ola energy uganda limited v attorney general of republic of uganda application no2 of 2024 arising from reference no6 of 2020 2025 eacj 8 6 march 2025

1 1 'I IN THE EAST AFRICAN COURT OF JUSTICE AT KIGALI, RWANDA APPELLATE DIVISION (Coram: Nestor Kayobera, P.; Anita Mugeni, VP.; Kathurima M'lnoti, Cheborion Barishaki; and Omar 0. Makungu, JJA.) APPLICATION NO. 2 OF 2024 (ARISING FROM REFERENCE NO. 6 OF 2020) BETWEEN OLA ENERGY UGANDA LIMITED (Formerly Libya Oil Uganda Limited) .............................APPLICANT AND ATTORNEY GENERAL OF THE REPUBLIC OF UGANDA ........................................ RESPONDENT [Application for stay of execution pending the hearing and determination of an appeal from the Judgment of the First Instance Division (Yohane B. Masara, PJ.; Dr. Charles 0. Nyawel/o, DPJ.; Richard Muhumuza; Richard Wabwire Wejuli and Dr. Leonard Gachuko, JJ.) dated 11th October 2024 in Reference No. 6 of 2020] RULING OF THE COURT 1 l \ \ I INTRODUCTION 1. By a Notice of Motion dated 31st October 2024 brought to the Court under a certificate of urgency, Ola Energy Uganda Limited (Formerly known as Libya Oil Uganda Limited) (the Applicant), has moved the Court for an order of stay of execution of the Judgment of the ·F irst Instance Division (the Trial Court) dated 11th October 2024, pen o ing the hearing and determination of an appeal to the Appellate Division. The Application is taken out under Article 39 of the Treaty for the Establishment of the East African Community (the Treaty) and rules 4, 52(4), 84 and 87(3) and (4) of the East African Court of Justice Rules of Procedure, 2019 (the Rules). 2. The Applicant is a limited liability company registered under Company No. BRS-NCHC-7-19/28820 in the Republic of Uganda, a Partner State to the Treaty. For purposes of the Treaty, the Applicant is resident in Kampala, Uganda, and its registered address is Plot No. 24 Binayomba Road, Bugolobi, Kampala. In these proceedings the Applicant is represented by Mr. Odhiambo Obonyo, Advocate and Ms. Alice Kamau, Advocate of Messrs. Anjawalla & Khanna LLP., ALN House, Eldama Ravine Close, Off Eldama Ravine Road, P. 0. Box 200-00606 Nairobi, Kenya. 3. The Respondent is the Attorney General of the Republic of Uganda, sued in his capacity as the principal legal adviser to the Government of Uganda. The Respondent's address is Bauman House, Plot 5, Parliament Avenue, P. 0 . Box 7183 Kampala, Uganda. In these proceedings the Respondent is represented by Mr. Jeffrey Atwine, Acting Commissioner; Ms. Charity Nabasa, Senior State Attorney; and Mr. Derrick Rutungu , State Attorney. 2 BACKGROUND AND REFERENCE TO THE TRIAL COURT 4. Following a post-clearance audit undertaken on the Applicant's business by the Uganda Revenue Authority (URA) for the period January 2014 to December 2018, URA made a preliminary finding that the Applicant owed UGX 5,308,622,375.00, being import duty on products that it had imported into Uganda. In response to the preliminary finding, the Applicant maintained that the said imports originated and were manufactured by its sister company, OLA Kenya, and as a result they were covered by the EAC Rules of Origin. After considering the Applicant's representations and evidence, URA concluded that some of the imports did not qualify for preferential treatment because the Applicant did not produce any evidence to show that they were indeed manufactured in Kenya. Ultimately, on 31st January 2020, URA imposed on the Applicant a tax liability of UGX 2,488,646,440.00. 5. The Applicant was aggrieved and on 1st April 2020 filed Reference No. 6 of 2020 in the Trial Court, seeking the following remedies: (a) a declaration that the impugned decision made by the Respondent's agent on 31st January 2020 contravenes and infringes the provisions of Articles 5(3)(a), 6(d), 7(1)(c), 75(1)(e), 75(6) and 80(1)(f) of the EAC Treaty; Articles 2(4) (a), 3(d) and 14(1) of the EAC Customs Union Protocol; Article 4 of the EAC Common Market Protocol and Rules 2, 4(1)(b), 4(2), 6 and Part 1 of the 1st Schedule to the EAC Rules of Origin; b) a declaration that the impugned decision made by the Respondent's agent on 31st January 2020 is unlawful, irregular, ultra vires, null and void to the extent that it infringes the provisions of Articles 5(3)(a), 6(d), 7(1)(c), 75(1)(e), 75(6) and 80(1)(f) of the EAC Treaty; Articles 2(4)(a), 3(d) and 14(1) of