british american tobacco v ag of uganda application 13 of 2017 2018 eacj 86 25 january 2018

f'! " ., 0 -::;;;-a.:~ .... :;.,,--~ IN THE EAST AFRICAN COURT OF JUSTICE AT ARUS& ·~ FIRST INSTANCE DIVISION 6~- ~ ~ (Coram: Monica K. Mugenyi, Pf; Faustin Ntezilyayo, and Faldhi A. ]undu, J ]) APPLICATION NO. 13 OF 2017 (Arising from Reference No. 7 of 2017) BRITISH AMERICAN TOBACCO (U) LTD ......................... APPLICANT VERSUS THE ATTORNEY GENERAL OF THE REPUBLIC OF UGANDA ....................................... RESPONDENT 25TH JANUARY 2018 Application No. 13 of 2017 Page 1 I..UM.t I [. RULING OF THE COURT Introduction 1. This is an Application by the British American Tobacco (BAT) Uganda Ltd ('the Applicant') for interim orders against the Attorney General of the Republic of Uganda ('the Respondent') pursuant to Article 39 of the Treaty for the Establishment of the East African Community ('the Treaty), and Rules 21 and 73 of this Court's Rules of Procedure. 2. The Applicant is a company incorporated under the laws of Uganda, and is operational and domiciled in the said Partner State. On the strength of the Treaty, the Protocol on Customs Union of 2004, as well as its own internal restructuring; the Applicant opted to move . its cigarrette manufacturing factory from Uganda to Kenya on the understanding that the East African Community (EAC) represented a single customs entity for tariff purposes. 3. In 2014 Uganda enacted the Excise Duty Act No.11 of 2014 , which I inter a/ia made provision for an excise duty on cigarettes that uniforn,ly applied to all such goods originating from any of the EAC Partner States. However, in 2017 the said Act was amended to create a distinction between locally manufactured goods and imported goods. Under the Amended Act, whereas the Applicant's goods were initially treated as locally manufactured goods, they were subsequently :re- classified by the Uganda Revenue Authority (URA) to be goods frorin a foreign country on account of their originating from Kenya, and subjected to the applicable excise duty. !. 1. Application No. 13 of2017 Page 2 L I 4. It is the Applicant's contention that URA's erroneous application of the Excise Duty Act (as amended) amounted to discrimination betw~en I goods originating from Uganda and those from Kenya in so far a~- a ! different duty was imposed on goods from Kenya as opposed to iike I goods from Uganda in contravention of the Treaty and the Proto 01s thereunder. 1I . 5. The Applicant did file Reference No. 7 of 2017 challenging the legJlity I of sections 2(a) and (b) of Uganda's Excise Duty (Amendment) Act l No. 11 of 2017, and relatedly filed the present Application seeking _ to stay the operation of the said law pending the determination of t!hat Reference. At the hearing of the Application, the Applicant ~ as I represented by Mssrs. Kiryowa Kiwanuka and Peter Kauma, while r.s. Margaret Nabakooza, Mr. Richard Adrole and Mr. Sam Tusubira I appeared for the Respondent. i I I Applicant's Submissions I I. 6. Learned Counsel for the Applicant highlighted the principles govern'. ing i the grant of interim injunctions as expounded in the case of Timothy ! Alvin Kahoho vs. The Secretary General of the EAC, EACJ Application No. 5 of 2012, namely proof of a prima facie case lith I probability of success, irreparable injury that cannot be compensated I by damages and, where the Court is in doubt on any of those two I I principles, a determination of the matter on the balance i ·o f convenience . J i Application No. 13 of 2017 II Page 3 t. : 7. Mr. Kiryowa linked the demonstration of a prima facie case to he f existence of a triable issue for determination in the Reference, arguing that should a triable issue be found to exist a prima facie case w+ld have been established. Learned Counsel contended that in ~he present case there was indeed a triable issue as to whether or not ~he Republic of Uganda, vide the Excise Duty (Amendment) Act, fas discriminating against goods of a Partner State in contravention of rhe Treaty and the Protocols made thereunder. Citing the casel of American Cyanamid Company vs. Ethicon Limited (1975) AC 3~6 , I he contended that whereas at this stage of the case the Court wquld not have considered the Reference on its merits, looking at rhe evidence on record it was (in his view) apparent that there was indTed a triable question such as would establish a prima facie case witt, a very high likelihood of success. \· I 8. With regard to the question of whether or not any injury suffered by ~he Applicant as a result of the Respondent's alleged actions could be atoned for in damages, the Applicant relied upon paragraphs 10 - 19 of one Mathu Kiunjuri's Affidavit to support the preposition that itheI I injury that it stood to suffer as a consequence of the Responde~t's I actions was two-fold : on the one hand, it was faced with the possibility I of incurring additional financial costs that would either be absorbed by I I the Applicant or passed on to its customers; and, on the other han?, it was likely to suffer unquantifiable reputational injury arising f~o_m uncompetitive goods that could erode the company's business good~ill I built over a 30 year operational period, and see a reduction in its ma~ket outreach . The argument was made that both scenarios wduld negatively impact the company's business operations, occasio~ing Application No. 13 of 2017 I· I I II . ~I I J \ immeasurable and irreparable injury that cannot be adequa ely compensated by an award of damages. 