GM Tumpeco Uganda Limited v Attorney General and Another (Misc Cause 17 of 2023) [2023] UGCommC 109 (20 October 2023)

### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA (CoMMERCTAL DTVTSTON)

# IN THE MATTER OF THE ARBITRATION AND CONCILIATION ACT. CAP.4 MISCELLANEOUS CAUSE NO. OO17 OF 2023

### ARISING OUT OF MISCELLANEOUS CAUSE NO. 93 OF 2022

GM TUMPEICO (U) LIMITED :::::::::::::::::::::::::::::::::::::::::::APPLICANT

#### VERSUS

#### 1. ATTORNEY GENERAL

#### 2. UGANDA REVENUE AUTHORITY: : : : : : : : : : : : : : : : : : : : : : : : : :RESPONDENTS

## Before Hon. Lady Justice Patricia Kahigi Asiimwe

### Ruling

#### Introduction

- The Applicant filed this application by chamber summons under Section 6(1) and 71(d) of the Arbitration and Conciliation Act Cap. 4, Section 98 of the Civil Procedure Act Cap 71, Section 33 of the Judicature Act, Cap 13 and Rule 13 of the Arbitration Rules seeking declaratory orders that: 1 - a) The Applicant is granted an interim measllre of protection and preservation of status quo by restraining the Respondents, their servants, agents from effecting the termination of the existing and running contract for the manufacture of Motor Vehicle

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Registration Number plates executed between the Applicant and the Respondents until the hearing and determination of the arbitration between the parties.

- b) The Applicant be granted an interim measure of protection and preservation of the status quo by restraining the Respondents, their servants, agents from awarding and/or enforcing any contract for the manufacture of digitized Motor Vehicle Registration Number plates to M/s Joint Stock company Limited or any company or entity until the hearing and determination of the arbitration between the Applicant and the Respondents. - c) The costs of this application are provided for. - 2. The Application was supported by the affidavit of Professor Gordon Wayamunno who stated as follows: - a) Following an advert run by the Government of Uganda on the 20<sup>th</sup> November 1993, for potential bidders to buy Tumpeco, GM Company bidded and emerged as the best bidder upon which the Government of Uganda through the Ministry of Finance sold Tumpeco to GM Company and the two merged to become GM Tumpeco (U) Limited, the Applicant herein. - b) On 10<sup>th</sup> August 2004, the Applicant entered into a contract for the manufacture of motor vehicle registration number plates with the Government of Uganda represented by the Ministry of Works and Transport. - c) In accordance with the signed contract, the Applicant embarked on the manufacture of motor vehicle registration number plates at the highest standards and for all the time of production, the Applicant never failed to deliver Number


Plates of high standard as ordered by respective authorities and/ or received any complaint from Government of Uganda or any Government agency or Authority on performance inadequacies.

- d) Following satisfactory performance by the Applicant, in 2013 and in order to bring the contract to conformity with the PPDA Regulations and Guidelines, the Parties executed an Addendum. Contract and/or Amended Contract for the Manufacture of motor vehicle Registration Number Plates and added the $2<sup>nd</sup>$ Respondent as a party which contract was cleared by the Solicitor General vide letter reference ADM/7/284/01 of 30<sup>th</sup> April 2013. - e) In a letter dated $29^{th}$ December 2022, the Government of Uganda purported to terminate the agreement and are in the process of awarding the contract to a Russian Company called Joint Stock Company Global Security without according the Applicant an opportunity to manufacture and provide Motor Vehicle Registration Number Plates with Intelligent Transport Monitoring System as preferred by the Government of Uganda for security purposes. - f) The Applicant, by its letter dated $8^{th}$ February 2023 which was duly received by the Ministry of Works and Transport on the $10<sup>th</sup>$ February 2023 contested the said termination as the same was in breach of the contracts signed by the parties and on that basis, notified the Government of Uganda through its representative, the Ministry of Works and Transport that a dispute had arisen within the meaning of clause 15 of the contract dated 10<sup>th</sup> August 2004 as amended by Clause 9 of the Addendum No. 01 of 2013, for purporting to terminate the contract.

