Beiersdorf East Africa Limited and Another v Dembe Trading Enterprises Limited (Miscellaneous Appeal 45 of 2022) [2022] UGCommC 174 (30 November 2022)

## **THE REPUBLIC OF UGANDA**

#### **IN THE HIGH COURT OF UGANDA AT KAMPALA**

**(COMMERCIAL DIVISION)**

## **MISC. APPEAL NO. 45 OF 2022**

## **(ARISING FROM MISC. APPLICATION NO. 1182 OF 2022)**

## **(ARISING FROM H. C. C. S. NO. 0712 OF 2022)**

**(Appeal against the Ruling of Her Worship Juliet Harty Hatanga, Deputy Registrar, delivered on the 18th day of October 2022 in Misc. Application No. 1182 of 2022)**

| 1. | BEIERSDORF EAST AFRICA LIMITED | ] | | |----|--------------------------------|--------|------------| | 2. | CHARMS UGANDA LIMITED | ] | APPELLANTS | | | | VERSUS | | | | DEMBE TRADING ENTERPRISES LTD | ] | RESPONDENT |

## **(BEFORE: HON. JUSTICE PATRICIA MUTESI)**

## **RULING**

## **I. INTRODUCTION**

## **Background to the appeal**

The 1st Appellant and Respondent entered into a Non- Exclusive Supply and Services Agreement effective 1st January 2022 (*the 'Agreement'*) in which it was mutually agreed that the 1st Appellant would supply, and the Respondent would purchase and distribute the goods listed in Schedule 1 thereof (*the 'listed goods'*), subject to the terms and conditions stipulated in the Agreement. On 3rd June 2022, the 1st Appellant issued a notice of termination of the Agreement to the Respondent. Thereafter the 1st Appellant engaged the 2nd Appellant to perform sale / distribution services of its goods in the Uganda market.

Subsequently the Respondent filed **H. C. C. S No. 712 of 2022** (*the 'main suit'*) seeking for, among others, declarations that the 1st Appellant's refusal to supply it with the listed goods, and its sale and distribution of the same through the 2nd Appellant amounted to a breach of the Agreement. The suit also sought a declaration that the 2nd Appellant was liable for procuring the Respondent's breach of the Agreement.

The Respondent also filed **Misc. Application No. 1182 of 2022***,* seeking a temporary injunction to be granted to restrain the 1st Appellant from selling / distributing any of the listed goods through the 2nd Appellant or any other persons until the disposal of the main suit. On 18th October, 2022, the Deputy Registrar of this court delivered a Ruling in the application ( via the ECCMIS platform), in which she granted a temporary injunction restraining the 1st Appellant from any further distribution through the 2nd Appellant or other persons, any of the stock listed in Schedule 1 of the Agreement, in the Ugandan market, with the exception that the 2nd Appellant can continue to sell the listed stock products already in its stores in Uganda, but it shall not import any new stock until the main suit is determined.

The 1 st Appellant being dissatisfied with the Ruling and Order of the Learned Registrar, filed the present appeal on 25th October 2022.

## **The appeal**

This appeal was brought by Notice of Motion under **S.33 of the Judicature Act, S. 78, 79 (1), 80 (1) & 98 of the Civil Procedure Act & Order 50, Rule 8 and Order 52, Rule 3 of Civil Procedure Rules, SI 71-1**. Whereas Charms Uganda Limited is named as the 2nd Appellant in this appeal, the motion indicates that the appeal was filed by MMAKS Advocates as 'Counsel for the 1st Appellant'. The motion and supporting affidavit were made in respect of the 1st Appellant. Furthermore Charms Uganda Limited is indicated as the 2nd Appellant in **Misc. Appeal No. 46 of 2022** which was also brought against the Respondent herein, challenging the same decision and order of the Registrar that is the subject of the present appeal. Charms (U) Ltd filed a supporting affidavit and submissions in ML 46 of 2022, but did not do so for the present appeal. Accordingly I have considered this appeal as one brought by the 1st Appellant.

The 1st Appellant seeks to challenge the decision and order of the Registrar dated 14th October 2022 wherein she granted a temporary injunction against the Appellants in effect stopping the 1st Appellant from supplying goods to the 2nd Appellant. The Notice of Motion is supported by the affidavit of Ms. Nyamu Florence, the National Sales Manager of the 1st Appellant, which was sworn on 25th October 2022. The Respondent filed an affidavit in reply affirmed by its Managing Director Mr. Anil Damani on 7th November 2022, and Ms. Nyamu filed an affidavit in rejoinder on 8th November 2022.