9. Learned Counsel referred us to the cases of Samsun Electronics Limited vs. Apple Incorporation (2012) EWCA Civ 1223 and iwi I Euro ean Holdin 8.V & Anor vs. o·aoto Arua Misc. A I. No. 457 of 2006 to buttress his argument that reputational mJury . as immeasurable, as well as Le al Brains Trust vs. Attorne GenJral & Another Misc. Appl. No. 638 of 2014, where a party opposing an application for interim orders had unsuccessfully argued tha{ a sovereign state had a right to make laws and such laws would I be enforced until they were declared illegal on the merits of the case. i I 10. As to where the balance of convenience lies in this matter, Mr. Kiryowa contended that no averment whatsoever had been made ~at I. the Respondent either stood to suffer any injury if the interim ordlers sought were granted nor had it been averred that the said Respond ent 1 was willing and able to atone in damages for any injury suffered by the Applicant. He argued that the balance of convenience in this ma~ter I I weighed in favour of the Applicant, who had clearly demonstrated ~he injury it stood to suffer. In that regard, learned Counsel cited the ca~es of Lansing Linde Limited vs. Kerr (1991) 1AIIER 417, Ca ne ~s. Global Natural Resources PLC (1984) 1AIIER 225 and he i Democratic Part & Mukasa Fred Mbidde vs. The Secredu General of the EAC & The Attorney General of the Republi of I. Uganda. EACJ Application No. 6 of 2011. I ! l. Application No.13 of2017 I Page 5 I I I ! I • I I I I . ( L 11. Finally, the Applicant's submissions did allude to the pres~_nt Application having been filed pursuant to a notice from URA to fhe Applicant to pay additional taxes following the re-categorisation off he Applicant's goods from Kenya as imported goods after the com pf ny had paid taxes for them as locally manufactured goods. They furtr,er submitted that it was, therefore, the pre-recategorisation status of rhe goods that the Applicant sought to maintain pending the determina ion of the Reference. Respondent's Submissions 12. Ms. Nabakooza relied on an Affidavit in Reply deponed by J~ne Kibirige, the Clerk to the Ugandan Parliament, to argue that ~he impugned Act was enacted in accordance with due legislative procrss and pursuant to a House Committee Report that had recommen~ed ! the differentiation in excise duty on locally manufactured goods [viz imported goods in accordance with the practice of Ugantja's I neighbours in the region. She further argued that given the reastns that were advanced by the House in support of the enactment of ~he impugned law, the Reference from which the present Application arises did not have a likelihood of success. I i 13. Pointing out that the Applicants had filed the Reference on 9th August 2017, way after the commencement of the impugned Act 011st July 2017, it was her contention that mere filing of the Reference c9uld not hinder the continued enforcement of a law before the hearing of ~he I. Reference on its merits. Indeed, Ms. Nabakooza did argue that fhe status quo in place presently was the enforcement of the impugned law by URA, and faulted the Applicant's pursuit of the maintenance qf a I Application No. 13 of2017 I I Page 6 ~ I I ) 1 · I status quo that depicted a repealed excise duty rate that was applic~ble under a repealed law. It was her contention that the status quo soug.ht to be maintained by the present Application was no longer availabf 14. Ms. Nabakooza sought to rebut the Applicant's contention that non- grant of interim orders would subject it to irreparable injury, contending that Annexures E1 and E2 to the Affidavit in support of the Applicaion (tax payment registration slips) depicted items that were easily quantifiable financially and therefore could be compensated by an award of damages. She dismissed the Applicant's contrary claimi to irreparable injury as sepuculative and maintained that the balanc of convenience tilted heavily in favour of the Respondent due ~ e 1 ,ad w-,J1 . that the process entailed in the enactment of the impugned had been ( . A I lengthy and costly to Uganda, not to mention the fact that the law vtas already being enforced. I. 15. For his part, Mr. Androle contended that the Applicants had :not satisfactorily demonstrated that the Reference depicted a prima rJcie I case with a likelihood of success. In tacit agreement with leart~d Counsel for the Applicant on the meaning of a prima facie case, rr. Androle referred us to this Court's decision in Mbidde Foundation Ltd i & The Rt. Hon. Margaret Zziwa vs. The Secretary General of the East African Community Consolidated Applications 5 & 10\ of 2014, where a prima facie case was supposedly held to mean a cl~im that was not frivolous or vexatious, one that presented a serif us question to be tried. On that basis and without delving into the m,ri_ts of the Reference as had been reportedly extolled in the case of Hepry Kyalimpa vs. The Attorney General of the Republic of Uganda, I Application No. 13 of 2017 · ( \ I EACJ Application No.3 of 2013, it was Mr. Adrole's submission rat !Jte the material on record per se had failed to establish a prima flcie case with probability of success. I 16. Reiterating