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- 3. The $1^{st}$ Respondent in response submitted an Affidavit in Reply sworn by Bageya Wasswa, the Permanent Secretary of the Ministry of Works and Transport who stated as follows: - a) That no valid arbitration has been commenced in accordance with arbitration agreement. - b) The 1<sup>st</sup> Respondent no longer needed the services of the Applicant as the Traffic and Road Safety (Registration Plates) Regulations, 2022 provided for an inbuilt sensor embedded in a registration plate and that the same shall be with an electronic device installed in the motor vehicle, capable of indicating real-time location of the motor vehicle which services were outside the scope of the contract between the Applicant and the Government of Uganda. - c) There was no express provision for termination in the contract however I am advised by attorneys from the Attorney General's chambers whose advise I verily believe to be true that the contract was not in perpetuity and could be terminated by either party upon giving reasonable notice. - d) On 29<sup>th</sup> December 2022, the Government of Uganda represented by the Ministry of Works and Transport issued a six $(6)$ months' notice to the Director GM Tumpeco (U) Ltd that the contract for manufacture of vehicle number plates would terminate on 30<sup>th</sup> June 2023. - e) A court of law cannot extend or revive a contract that has lapsed either by its own terms or by operation of law. - f) On 23<sup>rd</sup> July 2021, the Government of Uganda represented by the Ministry of Security and Ministry of Works and Transport signed an agreement with $M/s$ Joint Stock


Company Global Security to set up an Intelligent Transport Monitoring System(ITMS) in Uganda as one of Government's intervention to curb crime in the Country.

- g) The project includes arnong others production and fitting of new digitized vehicle registration plates in the country so as to identify and trace them in rea-l time especially when investigating a crime committed by rogue elements using motor cycles. - h) The Traffic and Road Safety (Registration Plates) Regulations, 2022 werc issued on 9th December 2022 and are set to come into effect on 1"t November 2023. Courts cannot issue reliefs having the effect of staying the operation of legislation. - 4. The 2"d Respondent filed an affidavit in Reply deponed by Thomas Davis Lomuria from the Legal & Board Affairs Department. The 2"a Respondent averred it is not responsible for vehicle number plates and that the 2"a Respondent was not a party to the contract in lSStle. - 5. The Applicant filed an a-ffidavit in rejoinder deponed by Professor Gordon Wavamunno where he stated that: - a) That valid arbitration proceedings are ongoing between the Applicant and the l"t Respondent at the ICAMEK and there is need for this Honourable Court to grant an interim measure of protection and preservation of status quo pending the hearing and determination of the arbitration between the Applicant and the 1"t Respondent. - b) That further by a letter dated 30th June 2023 from the Ministry of Works and Transport signed by the l"t Respondent's deponent Bageya Waiswa, the Government of Uganda extended

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the date of termination of the contract between Government of Uganda represented by the Ministry of Works and Transport and the Applicant for four months until 31<sup>st</sup> October 2023.

- c) The Applicant has the needed capacity to manufacture and Registration Number Plates Motor Vehicle with provide Intelligent Transport Monitoring system to curb on the alleged deteriorating security situation in the Country. - d) It is public knowledge that the purported company $M/s$ Joint Stock Company Global Security lacks the capacity and manpower to manufacture digitised number plates and has been undergoing bankruptcy proceedings in Russia. - e) The Applicant has invested colossal sums of money in equipment and a specialized workforce to specialized execute the works for the manufacture of motor vehicle number plates and will suffer irreparable injury if the 1<sup>st</sup> Respondent is not restrained from terminating and awarding the contract to another company.

