Private international Law has stagnated in Africa largely because Africa has largely been excluded from, and not actively engaged with, many of the contexts in which the subject’s development has been promoted in other jurisdictions. As opposed to Public International Law which is the law of the political system of nation-states, it provides a barometer for measuring the extent to which a country’s legal system engages with other legal systems -Richard Fripong Oppong (2015)[1]
According to McKeever (2006)[2] it is a distinct and self-contained system of law, independent of the national systems with which it interacts, and deals with relations which they do not effectively govern. Private International law also known as conflict of laws deals with private relations between differing legal jurisdictions and persons both natural and legal (Briggs (2008)).[3] As such, it concerns itself with questions of choice of laws; choice of jurisdiction; harmonization of the laws, conflict resolution; drafting of the contracts especially in commercial transactions.
As a matter of great importance, in an international commercial relationship, legal battles of international character wherein issues of which country’s court should have jurisdiction to try the dispute; which country’s laws should be applied to resolve the dispute; and whether any foreign judgment obtained abroad might be enforceable in the concerned country are bound to arise and these will call for complex analysis of Private International laws of various jurisdictions to enable parties settle their differences.
This paper attempts to examine the extent to which private international law is applicable to commercial transactions in Uganda with specific emphasis on the decided case of Bank of Uganda v Transroad Ltd.[4]
A brief on Bank of Uganda versus Transroad Ltd
This case arose as an appeal from the decision of court of appeal of Uganda which held that the appellant had submitted to the jurisdiction of the UK Court.
The facts
The respondent entered into a contract in the UK with the appellant to supply 300 railway wagons and spares from India to Mombasa for US $19,808 per wagon and the sum due payable in eight installments by promissory notes endorsed by the appellant. The respondent performed its part of the contract and consequently the appellant partially performed its part where upon the respondent filed a suit in UK against the appellant for the balance of the contract price. The appellant was served with court process but neither appeared nor defended itself thus an ex-parte judgement was entered for a sum of US $ 5,533,550.80 or its sterling equivalent.
The appellant subsequently applied to the UK Court to set aside the judgment on the grounds of lack of jurisdiction by the UK court and thus a consent judgment was entered dismissing the application to set aside judgment and also discharging with costs the garnishee Order Nisi.
On obtaining extension of time, the respondent applied to the High Court of Uganda for leave to register the UK Judgment under section 3 of the Reciprocal Enforcement of Judgements Act Cap 47 (now section 2 of the Reciprocal Enforcement of Judgments Act Cap 21 laws of Uganda) and the high court held that the appellant had not voluntarily appeared but submitted to the jurisdiction of the UK court and thus granted leave to register the judgment. On appeal, the court of Appeal upheld the position of the High Court and further held that the appellant had voluntarily appeared and also submitted to the jurisdiction of the UK Court, hence this appeal.
Holding
The Supreme Court on whether the appellant had voluntarily submitted to the jurisdiction of the UK court, overall held that the appellant had not.
Court held that ‘the provisions of section 3(2)(b) of the Reciprocal Enforcement of Judgments Act (cap 47 as it then was), must be satisfied. It must be shown that the appellant agreed to be bound by the decision of the foreign court.’ This position must be apparent from the contract obtaining between the parties. The agreement to be bound by decisions of a foreign court must be express or implied in a contract between the parties entering into a commercial dealing. Various rules of interpretation can be invoked by courts to determine the existence of the provision in the Contract.
Court further noted that “it would appear on the authorities that an appearance merely to protest the jurisdiction does not amount to submission. I do not accept the proposition that consent by the appellant to have the application set aside with costs amounted to submission to the jurisdiction of the UK Court.”
Justice Wambuzi C.J (as he then was) observed in the lead judgment, ‘I wish to add, however, another proposition relevant to this appeal that what constitutes submission where a defendant appears in Court are acts of the defendant on appearance before the Court not subsequent to the appearance”. In opining so, he considered the action of not appealing to a higher court on the merits of the case.
A further instructive commentary on this issue was offered by Justice A.H.O Oder (as he then was) when he stated that
“such acts need not be only those on or before appearance before the foreign Court which has passed a judgment against the defendant. While it is fairly clear that in the instant case the appellant’s conduct after the ex-parte judgment was entered did not amount to submission under section 3(2)(b), this may not be so in every case. Conduct or acts of a defendant subsequent to its appearance or to an ex-parte judgment may constitute a submission. An example of such conduct may be an acceptance (express or implied) to be bound by the ex-parte judgment. In my view no hard and fast rule can be laid down as to what constitutes submission under section 3(2)(b). Each case must depend on its own facts or circumstances”.