The Appellant raised six (6) grounds of appeal which can be broadly summarized into two premises. The Appellant contends that the Registrar erred in law when she entertained and determined the question on whether this court had jurisdiction to hear Misc. Application No. 1182 of 2022 arising out Civil Suit 712 of 2022, an issue which would dispose of the Main Suit. Secondly the Appellant contends that the Registrar failed to properly evaluate the evidence on record and she failed to properly apply the principles necessary for grant of a temporary injunction, thereby arriving at a wrong decision.

## **Representation and hearing**

The 1st Appellant was represented by Mr. Mathias Sekatawa and Mr. Brian Kajubi of MMAKS Advocates, while the Respondent was represented by Mr. Kusasira Denis and Steven Kabuye of ABMAK Associates, Advocates and Legal Consultants. Counsel for the 1 st Appellant and the Respondent duly filed their submissions on record as directed by court.

# **II. PRELIMINARY OBJECTIONS**

The Respondent raised two preliminary points of law namely; that the appeal was filed out of time and that the appellant is precluded from raising the issue of jurisdiction due to its failure to file a formal notice and application as provided under Order 9 rule 3 of the Civil Procedure Rules

# **1) Appeal was filed out of time**

The Respondent contends that under Section 79 (1)(b) of the Civil Procedure Act an appeal shall be filed within 7 days of the date of the order of the Registrar. That whereas the order of the Registrar appealed against is dated 14th October 2022 the appeal was filed on 25th October 2022, which is clearly outside the said limitation period. That Section 79 (1) (b) is couched in mandatory terms and failure to comply with it affects the competence of an appeal that is filed out of time. The Respondent further argued that whereas the Registrar's ruling was uploaded on ECCMIS on 18th October 2022, the prescribed time limit started to run from the 14th October 2022 when the Order was signed and dated. This because Section 79(1) (b) of the CPA clearly provides that the appeal shall be filed "within seven days of the date of the order", and not within seven days from the date when a party appealing became aware of the existence of the order. The Respondent thus prayed that the appeal be struck out for having been filed outside the limitation period, without first making an application for extension of time.

In reply to the objection, the Appellant submitted that Section 25 of the Civil Procedure Act and Order 21 rules 1 and 3(1) of the Civil Procedure Rules require that a court must *pronounce* its decision before the parties, and therefore a decision which is signed and

dated but has not yet been pronounced or read before the parties is not a decision as it does not meet the legal threshold of these provisions. Further that when the parties to this matter appeared before the Registrar on the 12th of September 2022, Court issued directions to the parties and communicated that the ruling would be delivered via ECCMIS on 30th September 2022, however it was not delivered on that date. Subsequently the ruling was uploaded on ECCMIS on 18th October 2022, notwithstanding that it was dated 14th October 2022. Thus in accordance with the legal requirement that court decisions must be pronounced to the parties, the time to appeal started to run from 18th October 2022 when the order was uploaded on the ECCMIS which was the date of its pronouncement to the parties.

The Appellant cited the case of **Misango V Republic [1969] 1 EA 538 (HCT)**, where the Tanzanian High Court held that '*A judgement is not a judgement until it is reduced into writing and delivered in open court."* They also cited the decision in **Joseph Amuyeka & Another V Philip Mwachi Otinga [2006] Eklr**, where Kenyan High Court in dismissing a preliminary objection that an appeal was filed out of time, held that;

*"The law expects the date of the award or decision to be the date it is pronounced. For this reason, Tribunals must pronounce their decisions or awards to the parties and date such awards or decisions on the day they pronounce them. It is expected that where the decision or award is not pronounced to the parties immediately after the conclusion of the proceedings, the Tribunal will notify the parties in writing of the date and place when the award/decision will be pronounced.*

*It is one thing to reach a decision, and even to put it down on paper, and it is yet another to pronounce it to the parties. If I borrow a leaf from caselaw in Civil litigation, my decision is fortified by the decision in Gillani vs Modern Bakery versus Kunther (1954) 21 EACA 123 by the then Court of Appeal for East Africa in which the Court of Appeal held a judgment not to be valid where it was prepared and signed in chambers immediately after a decision was delivered orally in open court, but the written judgment was not delivered in open court. Similarly, where a Tribunal makes a decision and dates it but does not pronounce it openly to the parties until later, it is the date on which it is pronounced that is the effective date."*

They invited this court to be persuaded by the above authorities and dismiss the preliminary point of law.

