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THE EAST AFRICAN COMMUNITY KICKS INTO THE REALITY OF TODAY’S COURT PRACTICE

In this edition of Hot From The Bench, LawAfrica’s Augustine Mwanzia & Charles Kanjama cast the spotlight on a recent decision of the Uganda High Court Commercial Division which potentially carries great importance for the development of the law relating to the East African Community.

The Recent decision of Deepak Shah and others v Manurama Limited and others. [to be published in 1 EA 2003, but currently available to current LLR Subscribers] appears to have recognised the important role of the East African Community in influencing today’s court practice in the arena of civil procedure. Specifically, whether a resident of a partner State of the EAC, suing or being sued in another partner State, should pay security for costs for being resident abroad or whether resident within the community is residence abroad for purposes of considering whether security for costs should be paid.

The role and value of co-operation within the East African Community (EAC) framework received resounding judicial recognition in the Ugandan Commercial Court case of Deepak Shah and others v Manurama Limited and others. The Plaintiffs in this case were residents of Nairobi, Kenya which is outside the jurisdiction of the Uganda High Court. The Defendants brought an application for an order that the Plaintiffs pay security for costs.

The Defendants contended that the fact of the Plaintiffs residence abroad was a prima facie ground for ordering payment of costs in tandem with the old English case of Ebrard v Gassier [1885] 28 Ch D 232. Further, that such a plaintiff could only escape payment of security if he owned property within the court’s jurisdiction which the present Plaintiffs did not own. The Plaintiffs property was in Kenya and comprised of some company shares. It was the Defendants’ contention therefore that such property lacked permanence, as it could be freely sold or transferred at any time and such property was not permissible for purposes of escape for in order to be permissible, the property must be substantial, fixed, permanent and not of a “floating” nature.

The Plaintiffs countered the Defendants’ application by arguing that an order for payment of security should not become a weapon of oppression against their action; that their case has great likelihood of success; that granting or denying the order applied for was a discretion of the court, to be exercised as the court sees fit in light of the circumstances of this case; and lastly, given the re-establishment of the East African Community, the question of residence for purposes of ordering the Plaintiffs to pay security for costs should be re-examined.

In his ruling, Ogoola J of the Commercial Court was of the view that the fact the Plaintiffs were residents of the East African Community begs for fresh re-evaluation of judicial thinking in relation to such matters as the need to order a resident of the East African Community to pay security for costs in another partner State of the Community. He pointed out some pertinent factors which ought to be taken into account viz:

“(1) The provisions of Order 23 of Uganda’s Civil Procedure Rules are similar to, if not identical with the corresponding Rules in Kenya (Order XXV of the Civil Procedure Rules) and Tanzania. (Sidpra v Sidpra Supreme Court civil appeal number 60 of 1995).

(2) All the three countries of Uganda, Kenya and Tanzania are partner States in the East African Community (EAC).

(3) The East African Community Treaty (like the European Community Treaty) seeks to establish a customs union, a common market and a monetary union – as integral pillars of the Community and ultimately a political union among the partner states. In particular the East African Community Treaty makes express provision for the unification and harmonization of the laws of the partner States, including “standardization of the judgments of courts within the Community” (article 126) and establishment of a common bar in the partner States. The court noted the existence of the East African Judges and Magistrates Association and the East African Law Society and the East African Court of Justice. The judgments of the East African Court of Justice are to be enforced through the national courts of partner States.

(4) The underlying objective of undertaking all the initiatives described above are stated in article 5 of the East African Community Treaty as being the need:

‘to develop policies and programmes aimed at widening and deepening co-operation among the partner states in political, economic, social and cultural fields, research and technology, defence, security and legal and judicial affairs, for their mutual benefit’.

(5) All the partner States have virtually identical foreign judgments (Reciprocal Enforcement) Acts – each of which extends the application of its provisions to the other two partner States: see Kapadia v Laxmidas [1960] EA 852.

(6) Under the aegis of the Capital Markets Development Committee of the East African Community, there are mutual understandings in place, among the capital markets of the three partner States, to facilitate the trading of company shares on each others stock exchange – a factor which, among other things, makes transparent the ownership and transfers of certain assets (being assets of the kind involved in the instant suit) within and between the Partner States.

(7) Article 104 of the East African Community Treaty provides for the free movement of persons, labour, services, and the right of establishment and residence. The partner States are under obligation to ensure the enjoyment of these rights by their citizens within the Community. In this regard, the court is mindful of the fact that the East African Community Treaty has the force of law in each partner State (article 8(2)(b)); and that this Treaty law has precedence over national law (article 8(5))

The Learned Judge proceeded to consider the practice of English courts which used to be dictated by the principle enunciated in the case of Ebrard v Gassier (supra) to the effect that the fact of a plaintiffs’ residence abroad was a prima facie ground for ordering him to pay security for costs. Ogoola J found that the situation had changed drastically in relation to European Community residents, after the United Kingdom became a member of the European Community. In Landi Den Hartog B v Stopps [1976] FSR 497, the court refused to order a plaintiff to pay security for costs. The court stated that in exercising its discretion to order payment of security, the court may take into account the fact that a plaintiff is resident within the community. The court’s underlying philosophy was that as the United Kingdom was now a member of the European Community, it ought not to be presumed that fellow members of that community would not honour orders made by the courts of England.

The Learned Judge then proceeded to pronounce that:

“the ancient and venerable principle of Ebrard v Gassier must yield to the realities of today. In East Africa, as was the case with the United Kingdom, there can no longer be an automatic and inflexible presumption for the courts to order payment of security for costs with regard to a plaintiff who is a resident of the East African Community. Accordingly, in the present application, I am prepared to disregard the fact of the Plaintiff’s residence as a factor in the consideration of whether or not to order payment of security for costs”.

With that, Justice Ogoola brought to fore the importance of the East African Community and its interrelation in the day to day practice in court. The decision is a ground breaking one which should be lauded as a pioneer in aiding the realization and actualization of co-operation in legal and judicial affairs of the three States. Judiciaries in the other partner States must wake up to the realities of today and embrace the principles of the Community in order to deliver justice without distinction to the residents of the Community.

LawAfrica profusely thanks Stuart Forster, Ministry of Justice and Consitutional Affairs (Uganda)- Commercial Court Management Adviser; Andrew Kasirye, President of the Uganda Law Society; Moses Adriko & Philip Karugaba.

Please send your comments or queries to raphael.msagha@lawafrica.com or call him on (020) 2722580. Current LLR subscribers may call Raphael for a copy of the decision.

EA 2002 will be out this month and will be circulated to all EA subscribers. EA 2003 will be out in the last quarter of this year.

EA 2002 is out and is currently being distributed to all EA subscribers. EA 2003 will be out in the last quarter of this year.