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[1] The Claimant is a company incorporated and
registered in the United Republic of Tanzania, having its residence and
registered offices at Sokoine Road, Arusha, Tanzania. It has perpetual
succession, a common seal and power to sue and be sued in its corporate
name. At the material time, it was an importer and sole distributor of
Masafi products, which include high quality fruit juices and mineral water
in the East Africa Region. The products were imported from a company called
Masafi Mineral Water Co. (LLC) based in the United Arab Emirates.
[2] The Respondent, Kenya Ports Authority (KPA) is a statutory corporate
body, established under the provisions of section 3 of the Kenya Ports
Authority Act (KPA Act), Cap. 391 Laws of Kenya. Its headquarters are at
Mombasa, Kenya. Its duties are inter alia, to act as a warehouse provider
and to store goods for persons making use of Kenyan ports. In addition, the
Respondent has the statutory obligation to determine, impose and levyrates,
fares, charges, dues or fees for its services or for use, by any persons, of
its facilities.
[3] The Claimant filed the reference in this Court on the 25th September
2008, under Article 30 of the Treaty for the Establishment of the East
African Community (herein referred to as “the Treaty”), Rule 20 of the East
African Court of Justice Rules of Procedure, the East African Community
Customs Management Act of 2004, and the East African Community Customs
Management Regulations of 2006.
[4] In the reference, the Claimant avers that it imported 21 x 40ft
containers of assorted Masafi fruit juices and mineral water which landed at
the Mombasa port on diverse days in December 2007 and January 2008. The
Claimant further avers that the consignment could not be cleared from the
port within the stipulated time due to the post election violence
experienced in Kenya during the aforementioned period which disrupted the
operations at the port. It avers that the Respondent was fully aware that
the consignments consisted of perishable goods with limited shelf life and
in order to cover for the period lost due to the disruptions of port
operations, it was imperative and legitimately expected that the clearance
of the Claimant’s consignments would be effected as a matter of top priority
on resumption of port operations.
[5] The Claimant contends that in recognition of this fact, and in the East
African Community spirit, the Kenya Revenue Authority (KRA) in accordance
with Regulation 85 of the East African Community Customs Management
Regulations of 2006 recommended on the 28th April 2008 to the Minister for
Finance a waiver of customs warehouse rent of 80%. It avers further that on
the 8th May 2009 (he must have meant 2008), the Government of Kenya acted on
the recommendation and waived 80 % of the customs warehouse rent up to 13th
March 2008. The Complainant complains that unknown to it and without its
consent, and/or without justification, the Respondent had warehoused its
consignment at the Makupa Transit Shade Ltd. (MTS Ltd.), an entity
contracted and/or which entered into some arrangement with the Respondent,
but which had no contractual obligation with the Claimant.
[6] The Claimant avers that the Respondent unlawfully and unjustifiably
insisted that the Claimant must clear its consignment through MTS Ltd, with
the direct consequence that the waiver granted by the Government of Kenya
and its tax agencies could not be enjoyed by the Claimant. The Claimant
added that the said company imposed unreasonable clearance conditions that
all twenty one (21) containers be cleared within three (3)days with a verbal
waiver of 90% of the customs warehouse rent, making it logistically
impossible to clear the consignments within the imposed duration apart from
only six (6) out of the twenty one (21) containers. The Complainant contends
that, MTS Ltd, after the expiry of the three (3) days period refused to
allow the Claimant to remove the rest of the consignments, notwithstanding
the arrival of nine (9) trucks from Tanzania and an additional six (6)
trucks sourced locally to transport the said containers, unless and until
the customs warehouse rent was paid in full, thereby overriding the waiver
granted by the Kenya Government.