Ms. Nabakooza's submision that the Applicant was tot liable to suffer any injury that could not be compensated by an awrrd of damages, Mr. Adrole did also make reference to the folloj ing exposition in Giella vs. Cassman Brown (1973) EA 258, as cited V(ith approval in Mbidde Foundation Ltd & The Rt. Hon. Margaret Zziwa I I (supra): The object of an interlocutory injunction or in this case an interim order is to protect the plaintiff against injuryJI by violation of his right for which he could not be adequa e·ly I compensated in damages recoverable in the action if fhe uncertainty were resolved in his favour at the trial. But ~he I plaintiff's need for such protection must be weighed agair,st the corresponding need for the defendant to protect agaihst I injury resulting from his having been prevented trbm I I exercising his own legal rights for which he could not be J adequately compensated under the plaintiff's undertakin~ in damages if the certainty were resolved in the defenda1t's favour at the trial. 17. In like vein, he re-echoed Ms. Nabakooza's position that the balalf)ce of convenience tilted in favour of the Respondents given that there was an Act of Parliament in force, the stay of application of which wo)uld amount to a shift in status quo to revert to a repealed law which, in ~he Respondent Counsel's view, was untenable. To buttress this positi~n, Application No. 13 of 2017 l I I I I. I l I 1 ./( Mr. Adrole referred us to the case of East African Industry vs. Tfue Foods (1972) E.A. 420 as cited with approval in Mbidde Foundation Ltd & The Rt. Hon. Margaret Zziwa (supra), where it was held: I think the harm the respondent company would suffer as a I result of an injunction, if it succeeded in the suit is likely to be greater and graver than that which the appellant comp, ny would suffer from the refusal of an injunction should it be successful. Moreover and I attach particular significance to this, I cannot see that the appellant company would suffer any loss that could not sufficiently be compensated. lI · 18. In an attempt to distinguish the facts of the present case from thbse I in Legal Brains Trust (supra), learned Counsel further argued thatI .in that case the law that had been subjected to an interim injunction vlras subsidiary legislation and not principal legislation, as is the ck se I presently. We understood this argument to suggest that whereas subsidiary law was injunctible, principal legislation was not. \· Submissions in Reply I I 19. In a brief reply, it was clarified for the Applicant that what wa~ .in issue in the Reference was not the Excise Dutv {Amendment) Act per I se, but the interpretation given to section 2(a) and (b) thereof by UIRA such as to make it discriminatory in application. In response to ~he Respondent's assertion that by the time the Reference was filed ~he status quo the Applicant sought to retain had been repealed, Mr. ! Kiryowa argued that the present Application aptly represented a c~se of changing status quo at the behest of the Respondent and invited he f Application No. 13 of2017 I I P~e9 i. i I I II . I Court to interrogate this issue further by recourse to the case law on the subject that he had cited earlier in his submissions. He maintaited that his client did not seek the application of the repealed law ~ut, rather, to have the Amended law properly interpreted by the releJrnt bodies. I 20. Be that as it may, Mr. Kiryowa faulted the Respondent's argum~nt that a law that had been enacted pursuant to due process sh~Uld I remain in force in Uganda until such time as this Court declare~ it inconsistent with the Treaty, maintaining his position that a repealed law could indeed be the subject of interim orders if found to infringl\ on a party's rights. He contested the Respondent's suggestion that a aw that was enacted pursuant to a costly due process could not I be challenged regardless of its non-compliance with the EAC legal regi~e, I • to which Partner States are bound. In that regard, and in respons~ to I Mr. Adrole's endeavour to distinguish the circumstances in Legal Brains Trust (supra) from the present Application, Mr. Kiryowa opif ed I that any attempt to draw a distinction between principal and subsidi~ry I legislation for purposes of the grant of interim orders would be I superfluous, rather, the principle established in the Legal Brains Trust I case was that a law could indeed be the subject of injunctive orders .. 1 Court's Determination 1 21. The grant of interim orders by this Court is governed by Article 3~ of ! the Treaty. It reads: i· I l The Court may, in a case referred to it, make any interim I orders or issue any directions which it considers necessrry Application No. 13 of2017 i Pag~ 10 '' l l I. I or desirable. Interim orders and other directions issued!by I the Court shall have the same effect ad interim as decisi1ns I of the Court. 