Wakilii

Alcon International Limited v Standard Charted Bank of Uganda and Others (Reference 6 of 2010)

East African Court of Justice · [2013] EACJ 6 · 2013 Reference Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Reference to the East African Court of Justice seeking interpretation and application of Treaty provisions regarding cross-border investment protection and enforcement of a bank guarantee
Decision
Reference dismissed with no order as to costs; Applicant directed to pursue original suit HCCS No. 1255 of 1998 in Uganda

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The East African Court of Justice dismissed the reference on grounds that the 1st and 3rd Respondents were improperly sued as they are neither Partner States nor Institutions of the Community. The Court held it lacked jurisdiction over acts occurring before the Protocol came into force on 1 July 2010, applying the principle of non-retroactivity of treaties under Article 28 of the Vienna Convention. The Court further found no cause of action existed against the 2nd Respondent because the bank guarantee, which formed the substratum of the reference, had ceased to exist following the Supreme Court of Uganda's decision setting aside all prior arbitral and court proceedings.

Outcome

Reference dismissed with no order as to costs; Applicant directed to pursue original suit HCCS No. 1255 of 1998 in Uganda

Facts

Alcon International Limited, a Kenyan construction company, entered into a contract in 1994 with Uganda's National Social Security Fund (NSSF) to complete a building in Kampala for USD 16,160,000. NSSF terminated the contract in 1999 for alleged defaults. After arbitration proceedings, an arbitrator awarded Alcon USD 8,858,469.97. Standard Chartered Bank issued a bank guarantee for this amount. The High Court and Court of Appeal of Uganda upheld the award. However, the Supreme Court of Uganda subsequently set aside the arbitral award and all related court decisions, ordering the original suit to proceed to trial afresh. Alcon filed this reference in the East African Court of Justice on 20 August 2010, seeking enforcement of the bank guarantee and alleging Uganda failed to protect its cross-border investment. The Protocol on the Establishment of the East African Community Common Market came into force on 1 July 2010.

Issues

  1. Whether the reference is properly brought before the Court against the 1st and 3rd Respondents within the meaning of Article 30 of the Treaty, they being neither Partner States nor Institutions of the Community.
  2. Whether the Applicant has a cause of action.
  3. Whether the Court has jurisdiction over acts that took place before the coming into force of the Protocol on the Establishment of the East African Community Common Market.
  4. Whether the reference is time-barred in accordance with Article 30 of the Treaty.
  5. Whether the provisions of the Protocol extended the jurisdiction of the Court for settlement of cross-border disputes.
  6. Whether the Respondents are in breach of the provisions of Articles 127 and 151 of the Treaty as read together with Article 54 of the Protocol by failing to honour the Bank Guarantee.
  7. Whether the Applicant is entitled to the prayers sought in the reference.

Orders

  • Reference dismissed.
  • Each party to bear its own costs.

Rules and key headnotes

Treaty Interpretation — Vienna Convention Principles — Good Faith and Ordinary Meaning
An international treaty among sovereign states must be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose, as provided by Article 31 of the Vienna Convention on the Law of Treaties.
Jurisdiction — Standing to Sue — Partner States and Community Institutions Only
Under Article 30 of the Treaty for the Establishment of the East African Community, only Partner States or Institutions of the Community established by the Summit may be properly sued before the East African Court of Justice; private entities such as banks or court registrars, even if they render services to Community citizens, are not Institutions of the Community and cannot be sued under Article 30.
Treaty Application — Non-Retroactivity Principle — Acts Before Entry into Force
Unless a different intention appears from the treaty or is otherwise established, the provisions of a treaty do not bind a party in relation to any act or fact which took place or any situation which ceased to exist before the date of entry into force of the treaty with respect to that party, in accordance with Article 28 of the Vienna Convention on the Law of Treaties.
Jurisdiction — Temporal Jurisdiction — Protocol on Common Market
The Protocol on the Establishment of the East African Community Common Market, which entered into force on 1 July 2010, does not apply retroactively to acts that took place before that date; the East African Court of Justice lacks jurisdiction to determine disputes arising from acts occurring before the Protocol came into force unless retroactive application is expressly stated or can be inferred from the Protocol's provisions.
Jurisdiction — Fundamental Requirement — Foundation of Judicial Authority
Jurisdiction is the most fundamental issue a court faces in any trial; it is the foundation upon which the judicial edifice is constructed and without jurisdiction, a court cannot proceed to hear and dispose of a case. A court cannot give itself jurisdiction in a case otherwise outside its jurisdiction on grounds of convenience to parties and witnesses.
Cause of Action — Existence of Enforceable Right — Bank Guarantee Set Aside
Where a bank guarantee issued pursuant to an arbitral award and court judgments forms the substratum of a claim, and the Supreme Court subsequently sets aside the arbitral award and all related court proceedings, the bank guarantee ceases to exist and no cause of action remains for its enforcement; the claimant's remedy lies in pursuing the original suit to conclusion.

Legislation cited (9)

  • Treaty for the Establishment of the East African Community Article 30
  • Treaty for the Establishment of the East African Community Article 27
  • Treaty for the Establishment of the East African Community Article 127
  • Treaty for the Establishment of the East African Community Article 151
  • Protocol on the Establishment of the East African Community Common Market Article 29
  • Protocol on the Establishment of the East African Community Common Market Article 54
  • Protocol on the Establishment of the East African Community Common Market Article 55
  • Vienna Convention on the Law of Treaties Article 28
  • Vienna Convention on the Law of Treaties Article 31

Cases cited (4)

  • Modern Holdings (EA) Ltd v Kenya Ports Authority (EACJ Reference No. 1 of 2008)
  • Anyang' Nyong'o and Others v Attorney General of Kenya and Others (EACJ Reference No. 1 of 2006)
  • Emmanuel Mwakisha Majawasi and 748 Others v Attorney General of Kenya (EACJ Appeal No. 4 of 2011)
  • Attorney General of Tanzania v African Network for Animal Welfare (EACJ Appeal No. 3 of 2011)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Alcon International Limited v Standard Charted Bank of Uganda and Others (Reference 6 of 2010) [2013] EACJ 6 (2 September 2013)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.