# **Decision**

**Section 79 (1) (b) of the Civil Procedure Act**, **Cap.71** (the "CPA") provides that " *Except as otherwise specifically provided in any other law, every appeal shall be entered … within seven days of the date of the order of a registrar… appealed against; but the appellate court may for good cause admit an appeal though the period of limitation prescribed by this section has elapsed*".

The ruling being appealed against was dated 14th October 2022 but it was uploaded of the Registrar to the ECCMIS platform on 18thOctober 2022. The Appellant filed this appeal on 25th October 2022 which was within 7 days after pronouncement of the ruling, but computes to 11 days after the date of the order of the Registrar. The question which arises is: *Did time begun to run from 14th October 2022 when the Order was signed and dated, or from 18th October 2022 when the decision was delivered by the Registrar to the parties via the ECCMIS?*

The law requires a court to pronounce its decision in open court to the parties or their advocates. **Section 25 of the CPA** states that:

"*The Court, after the case has been heard, shall pronounce judgement, and on that judgement a decree shall follow*…"

# **Order 21 rule 1 of the Civil Procedure Rules SI 71-1** CPR states that:

"*In suits where a hearing is necessary, the Court, after the case has been heard, shall pronounce judgement in open court, either at once or on some future day, of which due notice shall be given to the parties or their advocates*."

## Furthermore **Order 21 rule 3 (1)** states that:

**"** *A Judgement pronounced by the judge who wrote it shall be dated and signed by him or her in open court at the time of pronouncing* **it"**

The import of these provisions of law is that for a judgment (and by extension a ruling) to be considered valid, it must have been pronounced in open court. Accordingly a judgment can only be considered as such and it is deemed to take effect upon the date on which it

is pronounced in open court. In this case the open court was the ECCMIS platform where the ruling was uploaded. It should be noted that rule 7(7) of the **Constitution (Integration of ICT Into the Adjudication Processes for Courts of Judicature) (Practice) Directions, 2019** provides that "*At any time during or after court proceedings, the court may deliver a decision electronically, by transmitting a copy of the judgment to the parties by using email, instant messaging applications or any other widely used electronic communication method.*" The ECCMIS platform is an open court because it allows electronic communication between the court and the parties and their advocates and vice versa.

Therefore the ruling was pronounced on 18 th October 2022 when it was uploaded on ECCMIS platform. However in order to comply with Order 21 rule 3, the ruling should have also been dated on 18th October 2022 which is the date of its pronouncement.

The Respondent contends that that whereas the Registrar's ruling was uploaded on ECCMIS on 18th October 2022, the prescribed time limit started to run from the 14th October 2022 when the Order was signed and dated. They contend that this is because Section 79(1) (b) of the CPA provides that the appeal shall be filed "*within seven days of the date of the order*" and not within seven days from the date when a party appealing became aware of the existence of the order. This argument would apply if the court had pronounced the ruling on 14 th October 2022, and the Appellant only became aware of it on 18th October 2022. However in the circumstances of this case where the order was dated before it was pronounced to the parties, the argument is erroneous as it disregards the clear command of Order 21 rule 3(1).

I fully agree with the observation of the Kenyan High Court in **Joseph Amuyeka & Another V Philip Mwachi Otinga** that '*to require a party to be aware of the existence of an award or decision that he or she has not had notice of is both unreasonable and unfair*.' The position argued by the Respondent would mean that where a judicial officer inadvertently signed and dated their judgment or ruling eight days before pronouncing it to the parties, an aggrieved party who wished to appeal the decision would, through no fault of theirs, already be out of time to file an appeal even before the delivery of the decision. Such an interpretation would not be in the interest of justice or public policy, and would in fact amount to an absurdity.

Therefore since under Section 25 of the CPA and Order 21 rule 1, & 3(1) a judgment takes effect when it is pronounced to the parties, it follows that where a court judgment or ruling is signed and dated before the date of pronouncement, the prior date cannot be relied on for purposes of determining time for filing an appeal. The date of its pronouncement is the appropriate date to consider for purposes of determining the time within which to appeal against such a decision. I accordingly find that this appeal was duly filed on 25th October 2022, within the 7 days statutory period after the court ruling was pronounced via ECCMIS on 18th October 2022.

The preliminary objection therefore fails.