22. As was quite rightly opined by both sets of Counsel, this Court ~as had occasion to consider numerous interlocutory applications Ifor interim orders and has indeed upheld the trifold principles for the griant thereof advanced in Giella vs. Cassman Brown (supra), to wit, 'first, I . an applicant must show a prima facie case with a probabilitY; of success. Secondly, an interlocutory injunction will not norm+lly I be granted unless the applicant might otherwise suffer irrepararle injury, which would not adequately be compensated by an aw~rd I of damages. Thirdly, if the court is in doubt, it will decide Jan application on the balance of convenience.' See Prof. PJter I Anyang' Nyong'o & 10 Others vs. The Attorney General of the I Republic of Kenya & 3 Others (supra) and Timothy Alvin Kahdho vs. The Secretary General of the East African Community, E~ CJ I Application No. 5 of 2012. \. I 23. However, as was stated by this Court in FORSC & Others ws. I Attorney General of the Republic of Burundi & Another, EACJ I Appl. No. 16 of 2016, in the case of Mbidde Foundation Ltd & The l . Rt. Hon. Margaret Zziwa vs. The Secretary General of the Ebst African Community Consolidated Applications 5 & 10 of 2014 ~he l foregoing position was juxtaposed against the judicial approach advocated in the case of American Cyanamid Company vs. Ethidon Limited (1975) AC 396, which espoused the need for courts faced ~ith j an application for an interlocutory injunction to be satisfied that the I Application No. 13 of2017 Pagl 11 I i I i claim was not frivolous or vexatious - but that there was a sertus question to be tried; without attempting to resolve conflicts of evidence, as was previously required in the determination of 'a prima facie cfse with probability of success', as those were matters to be dealt wit1 at trial. . 24. In FORSC & Others vs. Attorney General of the Republic] of I i Burundi (supra), this Court upheld the following text in Blackstone's Civil Practice 2005, para. 37.19 - 37.20, pp. 392, 393, in defere~ce I to the demonstration of a serious triable issue rather than a prima r cie 1 case in applications for interlocutory injunctions:. . .' Therefore, the court only needs to be sat1sf1ed that there 1s· a ! I serious question to be tried on the merits. The result is that fhe J court is required to investigate the merits to a limited ext~nt I only. All that needs to be shown is that the claimant's cause of action has substance and reality. j i I 25. In the present case, both Parties misrepresented a prima facie c$se as extolled in Giella vs. Cassman Brown (supra) as b~ing synonymous with the pre-requisite of a serious triable issue I as j underscored in American Cyanamid Company (supra). We ~re constrained to observe that a prima facie case and a serious triJble l. issue are not necessarily one and the same thing and, therefore, wo;uld . I not be used interchangeably. The American Cyanamid case explittly distinguishes a prima facie case, which would necessitate 1the I resolution of 'conflicts of evidence on affidavit as to facts on w1ich claims of either party may ultimately depend' (a matter for trial), fror a serious question to be tried that is established where a cou1 is Application No. 13 of 2017 I· Pagf 12 I I 'satisfied that the claim is not frivolous or vexatious'. As was statef in Blackstone's Civil Practice 2005, 1 'the court is required I to investigate the merits to a limited extent only. All that needs t1be shown is that the claimant's cause of action has substance nd reality'. Stated differently, for a serious triable issue to be establis \ ed the substantive suit should disclose a cause of action. See The Siskina I (1979) AC 210. I 26. Within the context of EAC Community law, a cause of acJion demonstrating the prevalence of a serious triable issue has been ~eld to exist where the Reference raises a legitimate legal question un~er the Court's legal regime as spelt out in Article 30(1 ); more specificJ11y, I where it is the contention therein that the matter complained of viol,tes the national law of a Partner State or infringes any provision of the I Treaty. Causes of action before this Court are grounded in a pa1y's recourse to the Court's interpretative and enforcement function, as I. enca_fulated in Article 23(1) of the Treaty, rather than the enforcemrnt of typical common law rights. See Sitenda Sebalu vs. The Secretary ~( ' 1 General of the East African Community & Others EACJ Ref. Ni!J. 1 of 2010, Simon Peter Ochieng & Another vs. The Attorney GenJral of the Republic of Uganda, EACJ Ref. No. 11 of 2013 and FOR.SC & Others vs. Attorney General of the Republic of Burundi (sup~a). I 27. Applying that standard to the present case, we note that Mr. Kiry~Wa i did make the argument that there was indeed a triable issue in \his 1 case as to whether or not the Republic of Uganda, vide the Excise Outy I (Amendment) Act, was discriminating against goods of a Partner S~ate i i 1 Ibid. Application No. 13 of 2017 I . Pag\ 13 ] 1 in contravention of the Treaty and the Protocols made thereunder. On the other hand, we understood Respondent Counsel to argue that he impugned law was enacted in accordance with due legislative proc~ss and the grant of the interim orders sought would be tantamouni to reverting to the now repealed Excise Duty Act of 2014, yet the reasbns I that were advanced by the House in support of the enactment of ~he impugned law were such as would negate the present Applicati~n's likelihood of success. I I 28. Without recourse to the merits thereof, it is apparent on the fac$ .of I the Reference that it presents a legal question as to whether ~he enactment by the Respondent of a law that draws a distinction betw$en locally manufactured goods and goods from a foreign cou t i.ry contravenes Articles 6(d) and (e), 7(1 )(c), 75(1 ), (4) and (6) and 80(1!)