[7] The Claimant contends further that the Respondent and/or its agent MTS
Ltd, arrogantly and blatantly ignored and/or unreasonably refused to comply
with the directive issued by the Government of Kenya. It avers that through
no fault of its own and as a direct consequence of the Respondent acting in
cohorts with MTS Ltd, it has suffered colossal pecuniary losses in that:
All products in the aforesaid containers have expired and are no longer fit
for human consumption ;
It’s sales and distribution agreement dated 12th October 2008 with Mineral
Water Co[ LLC], a high quality and reputable juice supplier ,has been
terminated with no option for renewal;
Its bank guarantee of US $ 1,000,000 was utilized by Masafi Mineral Water
Co.(LLC) to liquidate outstanding invoices;
Bankers withdrew credit facilities, and threatened to foreclose on its
collateral so as to realize security;
Its reputation as a trading entity has been gravely injured and eroded;
It incurred expenses in hiring fifteen (15) trucks, nine (9) of which came
from Tanzania to carry the consignments;
It incurred expenses in purchasing air tickets, on road transport , hotel
accommodation and meals in following up clearance of the aforesaid
consignments from the custody of the Respondent;
It incurred unnecessary demurrage charges which continue to be incurred at a
rate of US $ 50 per day; and
It lost profit due to failure to deliver the consignments, and interest on
monies borrowed from banks to pay its creditors.
[8] Consequently, the Claimant claims from the Respondent and prays for the
following orders from the Court:
“(1) A declaration that the decision and the action of the Respondent in
refusing to clear and release the Claimant’s consignments is unlawful and an
infringement of the letter and spirit of the Treaty and The East African
Community Customs Management Act and Regulations.
(2) A declaration that no further customs warehouse rent is payable to the
Respondent by the claimant on the 15 containers in their custody, whose
contents and/or products have expired.
(3) Loss of the consignment through expiry of the product. $ 819,554
(4) Loss of profit for January to June 2008 $ 1,395,816
(5) Special damages $ 22,500,000
(6) Interest on borrowed funds up to June 2008 $ 28,749
(7) Expenditure on following up clearance $ 75,000
SUB TOTAL $ 24,819,119
(8) Loss of profit for the remaining period of the sales and distribution
agreement which is 31.12.2010, at a rate of$ 232,636 per month for 30 months
from 01.07.2008 totaling$ 6,979,080
(9) General damages to be assessed by the Court together withinterest
thereon at rates to be determined by the Court.
(10) Interest on items (3),(4),(5),(6)&(7) herein above and/or the decretal
sum from 01.07.2008 to the date of full payment at commercial rates and/or
such rates as this Honourable court may deem fit to grant.
(11) Any other relief that this Honourable Court may deem fit togrant.
(12) Costs of this reference be borne by the Respondent in anyevent.”
[9] In its response filed on the 27th November 2008, the Respondent admitted
the description of the parties, its statutory duties under the KPA Act, the
objectives of the Treaty as stated in the last four recitals of the preamble
as cited, the purpose of the promulgation of the East African Community
Customs Management Laws, namely, to facilitate trade and business in the
Partner States, the importation of the cargo by the Claimant on the dates
and in the quantities stated as well as their intended destination. The
Respondent, however, denied each and every allegation contained in the
reference as though the same were set out verbatim and traversed seriatim.
It described the reference as frivolous, vexatious and a grave abuse of the
process of the Court, and urged the Court to dismiss the same in limine.
[10] The response also gave notice of a preliminary objection seeking the
dismissal in limine of the reference on the grounds that:
(i) This honourable Court lacks the jurisdiction to entertain the nature of
the matter contained in the reference.
(ii) The Respondent lacks the capacity to be sued as a legal person in this
honourable Court.
(iii) The applicant lacks the locus standi to bring the referencebefore the
Court.
[11] When the reference came before the Court on 20th January 2009 for
scheduling conference, the Court ruled that the preliminary objection be
dealt with straightaway, since it was a fundamental point of law which
could, if upheld, dispose of the reference at this stage of the proceedings.
