Uganda Association of Consulting Engineers Limited v Prime Minister of the Republic of Uganda and Others (Miscellaneous Cause No. 182 of 2024) [2025] UGHCCD 70 (13 June 2025)

# THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT KAMPALA

# (CIVIL DIVISION)

# MISCELLANEOUS CAUSE NO.182 OF 2024

#### IN THE MATTER OFSECTION 36 OF THE JUDICATURE ACT, CAP.16 AS AMENDED

#### AND

## IN THE MATTER OF THE JUDICATURE (JUDICIAL REVIEW) RULES

### AND

# IN THE MATTER OF AN APPLICATION FOR JUDICIAL REVIEW

UGANDA ASSOCIATION OF

CONSULTING ENGINEERS LIMITED ::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

# VERSUS

- 1. THE PRIME MINISTER OF THE REPUBLIC OF UGANDA - 2. PUBLIC PROCUREMENT AND DISPOSAL OF ASSETS AUTHORITY - 3. THE ATTORNEY GENERAL :::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT

BEFORE: HON. JUSTICE SIMON PETER M. KINOBE

RULING

13th June 2025

#### BACKGROUND

The applicant filed Misc. Cause NO.182 OF 2024 and later Misc. Application No. 130 of 2024.

The Applicant brought the Miscellaneous cause under Articles 28, 42, and 44 of the Constitution and Section 36 of the Judicature Act Cap. 16, Section 98 of the Civil Procedure Act, Rules 3, 4, and 6 of the Judicature (Judicial Review) Rules, SI No.11 of 2009 for;

- 1. A declaration that clause 2.0 (ii) of the PPDA guidelines No.3 of 2024 (Performance and Bid Securities) is illegal, irrational, in bad faith and unreasonable. - 2. A declaration that the directives issued by the 1st Respondent in her letter dated 19th June 2024 are illegal, irrational, in bad faith, unreasonable and in breach of the rules of natural justice. - 3. An order of certiorari quashing the clause 2.0 (ii) of the 2nd Respondent's Guideline No.3 of 2024 on bid and performance securities. - 4. An order of certiorari quashing the directives of the 1st Respondent requiring consulting engineers on government projects to provide performance guarantees. - 5. An order of certiorari quashing the 1st Respondent's directive that the consultants' contract sums should not be fully paid out when the works are not yet complete and that all consultancy contracts should be designed and structured in such a manner that a consultant is only paid on the basis of the physical progress of the works contract.

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- 6. An order prohibiting the 1st , 2 nd and 3rd Respondents from enforcing the 1st Respondent's directives contained in her letter dated 19th June 2024. - 7. An order of prohibition against the Respondents from enforcing Clause2.0(ii) of the PPDA Guidelines No.3 of 2024. - 8. An injunction restraining the 1st Respondent and the 1st Respondent's agents or servants from enforcing the directives contained in the 1st Respondent's letter of 19th June 2024. - 9. Costs of the application

The application is supported by an affidavit by Dr. Ronald Musenze. The grounds of the application are set out in the affidavit of the applicant but briefly are that;

- a) The applicant is a company limited by guarantee which represents the interests of its members and that it represents Uganda through its affiliation to the International Federation of Consulting Engineers. - b) The 1st respondent visited construction projects in Kampala capital city and made findings regarding performance of engineers in government infrastructure projects. - c) The 1 st respondent did not accord the consulting engineers an opportunity to be heard. - d) Based on these findings, the 1st Respondent issued directives affecting applicant's members. - e) The said directives are illegal, arbitrary, irrational and affront to the applicant's right to a fair hearing.

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- f) That the directives contravene the PPDA Act and Regulations. - g) That the application ought to be granted on account of illegality, breach of the rules of natural justice, irrationality, arbitrariness, *ultra vires* and unreasonableness.

The 2nd Respondent filed two affidavits in reply to oppose the application. The grounds upon which the application was opposed are contained in the affidavit sworn by Mary Akiror and are briefly that;

- a. The PPDA Act does not mandate the 2 nd respondent to solicit views or opinions of the public providers when undertaking any of its functions. - b. The 2nd respondent has the mandate to issue the guidelines it issued under Section 8(1)(f) of the PPDA Act Cap. 205. - c. The application was fatally defective, lacked merit and should be dismissed.