the EAC Customs Union Protocol; Article 4 of the EAC 3 Common Market Protocol and rules 2, 4(1)(b), 4(2), 6 and Part 1 of the 1st Schedule to the EAC Rules of Origin; c) a permanent injunction do issue restraining the Respondent through its agents, servants, employees and or any other person whosoever and/or howsoever acting on their instructions in any manner whatsoever from taking any enforcement action, including the issuance of agency notices to enforce the impugned decision dated 31st January 2020 and the subsequent demand issued on 24th February 2020; d) costs of this Reference be borne by the Respondent; and e) any other order that this Honourable Court may deem just and reasonable. 6. In his Response to the Reference, the Respondent denied the violations alleged by the Applicant and pleaded that the imports in question did not qualify for Preferential Community Tariff Treatment. In addition, he contended that the Applicant's Reference was time-barred. 7. At the Scheduling Conference held on 15th March 2023, the Trial Court, with the consent of the parties, framed following four issues for determination, namely: (i) whether the Reference is time barred; (ii) whether the lubricants imported by the Applicant qualify for preferential treatment under the Treaty and the EAC's Rules of Origin; (iii) whether the Respondent's decision issued on 31st January 2020 is discriminatory, ultra vires and in violation of the spirit and letter of the Treaty, the EAC Customs and Common Market Protocols and the EAC Rules of Origin; and (iv) whether the Applicant is entitled to the reliefs sought. 4 ' I DETERMINATION BY THE TRIAL COURT 8. After hearing the Reference, the Trial Court rendered its Judgmerit on 11th October 2024. The Court held that the Reference was filed out of time; and that in the circumstances, the Court did not have jurisdict ion. Accordingly, the Court dismissed the Reference, but directed each party to bear its own costs. In terms of its final orders, the Court concluded as follows: "69. For the foregoing reasons, this Court lacks jurisdiction to determine the Reference on its merits. 70. The Reference is hereby dismissed in its entirety for being time barred. 71. We direct that each party shall bear its own costs." 9. The Applicant was aggrieved and filed a Notice of Appeal on 23rd October 2024, followed by the Application for stay of execution which is now before this Court. The Application is supported by the affidavit of Benedicta Karimi, the Applicant's Legal Counsel, sworn on 31st October 2024. At the hearing of the Application, the Applicant had filed its list of authorities, but not written submissions. However, with the concurrence of Counsel for the Respondent, the Court granted the Applicant's Counsel leave to make oral submissions. THE APPLICANT'S CASE 10. In support of the Application, Counsel for the Applicant, who addressed the Court in turn, submitted that this Court has jurisdiction to grant an order of stay of execution if the Applicant satisfies it that substantial loss may result unless the order of stay of execution is granted; the 5 Application for stay of execution has been made timeously and witllout undue delay; and that the Applicant has offered security for costs. In support of the proposition, the Applicant relied on the ruling of this Court in East African Law Society v. Attorney General of Ugandc1 & another (Application No. 1 of 2013). Counsel also relied on the persuasive ruling of the High Court of Kenya in RWW v. EKW [2019] KEHC 6523 (KLR) in support of the proposition that the purpose of an application for stay of execution pending appeal is to preserve the subject matter in dispute so that the rights of the applicant, who is exercising his undoubted right of appeal, are safeguarded and not rendered nugatory if the appeal succeeds. 11. Counsel contended that the Application for stay of execution was made timeously and that the Respondent had conceded as much. Regarding substantial loss, Counsel submitted that the Applicant stood to lose over · UGX 2 billion, which would adversely affect its operations and obligations to third parties as well as to employees, with redundancies being a distinct possibility. The Applicant also contended that it risked suffering reputational loss, which could not be easily undone, because the loss it was exposed to was not restricted to financial loss only. In addition, it was contended that without an order of stay of execution, the Applicant risked being subjected to similar taxation in four separate Partner States to the Treaty. 