Sunday May 25 2014

MTN loses Shs10b petition


Kampala- Court has dismissed a case in which MTN Uganda had sued a shipping company, demanding $4 million (about Shs10 billion) for alleged breach of contract regarding a signed Memorandum of Understanding (MoU).

In 2012, MTN Uganda sued Threeways Shipping Group for allegedly failing or refusing to pay $ 3,827,820 million (about Shs10 billion) which was agreed upon in the MOU.

The telecom giant also wanted the shipping firm to pay general damages, interests and legal costs.

The MoU was signed between the two companies to amicably resolve their disputes and the shipping firm had agreed to pay $4 million within six months.

However, Threeways Group Limited challenged the MTN case on account that the MoU was illegal and unenforceable in law because it contradicted the Penal Code Act which gives powers to the state to prosecute criminal cases.

Dismissal terms
Justice Christopher Madrama of the High Court Commercial Division held that a court of law cannot sanction what is illegal and an illegality once brought to the attention of court would be dealt with irrespective of pleadings.

“I think illegality, once brought to the attention of court, overrides all questions of pleadings, and therefore this is and remains a real and indeed insuperable difficulty in the way of the defendant so far as the mercantile agency is concerned,” the judge ruled before dismissing the case with costs.

Court said the MoU violated the Penal Code Act in regard to abstinence of the complainant to pursue their case against the accused company, its directors and shareholders in order to help them prosecute MTN employees and former employees for charges of embezzlement, theft and causing financial loss.

Threeways Group had argued that the said MoU was signed under duress owing to the freezing of its bank accounts despite maintaining their innocence.
However, MTN maintained that the objection alone could not dispose of the case without adducing evidence.