Wakilii

British American Tobacco v A.G. of Uganda (Application 13 of 2017)

East African Court of Justice · [2018] EACJ 86 · 2018 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for interim orders arising from Reference No. 7 of 2017 challenging the legality of Uganda's Excise Duty (Amendment) Act No. 11 of 2017
Decision
Interim orders granted staying enforcement of the impugned legislation against the Applicant pending determination of the underlying Reference

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The East African Court of Justice granted interim orders staying the application of Uganda's Excise Duty (Amendment) Act No. 11 of 2017 to the Applicant pending determination of the underlying Reference. The Court held that the Reference raised serious triable issues regarding whether the Act discriminated against goods from EAC Partner States in contravention of the Treaty and Protocols. The Applicant demonstrated it would suffer irreparable business disruption and reputational injury that could not be adequately compensated by damages. The balance of convenience favoured the Applicant, as the Respondent would suffer less injury from temporary suspension of additional duty collection than the Applicant would suffer from paying potentially unwarranted duties.

Outcome

Interim orders granted staying enforcement of the impugned legislation against the Applicant pending determination of the underlying Reference

Facts

British American Tobacco Uganda Ltd relocated its cigarette manufacturing from Uganda to Kenya, relying on the EAC as a single customs entity. Uganda's Excise Duty Act 2014 initially applied uniform excise duty to cigarettes from all EAC Partner States. In 2017, Uganda amended the Act to distinguish between locally manufactured and imported goods. The Uganda Revenue Authority reclassified BAT's goods from Kenya as imported goods subject to higher excise duty, despite BAT having already paid duty treating them as locally manufactured. BAT filed Reference No. 7 of 2017 challenging sections 2(a) and (b) of the Excise Duty (Amendment) Act No. 11 of 2017 as discriminatory and contrary to the EAC Treaty and Protocols. BAT then filed this Application seeking interim orders to stay the operation of the amended law pending determination of the Reference.

Issues

  1. Whether the Applicant established a serious triable issue warranting the grant of interim orders.
  2. Whether the Applicant would suffer irreparable injury that could not be adequately compensated by damages if interim orders were not granted.
  3. Where the balance of convenience lies between granting and refusing the interim orders sought.

Orders

  • Interim orders granted staying the application of the Excise Duty (Amendment) Act No. 11 of 2017 to the Applicant pending determination of Reference No. 7 of 2017.
  • Costs of the Application to abide the outcome of the Reference.
  • Reference No. 7 of 2017 to be fixed for hearing forthwith.

Rules and key headnotes

Interim Orders — Serious Triable Issue — Test for Establishment
For purposes of granting interim orders, a serious triable issue is established where the substantive suit discloses a cause of action, meaning the claim is not frivolous or vexatious and presents a serious question to be tried. Within the context of EAC Community law, a cause of action exists where the Reference raises a legitimate legal question under the Court's legal regime as spelt out in Article 30(1) of the Treaty, specifically where it is contended that the matter complained of violates national law of a Partner State or infringes any provision of the Treaty.
Interim Orders — Prima Facie Case Distinguished from Serious Triable Issue
A prima facie case and a serious triable issue are not synonymous and should not be used interchangeably. A prima facie case necessitates resolution of conflicts of evidence on affidavit as to facts on which claims of either party may ultimately depend, which is a matter for trial. A serious triable issue is established where a court is satisfied that the claim is not frivolous or vexatious, requiring the court to investigate the merits to a limited extent only to determine whether the claimant's cause of action has substance and reality.
Interim Orders — Irreparable Injury — Business Disruption and Reputational Damage
Damages are inadequate where the defendant's conduct has the effect of killing off a business before it is established, causing loss of goodwill or business disruption. Reputational injury arising from deregistration of a listed company from a Securities Exchange for non-compliance with financial undertakings would negate the company's credibility in the estimation of the public. The difficulty in assessment of damages arising from loss of goodwill, reputation or disruption of business poses the very real possibility of an inadequate award of damages, rendering such injury irreparable for purposes of interim orders.
Interim Orders — Balance of Convenience — Weighing Competing Interests
In determining the balance of convenience, the court must weigh the harm that the respondent is likely to suffer if the injunction is granted against the harm that the applicant stands to suffer if it is not granted, attaching particular importance to whether the harm suffered by either party can be adequately compensated by damages. The object of an interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages, but this need must be weighed against the corresponding need of the defendant to be protected against injury resulting from having been prevented from exercising his own legal rights.
Interim Orders — Status Quo — Determination of Relevant Point in Time
The relevant status quo to be preserved in applications for interim orders is the state of affairs existing during the period immediately preceding the issue of the writ claiming the permanent injunction or, if there is unreasonable delay between the issue of the writ and the motion for an interlocutory injunction, the period immediately preceding the motion. The applicable status quo ante is the state of affairs before a respondent commenced the conduct complained of by the applicant, unless there has been unreasonable delay in filing the application for interim orders.
Principal Legislation — Amenability to Interim Injunction
For purposes of the grant of an interim injunction, the distinction between subsidiary and principal legislation is redundant. It is commonplace for courts to declare principal legislation illegal or strike it off the law books. Courts can grant interim injunctions in respect of impugned principal legislation if the justice of the matter so dictates.
Regional Integration — EAC Customs Union — Non-Discrimination Principle
The lengthiness or costliness of a law enactment process cannot negate the obligation upon lawmakers to enact national laws that are in compliance with Partner States' obligations under the EAC Treaty and its attendant Protocols. The fact of costliness of an enactment process cannot be used to mitigate against a party's right to proper application of a law or amount to irreparable injury to a party that enacted it in the event that the application of such law was stayed temporarily until disposal of a Reference challenging its compliance with the Treaty.

