.

According to the plaintiff, this suit was provoked by a “document of the Bank of Ghana dated in December 2018 and titled; “Explanatory Notes on the Revised Corporate Governance Directive issued in December 2018” and the “Corporate Governance Directive of 2018.”

The Bank of Ghana issued a directive described as the Banking Business Corporate Governance Directive in March 2018 under the Banks and Specialised Deposit-Taking Institutions Act.

Subsequently, the BoG issued Transitional provisions to the Banking industry in July 2018 aimed at operationalizing the above directive issued in March 2018 and ensuring full compliance by 31st December 2018.

The plaintiff argued that the Bank of Ghana revised the March 2018 directives and issued another on 27th December 2018,due to concerns raised by various stakeholders. Thus was their bone of contention in this suit.

PLAINTIFF’S CASE

The Plaintiff held that “the directives of 27th December 2018 were legislative instruments which could be classified as rules and regulations under Article 11(1)(c) of the 1992 constitution and therefore ought to have been laid before parliament for a period of 21 sitting days and published in the gazette on the day it was laid before parliament.

Therefore, the failure thereof to comply with the above provision of the constitution rendered the directives unconstitutional, null and void, according to the plaintiff.

A total of five(5) reliefs were therefore sought by the plaintiff as follows;

I.A declaration that upon a true and proper interpretation of article 11 clause (1) (C ) and (7) of the 1992 constitution to the extent the Bank of Ghana corporates Governance Directive was made pursuant to the provisions of section 56 and 92(1) of the Banks and Specialised Deposit-taking Institutions Act 2016, the said directive are rules and or regulations.

II.A declaration that to the extent the Bank of Ghana Corporate Directive of December 2018 on the tenure for managing directors/CEOs, Board Chairs, etc… are rules and /regulations.

III.A declaration that to the extent the Bank of Ghana corporate Governance Directive of December 2018 on the tenure for Managing Directors, CEOs, Board Chairs, etc… was not laid in parliament and published in the gazette on the day it was laid before parliament, the said directive was made in violation of the provisions of article 11 clause 7 of the 1992 constitution.

IV. A declaration that to the extent the Bank of Ghana corporate Governance Directive of December 2018 on the tenure for Managing Directors, CEOs, Board Chairs, etc…was made in violation and/or contravention of article 11 clause 7 of the 1992 constitution, the said directive is null, void and of no effect.

V.An order of perpetual injunction retraining 1st Defendant(Bank of Ghana) from or in any way from enforcing that said Directives issued in 2018 against Plaintiff and or all persons affected by the said directive as same is unconstitutional, null, void, and of no effect.

DEFENDANTS’ CASE

The Bank of Ghana insisted that the  directive at issue in the case was not a rule or regulation in terms of Article 11 of the constitution and therefore was no obligation to follow the procedure under Article 11(7)

The Attorney General, who was the 2nd Defendant, argued that the purpose of delegated legislation is that “ while parliament deals directly with general principles, the body empowered to make subordinate or delegated legislation is given the opportunity to declare what parliament itself would have laid had its mind been directed to the precise circumstances.”

Furthermore, the AG indicated that for a directive to constitute an order, rule, or regulation under Article 11(1) ( C), the instrument must be legislative in nature.

JUDGMENT

The Supreme Court panel presided by Dotse JSC and consisted of Marful-Sau, JSC, Owusu JSC, Torkornoo(Mrs), JSC, Prof. Mensa-Bonsu(Mrs), JSC, and Kulendi, JSC, held as follows;

1.That the 1st Defendant was under no obligation to comply with the provisions of Article 11(7) in issuing its Directives of December and for that matter, any other directives of that nature.

2.The directives issued by the Bank of Ghana are administrative actions that it is charged with the responsibility of crafting and given the power to issue.

3.The Court further held that there is a certain level of absurdity or repugnancy in making every executive or administrative action take the nature of a legislative function and indicated that it could not have been the intention of the framers of the constitution who created the Bank of Ghana.

4.Moreover,the Court indicated that on a true and proper construction of Article 11(1) (C ), the directives and rules in question issued by the Bank of Ghana do not fall under the ambit of the said article.

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Source: DL News