The Court was alive in taking this step, to the observation made by LAW,J.A
of the then E.A Court of Appeal in Mukisa Biscuits Manufacturing Co Ltd – vs
- West End Distributors Ltd [1969] E.A 696 at 700 where he stated that:
“So far as I am aware, a preliminary objection consists of a point of law
which has been pleaded, or which arises by clear implication out of the
pleadings and which if argued as a preliminary point may dispose of the
suit. Examples are an objection to the jurisdiction of the Court…”
[12] Additionally, this Court took cognizance of the fact that jurisdiction
is basic to its adjudicatory function, such that if jurisdiction is
challenged and madean issue, it ought to be addressed and determined
forthwith. The rationale for this was aptly summed up by Nyarangi, J.A. of
the Kenya Court of Appeal (as he then was) in Owners of Motor Vessel “Lilian
S”- vs- Caltex Oil (Kenya) Ltd [KLR] 1 when he stated at page at page 14:
“…. I think that it is reasonably plain that a question of jurisdiction
ought to be raised at the earliest possible opportunity and the court seized
of the matter is then obliged to decide the issue right away on the material
before it. Jurisdiction is everything. Without it, a Court has no power to
make one more step. Where a Court has no jurisdiction, there would be no
basis for a continuation of proceedings pending other evidence….”
[13] Submissions were made by Mr Geoffrey Imende and Mr Paul Muite, Counsel
for the Respondent and Claimant, respectively. The Court reserved its ruling
on the issue till 12th February 2009.
[14] The bone of contention from the submissions of both learned Counsel is
the jurisdiction of this Court to entertain the reference and the capacity
of KPA as a Respondent. Spirited submissions were made before this Court on
behalf of both parties.
[15] The Respondent’s Counsel submitted that KPA lacks the capacity to be
sued in this Court as a legal person because it is not an institution of the
Community. Article 30 of the Treaty provides that a complaint must be
against an Act, regulation, directive, decision or action of a Partner State
or an institution of the Community. The Treaty defines an institution of the
Community in Article 9 (2) of the Treaty as such bodies, departments, and
services as may be established by the Summit. KPA was not established by the
Summit, it was established by the Republic of Kenya, a Partner State, under
the provisions of section 3 of the KPA Act. It was his submission therefore
that this Court has no jurisdiction to entertain and determine this
reference.
[16] Counsel for the Respondent abandoned ground (iii) of his objection.
[17] Learned Counsel for the claimant on his part maintained that this Court
has jurisdiction to entertain and determine this reference. He submitted
that Article 30 of the Treaty is not specific as to who should be a
respondent in a reference brought by legal or natural persons under the said
Article. He argued further that in the event that the Court accepts the
argument by the Respondent’s Counsel that the said Article only applies to
Partner States and institutions of the Community as respondents, KPA can be
classifiedas an institution of the Community by virtue of Article 9 (2) of
the Treaty because the said sub-Article refers to “services”. He pointed out
that under Article 93 of the Treaty which obligates the members of the
Community to co-operate in the development and promotion of port services,
the word “services” is used several times and that at the time the Summit
signed the Treaty, the said Article 93 was part and parcel of the Treaty,
and that therefore KPA is a service of the Partner States and the Community.
[18] Counsel for the Claimant also stated that one of the reasons why he
resorted to this Court is the failure by the Republic of Kenya to establish
a tax appeals tribunal to which he would have referred the matter before
this Court for adjudication.
[19] After due consideration of the submissions, it is the Court’s view that
the issues for determination are:
(a) Whether the Court has jurisdiction to entertain the matter complained of
in the reference.
(b) Whether the Respondent has the capacity to be sued in this Court.
[20] The Court is in agreement with Mr. Imende that in this case the two
issues are intertwined and is of the view that the matter revolves around
the interpretation of Article 30 read together with Article 27 of the
Treaty.
[21] The jurisdiction of the Court is conferred by the Treaty. The Treaty
describes the role and jurisdiction of the Court in two distinct but clearly
related provisions. In Article 23(1), the Treaty provides:
“1. The Court shall be a judicial body which shall ensure the adherence to
law in the interpretation and application of and compliance with the
Treaty.”