# **2) Ground 1 of the appeal is barred by law for failure to challenge jurisdiction in accordance with Order 9 rule 3 of the Civil Procedure Rules**

The Respondent asserted that the Appellant is barred from disputing the jurisdiction of this court due to its non-compliance with the requirements of Order 9 rule 3 (1) (2) (3) and (6). It was submitted that under Order 9 rule 3 (1) (g)(h) of the Civil Procedure Rules a party is required to dispute jurisdiction by giving notice of intention to defend the proceedings and filing a formal application for a declaration that the court has no jurisdiction to hear the suit. Under Order 9 rule 3(6) the filing of a defence instead of the required application is deemed to be a submission to the jurisdiction of the court, unless the defence is withdrawn with leave of court.

They contended that the Appellant neither filed a notice of intention to defend nor an application under Order 9 rule 3(1), but instead it filed a Written Statement of Defence. That by filing the defence, the Appellant lost the right to contest the jurisdiction of this Court, which it can only do after withdrawing the Written Statement of Defence with leave of Court. The Respondent therefore prayed that the ground relating to disputing the jurisdiction of this Court should be struck out.

In reply the Appellant submitted that this objection is misconceived because Order 9 rule (3) of the CPR relates to challenges to competence of a court to hear a matter (*procedural jurisdiction*), as opposed to subject matter (*substantive jurisdiction*) which is the basis of the Appellant's preliminary objection. They relied on the case of *Oozu Brothers Enterprises v Ayikoru Milka (Civil Revision No. 2 of 2016)* where a similar objection was raised and Hon. Justice S. Mubiru held that Order 9 r. 3(6) relates to challenges to competence (which is a procedural aspect of jurisdiction) rather than subject matter, personal, territorial or temporal jurisdiction (which is substantive jurisdiction). He further held that filing a defence in circumstances where the party should instead have filed a notice of intention to defend the proceedings, is a submission to the procedural rather

than the substantive jurisdiction of the Court. That a party who files the defence in those circumstances is not precluded from raising the issue of jurisdiction in the defence or as a preliminary objection.

The Appellant submitted that the Appellant's failure to file a formal application under Order 9 Rule 3 CPR is irrelevant since by filing its defence the Defendant submitted to the procedural jurisdiction of this Court to hear the preliminary objection relating to the subject matter of the suit, as provided for under Order 6 rule 28 of the Civil Procedure Rules. They prayed that court finds that this matter is properly before this Court, sets aside the ruling of the Registrar, and dismisses the suit with costs.

# **Decision**

Whereas the Appellants challenge to jurisdiction was not formally made as prescribed under Order 9 Rule 3, it was competently before this court because it was expressly pleaded as a preliminary objection in the Defence and the affidavit in reply to the application for temporary injunction.

The Respondent's assertion that the Appellant is barred from challenging jurisdiction for non-compliance with Order 9 rule 3 CPR disregards the provisions of Order 6 rules 27, 28 which are the effect that any party shall be entitled to raise by his or her pleading any point of law, and any point so raised shall be disposed of by the court at or after the hearing. It is trite that jurisdiction is an issue which qualifies as a preliminary point of law as it would dispose of a suit.

Thus in the present case, the Appellant's failure to file a formal application under Order 9 Rule 3 CPR is immaterial because its Defence pleaded a preliminary objection disputing the court's jurisdiction. The filing of the Defence with such an objection cannot be reasonably construed as a submission to the Court's jurisdiction to handle the dispute. Furthermore the Appellant's affidavit in reply to the application for temporary injunction also raised issue of jurisdiction as a preliminary objection. In these circumstances it is very clear that the Appellant did not submit to jurisdiction. In any case, when the Appellant raised the preliminary objection on jurisdiction before Registrar, the Registrar duly considered and determined the objection. Having considered the objection and delivered a ruling on the issue of jurisdiction, the Appellant cannot be precluded from exercising their statutory right of appeal from the said decision as provided under Section 79(1) (b) of the CPA. In light of the foregoing I find no merit in the Respondent's second preliminary objection and it accordingly fails.

