DealMakers AFRICA Q1 2020

Implementation of the COMESA Treaty in Uganda: A Commercial Perspective

by Silver Kayondo

In 2017, Uganda enacted the Common Market for Eastern and Southern Africa Treaty (Implementation) Act (the Act). The purpose of the Act is to give force of law to the Treaty establishing the Common Market for Eastern and Southern Africa (COMESA) in Uganda, and provide for other related matters.   

COMESA is a preferential trade area comprising of twenty one member states, including Angola, Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Eswatini (formerly Swaziland), Tanzania, Uganda, Zambia and Zimbabwe. It replaced the former Preferential Trade Area (PTA). COMESA’s main focus is the formation of a large economic and trading unit that helps to leapfrog some of the barriers faced by the individual member states. It has a collective population of over 540 million people and global trade in goods worth about US$235 billion. 
 

The Act categorically states that all rights, powers, liabilities, obligations, and restrictions created or arising from the COMESA Treaty, and all remedies and procedures thereunder, are recognised and enforceable in Uganda. Furthermore, the COMESA enjoys the legal capacity of a body corporate with perpetual succession, and may acquire, hold, manage, and dispose of movable and immovable property, and may sue or be sued in its corporate name. The Act is administered by the Minister of Trade, Industry and Cooperatives (hereinafter called “the Minister”). Regulations made by the Council of Ministers of the COMESA under Article 10 of the Treaty are also clothed with automatic force of law in Uganda. 

The Minister is also given the mandate to take all necessary steps to accord COMESA, its organs and institutions, the privileges and immunities accorded to similar organisations under Uganda’s Diplomatic Privileges Act or any other relevant enactment. 

Another key provision relates to financials. The Act provides for a charge on Uganda’s Consolidated Fund for payments to be made out of the fiscus, to meet Uganda’s obligations under the Treaty. To effect this provision, the Minister of Finance, Planning and Economic Development may, on behalf of the government of Uganda, raise loans through the creation and issue of securities to meet financial obligations due to the COMESA. Any monies received by the government under the Treaty must be remitted and form part of the Consolidated Fund of the Republic of Uganda. 

In terms of dispute resolution, any question as to the meaning or effect of any provision of the Treaty, or as to the meaning, validity or effect of any Common Market instrument arising in any proceeding in Uganda must be treated as a question of law, and if not referred to the COMESA Court of Justice (hereinafter called “the COMESA Court”), such question must be determined in accordance with the principles laid down by the Treaty and any relevant decision of the COMESA Court. 

A judgment or order of the COMESA Court which imposes a pecuniary obligation on a person is enforceable in Uganda upon verification, as required by Article 40 of the Treaty, which stipulates that the order for execution must be appended to the Court judgment for verification of authenticity by the Registrar. Execution in this case would be in accordance with Uganda’s Civil Procedure Act, and Rules thereunder. The COMESA Court sits in Khartoum, Sudan and it is well established with its own COMESA Court Rules of Procedure of 2016. Arbitration matters before the Court are governed by the Arbitration Rules of 2018. 

It is important to note that although Uganda does not have an over-arching Competition/Antitrust law, Article 55 of the Treaty is to the effect that the Member States agree that any practice which negates the objective of free and liberalised trade is prohibited. To this end, agreements between undertakings or concerted practice which is aimed at prevention, restriction or distortion of competition within the COMESA are prohibited. This inspired the establishment of the COMESA Competition Commission (the Commission) with the mandate to prohibit, monitor and investigate anti-competitive business practices, control mergers and acquisitions within the COMESA, and mediate disputes between member states concerning anti-competitive conduct. The Commission is established by the COMESA Competition Regulations of 2004, and is currently based in Lilongwe, Malawi. 

With recent developments, such as the African Continental Free Trade Agreement which created the African Continental Free Trade Area (AfCFTA), it is hoped that the COMESA will continue to play an integral role in driving a fully integrated pan-African free trade area. It is further anticipated that with the global economic slowdown arising from COVID-19 and market shocks in the USA, Europe and Asia, Africa will look more to trade with herself and spur more cross-border capital movement, joint project financing, and exchange of industrial and technological information. There is no doubt that instruments such as Uganda’s COMESA Treaty Implementation Act are a welcome move to facilitate intra-African trade and investment protection as we await full implementation of the AfCFTA. 

Silver Kayondo is a Partner at Ortus Advocates in Kampala, Uganda.

© 2018 Gleason Publications (Pty) Ltd

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