12. Regarding security, the Applicant submitted that it had already secured the amount demanded by the Respondent through an Insurance Bond from Mayfair Insurance, which was valid until 23rd June 2025. It was the Applicant's case that without an order of stay of execution, the Respondent was likely to call the bond. 6 13. Lastly, the Applicant submitted that its intended appeal raises arg wable issues and that the appeal had great likelihood of success. It was contended that the Trial Court erred in its computation of time and interpretation of section 63(4) of the Laws of the Comm u nity (Interpretation) Act, 2004 and also by holding that the Correspori ding Date Rule applies to all dates without exception. It was fu rther contended that even the Trial Court appreciated that the issues ra ised in the Reference were significant and that their resolution would have been a jurisprudential milestone in dealing with questions of violation of the Treaty. 14. For the foregoing reasons, the Applicant urged the Court to allow the Application and grant an order of stay of execution of the Judgment of the Trial Court pending the hearing and determination of the Appeal to this Court. THE RESPONDENT'S CASE 15. The Respondent, opposed the Application vide a Replying Affidavit sworn on 3rd February 2025 by Jjengo Nicholas, URA's Tax Auditor or Supervisor; written submissions dated 24th February 2025; and a list of authorities dated 25th February 2025. The substance of the response to the Application was that the same was misconceived because the Trial Court did not issue any positive order capable of being executed. The Respondent maintained that an order of stay of execution can only issue where the Trial Court has issued a positive order capable of execution. 16. The Respondent relied on the persuasive decision of the High Court of Uganda in Kyambogo University v. Prof. Isaiah Omolo Ndiege (Civil 7 Application No. 341 of 2013 (2013/UGCC 13), in support of the proposition that execution is the process by which a successful party enforces a decree or order. The Respondent further submitted that f or a decree or order to be amenable to an order of stay of execution, it must be capable of execution. Reliance was placed on the persuasive decision of the Court of Appeal of Kenya in Western College of Arts and Applied Sciences v E. P. Oranga & 3 others [1976] eKLH in which the Court held that where a trial court has not ordered any of the parties to do anything or refrain from doing anything or to pay any sum of money, there is nothing arising from the decision of the trial court for an appellate court to stay through an order of stay of execution. 17. As regards the merits of the Application, the Respondent submitted that the Applicant had not demonstrated substantial loss as required by rule 87(3) of the Rules. It was contended that the onus was on the Applicant to demonstrate by empirical evidence real and imminent irreparable loss and that, mere inconvenience or financial difficulty did not suffice or constitute substantial loss. In the Respondent's perception, financial loss is capable of compensation through refund or restitution, should the appeal succeed. The Respondent also contended that the Applicant had not even suggested that the Respondent was incapable of refunding the money in question. 18. In support of those propositions the Respondent relied on the persuasive decisions of the Court of Appeal of Kenya in Kenya Shell Ltd v. Benjamin Karuga Kibiru & another [1986] eKLR, the Court of Appeal of Uganda in P. K. Sengendo v. Busulwa Lawrence & another (CACA 207/14 and the Supreme Court of Uganda in Hon. Theodore Ssekikubo & others v. The Attorney General & others (SCCA No. 01 of 2014). 8 19. Regarding the Applicant's contention that it was exposed to reputational loss, the Respondent submitted that the contention was speculative and that compliance with tax obligation cannot leatd to reputational loss. In the Respondent's view, it was failure to comply with tax obligations and not payment thereof, which raised questions al:>out a party's credibility. It was also the Respondent's contention that the balance of convenience tilted in favour of dismissing the Application because payment of taxes was underpinned by public interest for purposes of provision of essential services. 