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Memorandum of Understanding Founded on Bilateral Agreement Declared Inconsistent with the Treaty Establishing East African Community.

Memorandum of Understanding Founded on Bilateral Agreement Declared Inconsistent with the Treaty EstablishingEast African Community.

Henry Kyarimpa v the Attorney General of Uganda

Emmanuel Ugirashebuja, P; Liboire Nkurunziza, VP; Edward Rutakangwa, Aaron Ringera and Geoffrey Kiryabwire, JJ.A

February, 2016

Reported By Linda Awuor & Faith Wanjiku

Download the Decision

Brief Facts:

The Government of Uganda (the GoU) requested for bids for the construction of the 600 MW Karuma Hydroelectric Plant and its associated transmission lines (the Karuma Dam). The Appellant, in his capacity as a procurement consultant, aligned himself with a company known as M/s China International Water and Electric Construction Corporation (China International) which placed a tender bid for the Karuma Dam. Before the award of the tender was made, the Inspector General of Government of Uganda (IGG) received a complaint regarding the transparency and integrity of the procurement process and, after investigations, issued a report recommending that the whole procurement process be cancelled and repeated which had the Minister of Energy and Mineral Development cancel it.

Subsequently, a judicial review application was institutedat the High Court of Uganda, at Nakawa, seeking orders, inter alia, that the Respondent be injuncted from implementing the recommendations of the IGG Report and that the permanent secretary, Ministry of Energy and Mineral Development (ME&MD) be ordered to declare the best evaluated bidder of the initial procurement process. During the pendency of the above hearing the Appellant lodged an interlocutory application in the same judicial review cause. The Court then issued an interlocutory order for the preservation of the status quo, that the implementation of the recommendation of the IGG Report be prohibited and the bids be renewed before their expiration.

The Constitutional Court issued an interim injunctive order restraining the GoU/Cabinet, or the ME & MD from implementing the IGG’s report and interfering with the procurement process until the determination of the main constitutional application or such further order of the Court. However the High Court of Uganda, at Nakawa, thereafter issued final orders in the judicial review application restraining the Respondent from implementing the recommendations in the IGG Report, and directed the Respondent to declare the best evaluated bidder for the Engineering Procurement and Construction Contract(EPC) for the Karuma Dam. The Respondent lodged an appeal in the Court of Appeal against the aforesaid orders and went ahead to sign a Memorandum of Understanding (“MoU”) with M/s Sinohydro Corporation Limited (“Sinohydro”) for the construction of the Karuma Dam. The Appellant instituted the Reference subject matter of the Appeal in the Trial Court.

Issues:

  1. Whether the Trial Court erred in law in finding that the selection and subsequent signing of the MoU between the GoU and Sinohydro was not inconsistent with and was not an infringement of Articles 6 (c) and (d), 7 (2) and 8 (1) of the Treaty.
  2. Whether the Trial Court erred in law in finding that the acts of the GoU in implementing the MoU between itself and Sinohydro, after the filing of the Reference, was not inconsistent with and was not an infringement of Article 38 (2) of the Treaty.
  3. Whether the Trial Court erred in law in declining to award costs to the Respondent.

International Law-law of Treaty-Treaty Establishing East African Community- Fundamental and Operational Principles of the Community- whether the Trial Court erred in law in finding that the selection and subsequent signing of the MoU between the GoU and Sinohydro was not inconsistent with fundamental and operational principles of the Community- Treaty Establishing East African Community – articles 6 (c &d),7

International Law-law of Treaty-Treaty Establishing East African Community- whether the Trial Court erred in law in finding that the selection and subsequent signing of the MoU between the GoU and Sinohydro was not inconsistent with measures likely to jeopardise the achievement of those objectives or the implementation of the provisions of the Treaty- Treaty Establishing East African Community -article 8(1) (c)

International Law-law of Treaty-Treaty Establishing East African Community-whether the Trial Court erred in law in finding that the acts of the GoU in implementing the MoU between itself and Sinohydro, after the filing of the Reference, was not inconsistent with engaging in actions aggravating the dispute-Treaty Establishing East African Community – article38(2)

Relevant Provisions of the Law

Treaty Establishing East African Community

Article 6(c & d) - Fundamental Principles of the Community

(c) peaceful settlement of disputes;

(d) good governance including adherence to the principles of democracy, the rule of law, accountability, transparency, social justice, equal opportunities, gender equality, as well as the recognition, promotion and protection of human and peoples rights in accordance with the provisions of the African Charter on Human and Peoples Rights

Article 7(2) – Operational Principles of the Community

The Partner States undertake to abide by the principles of good governance, including adherence to the principles of democracy, the rule of law, social justice and the maintenance of universally accepted standards of human rights.