(f) of the Treaty; Article 15(1) and (2) of the Customs Union Protocol, ~nd l Articles 4, 5, 6 and 32 of the Common Market Protocol. Lear~ed Counsel for the Applicant did clarify in submissions that his client idid not take issue with the impugned law per se but, rather, with UR¥\'s l reclassification of the Applicant's goods as imported goods or go?ds corning from a foreign country. We take the view that the Applica~t_is i bound by his pleadings and the Court's determination would, at ~his stage, simply be to deduce from the face of those pleadings whetber l there is a serious issued to be tried. Needless to say, the Refere~ce would be the relevant pleading in this regard because it forms the b~sis j of any 'trial' in respect of which triable issues would arise. 1 I j lI . 1 i: Application No. 13 of2017 l Pag~ 14 I . l I j 1· lUU-1_ I I I Il i I . 29. We have carefully scrutinised the Reference. We find fhat paragraph 3(q) - (t) thereof does indeed challenge the legalitJ of I section 2 of the Excise Duty (Amendment) Act, but sub-paragraph ru) does also contest the implementation of the said law. Indeed, the rel rfs sought by the Applicant pertain to both the legality and applicatio1 of section 2 of the impugned law. We reproduce the pertinent paragrar! hs for ease of reference: .· Paragraph 3 of the Reference I 1 (a)- (p) ..................... . (q) The Applicant contends that section 2 of the Exercise duty I (Amendment) Act No. 11 of 2017 is unlawful, discriminat;ory and completely negates the purpose for which the Tr~aty was enacted. I (r) The Applicant contends that section 2 of the Exercise duty (Amendment) Act No. 11 of 2017 violates and infringes lthe provisions of the Treaty, to wit, Articles 6(d) and (e), 7(1}'(c), l 75(1 ), (4) and (6) and 80(1 )(f) of the Treaty. l (s) The Applicant contends that section 2 of the Exercise duty i l (Amendment) Act No. 11 of 2017 violates and infringes ;the provisions of the Customs Union Protocol, to wit, Artfcle I 15(1) and (2) of the Customs Union Protocol. l1 (t) The Applicant contends that section 2 of the Exercise 9uty (Amendment) Act No. 11 of 2017 also violates and infringes Articles 4, 5, 6 and 32 of the Common Market Protoco1. J (u) The Applicant contends that the provisions of the Act, u~on I implementation, will adversely affect its operations and -lwill l Application No. 13 of 2017 j Pagr 15 i j lI I. I l I I I have a negative impact on its business as the ApplicantlVlii/1 be required to pay excessive amounts in excise duty, w1ich its competitors are not subject to, only because !the Applicant manufactures its cigarrettes in Kenya, ~nd despite the fact that Kenya is an EAC Partner State. 30. Consequently, the Reference does in fact challenge both the Excise Duty (Amendment) Act, as well as its enforcement. To that extent, ~he Court's interpretative mandate does come to bear in examining ~he impugned law's compliance with the Community's legal regime on I l trade and investment. Notwithstanding the generality of some of fhe legal provisions the Applicant seeks to rely on, the issues presented in the Reference do at face value raise formidable questions J for interrogation by this Court. In the result, we are satisfied that ~he ! . present matter raises serious triable issues. We so hold. 31. Turning to the question of irreparable injury, it was submitted for the I Applicant that the injury the company stood to suffer would adversely impact its business operations, occasioning immeasurable ~rid I irreparable injury that could not be adequately compensated by j an l award of damages. Conversely, the Respondent contended that lthe quantifiable injury depicted in tax payment registration slips that wkre annexed to the affidavit in support of the Application could easily\ be atoned by an award of damages, while the alleged reputational injiury j I was merely speculative. l· 32. We have carefully considered the authorities cited by either P~rty 1 on this issue, as well as the rival submissions of both Parties. It is trite 1 law that 'if damages in the measure recoverable at common law w9u.ld Application No. 13 of 2017 I I ! Pag~ 16 l be an adequate remedy and a respondent would be in a position to iay I. them, no interim injunciton should normally be granted'. ~ee i American C anamid Com an vs. Ethicon Limited 1975 AC 396 at p. 408. Be that as it may, in Blackstone's Civil Practice 2005, para. 37.22, 11· 394 it was opined (quite correctly, in our view) that dama~es would be inadequate where: J. (a)The defendant is unlikely to be able to pay the sum likel ~o be awarded at trial. 1 (b)The wrong is irreparable e.g. loss of the right to vote. j (c)The damage is non-pecuniary e.g. libel, nuisance, trJde I i. I secrets. (d)There is no available market. .\ (e)Damages would be difficult to assess. Examples are losJ of I goodwill, disruption of business and where the defenda~t's I. conduct has the effect of killing off a business before it is i established. (Our emphasis) ! 