20. Lastly, the Respondent submitted that the Applicant had not demonstrated any steps taken by the Respondent to execute the Judgment or to call the insurance bond. The Respondent however, conceded that the Applicant had made the present Application without undue delay. APPLICANT'S SUBMISSIONS IN REJOINDER 21 . In a brief rejoinder, Counsel for the Applicant submitted that although the Applicant had prayed for an order of stay of execution, in prayer 4 the Applicant had also prayed that the Court grants such further, other and or consequential orders that it may deem fit and just. Counsel added that by dint of rule 4 of the Rules, under which the Court has inherent power to make such orders or give such directions as may be necessary for the ends of justice or to prevent abuse of the process of the court, the Court could issue an order to stop the implementation of the impugned decision of the Trial Court. 9 ISSUES FOR DETERMINATION 22. On account of having been filed under a certificate of urgency, the Application before us did not go through the ordinary process o f a Scheduling Conference. In our perception, the Application raises the following three issues for determination, namely: (a)whether the Application is properly before the Court; (b)if the answer is in the affirmative, whether the Applicant has satisfied the conditions for grant of an order of stay of execution; and (c) who should bear the costs of the Application? ANALYSIS AND DETERMINATION 23. Having carefully considered the Judgment of the Trial Court, the Application before us, the submissions by Counsel and the authorities relied upon, we determine the three issues as follows. Issue No. 1: Whether the Application is properly before the Court. 24. Rule 87 confers on this Court jurisdiction to issue an order of stay of execution. The rule provides as follows: (1) "87. An appeal shall not operate as a stay of proceedings or of the decree or order appealed from except so far as the Court may order, nor shall execution of a decree or order be stayed by reason only of an appeal having been preferred from the decree or order; but the Court may for sufficient cause order stay of execution of such decree or order. 10 (2) Where an application is made for stay of execution of a decree or order before the expiration of the time allowecl for appealing therefrom, the Court may on sufficient reason being shown order the execution be stayed. (3) No order for stay of execution shall be made under sub-rule (1) or sub-rule (2) unless the Court is satisfied:- (a) that substantial loss may result to the party applying for stay of execution unless the order is made; (b) that the application has been made witfJout unreasonable delay; and (c) that security has been given by the applicant for the due performance of such decree or order as may ultimately be binding upon him. (4) Notwithstanding anything contained in sub-rule (3), a single Judge of the Appellate Division may make an ex-parte order for stay of execution pending the hearing of the application." 25. From the above provision, preferring an appeal alone does not serve to stay a decree or order of the Trial Court. To obtain an order of stay of execution, an applicant must apply for such an order before the expiry of the period provided for appeal; provide sufficient reason to justify the order of stay of execution; and satisfy the three conditions set out in rule 87(3). In East African Law Society v Attorney General of Uganda & another (supra), this Court explained that an Applicant who has filed an Appeal or a Notice of Appeal has standing to apply for an order of stay of execution. 26. We would add that among the "sufficient reason" that an Applicant must demonstrate in an application for stay of execution is that the Appeal or intended Appeal is not frivolous, but is one that is arguable. The substantial loss contemplated by rule 87(3) (a) must be of the 11 nature that would render the Appeal or intended Appeal nugatory iff the Appeal were to succeed. 