The East African Court of Justice (EACJ) has confirmed that (1) a party which is not a partner state or an institution of the East African Community under Treaty For the Establishment of the East African Community cannot be properly sued before the East African Court of Justice and (2) the East African Court of Justice has no jurisdiction over acts that took place before the coming into force of the Protocol on the Establishment of the East African Common Market (the Common Market Protocol).

This decision was delivered by the EACJ on 2 September 2013 in Reference No 6 of 2010: Alcon International Dispute v Standard Chartered Bank Uganda, Attorney General of Uganda and the Registrar of the High Court of Uganda.

The reference instituted by Alcon under Articles 27(2) and 151 of the Treaty and Article 54(2) of the Common Market flowed from a long-running dispute between the claimant and the National Social Security Fund (NSSF) over the aborted contract for the construction of Worker’s House in Kampala, Uganda. Alcon secured an arbitral award of US$ 8,858,469.57 for breach of contract which NSSF successfully challenged successfully before the Supreme Court of Uganda. Standard Chartered Bank’s involvement in the dispute was with respect to a guarantee the bank issued on 30th of October 2003, on application by NSSF, in favour of the Registrar of the High Court of Uganda at Kampala for US$ 8,858,469.97. The guarantee was to be paid in full in the event that Alcon International Limited as judgment creditor became entitled to immediate payment of the decretal sum, full interest and taxed costs upon determination of the dispute between it and NSSF. The Attorney General was sued on account of the claimant’s allegation that the Government of Uganda failed to protect its cross-border investments contrary to the spirit of the Treaty.

In the main, Alcon sought orders to the effect that:

  • A declaration that the signing of the Protocol on the Establishment of the East African Community Common Market and the coming into force of the Protocol on 1st July 2010 enhanced the jurisdiction of the East African Court of Justice under Article 27(2) of the Treaty as a competent judicial authority for the determination of cross-border trade disputes between persons from the partner states of the East African Community (EAC).
  • A declaration that the EACJ has the jurisdiction to enforce a statutory/legal duty owed to a person from a different partner state where a public official in the home state fails to honour such duty.
  • The EACJ orders Standard Chartered Bank to pay the sum owing under the guarantee.

A number of preliminary points of law were raised on behalf of the respondents. Summarily, it was argued that:

  • Under Article 30 of the Treaty, references must be brought only as against a Partner state or an institution of the Community
  • Settlement of disputes under the Protocol is by competent institutions in the Partner states.
  • No Protocol has been passed, as is required, to operationalise the extended jurisdiction of the EACJ to provide for original, appellate, human rights and other jurisdictions pursuant to Article 27 (2) of the Treaty.
  • The substratum of the reference was rendered non-existent following the decision of the Supreme Court of Uganda in Civil Appeal No 15 of 2009: National Social Security Fund v Alcon International that overturned set aside all orders made by the High Court and Court of Appeal of Uganda related to the guarantee.

Ruling:

In its decision, the EACJ notably determined and re-affirmed the position that Standard Chartered Bank Uganda and the Registrar of the High Court, not being Partner states or institutions of the Community within the terms of Article 30(1) of the Treaty, cannot be properly sued in that capacity before the EACJ because they are not bound by the treaty or any of its protocols. The EACJ further affirmed the position that the Treaty cannot apply retroactively unless it derived explicitly from the provisions of the Treaty itself or it may be implicitly deduced from the interpretation thereof and from the reading of the Treaty, there was nothing to show that the farmers of the Protocol has any intention of is retroactive application.

However, the EACJ made no finding on the question as to whether the Common Market Protocol could possibly enhance the jurisdiction of the EACJ without an enabling instrument.

This article is intended as a general overview and discussion of the case dealt with. This information is not intended to be, and should not be used, as a substitute for taking legal advice in any specific situation. Sebalu & Lule is not responsible for any actions taken or not taken on the basis of this article