Article 8(1) – General Undertaking as to Implementation

The Partner States shall:

(a) plan and direct their policies and resources with a view to creating conditions favourable for the development and achievement of the objectives of the Community and the implementation of the provisions of this Treaty; (b) co-ordinate, through the institutions of the Community, their economic and other policies to the extent necessary to achieve the objectives of the Community; and (c) abstain from any measures likely to jeopardise the achievement of those objectives or the implementation of the provisions of this Treaty.

Article 38 (2) – Acceptance of Judgements of the Courts

Where a dispute has been referred to the Council or the Court, the Partner States shall refrain from any action which might be detrimental to the resolution of the dispute or might aggravate the dispute.

 

Held:

  1. It was a cardinal principle of procedure in international courts that he who asserts must prove. The general principles of evidence in the International Court of Justice were expressed as generally,in the application of the principle of actori Incumbit probatio, the Court would formally require the party putting forward a claim or a particular contention to establish the elements of fact and of law on which the decision in its favour might have been given. As the Court had said,ultimately it was the litigant seeking to establish a fact who bore the burden of proving it.The burden of proof was on the one who would fail if no proof was offered. In the instant matter, it was the Respondent who asserted the existence of a bilateral agreement between the GoU and the Peoples’ Republic of China which ousted the application of the PPDA Act in the procurement of Sinohydro. It was the Respondent who was bound to fail in the absence of proof of such an agreement. The burden of proof was thus squarely on the Respondent. The Respondent could only discharge such a burden by producing the agreement relied upon either as an annexure to an affidavit or through a competent witness. In the event, the Respondent did not do so, he miserably failed to discharge that burden of proof.
  2. The proposition by the Trial Court that the obligation to produce the evidence of the existence of such an agreement was on Sinohydro was patently wrong. Sinohydro was not a party to the Reference and was not obligated to prove anything. Even the sentence in the MoU referred to by the Trial Court to support its conclusion in the respect did not, on a plain reading thereof, obligate Sinohydro to produce the bilateral agreement in any proceedings. Indeed, the Court wondered how an entity which was not a party to the agreement could have been expected to have had custody of that agreement in order to have been in a position to produce the same in Court.
  3. The Respondent having failed to discharge its burden to produce the written bilateral agreement or arrangement, the legal conclusion that the selection and subsequent signing of the MoU between the GoU and Sinohydro was arbitrary, illegal and unlawful under Ugandan law, for being outside the provisions of the PPDA Act, was inescapable, for it was only its production which would have revealed the provision thereof that required the use of and choice of the procurement method that was used by the Respondent to select Sinohydro outside the PPDA Act and the Regulations. The Trial Court’s finding that a bilateral agreement existed on the basis of inferences drawn from other documents including intra-governmental correspondence, though attractive at face value on the basis of the doctrine of good faith on the part of public officials, was misconceived in law and could not be supported by the Court.
  4. The EACJ was fortified in that view of the matter by a journal article entitled “Good Faith” in Encyclopedia of Public International law. The author after considering the evolution and application of the principle of good faith in international law concluded that in general, the uses to which the principle of good faith seemed to be applied included statements made publicly, or in negotiations, or in the course of judicial proceedings. Nations had to be more careful of what they said, because they could be held to it. The expanded role for the concept of good faith indeed appeared to be consistent with its roots in a natural law conception of international law. Taking inspiration from the above, the Court was of the view that the Respondent having stated in its Response to the Reference and deponed in the supporting affidavit thereto that there existed an executed bilateral agreement between the Peoples’ Republic of China and the Republic of Uganda on the financing of the Karuma Dam, the principles of good faith and of transparency required nothing less than production in Court of the said executed bilateral agreement by the GOU which placed reliance thereon to legitimize its departure from the provisions of the PPDA Act.
  5. The upshot of the Court’s consideration of the aspect of the issue was that the procurement of Sinohydro to construct the Karuma Dam was in contravention of the Internal Laws of Uganda. The Court found in the case that such conduct by the Respondent offended the principles of the rule of law, transparency and accountability encapsulated in articles 6(d) and 7(2) of the Treaty. The Court noted that the Appellant did not make out a case for the said conduct to be considered a violation of Article 6(c) of the Treaty which dealt with peaceful settlement of disputes. However a case existed for holding that any conduct in breach of the rule of law was conduct which was likely to jeopardize the achievement of the objectives of the Treaty and, accordingly, offended article 8(1) (c) thereof.
