44123 Ontario Ltd v Crispus Kiyonga
| Jurisdiction | Uganda |
| Date | 07 December 1992 |
| Court | High Court (Uganda) |
(Byamugisha J)
Governments Revolutionary government Liability for acts prior to assumption of power Whether rebel movement a legal entity capable of concluding contracts National Revolutionary Movement of Uganda Whether contract concluded with rebel movement enforceable against Government formed when that movement succeeds in taking power The law of Uganda
Summary: The facts:The plaintiff, a Canadian company, filed a suit against the Attorney-General of Uganda as representative of the Government of the Republic of Uganda. The other defendants in the suit were officers of the National Resistance Movement (NRM).
In 1985 the NRM, which was then a rebel movement fighting to seize power, controlled certain areas of Uganda. The contract, under which the NRM agreed to supply the plaintiff with coffee, was signed on behalf of the interim government. Under the agreement, the plaintiff agreed to pay a deposit of Uganda Shillings (Ushs) 200,000,000 and also to supply petroleum products to be used in NRM operations against the then Government of Uganda. The plaintiff paid the deposit and supplied the products. The NRM supplied part of the coffee but, in January 1986, before the remainder of the coffee was delivered, the NRM took power. No further deliveries were made to the plaintiff and, in 1988 the Government paid Ushs 200,000,000 to the plaintiffs, which the plaintiff accepted.
The plaintiff sought an order for specific performance of the alleged contract or, in the alternative, damages for breach of contract. The plaintiff claimed that the refund disregarded the contract between the parties, and maintained that it had suffered loss and damage as a result of the nondelivery of the coffee.
The plaintiff maintained that the existence of the contract was recognized by the NRM Government by the payment of the refund and that this estopped the Government from denying its existence. The plaintiff submitted that there was nothing to indicate that the contract was illegal. He further claimed that once a revolution succeeded, the actions of the revolutionary movement were validated. He denied that the action was time-barred because the suit was filed before the limitation period of three years had lapsed.
The Attorney-General denied that there was a cause of action against him. In the alternative, he submitted that the suit was time-barred. The other defendants submitted that, at the time the contract was allegedly made, the NRM was not a legal entity and was therefore unable to conclude a legally binding contract. The defendants maintained that revolutionary movements did not have legal personality until they achieved power and therefore the NRM only came into legal existence in January 1986. It was also claimed that, as they had been rebels at the relevant time, they could not have signed a contract binding the lawful Government of Uganda. If there had been a contract, the defendants submitted, it had become impossible to perform because once the NRM came to power it had to operate within the law and comply with the rules relating to coffee exports. The defendants asserted that the contract was illegal and, as such, could not be enforced or ratified. Finally, they claimed that there had been an oral agreement with the plaintiff that the payment of Ushs 200,000,000 by the Government of Uganda would discharge the contract.
Held:The suit was dismissed.
(1) To be binding, a contract had to be made between persons existing at the time the contract was made. As a rebel movement at the relevant time, the NRM was not a legal entity.
The area controlled by the NRM in December 1985 was not a sovereign State. The de facto control over some areas of Uganda by the NRM at the time of the contract did not validate the transaction and the NRM's actions could not be validated by the courts which at the relevant time owed allegiance to the then established Government of Uganda. In addition, the contract was for the supply of materials to support the military effort to overthrow the established government and was thus for an illegal purpose and not enforceable (pp. 2656).
(2) The contract was not ratified after the NRM came to power. The Legal Notice issued after the revolution establishing the new government and giving it legal existence did not expressly state, as would have been required, that the acts of the rebel movement were binding upon the new regime. Only the liabilities of the Government of the Republic of Uganda before January 1986 were recognized in the Legal Notice.
The payment of the Ushs 200,000,000 by the Government did not constitute ratification. This was a matter dealt with by executive officers of government and it would not be inappropriate for the Court to look at the way in which they may have exercised their discretion (pp. 2667).
(3) Performance of the contract was impossible. Once the NRM took power, it had to carry out its duties in compliance with the law. This was the reason for the payment of Ushs 200,000,000 by the Government to the plaintiff. Further, the plaintiff was...
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