27. Turning to the first issue for determination, the Respondent has submitted that in the circumstances of this Application, an order of stay of execution cannot issue because the Trial Court merely dismissed the Applicant's Reference and that by its nature, the order of the Trial Court is not capable of execution. At the hearing of the Application, the Applicant's Counsel conceded that he had never come across a case where the Court had stayed execution of an order dismissing an action. Nevertheless, he was of the view that the Court can still deploy its inherent powers under rule 4 of the Rules to grant an order of stay of execution or a similar order. 28. We agree with the Applicant that a Court cannot stay execution of a decision of the Trial Court which has merely dismissed a Reference or an Application. There are a myriad of persuasive decisions from the superior courts of the Partner States that speak to that point, among them Western College of Arts and Applied Sciences v. E. P. Orang a & 3 others (supra), which the Respondent relied upon. In that case, the applicant had sought an order of stay of execution in the Court of Appeal after the High Court had dismissed his suit. In declining to grant the order, the Court of Appeal delivered itself as follows: "But what is there to be executed under the judgment, the subject of the intended appeal? The High Court has merely dismissed the suit, with costs. Any execution can only be in respect of costs ... In the instant case, the High Court has not ordered any of the parties to do anything, or to refrain from doing anything, or to pay any sum. There is nothing arising out of the High Court judgment for this Court, in an application for a stay, to enforce or refrain by injunction.,, 12 29. In George ole Sangui v. Kedong Ranch Ltd [2015] eKLR the same Court reiterated the position as follows: "In the instant case, the High Court dismissed the suit in which the applicants were seeking a declaration and an order to be registered as the proprietors of the suit land on the basis doctrine of adverse possession. The dismissal order cannot be o, the enforced and is not capable of execution. It is not a positive order requiring any party to do or to refrain from doing anything. It does not confer any relief. It simply determined the suit by making a finding that the claimant was not entitled to the reliefs or orders sought and dismissed the suit against the respondent. That was not a positive order that required any party to do or refrain from doing anything. It was not capable of execution or enforcement. The act of dismissal of the suit could not be stayed. It is our finding that to the extent to which the application seeks stay of the order of the dismissal of the suit it cannot be granted." 30. Other similar decisions to the same effect include, Exclusive Estates Ltd v. Kenya Posts and Telecommunications Corporation & another [2005] 1 EA 53; FRS v. JDS (CA. No. Nai. 114 of 2012); Devani & 4 others v. Joseph Ngindari & 3 others (CA No. Nai 136 of 2004); F & S. Scientific Ltd. v. Kenya Revenue Authority & another (CA No. 260 of 2012); Republic v. Kenya Anti-Corruption Commission & 2 others (CA No. 51 of 2008); Mombasa Sea Port Duty Free Ltd v. Kenya Ports Authority (CA No. Nai. 242 of 2006); Stanbic Bank Kenya Ltd v. Kenya Revenue Authority (CA No. Nai 294 of 2007); Metro Pharmaceuticals Ltd v. Kenya Revenue Authority (CA No. Nai 131 of 2012); and Marangu Rucha & another v Attorney General & 10 others (CA No. 180 of 2013). 31. The above decisions of the national courts are of persuasive authority before this Court, as was held by this Court in Male H. Mabirizi K. Kiwanuka v. Attorney General of Uganda, Reference No. 6 of 2020. In Geoffrey Magezi v. National Medical Stores (Appeal No. 2 of 13 2016) this Court held as follows on the precedential value of casiElaw from the Partner States: "The Court once again states that decisions of municipal courts do not have precedential authority here. However, as the Court has stated often before, such decisions may provide inspiration to this Court, particularly where they have been rendered by the highest tribunals in those countries and they are relevant to the matter under consideration by the Court." 32. In the Application before us, we particularly bear in mind the similarity of the Court's Rules and those of the courts of the Partner States regarding grant of an order of stay of execution pending appeal. Accordingly, we are persuaded by the reasoning in the above decisions. 