Additional grounds of opposition are contained in the second affidavit filed by Uthman Segawa, and briefly are briefly that;

- a) The requirement for performance security is for the procurement of consultancy services under the open domestic or international bidding methods only and not for all bidding methods. - b) The respondent held a meeting with the applicant's representatives to find feasible solutions to address the applicant's concerns.

The 1st and 3rd Respondents did not file affidavits in reply.

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#### REPRESENTATION

The applicant was represented by Augustine Idot Joachim Kuntakinte.

The Respondents were collectively represented by Ochol Said Kiwanuka.

#### ISSUES FOR DETERMINATION

1. Whether the application is amiable for Judicial review.

#### DETERMINATION

The parties filed their submissions which I have duly considered in this application together with the affidavit evidence for both parties. I note that the 1st and 3 rd respondents did not file their affidavits in reply or submissions. I will therefore proceed with what is on record to render my decision.

I also note that it is agreed by both parties that the second respondent is a public body and therefore a subject of Judicial Review. I will therefore not delve into the definition of a public body and whether the 2 nd respondent falls within that category as this is already settled by agreement of both parties and by law.

I have also zeroed down on what I consider the cardinal conflict for resolution in this application. I will also concentrate this ruling on the conflict between the applicant and the 2nd respondent because the 1st respondent does not have the legal authority to control and or influence the decision of the second respondent. The second respondent is established and empowered under Section 6 of the Public Procurement and Disposal of Public Assets Act Cap 205 to act independently in the conduct of its affairs. It would therefore follow that any directives from the 1st

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respondent would be interpreted as merely advisory and not mandatory. It would be unfair to make a decision based on the utterances of the 1 st respondent on issues that are not binding on the 2 nd respondent and on issues that are advisory in nature that ought to be investigated and interrogated before any policy formulation. Accepting a cause of action based on advisory statements would open a pandora box to endless litigation and would in turn stifle both policy formulation and the guaranteed freedom of expression.

I also note that the 3rd respondent was sued in its capacity as the cardinal representative of government and in this case the 1st respondent.

The applicant's major contention is that the 2 nd respondent acted illegally and irrationally when it passed Guidelines No.3 of 2024 requiring the members of the applicant to furnish both professional indemnity and performance guarantees.

That this was done without consulting them contrary to Section 65 of the Public Procurement and Disposal of Public Assets Act Cap 205. That this requirement is bound to make the course of business for the applicant's members unnecessarily costly. That these guidelines and the requirements set there in are contrary to the international standards and practices as set out in the FIDIC rules.

The respondents on the other hand contend that the guidelines were passed in accordance with the law and within their mandate. That there was nothing illegal or irrational about the guidelines. That there is no requirement whatsoever for them to consult anybody and that the FIDIC rules are only persuasive and not binding or mandatory on the 2nd respondent.

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Both parties relied on a plethora of authorities to define and set the law. I fully agree with the principles in the said authorities but find some of them distinguishable from this particular application.

Judicial Review is the process by which court exercises its' supervisory jurisdiction over the proceedings and decisions of subordinate courts, tribunals and any other bodies or persons who carry out quasi-judicial functions or who are charged with the performance of public acts and duties (See; - rule 2(1) of the Judicature (Judicial Review) Rules 2019)

The principles governing Judicial Review have been set out in various authorities and thus the law on Judicial Review has been settled. I therefore find no reason to regurgitate the same herein in detail.

Judicial review is concerned with the process through which a decision is arrived at. It is not concerned in any way whatsoever with the correctness of the decision. It is intended to check the excesses that may occur in the exercise of judicial power.

Judicial review is not concerned whatsoever with and does not deal with private rights. (see; - MC No. 235 of 2024 Byaruhanga John Patrick Vs Commissioner for Land registration)

Private rights have been defined as what is proper under law morality or ethics, something that is due to a person by just claim, legal guarantee or moral principle a power privilege or immunity secured to a person by law a legally enforceable claim that another will do or will not do. Right is correlative to duty. Where there is no duty there can be no right, but the converse is not necessarily true where there may be

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duties without rights. In order for a duty to create a right it must be a duty to act or forbear. (see; - the Black's Law Dictionary 10th edition)

Judicial review is mainly premised on illegality, procedural impropriety and irrationality. For an application of Judicial Review to succeed the applicant must prove any of the above grounds.