### **III. GROUNDS OF APPEAL**

The Appellant raised the following grounds of appeal;

- 1. The Learned Registrar erred in law when she overlooked the exclusivity clause on jurisdiction and entertained and determined the question on whether this Court had jurisdiction to hear the Injunction Application arising from the Main Suit, which would have disposed of the Main Suit. - 2. The Learned Registrar erred in law and in fact when she held that the Respondent had proved a prima facie case with a probability of success the parties having executed a non-exclusive agreement which had since been terminated by a letter dated 3rd June 2022. - 3. The Learned Registrar erred in law and fact when she found that the Respondent will suffer irreparable damage that cannot be atoned for by an award of damages the underlying dispute being a money claim and the Respondent having adduced no evidence of the customers allegedly affected by the termination of the agreement between the 1st Appellant and the Respondent. - 4. The Learned Registrar erred in law and fact when she failed to properly assess the balance of convenience before granting the temporary injunction. The 1st Appellant's conduct or actions were within the scope of the Agreement as it was at liberty to engage any third party. At all material times, the 1st Appellant complied with the terms and conditions of Agreement and took appropriate steps to terminate the same before engaging the 2nd Appellant. - 5. The Injunction application did not disclose any grounds for the grant of a temporary injunction and ought not to have been granted.

**Ground 1: The Learned Registrar erred in law when she overlooked the exclusivity clause on jurisdiction and entertained and determined the question on whether this Court had jurisdiction to hear the Injunction Application arising from the Main Suit, which would have disposed of the Main Suit**.

The Appellant submitted that the Learned Registrar erred in law when she assumed jurisdiction she did not have and made an order for determination of preliminary points of law to dispose of the main suit, which jurisdiction and powers are ordinarily a preserve of the trial judge. They contended that the powers of the Registrar were limited to handling interlocutory applications for temporary and interim injunction, but not to objections relating to jurisdiction of the suit. That such questions are within the ambit of the trial judge and ought to be raised before the Judge as preliminary points of law. Thus, it was erroneous for the learned Registrar to assume such jurisdiction that she did not have.

In reply the Respondent submitted that it is the Appellant who requested the Registrar to determine the issue of jurisdiction and thus the claim that she usurped the Judge's jurisdiction to determine the issue, amounts to approbation and reprobation.

## **Decision**

**(i) Whether the Learned Registrar erred in law when she determined the question of jurisdiction**

In her ruling, the Deputy Registrar held that the question of jurisdiction is a preliminary matter and thus it was not determinable before a trial Judge. She stated as follows;

# *" The question of jurisdiction is preliminary, to this end I am not agreeable to the argument by counsel of the applicant that the issue of jurisdiction is determinable before the trial judge and not in this application*

*In this case, the parties agreed that under clause 27.5 of the Agreement that if any dispute or disagreement cannot be settled in accordance with the foregoing provisions of this clause, the dispute shall be referred to the commercial courts of Nairobi, Republic of Kenya for a competent resolution. I am in agreement with the submission of the applicant, in effect, that the agreement, specifically the above clause; speaks for itself. Had the parties intended to create exclusive jurisdiction in their dealings. They would have expressly stated so… in the instant case the above clause does not provided for exclusion jurisdiction as was the case in Huadar Guandong Chinese Co. Ltd the use of the word shall in clause 27.5 is taken to be directory and not mandatory.*

*… I am persuaded by the argument raised for the applicant that in the instance involving third parties such as the instant case, it brings the case in the ambits of* *the exception and thus the applicant would be justified in presenting an action in the High Court other that the agreed court in the agreement."*

Order 50 rule 3 of the Civil Procedure Rules provides that;

*All formal steps preliminary to the trial, and all interlocutory applications, may be made and taken before the registrar.*

However the issue of jurisdiction, which is the authority of a court to hear and determine a matter, is not one of the preliminary matters envisaged to be determined by a Registrar under Order 50 rule 3.

One of the main considerations for granting a temporary injunction is whether the court has jurisdiction to grant the order sought in the main suit. (See **Court of Appeal Misc. Application No. 24 of 2015; Ibrahim Damulira V Attorney General**) It is only the trial Judge who can determine whether the court has jurisdiction in the main suit, since such a determination may dispose of the suit. The Deputy Registrar by adjudicating on the issue of jurisdiction, was in effect disposing of a trial issue which went to the core of the main suit, yet it could only be determined by the trial Judge. Since the Deputy Registrar's decision cannot prevail over the trial Judge, she ought to have referred the matter to the Judge for determination under rule 50(7) of the Civil Procedure Rules which states that:-

*If any matter appears to the registrar to be proper for the decision of the High Court the registrar may refer the matter to the High Court and a judge of the High Court may either dispose of the matter or refer it back to the registrar with such directions as he or she may think fit.*

Accordingly, and with due respect, I find that the Deputy Registrar erred in law when she entertained and determined a question of whether this court had jurisdiction to hear Misc. Application No. 1182 of 2022 arising out of Civil Suit 712 of 2022, an issue which would dispose of the main suit. Ground 1 of the appeal is allowed.