33. A definition of damages is also instructive. They are defined c;3s follows in the Oxford Dictionary of Law. Oxford University Pre1ss, 2009 (7th Edition), p. 246: I General damages are given for losses that the law will presu~e are the natural and probable consequence of a wrong. )· ... ! ' General damages may also mean damages given for a loss t~at ,; is incapable of precise estimation such as pain and sufferang or loss of reputation. In this context special damages kre damages given for losses that can be quantified. Application No. 13 of 2017 I- 34. In the present case the Head of Sales, Marketing and Distributiol in the Applicant company attested to the financial impact on fhe company's business operations that would arise from either ~he i absorption of the extra cost caused by a higher duty or the passing! on of that cost to their consumers. It was his affidavit evidence r at whereas absorption of the cost would lead to negative profit margins, operational losses and financially unstable business, and ~he deregistration from the Uganda Securities Exchange (USE) owinci to I consistent operational losses; if the cost was passed on to \t he company's consumers the unit price increase wou ld cause a 1!7% market share loss, rendering the business unviable especially git en more favourable prices from competitors. The foregoi ng evide~·ce paints a clear scenario of business disruption, as well as loss! of credibility in the market in the event that the company was e- l f registered from the USE, not to mention reduced trading prospects1on the Securities Exchange even if it were reinstated at a later date. !· I 35. Simply stated, the term 'reputation' refers to the qualita{ive I estimation in which a person is generally held. Therefore, f he deregistration of a listed company for non-compliance with its finan f ial undertakings to a Securities Exchange would, in our view, certajnly negate its credibility in the estimation of the public thus causin? . it reputational injury. Whereas reputational injury does indeed ofjten , attract an award of damages, for purposes of applications \tor interlocutory orders the question would be how ade.q uate such awajrds ~/ are for atoning the injury that could otherwise be negated by the g~ant of the orders sought. i Application No. 13 of 2017 I I • l Pag~ 18 I j. l I ! I 36. A similar question was addressed in the case of Sams 'n Electronics Limited vs. Af;!?Jt Incorporation (supra), to which we were referred on the subject does appear to affirm this position. In h·at µt..Lk ' A ( case the matter before the court was an application for stay pen~ing i appeal of a consequential order that required Apple Inc. to publicly I advertise that it was wrong to have alleged that Samsung Electroi ics had copied its iPad design. Compliance with the said order by A~ple I was held to be likely to cause damage to Apple's reputation and goodwill , and such damage was likely to be unquantifiable and ~e_ry difficult, if not impossible, to repair in the event that Apple prevailedj on the appeal. It seems to us that the same manner in which the wr~ng that Apple was required to concede was deemed likely to lower r he company's estimation in the electronics market, the Applicapt's deregistration from a Securities Exchange for non-compliance issies l would negate its estimation within its market and stakeholders. I 37. i. Quite clearly, therefore, the Applicant is liable to suffer business disruption, as well as reputational injury. From the Oxford Dictionkry 1 of Law definition of damages, it is abundantly clear that dama~es 1 would ensue from that injury. The question is whether such injury tan be adequately compensated by an award of damages. We do find persuasive authority in the position advanced in Blackstone's divil Practice 2005 above. 2 In our considered view, the difficultyJ in I . assessment of damages arising from loss of goodwill, reputatio~ or l disruption of business would pose the very real possibility of j an inadequate award of damages. In the result, we are satisfied that the I i . l 2 Para . 37 .22, p. 394 i: Application No. 13 of2017 j I Par 9 l. j 4 Applicant is liable to suffer business disruption, as well as reputatiqnal ' injury and loss of goodwill that cannot be adequately compensate~ by damages. I. 38. It is now well settled law that where an application for an interlocutory injunction cannot be determined on the existence qf a I serious triable issue or the adequacy of damages to atone for possible ~ injury to an applicant, the court shall decide the matter on a balanc$ of ' convenience. See East African Industry vs. True Foods (1972) E.A. I 420. In the present case it was argued for the Applicant that in r he absence of any averment or evidence that the Respondent either stq>od • ' to suffer any injury if the interim orders sought were granted or was I I willing and able to atone for any injury suffered by the Applicant in damages, the balance of convenience weighed in favour of !Ithe j Applicant, who had demonstrated the injury it stood to suffer. Learmed Counsel for the Applicant relied on numerous cases that we have c~ted .! earlier in this judgment in support of this position. It was also clari~ied for the Applicant that the status quo sought to be maintained was ~he I pre-recategorisation status of its goods that prevailed prior to the noiice from URA to the Applicant seeking additional taxes. !l . 