Judicial review should not be used by parties to stifle the inherent statutory obligations of entities against which they complain, in other words court shall not entertain an application that is brought to challenge the legal correctness of a decision that was made rightly within the course of authority or duty and under the provisions of law. The purpose of judicial review is to ensure that the individual receives fair treatment, not to ensure that the authority after according a fair treatment reaches on a matter it is authorized or enjoined by law to decide, for itself a conclusion which is correct in the eyes of the court (see;- Chief Constable Of North Wales Police Vs Heavens (1982)3 All ER 108)

#### ILLEGALITY

4. Illegality is when the decision-making authority commits an error of law in the process of taking or making the act, the subject of the complaint. Acting without jurisdiction or *ultra- vires*, or contrary to the provisions of a law or its principles, are instances of illegality. (see; Real Task Agencies Limited Vs Uganda Revenue Authority and 2 Ors Mc No.069 Of 2023 (HC)

13th June 2025 The applicant contends that the 2nd respondent's Guidelines No.3 of 2024 are illegal because they were enacted contrary to the mandatory provisions of Section 65 of the Public Procurement and Disposal of Public Assets Act Cap 205. That the mandate under Section 6 the Public Procurement and Disposal of Public Assets Act Cap 205 can only be exercised in strict compliance with Section 65 the Public Procurement and Disposal of Public Assets Act Cap 205.

In reply, the 2 nd respondent submits that Section 65 of the Public Procurement and Disposal of Public Assets Act Cap 205 which the applicant seeks to rely on, is not directed to the 2 nd respondent as a regulator but to procuring and disposing entities to which the 2 nd respondent issues the guidelines in its capacity as regulator.

Section 65 of the Public Procurement and Disposal of Public Assets Act Cap 205 provides that;-

*"Procuring and disposing entities shall at all times use industry standards defined and codified by internationally recognized trade associations and professional bodies in the appropriate field".*

Procuring and disposing entity is defined under Section 2 of the Public Procurement and Disposal of Public Assets Act Cap 205. It states that;

*"procuring and disposing entity" means*

- *a) a Ministry of Government,* - *b) a district council or a municipal council,*

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- *c) a body established by an Act of Parliament, which receives public finances from the Consolidated Fund and related special finances expended through the capital recurrent budgets, whatever form these may take,* - *d) a company registered under the Companies Act in which Government or a procurement and disposing entity* - *i. controls the composition of the Board of Directors of the company;* - *ii. is entitled to cast, or controls the casting of more than 50 percent of the maximum number of votes that may be cast at the general meeting of the company; or* - *iii. controls more than 50 percent of the issued share capital of the company, excluding any part of the issued share capital that does not carry a right to participate beyond a specified amount in the distribution of profits or capital;* - *e) an entity, not being of Government to which section 2(1)(d) applies; and includes-* - *f) a commission established under the Constitution or under an Act of Parliament;* - *g) a public university and a public tertiary institution established under the Universities and Other Tertiary Institutions Act;* - *h) Bank of Uganda except in exercise of the functions specified in section 4 of the Bank of Uganda Act; and* - *i) any other procuring and disposing entity as may be prescribed by the Minister.*

## Section 8 provides for the functions of the authority it provides that;-

- "1) *Functions of the Authority are;-* - *a) to advise procuring and disposing entities on the application of this Act and regulations and guidelines made under the Act……."*

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## *Section 134 on guidelines provides,*

*" For the better carrying out of the object of and functions under this Act, the Authority shall issue and Gazette guidelines".*

It is clear from the definition of a procuring and disposing entity that Section 65 of the Public Procurement and Disposal of Public Assets Act Cap 205 does not apply to the 2nd respondent. I find that this provision is intended for the entities that the 2nd respondent regulates. Therefore, in exercising its mandate under Section 8 and 134 of the Public Procurement and Disposal of Public Assets Act Cap 205, Section 65 of the Public Procurement and Disposal of Public Assets Act Cap 205 would have no relevance or bearing to the 2 nd respondent's function under the said sections. This ground on illegality fails.

I also note that the FIDIC guidelines are persuasive in nature and not mandatory.

FIDIC refers to the International Federation of Consulting Engineers and Designers, that was founded in the 1960s to standardize engineering agreements around the world. These contracts are called "FIDIC Contracts" because they are all issued under the auspices of the society. They were developed to govern the construction of large, complex engineering projects and designed to minimize disputes and to ensure a fair distribution of risk. This initiative was led by Dr. Henry Higginson, who was then chairman of the board at the British construction company Balfour Beatty and a former president of the Institution of Civil Engineers in Great Britain. The FIDIC contract is important because it provides a way for parties to agree on a set of rules which will govern their relationship. It also helps to ensure that all parties have an understanding of their responsibilities and obligations.