### Representation

The Applicant was represented by Kalenge Bwanika & Co 6. Advocates and AF Mpanga Advocates. The 1<sup>st</sup> Respondent was represented by the Attorney General's Chambers. The $2^{\rm nd}$ Respondent was represented by it's the Legal Services and Board Affairs Department.

### Submissions

# *Applicant's submissions*

Counsel for the Applicant cited Section 6 of the Arbitration and 7. Conciliation Act on interim reliefs in arbitration matters and


submitted that there are va-lid arbitration proceedings going on between the Applicant and the 1"t Respondent. Counsel cited the case of Multiplex Limited uersus Ditaco Uuslararasi Ticaret VE Muteahhit Lik Limited Sirketi (Miscellaneous Cause 78 of 2022) for the holding that the principles to be considered in an application for interim reliefs are those of granting a temporary injunction. Counsel submitted on the grounds in the case of Kigimba- Kagwa Versus Haji Nassar Katende (1988) HCB 43 as follows:

### Prima facie case:

- B Counsel for the Applicant argued that to establish a prima facie case, court does not delve deep into the merits of the case to see if the Applicant has a plausible case, rather, the court determines that there is a serious issue to be determined at the trial. - 9 Counsel for the Applicant submitted that for one to make out a prima facie case that merits the grant of an interim measure of protection, the question to be considered is whether there is an agreement to submit a dispute to arbitration which is valid and whether a dispute has arisen between the parties. He relied on the case of Doniel Mukwaga uersus Administrator General HCCS 630 of 1993. He submitted that in the instant matter there was a valid ongoing arbitration proceeding at ICAMEK under Registration No. ICAMEK/REQ|2O23|OO|2- GM T\rmpeco (u) Limited versus Attorney General and the Chief Justice Emeritus Bart Katureebe was appointed the arbitrator.

# Applicant will suffer irreparable damages

10. Counsel submitted that the Applicant will suffer irreparable damages. He explained that irreparable injury has been defined to mean substantial injury which cannot be adequately atoned for in damages. Counsel cited the case of Francis Babumba, John Byekwaso, Yusuf Mwasa vs Erusa Bunju Civil Suit No 679/90. Counsel submitted that the Applicant invested colossal sums of money in specialized equipment and a specialized workforce to execute the works for the manufacture of motor vehicle number plates and will suffer irreparable injury if $1^{st}$ Respondent is not restrained from terminating and awarding the contract to another company.

# Balance of convenience

The Applicant relied on the case of *Gapco Uganda Limited Versus* 11. Kaweesa Badru & Another, M/Application No. 259 of 2013 and submitted that the Applicant is at risk of suffering immeasurable loss if the Government of Uganda proceeds to terminate the contract between the parties and awards it to a Russian Company and this will render the arbitration proceedings at ICAMEK nugatory. Therefore, the balance of convenience lies with the Applicant.

# The Respondents' submissions

- Counsel for the $1^{st}$ Respondent submitted that the termination 12. notice was overtaken by the extension of the contract. The Respondent stated that the contract shall expire on 30<sup>th</sup> October 2023. - Counsel for the 1<sup>st</sup> Respondent further submitted that the grant of 13. this application will have the effect of suspending the Traffic and Road Safety (Registration Plates) Regulations, 2022 that are coming into force on 1<sup>st</sup> November 2023 which require registration plates with "ITMS" security systems which are not covered in the Scope of the 2004 contract between the Applicant and Government. The 1<sup>st</sup> Respondent cited the case of **Uganda** National Bureau of Standards, Miscellaneous Application No.

 635 of 2O19 where it was held that "Courts cannot as a matter of law grant an injunction which will have the effect of suspending the operation of legislation".

- L4. On the balance of convenience counsel submitted that it lies in favour of the Government because the government is already bound to a contract with M/s Joint Stock Company Global and will suffer inconvenience. - 15. Counsel for the 2nd Respondent raised a preliminary issue that the 2"d Respondent is not a party to the contract that is the subject of this dispute and that therefore no rights and obligations are imposed by the contract. Counsel further submitted that the 2"a Respondent has no legal basis to terminate the contract it is not a pa-rty to and neither does it have the powers to prevent the termination of a contract to which it is not a pa-rty.