39. On his part, Mr. Ad role opined that the balance of convenience ti~ted in favour of the Respondents given that there was an Act of Parliam:e nt in force, the stay of application of which by a grant of the interim or~ers j . sought would have the effect of a shift in status quo to revert t'. a repealed law. Mr. Adrole did also seek to distinguish the facts of he I present case from those in Legal Brains Trust (supra), on the b~sis of the law in issue in that case having been subsidiary legislation1as Application No. 13 of 2017 I Pag~ 20 I i opposed to principal legislation, as is the case presently. However, lhis drew sharp criticism from Mr. Kiryowa, who deprecated any attemJt to draw a distinction between principal and subsidiary legislation for purposes of applications for interim orders for being superfluous and non-cognisant of the principle that the Legal Brains Trust c~se established. We are constrained to observe that for purposes of rhe grant of an interim injunction the distinction between subsidiary cjlDd principal legislation is fairly redundant. It is quite commonplace !for courts to declare a principal legislation illegal or indeed strike it off the law books. It defies logic, therefore, for the argument to be advanied I l . that they cannot grant interim injunctions in respect of impugljled principal legislation if the justice of the matter so dictates. I 40. We now revert to a consideration of the balance of convenie, ~e herein. The balance of convenience in applications such as the 0ne I I before us is largely determined on a case by case basis. As ql1Jite rightly advanced by Mr. Adrole, in E. A. Industries vs. True FoJds i (supra) the court weighed the harm that the respondent company vifas likely to suffer in the event that the injunction was granted against ~he harm that the applicant stood to suffer if it was not granted, ~nd l attached particular importance to the fact that the harm suffered by f he applicant could be adequately compensated by damages, to uph:old the refusal of the injunction by the lower court. ' 41. Similarly, American Cyanamid (supra) re-echoed the emphasis; on adequacy of damages to atone for harm in the following terms: I I, The object of the interlocutory injunction is to protect the l plaintiff against injury by violation of his right for which Ihe Application No. 13 of2017 PaJ,e 21 l i. I I I l I • .,,.. ' could not be adequately compensated in damages recovera .le in the action if the uncertainty were resolved in his favou J at I the trial; but the plaintiff's need for such protection must!be weighed against the corresponding need of the defendant tojbe 1 protected against injury resulting from his having b ~n prevented from exercising his own legal rights for which he i could not be adequately compensated under the plaintiff's I undertaking in damages if the uncertainty were resolved in the defendant's favour at trial. The court must weigh one n4ed against another and determine where 'the balance I of convenience' lies . I. 42. Meanwhile, in Cayne vs. Global Natural Resources PLC (1984) 1 i 'I AIIER 225 the court asserted that it was not mere convenience ~hat needed to be weighed , but the risk of doing an injustice to one sid~ or the other. 3 l\ 43. In the present case we understood the Respondent to have arg ~ed the balance of convenience of this matter concurrently with ~he 1 question of the status quo sought to be preserved . For parity, we propose to adopt the same approach. In the American Cyanamid case, 4 the court linked the determination of the balance of convenieh e to the status quo sought to be preserved as follows: 1 l l l- 1 3 Blacstone's Civil Practice 2005, para. 32.27, pp. 396, 397. 4 At p.408 Application No. 13 of2017 Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculat~d to preserve the status quo. 44. The question is what is the status quo that seeks to be preserved in the matter before us. We have carefully considered the case .of Garden Cottage Foods vs. Milk Marketing Board (1984) AC 130, to which we were referred by the Applicant. In that case, the possibility of status quo changing was addressed in the following terms (Lord Diplock): The status quo is the existing state of affairs; but since states of affairs do not remain static this raises the query: existing when? In my opinion, the relevant status quo to which reference was made in American Cyanamid is the state of affairs existing during the period immediately preceding the issue of the writ claiming the permanent injunction or, if there be unreasonable delay between the issue of the writ and the motion for an interlocutory injunction, the period immediately preceding the motion. 45. Thus 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, in which case it would be the state of affairs immediately before the application. Therefore it behoves an applicant for interim orders to act quickly. However, an apparently unreasonable delay may be negated if sufficiently explained by the applicant. See Blackstone's Civil Practice 2005, para. 37.29, p. 397. Application No. 13 of 2017 Page 23 46. We have already determined that the Applicant in the present case 1s likely to suffer irreparable harm that cannot be compensated by damages. On the other hand , we were not addressed on the injury the Respondent stood to suffer beyond the assertion that the balance of convenience tilted heavily in favour of the Respondent given that the process entailed in the enactment of the impugned"~ had been lengthy : ~--<r· and costly to Uganda, not to mention