The proper procedure for entertaining applications for preliminary objections

Pontrilas Investments Limited v Central Bank of Kenya & Another

Reference No.8 of 2017

East African Court of Justice

First Instance Division

M K Mugenyi, PJ; F Ntezilyayo, DPJ; F A Jundu, J ANgiye, C Nyachae, JJ

July 4, 2019

Reported by Faith Wanjiku

International Law-Law of Treaty- Treaty for the Establishment of the East African Community- organs and institutions of the Community- establishment of- whether or not an entity was an institution of the Community- what was the procedure to discern that an entity had been established as an institution of the East African Community- Treaty for the Establishment of the East African Community, 1999 (Amended on 14th December, 2006 and on 20th August, 2007, article 9 (2, (3)

Civil Practice and Procedure-preliminary objection-scope and nature of- what constituted properly raised preliminary objections.

Brief Facts:

The instant reference was filed by Pontrilas Investments Limited (the applicant) on August 31, 2017. The applicant’s contention was that the respondents breached their obligations under the Treaty for the Establishment of the East African Community, (the Treaty) and in particular articles 6, 7(2) and 8(1) (c) thereof, as well as the Protocol for the Establishment of the East African Monetary Union (the Protocol) as regards supervision of Imperial Bank of Kenya Limited and actions related thereto.

By a notice of preliminary objection, the 1^st respondent prayed that the court dismiss the reference as against it, with costs, on the following grounds:

a. That the court lacked jurisdiction over the 1^st respondent;

b. That the court lacked jurisdiction to determine and grant the reliefs sought;

c. That the reference was time barred;

d. That the reference was bad in law and had been filed contrary to the provisions of the Treaty

e. That the applicant lacked locus standi to file the subject reference;

f. That the reference was based on an illegality;

g. That the reference was an abuse of court process;

h. That the reference was therefore incompetent, fatally defective and did not lie and the same ought to be struck out or dismissed with costs.

Issues:

What constituted properly raised preliminary objections?
What was the procedure to discern that an entity had been established as an institution of the East African Community?

Relevant Provisions of the Law

Treaty for the Establishment of the East African Community, 1999 (Amended on 14th December, 2006 and on 20th August, 2007)

Article 9-Establishment of the Organs and Institutions of the Community

2. The institutions of the Community shall be such bodies, departments and services as may be established by the Summit.

3. Upon the entry into force of this Treaty, the East African Development Bank established by the Treaty Amending and Re-enacting the Charter of the East African Development Bank, 1980 and the Lake Victoria Fisheries Organisation established by the Convention (Final Act) for the Establishment of the Lake Victoria Fisheries Organisation, 1994 and surviving institutions of the former East African Community shall be deemed to be institutions of the Community and shall be designated and function as such.

Held:

The improper raising of points by way of preliminary objections did nothing but unnecessarily increase costs and, on occasion confuse the issues. The court had to therefore, insist on the adoption of the proper procedure for entertaining applications for preliminary objections. In that way, it would avoid treating, as preliminary objections, those points that were only disguised as such; and would instead, treat as preliminary objections, only those points that were pure law; which were unstained by facts or evidence, especially disputed points of facts or evidence or such like.
A preliminary objection was in the nature of what used to be a demurrer. It raised a pure point of law which was argued on the assumption that all the facts pleaded by the other side were correct. It could not be raised if any fact had to be ascertained or what was sought was the exercise of judicial discretion. A preliminary objection could only be properly taken where what was involved was a pure point of law, but that where there was any issue involving the clash of facts, the production of evidence and assessment of testimony it should not be treated as a preliminary point. Rather, it became a matter of substantive adjudication of the litigations on merits with evidence adduced, facts shifted, testimony weighed, witnesses called, examined and cross examined, and a finding of fact then made by the court.
As a matter of law, institutions of the East African Community (the Community) would firstly be such institutions as were designated as such in article 9(3) of the Treaty. Article 9(2), on the other hand, envisaged that the Summit would from time to time as it deemed fit or necessary establish various bodies, departments and services as institutions of the Community. That clearly was an ongoing process. At any given time, therefore, including at the time of filing or hearing the instant application, it could not be discerned, by reading the said article whether or not a particular entity was an institution of the Community having been so established by the Summit in terms of article 9(2). Whether or not an entity had been so established, could only be demonstrated by adducing appropriate evidence either in support or negation of that contention.
Articles 9(2) and 9(3) were separate and distinct legal bases under the Treaty for determining whether or not a particular entity was an institution of the Community, in terms of article 1 thereof, which provided institutions of the Community meant the institutions of the Community established by article 9 of the Treaty. An entity would thus be determined to be an institution of the community by one or the other of those bases. In the case of article 9(2), such determination by the Court was a question of fact that would require proof of the Summit having established the entity as an institution of the community.
Whether or not an entity was an institution of the Community under article 9(2), was a question of both law and fact, the latter requiring evidential proof. When therefore a party based an application on a contention that it was or was not an institution of the Community, in terms of the said article 9(2) that required evidential proof, and could not rightly be the subject of a preliminary objection.
The question as to whether or not the 1^st respondent was an institution of the Community would require proof of affirmation or rebuttal under the precincts of article 9(2) of the Treaty. In the same vein, the issue as to whether or not the services provided by the 1^st respondent were services created by the Summit and therefore services provided by an institution of the Community under article 9(2) was a question of evidence that could not be conclusively disposed of as a preliminary point of law.
Having concluded that the question before the court, was a question of both law and fact, and therefore not a proper preliminary point of law, it would be inappropriate at the stage to make a determination on the doctrine of emanation of the State. That seemed to be an issue to be canvassed and determined at the substantive hearing of the reference, if the 1^st respondent chose to challenge the court’s jurisdiction over it, at the said hearing.
Reference No.8 of 2017 should be heard on its merits, and the parties should they be so inclined should address the issue of the 1^st respondent’s locus standi therein as a question of law and fact.

Preliminary Objection dismissed; no order as to costs.

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