In the absence of the trial Judge's determination on whether Court has jurisdiction in the main suit, the learned Registrar's decision and orders in respect to the application for temporary injunction amount to a nullity. Accordingly there is no need for this Court to consider Grounds 2 to 5 of the appeal which collapse in light of my finding on Ground 1.

# **IV. WHETHER THE EXCLUSIVE JURISDICTION CLAUSE SHOULD BE ENFORCED**

The Appellant submitted that clause 27.5 and 27.6 of the Agreement provided the law which would govern the parties in respect of any contractual claim or dispute and it also specified the forum by giving exclusive jurisdiction to the Kenyan High Court, Commercial Division in Nairobi. Further that the said clause if valid and binding between the parties. They relied on the High Court decision in **Uganda Telecom Limited V Rodrigo Chacon t/a Andes Alps Trading; HCMA No. 337 of 2008** where Hon. Justice Stella Arach Amoko, a Judge of the High Court( as she then was), in interpreting a similar clause conferring jurisdiction on the English courts, held that the parties had unequivocally submitted to the exclusive jurisdiction of English courts and that the Ugandan court had no jurisdiction to adjudicate the dispute. They further relied on the case of **Bank One Ltd vs Simbamanyo Estate Ltd ; High Court Misc. Application No. 1302 of 2022;** where Hon. Justice Mubiru held that where parties have bound themselves by an exclusive jurisdiction clause, effect should ordinarily be given to that obligation unless the party suing in the non-contractual forum discharges the burden cast on him by showing strong reasons for suing in that forum. They also cited **Huadar Guangdong Chinese Co Ltd Vs Damco Logistics Uganda Ltd Civil Suit No. 4 & 5 of 2012** where court held that the Respondent/Plaintiff must show that the Appellant/Defendant is using the clause to submit their disputes to the exclusive jurisdiction of the foreign court as a means of avoiding liability. In the absence of the above the court will enforce the contract.

They submitted that the Respondent did not bring to the attention of the Court any disability or other reason as to why it did not institute a suit in the High Court of Kenya in Nairobi as expressly agreed in the contract. As such they contended that the suit is incompetently before this Honourable Court because by the choice of parties they agreed on a different forum, and the same should be dismissed with costs.

In reply the Respondent submitted that the parties never agreed to the exclusive jurisdiction of the Commercial Court of Nairobi but they only agreed to the said forum as an option to have matters filed in such courts. Further that even if Clause 27.5 of the Supply and Service Agreement were to be interpreted to be conferring exclusive jurisdiction to the Commercial Court of Nairobi, it does not apply where the dispute involves a third party, like the 2nd Respondent, who has been sued for its tortious actions of procuring a breach of contract.

#### **Decision**

Whereas Article 139 of the Constitution vests unlimited original jurisdiction over all matters with the High Court, parties can agree in a private contract, to submit exclusively or otherwise, any dispute to foreign courts. The High Court of Uganda retains the jurisdiction which it would have exercised if the parties had not agreed to submit their disputes to a foreign court. However the High Court has the discretion to decline to exercise the jurisdiction and hold the parties to their bargain of having the disputes determined by agreed foreign courts. (See **Huadar Guangdong Chinese Co. V Darnco Logistics Uganda Limited; Civil Suit No. 4 & 5 of 2012.** Where parties expressly stipulate that the contract shall be governed by a particular law, that law will be the proper law of contract, provided the selection is bona fide and there is no objection on the ground of public policy (See **Halsbury's Laws of England 3rd Edition, Vol 7 page 73**). A stipulation that the parties agree to be bound in all things by the jurisdiction and decision of the courts of a particular country has been held to be binding. (**Uganda Telecom Limited V Rodrigo Chacon t/a Andes Alps Trading HCMA No. 337 of 2008**, **Halsbury's Laws of England 3rd Edition, Vol 7 page 75**).