[22] It then provides thus in Article 27(1):
“The Court shall initially have jurisdiction over the interpretation and
application of this Treaty.”
[23] The Treaty also makes provision for reference by natural or legal
persons to the Court under Article 30 on which the preliminary objection is
based. It reads:
“Reference by Legal and Natural Persons
1. Subject to the provisions of Article 27 of this Treaty, any person who is
resident in a Partner state may refer for determination by the Court, the
legality of any Act, regulation, directive, decision, or action of a Partner
State or an institution of the Community on the ground that such Act,
regulation, directive, decision or action is unlawful or is an infringement
of the provisions of this Treaty.”
The Treaty, being an international treaty among five sovereign states,
namely, Kenya, Uganda, Tanzania, Rwanda and Burundi, is subject to the
international law on interpretation of treaties, the main one being “The
Vienna Convention on the Law of Treaties”.
[24] Article 31 of The Vienna Convention on the Law of Treaties sets out the
general rule of interpretation of treaties as follows:
“1. A Treaty shall be interpreted in good faith in accordance with the
ordinary meaning to be given to the terms of the treaty in their context and
in the light of its object and purpose.
2. The context for the purpose of the interpretation of a treaty shall
comprise, in addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the
parties in connection with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in connection with
the conclusion of the treaty and accepted by the other parties as an
instrument related to the treaty.
3. There shall be taken into account:
(a) any subsequent agreement between the parties regarding the
interpretation of the treaty or the application of its provisions;
(b) any subsequent practice in the application of the treaty which
established the agreement of the parties regarding its interpretation.
(c) any relevant rules of international law applicable in the relations
between the parties.
4. A special meaning shall be given to a term if it is established that the
parties so intended.” (Underlining is added for emphasis)
[25] This rule has been applied by this Court in for instance, Prof. Peter
Anyang’ Nyong’o and Others - vs – The Attorney General of The Republic of
Kenya and Others, Reference No. 1 of 2006; and in The East African Law
Society and Others - vs - The Attorney General of the Republic of Kenya and
Others, Reference No.3 of 2008.
[26] The Court has been proactive in the interpretation and application of
the Treaty. For instance in Katabazi and Others - vs - The Attorney General
of The Republic of Uganda and The Secretary General of the East African
Community, Reference No.1 of 2007, a similar preliminary objection was
raised by Counsel for the Respondents on the grounds that the reference was
a human rights issue, and that the Court had no jurisdiction under Article
27 (2) of the Treaty in the absence of a protocol to operationalise the
Court’s extended jurisdiction. The Court had no difficulty in overruling the
preliminary objection in question because that complaint did not only
involve the interpretation of the Treaty, but was also basically against the
Republic of Uganda, a Partner State of the Community. That case is
distinguishable from the instant one in that the Respondent KPA is not a
Partner State of the Community.
[27] The Court has also declined to entertain matters where it has no
jurisdiction. (See: Christopher Mtikila and Others – vs - The Attorney
General of the United Republic of Tanzania, Ref No.2 of 2007).
[28] In Prof. Anyang’ Nyongo and Others – vs – The Attorney General of the
Republic of Kenya and Others, Ref. No.1 of 2006, the Court struck out the
reference against three individuals for lack of capacity. The Respondents
were sued as the Clerk to the National Assembly of Kenya, Leader of
Government Business of the National Assembly of Kenya and the Chairman of
NARC Kenya, a political party, respectively. Counsel for the applicants had
argued that since a natural person has the capacity to sue in this Court a
natural person must also have the capacity to be sued in the same Court
under the Treaty. He had urged the Court to give Article 30 of the Treaty an
interpretation that would bring natural persons who commit misfeasance that
infringe provisions of the Treaty within the ambit of Article 30 to account
for their actions. This is what the Court held at page 7 of the ruling dated
27th November, 2006:
“With due respect to Counsel for the Applicants, it appears to us that
enjoining the 2nd, 5th and 6th Respondents to the reference was under a
misconception. A reference under Article 30 of the Treaty should not be
construed as an action in tort brought by a person injured by or through the
misfeasance of another. It is an action to challenge thelegality under the
Treaty of an activity of a Partner State or of an institution of the
Community. The alleged collusion and connivance, if any, is not actionable
under Article 30 of the Treaty.
