Wakilii

Transstrack v Damco Logistics Uganda Ltd (Miscellaneous Application No. 394 of 2010)

High Court · [2011] UGCOMMC 202 · 2011 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Preliminary objection to jurisdiction in third-party proceedings arising from a civil suit for indemnification
Decision
Application dismissed — third-party proceedings to continue in the High Court

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that while parties to a contract may agree to submit to the exclusive jurisdiction of a foreign court, only parties to that contract may invoke such a clause. A third party claiming benefits under a contract cannot be bound by an exclusive jurisdiction clause to which they were not a party. The High Court's constitutional jurisdiction cannot be ousted by contract, though courts will enforce contractual forum selection clauses in appropriate cases. Application dismissed with costs.

Outcome

Application dismissed — third-party proceedings to continue in the High Court

Facts

The respondent, as defendant in a civil suit, issued a third-party notice seeking indemnification from the applicant for USD 303,330 for goods stolen in transit. The claim was based on a contract dated 29 October 2004 between Maersk Uganda Limited and Transtrac Ltd. Clause 19 of that contract provided for English law to govern and submitted the parties to the exclusive jurisdiction of English courts. The applicant objected to the High Court's jurisdiction, arguing the contractual clause ousted the court's jurisdiction. Neither the plaintiff nor the defendant in the main suit were parties to the underlying contract. The applicant based its objection on a contractual provision it claimed bound the respondent to pursue claims only in England.

Issues

  1. Whether the High Court has jurisdiction over the applicant in respect of third-party proceedings where the underlying contract contained an exclusive jurisdiction clause submitting to English courts.
  2. Whether a non-party to a contract may invoke an exclusive jurisdiction clause against a party claiming benefits under the contract.
  3. Whether the unlimited original jurisdiction of the High Court under Article 139(1) of the Constitution can be ousted by a contractual clause.

Orders

  • Application for declaration that the High Court has no jurisdiction dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Jurisdiction — Exclusive Jurisdiction Clauses — Privity of Contract
A contractual clause submitting parties to the exclusive jurisdiction of a foreign court can only be invoked by and against parties to that contract. A third party claiming benefits under a contract is not bound by an exclusive jurisdiction clause to which they are not a party and cannot be prevented from pursuing proceedings in the High Court on that basis.
Privity of Contract — Third Party Beneficiaries
It is a fundamental principle of contract law that only a person who is a party to a contract can sue on it or invoke its provisions. While a contract for the benefit of a third party may be enforceable between the promisor and promisee, the third party beneficiary cannot assert rights or be bound by terms of a contract to which they are not a party.
High Court Jurisdiction — Unlimited Original Jurisdiction
The unlimited original jurisdiction of the High Court under Article 139(1) of the Constitution cannot be ousted by an Act of Parliament or by a contractual agreement between private parties. When a court declines to exercise jurisdiction based on an exclusive jurisdiction clause, it is enforcing the parties' contract, not yielding to an ouster of jurisdiction.
Exclusive Jurisdiction Clauses — Discretion to Stay Proceedings
Where parties to a contract have agreed to submit disputes to the exclusive jurisdiction of a foreign court, the High Court has discretion whether to stay proceedings instituted in breach of such agreement. The court's power to stay is not an ouster of jurisdiction but enforcement of the parties' contractual bargain. The onus is on the plaintiff to show it is just and proper for proceedings to continue despite the contractual term.
Exclusive Jurisdiction Clauses — Analogy with Arbitration Clauses
A contractual submission to the exclusive jurisdiction of a foreign court is analogous to an arbitration clause. The court enforces such clauses not because jurisdiction is ousted, but because the court gives effect to the parties' agreement on the forum for resolving their disputes. The discretion to stay proceedings operates in a similar manner in both contexts.

Legislation cited (4)

Cases cited (10)

  • Uganda Telecom v Rodrigo Chacon T/A Andes Alpes Trading (Miscellaneous Application No. 337 of 2008)
  • The Fehmarn [1958] 1 WLR 159
  • David Kayondo v Cooperative Bank (Civil Appeal No. 19 of 1991)
  • Uganda Projects Implementation and Management Centre v Uganda Revenue Authority (Constitutional Appeal No. 2 of 2009)
  • Commissioner General Uganda Revenue Authority v Meera Investments Ltd (Civil Appeal No. 22 of 2007)
  • Scruttons Ltd v Midland Silicones Ltd [1962] 1 All ER 1
  • Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847
  • Shiv Construction v Endesha Enterprises Ltd [1999] 1 EA 329
  • Smith v River Douglas Catchment Board
  • White v John Warrick & Co Ltd

Full judgment

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

Transstrack v Damco Logistics Uganda Ltd (Miscellaneous Application No. 394 of 2010) [2011] UGCommC 202 (8 April 2011)
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.