the fact that the law was already being enforced; and staying the application of such a law by a grant of the interim orders sought, before a determination of the main ~uit, : . would have the effect of reverting to a repealed status quo. It was submitted for the Respondent that the status quo in place presently was the enforcement of the impugned law by URA and, therefore, the Applicant's pursuit of a status quo that prevailed under a repealed law was untenable. Ms. Nabakooza did also contend that the Applicants had filed the Reference on 9th August 2017, way after ~he i commencement of the impugned Act on 1st July 2017 and mere fi(ing of the Reference could not hinder the continued enforcement of a law before the hearing of the Reference on its merits. In reply, the stance ! adopted by the Respondent was faulted by the Applicant, on wh~se ' behalf it was argued that the Reference did not seek to rescusitat~-a repealed law but, rather, to secure a proper interpretation of the ' Amended law. Mr. Kiryowa further argued that the the present I Application aptly represented a case of changing status quo at the I behest of the Respondent. I 47. As we have held earlier in this Ruling, the Applicant's contesta~ion I of the misconstruction of the impugned law is indeed borne out b~ its i pleadings. We shall not belabour that point further. Be that as it m;ay, Application No. 13 of 2017 Pag~ _24 ·-:-. we are hardpressed to appreciate how a lengthy, costly enactm~nt process can negate the obligation upon lawmakers to enact nati+al laws that are in compliance with Partner States' obligations under f~e Treaty and its attendant Protocols, or how the fact of costliness ofl an I enactment process can be used to mitigate against a party's right to I I proper application of a law. Even in the interim, we are unable, to I fathom how the legthiness or costliness of a law enactment prod~ss can amount to irreparable injury to a party that enacted it in the eJrnt that the application of such law was stayed temporarily until t he disposal of the Reference. 48. We do appreciate that the grant of an interim injunction in this ct,se f would inhibit the URA's right to collect the additional duties billed to he Applicant, however, that right must be weighed against the injustice of ! leaving the Applicant company to bear the brunt of a possibly I misconstrued law that could indict it to the payment of exorbitant fu~ds i in excise duty pending the determination of the Reference. Would sych I . an eventuality be in tandem with the dictates of commercial justice ~nd expediency that should underpin regional trade? On interim ba~is, would it be more just to subject a commercial entity, the operationf of which are heavily reliant on availability of financial resources $rid competitive product prices, to the payment of possibly unwarran~ed I extra duties; or to stay the collection of those additional duties by a ' public entity until the determination of the matters in contention it, . a I ' suit? 1 l I 49. We take the considered view that the justice of the matter dict*es that the Respondent would suffer less injury from being temporJrily I i Application No. 13 of2017 ! i Pagr 25 I· II I I I I i 1.. 00 ,.J . t· I ·~ ' I r prevented from exercising its right to collect the extra excise duty bi~led to the Applicant if the interim orders sought in the present Applicat on were granted, than the injury the Applicant stands to suffer as a consequence of paying the additional duty. We so hold. 50. Having so held, quite clearly the factors informing the balanc of 1 convenience in this matter are not evenly balanced so as to war~ant I recourse to the preservation of the status quo as a matter of pruderlce, as was opined in the American Cyanamid case .5 Nonetheless, ~ad I we considered a preservation of the status quo, in Garden Cottage Foods vs. Milk Marketing Board (supra) the status quo ante that ~as held in to be applicable in an application for interlocutory injunctib~s was the state of affairs before a respondent commenced the conduct I complained of by the Applicant. In this case, that would be the statt of affairs that prevailed prior to the service of a notice of additional tafes by the URA upon the Applicant. Stated differently, a grant of the inte\rim orders sought in this case would in effect forestall the payment by he f Applicant of the extra excise duties billed for by URA until ~he determination of the Reference . This does not amount to a reversJ1 of the application of the impugned law, as was opined by lear~ed Respondent Counsel, but a stay of its application to the Appli$ nt I . company pending the determination of the Reference. I I i Conclusion 'I i 51. In the result, we do grant the interim orders sought and herkby uphold this Application . The costs thereof shall abide the outcomJ of ! i 5 Ibid. 1. I Application No. 13 of 20 17 I Pag~ 26 I' i I • C the Reference. We direct that it be fixed for hearing forthwith. It i so ordered. Dated, signed and delivered at Arusha this 25th day of January, 2ol1s. l f .......-t~._..,v--, ( _________________________________________{" -------------- HON. LADY JUSTICE MONICA K. MUGENYI PRINCIPAL JUDGE I I HON. DR. JUSTICE FAUSTIN NTEZILYAYO JUDGE I l. I iI I I· I I I HON. JUSTICE FAKIHI A. JUNDU 1- JUDGE 1 I I Application No. 13 of2017 I. I I Pag~ 27 I