Saturday August 30 2014

Institute a fair dispute resolution mechanism

Works state minister John Byabagambi on Wednesday said government had signed a Memorandum of Understanding (MoU) with China Harbour Engineering Company (CHEC) and that the company, as a result, will next week embark on a feasibility study for upgrading the eastern route of the railway line to standard gauge.

The minister’s pronouncement is despite a court ruling stopping the cancellation of an MoU with another Chinese company, China Civil Engineering Construction Company (CCECC), which the government had engaged earlier and hoped to eventually sign a contract with to construct the railway.

Speaking to journalists on Wednesday, Mr Byandala said the court ruling, which restrained the government from cancelling the MoU with CCECC, was premised on the fact that the Attorney General, the government’s legal adviser, had not cleared the cancellation of the MoU. He said that the AG had since cleared the move. He, however, did not provide evidence to that effect.
Deputy Attorney General Freddie Ruhindi said he was not aware of the development, referring us to his senior, Mr Peter Nyombi.

We cannot, therefore, at this moment tell whether the Attorney General has cleared the cancellation of CCECC’s MoU. But even if he were to have changed his mind and cleared the move, the fact is that the court ruling still stands. It would not be right to act against it. The proper thing would be to first go back to court.
One of the lawyers representing CCECC, Mr Kabiito Karamagi, said: “With this development (signing an MoU with CHEC) now we shall go back to the drawing board.” He was probably talking about further court action.

If CCECC goes back to court, the government may suffer further financial loss and the railway project may delay even further.

But there is even a worse potential consequence. Uganda may eventually get a reputation as a country where the politicians overrule the courts when they deem it fit. Investors, including foreign ones, want to sink their money in places where there are good dispute resolution mechanisms, so that once they feel that they have not got a fair deal, they will go to the courts and get justice.

Having an effective dispute resolution mechanism is listed by the World Bank as one of the key factors that influence the ease of business in any country.

It is something the government has to consider seriously in order to boost investor confidence, especially since we are looking for international investors in different fields.