33. We also bear in mind that the Applicant seeks to stay execution of the order of the Trial Court, not the order of URA. An application for stay of execution must relate to and is restricted to the decision of the Trial Court. The order of the Trial Court in the current Application merely dismissed the Applicant's Reference on the grounds that it was filed out of time. The Court did not even award costs, which would have been amenable to an order of stay of execution, subject to satisfying the other conditions set out in rule 87 of the Rules. 34. Turning to the Applicant's argument on inherent powers, we are not persuaded that we can invoke the Court's inherent power under rule 4 in the present circumstances where the issue of stay of execution is comprehensively regulated by rule 87, and the Applicant has failed to bring itself within the terms of that rule. In Attorney General of the Republic of Uganda v. Johnson Akol Omunyokol, Application No. 10 of 2015, this Court held as follows on its inherent powers:- 14 r . r 1 "It is trite law that the inherent powers of a court may only be invoked where there is no express provision that addresses a matter for adjudication. Inherent powers certainly cannot be exercised in contravention of, conflict with or ignoring exp ress legal provisions." 35. Taking all the foregoing into account, we answer issue No 1 in the negative, meaning that there is no proper Application for an order of stay of execution before the Court. Issue No. 2: If the answer is in the affirmative, whether the Applicant has satisfied the conditions for grant of an order of stay of execution. 36. We are called upon to engage with and decide issue No. 2 only if we answer issue No .1 in the affirmative. If the answer to issue No. 1 is in the negative, as we have found it is, we must down our tools. Accordingly, in answer to issue No. 2, we do not have to proceed and consider whether the Applicant has satisfied the other conditions for grant of an order of stay of execution. Issue No. 2 has been automatically resolved by the answer to issue No. 1. Issue No. 3: Who should bear the costs of the Application? 37. Rule 127 of the Rules provides as follows, regarding costs: "127. (1) Costs in any proceedings shall follow the event unless the Court shall for good reasons otherwise order. (2) If it appears to the Court that costs have been incurred improperly or without reasonable cause by reason of any misconduct or default of the party and/or advocate, the Court may call on the advocate by whom such costs have been so incurred to show cause why such costs should not be borne by the advocate personally, and thereupon may make such order as the justice of the case requires." 15 r r i 38. Under rule 127 the general rule is that the party who prevails is t.o be awarded costs, to be paid by the party who has failed. However., the Court has discretion to depart from that general rule if there are good reasons to do so. In Attorney General of Burundi v. Secretary General of EAC & another (Appeal No. 4 of 2019), this Court helci as follows regarding award of costs: "The general principles applied by the Court when called upon to award costs are well settled. We recently restated them in Dr. Margaret Zziwa v. The Secretary-General of EAC [EACJ Appeal No. 2 of 2017]. They are: one, costs are in the discretion of the Court; and, two, in exercising such discretion, the Court bears in mind that costs follow the event and that a successful party may only exceptionally be deprived of costs depending on the particular circumstances of the case such as the conduct of the parties themselves or their legal representations, the nature of the litigants, the nature of the proceeding or the nature of the success." 39. Taking the above principles into account, we do not perceive any exceptional reason why we should depart from the general rule that costs follow the events. Accordingly, we award costs of this Application to the Respondent. DISPOSITION 40. The upshot of our consideration of the Applicant's Application is that:- a. the Application is hereby dismissed; and b. the Applicant to bear costs of the Application. 16 IT IS SO ORDERED DATED, DELIVERED, AND ~i-Nl"~tn-t~ ALI on this ... G.'?7-;ay of March 2025 Nestor Kayobera PRESIDENT . . . . . . . . . . . .¾;. . Anita Mugeni . VICE PRESIDENT Kathurim M'lnoti f JUSTICE OF PP EAL A . . . . . . :. :. . . . . . .t Cheborion Barishaki JUSTICE OF APPEAL Omar 0. Makungu JUSTICE OF APPEAL 17