This commentary reveals the difficulty faced by courts to set down specific rules for consideration. It falls therefore that parties to a contract must conclusively deal with the question of jurisdiction and choice of law. To avoid endless and time wasting litigation on interpretation of such matters, draftsmen and solicitors constructing terms of contracts must of necessity enshrine in clear, precise and uncertain terms the provisions as to choice of law and jurisdiction.
The Learned Justices observed that the contract in question did not ‘specify what law would govern the contract’. In overturning the judgments of Court of Appeal and High Court, it was observed that
“where a defendant voluntarily appears in a case in a foreign court and takes some action in the case, without contesting jurisdiction, such defendant is taken to have submitted to the jurisdiction of that Court and puts himself in a position that he must obey the orders of such a court. If the defendant contests jurisdiction but also takes some other action related to the merits of the claim, he will be taken to have submitted to jurisdiction of the court and therefore obliged to obey the order of that court”
In this case, the appellant went to the UK Court to protest jurisdiction of that court. They did not continue to protest the merits of the claim.
This decision in a sense settled the dust on what a party ought to do to protest the jurisdiction of a foreign court in deciding a dispute between two conflicting parties in international private law.
The relevance of Private International Law to Commercial Practice in Uganda
A careful analysis of the Bank of Uganda v Transroad Ltd [5]case raises key aspects of great concern to a private international law practitioner in Uganda. These include: –
Choice of Law:
A contract is international in private international law when it contains a foreign element or is between parties operating or who are located in more than one jurisdiction. In this case, a contract is entered into by a UK Company and the government of Uganda and the subject matter (railway wagons) is located in India. When a conflict arose as to enforcement of the contract, as rightly observed by Justice H.O Oder, the parties had not chosen the law that would govern them.
In such instances it becomes paramount to determine, even by litigation, the conflict of laws to determine which law governs the contract. And where there is a complexity as to what law to apply, solace may be sought in the English decision in Macmillan Inc v Bishopsgate Trust PLC[6]where court looked at the issue of conflict of laws as opposed to characterization of the claim to determine the dispute.
While engaging in international commercial dealings, or drafting contracts in private international law by a lawyer, parties ought to be careful to specify the choice of law applicable to govern the contract. Where the contract in question does not contain details as to which law is applicable, circumstances surrounding the particular case must be carefully deciphered in determining the law applicable. In the Bank of Uganda case, the English law was adopted on the basic consideration that the contract was entered into in the UK, one of the parties was resident in the UK and the decision to file the case in the UK clothed the courts with the requisite jurisdiction.
Choice of Jurisdiction:
The choice of jurisdiction is a pertinent aspect that emanates from the Bank of Uganda case and is pertinent for commercial law practitioners in Uganda. The question of jurisdiction must closely consider a number of factors: are the court systems or other alternative dispute resolution mechanisms well established; are they efficient in making decisions; are the decisions of other jurisdictions enforceable in that jurisdiction; are there municipal laws or policies that may impede the enforce-ability of the judgment.
This was not an issue closely envisaged by parties in the Bank of Uganda case. After Transroad Ltd obtained its judgment from the UK courts and a Garnishee order against the accounts of Bank of Uganda contrary to the provisions of the State Immunity Act which protected the property of Uganda from being attached within UK, it became hard to enforce their judgment in the United Kingdom. Had these considerations been made, Transroad Ltd should have chosen either the Ugandan or Indian Jurisdiction to handle its dispute in order to seek to avoid the implications of a local law in the United Kingdom which barred the enforcement of the court order.
Dispute resolution:
Dispute resolution and the specific mechanism of resolution of conflict in a private international law and international commercial practice are key. Over the years’ dispute resolution through courts of law have been seen as costlier, and public and as such arbitration or other alternative dispute mechanisms are continually being embraced as ideal and less costly in terms of time and resources and as such should be embraced by practitioners in Uganda.