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While the FIDIC guidelines are a good reference point, I find that these guidelines cannot and do not oust the jurisdiction, mandate and authority of the 2nd respondent to issue guidelines. The FIDIC guidelines themselves have a caution that;

"*This document was produced by FIDIC and is provided for informative purposes only. The contents of this document are general in nature and therefore should not be applied to the specific circumstances of individuals. Whilst we undertake every effort to ensure that the information is complete and up to date, it should not be relied upon as the basis for investment, commercial, professional or legal decisions*"

These guidelines bear in mind that a contracting party may have peculiar circumstances that would render the said guidelines unsuitable.

Making the FIDIC guidelines binding as the set international standard to be followed by the respondent would set a very dangerous precedent, cause an injustice and would stifle the mandate of the 2 nd respondent making it impractical to regulate an industry that is already grappling with problems. This as a ground for illegality fails.

## PROCEDURAL IMPROPRIETY

Procedural Impropriety is when there is a failure to act fairly on the part of the decision-making authority in the process of taking a decision. The unfairness may be in non-observance of the rules of natural justice or failure to act with procedural fairness towards the one to be affected by the decision. It may also involve a failure to adhere to and observe procedural rules expressly laid down in a statute or legislative instrument by which such authority exercises jurisdiction to make a decision (see; HC-MC No.059 of 2016, Ignatius Loyola Malungu Vs IGG)

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While it is good practice to consult stakeholders before guidelines are passed, Section 8 and Section 134 of the Public Procurement and Disposal of Public Assets Act Cap 205 do not make it mandatory for the 2nd respondent to consult or hold consultative meetings before passing any guidelines. Therefore, the failure to consult cannot render the guidelines issued by the 2nd respondent illegal and or irrational. The second respondent can only be blamed for procedural impropriety if there is a clear provision of law imposing the duty to consult. In this case, I find none. (see Silver Kayondo Vs Bank Of Uganda MC 109 of 2022). This ground too fails.

I therefore find that the 2nd respondent did not act illegally in passing Guidelines No.3 of 2024.

## IRRATIONALITY

Irrationality is when there is such gross unreasonableness in the decision taken or act done that no reasonable authority, addressing itself to the facts and the law before it would have made such a decision. Such a decision is usually in defiance of logic and acceptable moral standards.

The applicant contends that the requirement for both professional indemnity and performance guarantee for consultancy services under the open domestic and open international bidding methods is contrary to Section 65 of the Public Procurement and Disposal of Public Assets Act Cap 205 that mandates procuring and disposing entities to at all times use industrial standards defined and codified by internationally recognized trade associations and professional bodies in the appropriate field like FIDIC.

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That FIDIC has set professional indemnity insurance and public liability insurance as the globally acceptable standard for security by employers against professional misconduct/ negligence for failure to perform against consulting engineers. (see the FIDIC white Book Clause 9). That Guidelines No.3 of 2024 make the cost of the members of the applicant unnecessarily high.

The 2nd respondent on the other hand contends that is intended to protect the government of Uganda from risks arising from professional negligence and other breaches including poor performance.

This issue has already been dealt with comprehensively above. However, the cost may become an issue of irrationality, especially if the two instruments required serve the same purpose.

A Performance guarantee is the agreement between a client and a contractor that ensures that the contractor will fulfill its obligations under the contract. It serves as some form of guarantee to the client in the event that the contractor breaches the contract or fails to complete the works. In this respect, the Bank gives an undertaking to the client that if the contractor fails to perform its duties as per the contract, the bank will pay the damage up to the guaranteed amount. This guarantee includes a clause to protect the client against the losses incurred if the contractor fails to perform.

Professional liability insurance, also called professional indemnity insurance, is a form of liability insurance which protects professional advising, consulting, and service-providing individuals and companies from bearing the full cost of negligence. Professional indemnity protects service providers, consultants and companies

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against claims of financial losses resulting from alleged or actual negligence during the fulfilment of a professional service.

From the definitions above, a Performance guarantee and Professional liability insurance provide for two different things. While one provides for nonperformance of a contract, the other provides cover for negligence that may arise in the process of performing a contract. The two covers are exclusive. Requiring both may be costly but cannot be held to be irrational. This ground too fails.

I therefore dismiss this application with costs to the respondents.

…………………………………………………

SIMON PETER M. KINOBE JUDGE

DATE: 13th June 2025