Legislation cited (21)

  • Treaty for the Establishment of the East African Community Article 6(d)
  • Treaty for the Establishment of the East African Community Article 6(e)
  • Treaty for the Establishment of the East African Community Article 7(1)(c)
  • Treaty for the Establishment of the East African Community Article 23(1)
  • Treaty for the Establishment of the East African Community Article 30(1)
  • Treaty for the Establishment of the East African Community Article 39
  • Treaty for the Establishment of the East African Community Article 75(1)
  • Treaty for the Establishment of the East African Community Article 75(4)
  • Treaty for the Establishment of the East African Community Article 75(6)
  • Treaty for the Establishment of the East African Community Article 80(1)(f)
  • Protocol on Customs Union of 2004 Article 15(1)
  • Protocol on Customs Union of 2004 Article 15(2)
  • Common Market Protocol Article 4
  • Common Market Protocol Article 5
  • Common Market Protocol Article 6
  • Common Market Protocol Article 32
  • Excise Duty Act No. 11 of 2014
  • Excise Duty (Amendment) Act No. 11 of 2017 s.2(a)
  • Excise Duty (Amendment) Act No. 11 of 2017 s.2(b)
  • East African Court of Justice Rules of Procedure Rule 21
  • East African Court of Justice Rules of Procedure Rule 73

Cases cited (18)

  • Timothy Alvin Kahoho v Secretary General of the EAC (Application No. 5 of 2012)
  • American Cyanamid Company v Ethicon Limited [1975] AC 396
  • Samsung Electronics Limited v Apple Incorporation [2012] EWCA Civ 1223
  • European Holdings B.V & Anor vs. Ojaoto Arua Misc. Appl. No. 457 of 2006
  • Legal Brains Trust vs. Attorney General & Another Misc. Appl. No. 638 of 2014
  • Lansing Linde Limited v Kerr [1991] 1 All ER 417
  • Cayne v Global Natural Resources PLC [1984] 1 All ER 225
  • Democratic Party & Mukasa Fred Mbidde v Secretary General of the EAC & Attorney General of Uganda (Application No. 6 of 2011)
  • Giella v Cassman Brown [1973] EA 258
  • East African Industry v True Foods [1972] EA 420
  • Mbidde Foundation Ltd & Margaret Zziwa v Secretary General of the East African Community (Consolidated Applications 5 & 10 of 2014)
  • Henry Kyalimpa v Attorney General of Uganda (Application No. 3 of 2013)
  • Prof. Peter Anyang' Nyong'o & 10 Others vs. The Attorney General of the Republic of Kenya & 3 Others
  • FORSC & Others v Attorney General of Burundi & Another (Application No. 16 of 2016)
  • The Siskina [1979] AC 210
  • Sitenda Sebalu v Secretary General of the East African Community & Others (Reference No. 1 of 2010)
  • Simon Peter Ochieng & Another v Attorney General of Uganda (Reference No. 11 of 2013)
  • Garden Cottage Foods v Milk Marketing Board [1984] AC 130

Full judgment

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British American Tobacco v A.G. of Uganda (Application 13 of 2017) [2018] EACJ 86 (25 January 2018)
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.