  6. Article 38(2) concerned the conduct of a partner state in a situation where a dispute in which it was a party had been referred to either the Council or the Court. It enjoined such partner to exercise self-restraint in respect of conduct or actions with a possibility of aggravating the dispute or which would be detrimental to its resolution. The provision had nothing to do with the grant of coercive judicial injunctive relief. The latter was the province of article 39. In the circumstances, the appreciation that article 38(2) did not amount to an automatic Treaty injunction did not require to be supported by any references to the principles germane to the grant of judicial injunctive relief. The Court found that the Appellant’s Counsel’s criticism of the Trial Court’s reasoning was well merited, as the Court’s reasoning suggested that the provisions of Article 38(2) were to be read subject to and with a view to harmonizing them with the Partner States’ internal law jurisprudence on interlocutory injunctions. That view was manifestly wrong as it offended the principle of customary international law as codified in article 27 of the Vienna Convention on the Law of Treaties of 1969which provided that a party could not invoke the provisions of its internal law as justification for its failure to perform a treaty. The Trial Court did not err in law in finding that the acts of the Government of Uganda complained of were not inconsistent with or an infringement of Article 38(2) of the Treaty.
  7. Article 23 of the Treaty conferred on the Court the duty to ensure adherence to the law in the interpretation, application and compliance with the Treaty. Article 30 had given any person who was resident in a partner state the right to directly invoke state responsibility on his own account without the intermediation of the State to which he was a national. The Treaty itself had not prescribed the nature and form of the international responsibility entailed by a breach thereof. In those circumstances, the Court was of the considered opinion that the Treaty having provided a right, it was for the Court to provide such remedy or remedies as may have been appropriate in each individual case. And it could be said that in providing a remedy, the Court did no more than implement the obligation that was not respected. The legal consequences to be visited upon the State in breach of its international obligation to a resident of a partner state could have, in appropriate cases, included cessation, or reparation (which usually took the form of damages). The jurisprudence of the Court indeed disclosed that the remedies of declaration and Injunction had been granted in appropriate cases.
  8. The interpretation and application of the Treaty was the core mandate. A declaration of violation, or infringement of, or inconsistency of any action of a member state with a treaty violation was not a discretionary remedy. It was a command of the treaty. The submission of the Respondent to the contrary was rejected as being ill founded. In the result, the Court found that the Appellant was entitled to the order of declaration sought subject to slight amendments thereof to align the facts with pertinent treaty provisions. The treaty provisions offended by the Respondent’s actions were Articles 6(d), 7(2) and 8(1) (c). An Order of declaration would issue accordingly.
  9. With respect to the order to cancel the MoU between the GoU and Sinohydro, the Court was persuaded that such an order would be academic and futile. There was no dispute that as at the time of the Reference, the MoU had been implemented and mutated into an EPC Contract for the Karuma Dam. There was no more left of the MoU. The Court when it donned its gowns, stepped out of its chambers, and entered the temple of justice to do its sacred duty of dispensing justice, never ever left its common sense outside. As a Court of Law, it could not act in vain and the Court accordingly, declined to order the Respondent to cancel the MoU between the GoU and Sinohydro. The Appellant’s argument that the EPC Contract ought not to have been signed after the filing of the Reference by dint of Article 38(2) of the Treaty; the Court found that Article 38(2) did not constitute a statutory injunction against a partner state whose actions were the subject of a complaint before either the Council or the Court and, accordingly, the Government of Uganda was within the law to sign the EPC Contract. The Appellant was not however entitled to the enforcement orders sought including a restoration of the status quo. The Court came to the conclusion that the relief was not for granting. The reason was simple as remedies were only to be granted to the extent possible. The Court was faced with the sheer impracticability of the orders sought. The record revealed that too many actions, which ought not to have been done, had been done, and it was now impractical to reverse the construction of the Karuma Dam by Sinohydro. It was, from the stand point of fidelity to the law, an unfortunate fait accompli. The remedy sought by the Appellant was, thus, inappropriate in the circumstances and the same was, albeit for the wrong reasons, rightfully refused.

Appeal partially allowed.

Cross-Appeal dismissed with orders that:

(a). The part of the Judgment of the Trial Court refusing to issue a declaration that the selection and subsequent signing of a Memorandum of Understanding between the Government of Uganda and Sinohydro was inconsistent with and an infringement of articles 6(c), 7(2), and 8(1) be set aside.

(b). A declaration be hereby issued that the selection and subsequent signing of the Memorandum of Understanding between the Government of Uganda and Sinohydro was inconsistent with and an infringement of Articles 6(d), 7(2) and 8(1) (c) of the Treaty.

(c). That part of the Judgment of the Trial Court issuing an order of declaration that the acts of the Government of Uganda in implementing the Memorandum of Understanding between itself and Sinohydro after the filing of the Reference was not inconsistent with or an infringement of Article 38(2) of the Treaty be upheld.

(d).Each party to bear their own costs.

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