### Issue s

16. Whether the Applicant is entitled to an interim protective order pending arbitration

## Resolution

# Preliminary issue:

- 17. The 2"d respondent raised a preliminary issue to the effect that because they were not a party to the contract in issue they were wrongly sued. - 18. The Applicant attached two agreements to the affidavit in support to the Notice of Motion. The first agreement dated loth August 2004 was signed between the Government of Uganda represented by the Ministry of Works, Housing and Communications and the Applicant (Annexture A). The second agreement attached as

Annexture B indicates the parties as the Applicant, the Ministry of Works and Transport, and the 2<sup>nd</sup> Respondent. However, only the Applicant signed the agreement. The other parties did not sign the agreement. The $2<sup>nd</sup>$ Respondent not being party to any of the agreements in question was therefore wrongly sued. The preliminary objection is therefore upheld.

# Issue: Whether the Applicant is entitled to an interim protective order *pending arbitration*

- Section 6(1) of the Arbitration and Conciliation Act, Cap 4, 19. provides that a party to an arbitration agreement may apply to the court, before or during arbitral proceedings, for an interim measure of protection, and the court may grant that measure. The provision gives the court discretionary powers whether or not to issue an order of interim measure of protection. (See: International Investment House LLC and Another versus Amos Nzeyi and others miscellaneous cause number 11 of 2012) - 20. In the case of Multiplex Limited versus Ditaco Uluslararasi Ticaret VE Muteahhit Lik Limited Sirketi (Miscellaneous Cause 78 of 2022) cited by the Applicant it was held that the general grounds for the grant of injunctions also apply to the cases of interim protection orders pending arbitration. (See also Sekaziga & Another versus Church Commissioners Holding Company Ltd (Miscellaneous Cause No. 15 of 2013). - The conditions for the grant of an interlocutory injunction are well 21. settled. First, an Applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the Applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an Application on the balance of convenience.


(see American Cyanamid Co v. Ethicon Limited [1975] AC 396, and GAPCO Uganda Limited V. Kaweesa and another H. C. Misc Application No. 259 of 2013)

### A prima facie case

- In the case of Swabri Ali Abubaker Mukungu Versus Kobil 22. Uganda Ltd Miscellaneous Cause No 41 of 2015, Madrama J held that in considering whether there is a prima facie case that merits the grant of an interim measure of protection, the question to be considered is whether there is an agreement to submit a dispute to arbitration which is valid and whether a dispute has arisen between the parties. - In the Kenyan case of **BABS Security Limited V Geothermal** 23. Development Limited [2014] eKLR it was held that:

A consensus seems to have emerged from the string of judicial authorities cited and which the Court is familiar with, that, if an injunction is sought as the interim relief under ... the Arbitration Act, existence of an enforceable arbitration agreement constitutes prima facie case.

- $24.$ the $\quad\text{ of }\quad$ Sekaziga & Another Church In case versus **Commissioners Holding Company Ltd (supra)** the court stated that in establishing whether there is a prima facie case, the court can only rely on the affidavit evidence. In the present case, clause 15 of the contract in issue provides for reference of disputes to arbitration. The parties have registered an arbitration matter at ICAMEK and have appointed an arbitrator. - 25. The Applicant therefore has a prima facie case.

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Irreparable injury which would not adequately be compensated by an award of damages

In the case of American Cynamid V Ethicon [1975] 2 WLR 316, 26. the court held that:

> The governing principle is that the court should first consider whether if the Plaintiff were to succeed at the trial in establishing his right to a permanent Injunction he would be *adequately compensated by an award of damages for the loss* he would have sustained as a result of the Defendant's *continuing to do what was sought to be enjoined between the* time of the Application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no Interlocutory Injunction should normally be granted..."