The jurisdiction clause in the Agreement provided as follows;

# "*Section 27 Applicable law and Jurisdiction*

*27.1 This Agreement and any non-contractual obligations arising out of of or in connection with it, is governed by, and shall be construed by the laws of the republic of Kenya.*

*27.5 If any such dispute or disagreement cannot be settled in accordance with the foregoing provisions of this clause, the dispute shall be referred to the commercial courts of Nairobi, Republic of Kenya, for a competent resolution."*

*27.6 Nothing shall prevent or delay a Party seeking urgent injunctive or interlocutory relief in a court of competent jurisdiction in the republic of Kenya."*

The clause is clear and certain. It conferred conferred exclusive jurisdiction to the Kenyan Commercial Court, and imposed a contractual obligation on the parties to sue in the nominated forum. I therefore do not accept the Respondent's argument that the parties only agreed to the said forum as an option to the High Court of Uganda.

The Respondent further argued in the alternative that even if Clause 27.5 of the Supply and Service Agreement were to be interpreted to be conferring exclusive jurisdiction to the Commercial Court of Nairobi, it does not apply where the dispute involves a third party, like the 2nd Respondent, who has been sued for its tortious actions of procuring a breach of contract.

### **Decision**

Where it is established that the parties have contractually submitted to the exclusive jurisdiction of a foreign court, courts will ensure that they comply with that obligation unless the party suing in a non-contractual forum shows strong reasons for suing in that forum. (**Bank One Ltd V Simbamanyo Estate Ltd; HCMA 1302 of 2022**) One such reason which is considered as strong enough to warrant the High Court not to enforce an exclusive jurisdiction clause is where a party is using the clause to submit their dispute to a foreign court as a means to avoid liability (See **Huadar Guangdon Chinese Co. Ltd V Damco Logistics Uganda Ltd HCCS No. 4& 5 of 2012**). In the case of **Icco Cooperation vs. Trivision Uganda Ltd; Misc. Applicadtion No. 64 of 2018 (Arising from Civil Suit 945 of 2016)** Hon. Justice David Wangutsi held that;

*"It is my opinion that when parties have bound themselves by an exclusive jurisdiction clause, they ought to comply with that obligation unless a party suing outside the prescribed jurisdiction for suit gives justification for suing contrary to the contract. (….)*

*Because of the need to protect the public policy of freedom of contract, the parties are usually free to nominate the proper law under which all relevant disputes will be resolved. Where there is an express selection, the choice should not be respected so long as it is made bonafide. That is to say that the subjective intention will prevail unless it is shown that the purpose of the one of the parties is to;*

- *a) Evade the operation of some mandatory provision of the relevant law* - *b) There is an element of fraud or duress or undue influence involving in signing of the agreement* - *c) There was other evidence of malafide*

*If the above matters are not established, the selected forum will most probably deal with the matter."*

In the present case the Respondent asserted that the exclusive jurisdiction clause does not apply because the dispute involves a third party, i.e. the 2nd Respondent, who has been sued for its tortious actions of procuring a breach of contract.

I am not convinced that the act of suing a third party is a strong reason to justify the Respondent having sued in this court. First of all the dispute between the Respondent (Plaintiff) and Charms Uganda Ltd (2nd Defendant) is still in respect of the Agreement which contains the jurisdiction clause. In order to establish that there was procurement of breach of contract by Charms Uganda Ltd, it would be necessary for the Respondent/ Plaintiff to first establish that the Appellant breached the said Agreement. The Respondent and Appellant agreed that the forum for determining such a breach would be the Kenyan Commercial Court. Moreover the said third party did not raise any objection to the chosen forum under the Agreement. In the circumstances, I find that the Respondent has not provided valid justification for the High Court to exercise its jurisdiction to hear the suit.

I find that clause 27.5 and 27.6 of the Agreement which conferred exclusive jurisdiction to Kenyan Commercial Court is valid and binding on the Respondent. The Appellant / Defendant's objection to the suit on the ground of jurisdiction is sustained and Civil Suit No. 712 of 2022 is hereby dismissed with costs.

Consequently I make the following orders;

- 1. Ground 1 of the appeal is allowed. - 2. The Ruling and Order of the Learned Registrar in Miscellaneous Application No. 1182 of 2022 is hereby set aside. - 3. Costs of the appeal are awarded to the 1st Appellant. - 4. High Court Civil Suit No. 712 of 2022 is dismissed with costs to the 1st Appellant, for lack of jurisdiction.

Dated at Kampala this 30th day of November 2022.

………………………………………………..

**Hon. Justice Patricia Mutesi**

**(Ag. Judge)**

**30/11/2022**