We think there is merit in the objections. The matters referred to this
Court, whose legality it has to determine relate to the responsibility of
the Republic of Kenya as a Partner State, acting by its National Assembly
under Article 50 of the Treaty, to elect nine members of the EALA. Both the
process of selecting the nine members whose names have been remitted to the
3rd Respondent and the Election Rules under which they were elected or
selected were done by the Republic of Kenya through its National Assembly.
It is for that reason that the Attorney General of Kenya was rightly made
the 1st Respondent.”
[29] Applying the above principles to the matter before us, and we find the
language of Article 30 plain and clear. As we have demonstrated earlier on
in this ruling, and it is not in contention by both parties:
• Article 30 makes provision for reference by any natural and legal person;
• who is resident in a Partner State;
• in respect of the legality of any Act, regulation, directive, decision, or
action of a Partner State or an institution of the Community;
• on the grounds that such Act, regulation, decision or action is unlawful
or is an infringement of the provisions of this Treaty.
[30] Article 9 (2) contains the following definition of institutions of the
Community:
“2. The institutions of the Community shall be such bodies, departments and
services as may be established by the Summit.”
[31] The institutions of the Community are enumerated under Article 9 (3).
These are:
-The East African Development Bank, The Lake Victoria Fisheries Organization
and surviving institutions of the former East African Community which are
defined as follows on page 10 of the Treaty:
“surviving institutions of the former East African Community” means the East
African Civil Aviation Academy, Soroti, the East African Development Bank,
the East African School of Librarianship and the Inter-University Council
for East Africa.”
[32] KPA is definitely not among the institutions of the Community created
under Article 9 (2), or a surviving institution of the East African
Community appearing on the above list. As such KPA is not one of the
respondents envisaged under Article 30 of the Treaty.
[33] KPA is an authority created under section 3 of the KPA Act as a
statutory body with perpetual succession, a common seal and power to sue and
be sued in its corporate name. It was created by the Republic of Kenya, a
Partner State, and not by the Summit. The “Summit” means the Summit
established by Article 9 of Treaty. Members of the Summit consist of Heads
of State or Government of Partner States. The mere fact of rendering the
nature of the services it renders at Mombasa port, namely, serving the East
African Partner States and citizens, does not ipso facto make it an
institution of the Community. In order to qualify as a service under Article
9 (2) of the Treaty, the service must be such a service created by the
Summit.
[34] Further and in respect of the submission by learned Counsel for the
claimant based on Article 93 of the Treaty, the Court finds that the
obligation to promote the development of efficient and profitable sea port
services enumerated in the said Article is an obligation of the Partner
States. In this particular case, the obligation lies squarely on the
shoulders of the Republic of Kenya, and not on other implementers along the
way like KPA. In sum, therefore, the reference is not properly before this
Court due to lack of capacity of KPA as a respondent under Article 30 of the
Treaty.
[35] Finally an allegation was levelled against the Republic of Kenya by
Counsel for the Claimant that the Claimant had to resort to this Court due
to failure by the Republic of Kenya in setting up a tax appeals tribunal to
deal with disputes such as the one before this Court. With due respect to
learned Counsel, we are unable to make any finding on this issue because the
Republic of Kenya was not a party to this reference and the statement was
from the bar.
[36] Based on the above reasons, we hold that this Court has no jurisdiction
to entertain this reference. We accordingly uphold the preliminary objection
raised by Counsel for the Respondent and dismiss the reference with costs to
the Respondent.
Dated and delivered at Arusha this--------------day
of-----------------------2009.
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