- In the case of **Kiyimba Kaggwa Vs. Katende Abdu Nasser (supra)**, 27. the court held that irreparable injury does not mean that there must not be the physical possibility of repairing the injury, but means that the injury must be a substantial or material one, that is, one that cannot adequately be compensated for in damages. - In the Applicant's Affidavit in Rejoinder the deponent stated that 28. the Applicant has invested colossal sums of money in specialized equipment and a specialized workforce to execute the works for the manufacture of motor vehicle number plates and will suffer irreparable injury if the application is not granted. The applicant has not furnished court with an indication of the colossal amounts invested, for Court to decide whether the respondent is incapable of providing adequate compensation, nor has there been any evidence to show the uniqueness of skills referred to. I find that the loss the Applicant may suffer if an order for a temporary

injunction is not granted is not irreparable. The Applicant can be compensated for in monetar5r terms.

29. The Applicant has not met this condition.

## Balance of convenience

30. In the case Legal Brains Trust (LBT) Ltd V AG Civil Application No.56 of 2o23 Kihika JOA held that:

> ...balance of conuenience lies more on the one who will suffer more if the Respondent is not restrqined in the actiuities complained of...

- 31. It was held in the case of GAPCO Uganda Limlted Versus. Kaweesa (supra) that "the term balance of convenience literally means that if the risk of doing an injustice is going to make the applicants suffer then probably the balance of convenience is favorable to him/her and the Court would most likely be inclined to grant to him/her the application for a temporaqr injunction." - 32. The question then is on which side does the balance of convenience lie? - 33. Counsel for the Applicant submitted that the Applicant is bound to suffer irreparable loss and therefore the balance of convenience lies with the Applicant. The Respondent on the other hand submitted that the balance of convenience lies with the Respondent for several reasons. Firstly, allowing the application will prejudice public interests as Security Organizations will be constrained in the exercise of their roles. Secondly, the government is already bound to a contract with M/s Joint Stock Company Global Security and cannot retract from it without incurring costs. Thirdly, the number plates provided for in the contract in issue will become invalid once the Traffic and Road Safety (Registration Plates) Regulations 2022 come into force on l"t November 2O23.

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Finally, motorists will be inconvenienced as they will not be authorised to drive without valid number plates.

- 34. As already found above the loss that maybe suffered by the Applicant if the Application is not granted is not irreparable. On the other hand, if the application is granted the decision will not only have security and financial implications, the general public sill also be inconvenienced when Traffic and Road Safety (Registration Plates) Regulations 2022 corne into force and cannot be implemented. - 35. In the case cited by counsel for the l"t Respondent of Uganda National Bureau of Standards versus Ren Publishers Limited & Another Ssekaana J, held that Courts cannot grant an injunction which will have the effect of suspending the operation of legislation. - 36. The learned judge further held that "Public interest is one of the paramount and relevant considerations for granting or refusing to grant or discharge an interim injunction." - 37. In the case of Multiplex Limited v Detach Uluslararasi Ticaret Ve Muteahhit Lik Limited Sirketi (Misc Cause 78 of 2o221 it was stated that the power to grant interim protective orders should be exercised cautiously and with circumspection since a party is not entitled to this relief as a matter of right or course. It is in discretion of the court and such discretion must be exercised in favour of the applicant only if the court is satisfied that, unless the respondent is restrained by an order of injunction, irreparable loss or damage will be caused to the applicant. The court must keep in mind the principles ofjustice and fair play and should exercise its discretion only if the ends of justice require." - 38. In the present case, I find that the balance of convenience lies in favour of the 1"t Respondent.


39. The Application is therefore dismissed with costs to the 2"d Respondent. The costs in respect to the l"t Respondent will be in the cause.

Dated this 20th day of October 2023

Patricia Kahigi Asiimwe Judge Delivered on BCCMIS

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