In the Bank of Uganda case, parties failed to consider arbitration or other alternative dispute resolution mechanisms as avenues for resolving disputes arising from the contract. The lack of an arbitration clause in the contract is to blame for the trial mechanism embraced by the parties.
Now with Uganda being a party to various treaties that embrace Arbitration as a major dispute resolution mechanism, and having enacted the Arbitration and Conciliation Act, it is only proper, all disputes involving international transactions should be submitted for arbitration or alternative dispute resolution forums.
Practitioners and the business community should be encouraged to embrace alternative dispute resolution mechanisms as opposed to courts of law. Uganda should consider a quicker method of filing and service of claims, especially electronically to enhance the process of resolving disputes. An independent, private sector led, dispute resolution or arbitration Centre that is well equipped and well-funded to ensure quicker dispute resolution processes should be set up.
Enforcement of foreign Judgments:
Another consideration for private international practitioners in Uganda is the question of enforcement of foreign judgments. Prior to the case of Bank of Uganda which largely considered the issue of protesting jurisdiction of foreign courts and the registration of such judgments for enforcement in Uganda, proceedings herein dealt with the law. This was the major conflict testing the veracity of the laws and the judicial system’s appreciation of the subject.
It was clearly espoused that for foreign judgment to be enforced in Uganda, it must emanate from a recognized court or judicial system which has a reciprocal arrangement with Uganda and the judgment should be registered in the High Court of Uganda before it can be enforced within Uganda. There are other provisions within the law, especially in the Arbitration and Conciliation Act, which recognize arbitral awards from other jurisdictions such as ‘New York Convention awards’ in pursuance of an arbitration agreement in the territory of a State which is party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”); and ‘ICSID Convention award’ pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of other States (the “ICSID Convention”) and thus are enforceable in Uganda.[7]
Knowledgeable Counsel of Contracting Parties:
As a key consideration, the parties that are contracting are key in determining the choice of law and jurisdiction. In the Bank of Uganda case, a key consideration was the involvement of a state party with a private party in commercial transactions. State parties normally enjoy some sovereign immunity in certain circumstances and where they are a contracting party; the non-state party should always seek a waiver of the state-party’s immunity and if such is not easily obtained, then seek a governing law or jurisdiction that is more favorable to that party. Transroad Ltd should have made that consideration while contracting with Uganda. This is a key lesson for Private law practitioners in Uganda. Legal Counsel for contracting parties must be knowledgeable of the best interests of their clients in order to negotiate better contracts in International Trade transactions.
Careful Draftsmanship of Contracts
For Private International Law practitioners in Uganda, a key consideration is the need to take due diligence and care in drafting contracts of international trade between parties. They should consider with carefulness the governing laws, the jurisdiction to submit disputes to, the manner in which the dispute ought to be resolved between the parties, the issues of any immunities enjoyed by a particular party in a transaction besides the percentages of pays, the time of execution among other key terms. Where parties use some standard contracts such as INCOTERMS to govern particular aspects of their transactions, the parties should be free to decide how the whole transaction is to be governed. The lawyers involved in these transactions should as such consider these issues and more with great carefulness.
Conclusion
Private International Law and its practice determine international investments through building investor confidence in the dispute resolution mechanisms which in turn attracts investments and economic development of a country. Concerns of choice of law, choice of jurisdiction, dispute resolution mechanisms, enforcement of foreign judgments, knowledgeable and experienced legal counsel become pertinent considerations to make. These implications as discussed are critical for a developing country like Uganda. Aligning all laws and practices to engender their realization will contribute to the economic, social and political well-being of Uganda.
[1] Private International Law in Africa: The Past, Present and Future, Richard Fripong Oppong; http://conflictoflaws.net/2007/private-international-law-in-africa-past-present-and-future/, visited 21st March 2015
[2] Researching Public International Law, Kent McKeever, 2006; http://library.law.columbia.edu/guides/Researching_Public_International_Law#Definitions_of_International_Lawvisited 21st March 2015
[3] Briggs (2008), The Conflict of Laws pp.2-3
[4] Civil Appeal No.3 of 1997 (unreported); http://www.ulii.org/ug/judgment/supreme-court/1998/7 visited 21st March 2015
[5] Supra
[6] [1995]1 WLR 978 on appeal [1996] 1 WLR 387
[7] Sections 38 and 45 of the Arbitration and Conciliation Act Cap 4 Laws of Uganda
